Monday, 14 June 2021

TONIGHT: Shoukry is in Qatar. + Oil is up to a 32-month high. ALSO: EFG Hermes and Saudi Exchange Virtual Investor Conference kicks off today.

It’s another macro-heavy issue this afternoon, friends, with both the US Fed and our own central bank meeting this week to decide on interest rates. Consequently, inflation is the big concern both domestically and internationally, thanks to the continued commodities price boom of 2021.

Not helping matters was oil hitting a 32-month high yesterday, with futures rising 0.9% in New York, reflecting bolstered demand in the US and Europe as vaccine rollouts continue, as well as the expected delay in reviving the 2015 Iran nuclear agreement, according to Bloomberg. Negotiations to reactivate the agreement were expected to be complete before Iran’s elections take place this Friday, a target which seems increasingly unlikely to be met. Increased road and air traffic in the West has also given investors a bullish outlook on crude, with some forecasting continued price increases over the coming weeks.

Inflation will be front and center when the Fed’s Open Market Committee kicks off its two-day meeting tomorrow, especially after a heated US consumer prices report out last week and May prices coming 5% higher than forecasts. Market watchers floated the idea that inflation will prove short-lived, and no policy action is to be expected. Investors will still, however, be on the lookout for clues on how and when the Fed will shift its policy stance.

The Fed is pushing the idea that “the current spike in inflation is transitory,” and this week’s meeting will be a test of this so-called “narrative,” market sage Mohamed El Erian writes for the Financial Times.

REMINDER- It’s interest rate day here on Thursday: The Central Bank of Egypt’s (CBE) own Monetary Policy Committee meets on Thursday to review rates here at home. All 11 analysts and economists surveyed in our poll are calling another hold as inflation hit its highest level all year in May as the global commodities boom began to hit the domestic economy.

Inflation will be something investors will be eyeing when looking at which emerging markets to invest in, according to a Bloomberg survey, with takers suggesting that the more an EM central bank promotes inflation control the more investors will likely jump in. What does that mean for us? Read today’s Speed Round to find out.


** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

  • Egyptian Banks may face more pressure in the coming fiscal year: Banks could see their interest income squeezed during the coming state fiscal year due to lower interest rates and a potential dip in treasury yields, Fitch Ratings said in a report.
  • Jumia flags Egypt as a top investment destination: Africa-focused e-commerce giant Jumia plans to invest over USD 590 mn in Egypt and other African countries over the upcoming years starting 2021.
  • Four companies to IPO in 2H2021? EGX Chairman Mohamed Farid told Reuters as much, without revealing the companies. Likely contenders include Banque du Caire, State-owned e-payments company E-Finance, NBSF player Ebtikar, and

Cosmeceutical giant Macro Group.

The German-Arab Chamber of Industry and Commerce is offering to assist its members and clients with the procedures of registering on the Advanced Cargo Information (ACI) system Nafeza, according to a statement (pdf). Members who have not completed their registration on the system may submit their documents to the chamber, who will take over the process. The chamber will also offer long-term support with troubleshooting and problems that may arise at a later date. If you’re still unsure how you can prepare for Nafeza, check out our explainer on the topic. All businesses importing goods at seaports must be registered on the system by 1 July.

HAPPENING NOW- Foreign Minister Sameh Shoukry is meeting with his Qatari counterpart Mohammed bin Abdulrahman Al Thani in Doha, Foreign Ministry Spokesperson Ahmed Hafez tweeted. They are expected to discuss the latest developments in Egyptian-Qatari relations since the Al Ula declaration was inked earlier this year. In late May, Al Thani met with Shoukry for the first time in Cairo since the lifting of Egypt and the GCC’s 2017 blockade on Qatar. Their meeting today comes ahead of the Arab League’s meeting for “emergency” GERD talks in Doha tomorrow.

THE BIG STORY ABROAD #2- US urges G-7 allies to take bolder stance against China: President Joe Biden has called on democratic western allies to take a tougher stance on China and other “autocratic governments around the world” to curb their economic influence, the Financial Times reports. Countering China was a key theme throughout the G7 summit, with the summit’s final communique yesterday denouncing China over human rights abuses in Xinjiang, and asking for further probes into the origins of covid-19. In response, a spokesperson at the Chinese embassy in London criticized the summit, noting that it “exposed the sinister intentions of a few countries including the US.” The story is front-page news in Bloomberg and the Wall Street Journal.

The Nato summit taking place in Brussels today also appears to be focusing on freezing out China, with Nato countries agreeing that Beijing poses a security threat, according to The Guardian. The Nato summit will also see discussions on how to align on broader topics such as cyberattacks, resource scarcity, migration flows, climate change, global health security, and trade cooperation, USA Today reports.

…And taking the alliance to outer space (yes, you read correctly): The military organization has extended an article in Nato’s founding treaty that stipulates that an attack on any one of the 30 allies will be considered an attack on all of them to include attacks in space, according to the Associated Press.

YOUR MANDATORY COVID STORY- New vaccine entrant could boost supply to developing world: A covid-19 vaccine developed by US pharma firm Novavax was found to be 90% effective in a large-scale study in the US and Mexico, the company announced. The jab is expected to help fill in the global gap in vaccine availability, with the pharma firm pledging 1.1 bn doses to developing countries over the next year. Novavax will seek authorization for the shots in the US and Europe by the end of September, according to the Associated Press, and is currently working to expand capacity to produce up to 100 mn doses a month by 3Q2021.

FOR TOMORROW-

DON’T MISS PART 2 OF OUR EXCLUSIVE INTERVIEW WITH BRUNO LE MAIRE, France’s Finance Minister, in tomorrow’s EnterpriseAM. Le Maire was in Cairo this past week where he signed yesterday infrastructure funding agreements worth EUR 3.8 bn covering everything from the Cairo Metro to railway upgrades to wastewater, energy and food security.

Missed Part 1? In addition to revealing details of the agreements, Le Maire expanded on areas of cooperation Egypt and France could dive further into. These include supporting Egypt’s rollout of its universal healthcare system, renewables and clean energy (including green hydrogen), and urban development in the new cities. You can read the full interview here.

But France isn’t satisfied with just that: In the second part of our sitdown, Le Maire reveals his ambitions for France to be among Egypt’s top three contributors to FDI — up from its current position as eighth — and how the Macron administration hopes to take it there.

Other key highlights from tomorrow’s interview you don’t want to miss include:

  • What Egypt’s been doing right to attract French investment.
  • How we could become a regional export hub for French goods and services.
  • How the French-Egypt partnership could be a model to link developed and developing nations.
  • The global importance of the new G7 tax proposal, and what it means for us here.

🗓 CIRCLE YOUR CALENDAR-

EFG Hermes and the Saudi Exchange kicked off a joint conference today titled the EFG Hermes and Saudi Exchange Virtual Investor Conference, which will run until Thursday, 17 June, according to a press release (pdf). The virtual event aims to share and discuss insights on compelling prospects across the Saudi capital market, and brings together executives from 61 companies with more than 450 international investors from over 190 institutions.

The Egyptian Center for Economic Studies is holding a virtual seminar tomorrow exploring the extent to which SMEs benefit from Egypt’s financial services. The discussion will take place from 10-12 am and you can register to join the Zoom call using this link. The seminar will also be streamed live on their YouTube page.

Entrepreneurs in the tourism sector have until 20 June to apply for the six-month Tourism Recovery Program launched by Enpact and the TUI Care Foundation and supported by GIZ, according to a press release (pdf). Some 100 startups will be eligible for direct support to the tune of EUR 9k each. The program also aims to create an international network of tourism business to expand cooperation between Egypt, Germany, and other European countries. You can apply here.

🚙 FOR YOUR COMMUTE-

The threat of rising oceans could wipe out tns of USD from China’s economic activity this century — including USD 974 bn in Shanghai alone — if climate change is not kept in check, according to Financial Times analysis of unpublished data. Higher tides and annual flooding are expected to hit China’s most important commercial hubs on the east coast, chipping away at the country’s GDP and undermining economic growth. Panasonic’s new China headquarters and Tesla’s Shanghai gigafactory are expected to be among the facilities at risk. So far, China has given little attention to the literal tsunami coming its way, rejecting international projections. President Xi Jinping has put climate change on his radar by pledging to reach carbon neutrality by 2060, possibly shifting the attention towards the rising oceans dilemma in the world’s second largest economy.

📺 ON THE TUBE TONIGHT-

A dark retelling of the puppet who wished he were a real boy is out on Amazon Prime. The 2020 Italian remake of a childhood favorite, Pinocchio, is unapologetically weird. With its psychedelic imagery and wild storyline, the film is giving us Pinocchio meets Alice in Wonderland vibes. The remake follows the boy puppet as he tries to fit in with the humans at school. When that fails, he decides to go off on his own and find his own crowd by joining a travelling puppet show. Pinocchio ends up meeting a cast of unsettlingly strange characters that all try to help him become a real boy.

Today in UEFA EURO 2020: Scotland and Czech Republic started a match less than an hour ago in Group D. Meanwhile, Poland and Slovakia are playing at 6pm in Group E and Spain and Sweden will hit the field at 9pm, also in Group E. Spain is expected to come out on top in the group, while Poland could come in second, fueled by striker Robert Lewandowski.

Last night’s score: England beat Croatia 1-0, Austria won against North Macedonia 3-1, while the final match of the day was a close one, with the Netherlands barely scraping past Ukraine with 3-2.

🎤 OUT AND ABOUT-

Contemporary poster exhibition Cairo Prints is ongoing until Thursday at Cairopolitan, the French Institute in Cairo, and Institut français d’archéologie orientale. The annual exhibit features a vast array of works from local and regional graphic designers and visual artists.

It’s karaoke night at The Cork in Heliopolis, a cozy Irish pub you should check out regardless of your singing abilities.

💡 UNDER THE LAMPLIGHT-

The history of the city: Over half of the world’s population lives in urban areas, with cities getting bigger and bigger over the years. But how did these cities come to be? How do they affect us? And why do we still live in them? (We ask ourselves that last one every day). Cities by Monica L. Smith explores all of these questions by taking a look at the historical origins of our modern metropolises, from Pompeii, Ancient Rome, and Athens, to the lesser known Tell Brak in Syria and Teotihuacan in Mexico. From Mesopotamia to Manhattan, the book aims to show how the emergence of cities brought dominance and knowledge to homo sapiens.

🌤 TOMORROW’S WEATHER- Expect daytime highs of 35°C and nighttime lows of 20°C tomorrow, our favorite weather app tells us.

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