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Wednesday, 7 July 2021

Is a Mideast SPAC boom upon us?

Is a Mideast SPAC boom upon us? Bloomberg seems to think so, writing yesterday that Shuaa Capital’s plans to establish three SPACs provides more evidence that the number of MENA blank-check companies might turn into a “flood.” The Dubai financial services firm wants to create three companies worth USD 200 mn each, which would search for energy, tech and financial companies to merge with and take public in the US, according to people familiar with the matter.

SPAC isn’t a word you hear too often in MENA, but they’re getting more popular: FIM Partners — a Dubai-based EM asset manager backed by EFG Hermes — has taken it’s Frontier Investment Corp SPAC public on the Nasdaq in a USD 200 mn listing. Then there’s music streaming service Anghami which plans to hit the Nasdaq by merging with a blank-check firm. Abu Dhabi sovereign wealth fund Mubadala is also about to roll out two SPACs that will look for companies in the technology and healthcare sectors.

Retail inflows hit 7-year high as US day traders keep on buying: US retail investors bought nearly USD 28 bn of stocks and ETFs in June, the highest figure since at least 2014 — surpassing the amount spent during the meme-stock rally earlier this year, according to the Wall Street Journal. Individual investors have flocked to stock trading since the covid-19 pandemic broke out, even as their favorite stocks languished in recent months such as GameStop and AMC.

Fund managers are not pleased, with the advent of retail investors signalling a shift in behaviour in the market and raising volatility. However, whereas at the beginning retail investors tended to run after trends and go all in at once, they’ve now begun venturing into wider parts of the stock market with the June high bolstered by energy, materials, financial industrial, and travel stocks, analysts say.

More vehicle and smartphone manufacturers are feeling the effects of the global semiconductor shortage: Smartphone makers like Samsung and Apple, who rely on OLED semiconductor chips for their cell phone and TV screen displays, are now coming under increasing pressure to raise prices and stockpile chips, the FT reports. Prices for OLED chips increased by around 20% in 2Q2021 as the global shortage for advanced semiconductors intensifies.

And auto companies are now warning about the impact on sales: Jaguar Land Rover is anticipating an even steeper shortfall in deliveries this quarter, saying that sales will be 50% worse than the companies had initially thought, Bloomberg reports. Auto manufacturers are expected to lose out on some USD 110 bn due to the shortage, according to forecasts.

Down

EGX30

10,155

-1.9% (YTD: -6.4%)

Down

USD (CBE)

Buy 15.64

Sell 15.74

Down

USD at CIB

Buy 15.64

Sell 15.74

None

Interest rates CBE

8.25% deposit

9.25% lending

Down

Tadawul

10,971

-0.3% (YTD: +26.3%)

Down

ADX

6,984

-0.2% (YTD: +38.4%)

Down

DFM

2,782

-0.7% (YTD: +11.7%)

Down

S&P 500

4,343

-0.2% (YTD: +15.6%)

Down

FTSE 100

7,100

-0.9% (YTD: +9.9%)

Down

Brent crude

USD 74.94

-2.9%

Down

Natural gas (Nymex)

USD 3.67

-2.9%

Up

Gold

USD 1,794.20

+0.1%

Up

BTC

USD 34,152

+0.3% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 1.9% yesterday on turnover of EGP 1.11 bn (10.1% below the 90-day average). Regional investors were the net buyers. The index is down 6.4% YTD.

Only one EGX 30 stock finished in the green yesterday: USD-denominated Egyptian Kuwaiti Holding, which rose 0.1%.

In the red: Ezz Steel (-5.0%), Pioneers Holding (-4.5%) and Heliopolis Housing (-4.0%).

Asian markets are mixed in early trading this morning, with Chinese shares in the green but stocks in other parts of the region in the red. Futures suggest a similarly mixed open later today, with US exchange set to fall and European shares looking to open slightly in the green.

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