“A perilous moment for supply chains”: That’s the prognosis of one shipping insider as a resurgence in global covid cases and a series of natural disasters heaps pressure on supply chains, Reuters reports. Floods in China and Europe, covid outbreaks in Asia, and a cyber attack on South African ports are combining to disrupt global trade at a time when supply chains are still recovering from the shock of the initial wave of covid last year. Industry insiders say that a lack of containers, a shortage of vessels, and operational setbacks are causing blockages at ports not seen in decades.

Manufacturers are being hit hard: A shortage of parts, rising prices, and labor disruption caused by covid have forced manufacturers in countries across the world to cut back on production. Toyota was forced to halt production in Japan and Thailand last week after not being able to get the parts, while Europe's biggest home appliances maker, Electrolux, said it is having to scale back production.

What impact will this have on the global recovery? It’s too early to say, though early signs out of the US aren’t great. The US flash PMI for July showed economic activity falling to a four-month low as businesses found it harder to access raw materials and labor.

We have a few months of this left: Analysts say that we’re probably not going to see the end of it until 4Q2021 or 1Q2022.

Traders to go risk-on on EM despite mounting covid worries? Traders are shrugging off concerns about rising US inflation and the delta surge and are buying into emerging markets, Bloomberg reports. Some analysts are anticipating a pick-up in risk appetite, betting that investors will focus on improvements in EM assets and downplay the likelihood of tightening by the Federal Reserve. EM earnings are above estimates for the first time in 2.5 years while MSCI’s EM currency and bond indexes remain up year-to-date, despite falling back this month.

EMs helped by strong growth potential and hopes for improved vaccine rollouts: “Emerging markets still look to me like that place where investors will find the best-priced earnings growth, and I expect that the continuing rapid pace of vaccination across many EM countries will increase conviction,” said one analyst. Not only that, but emerging nations are expected to outperform developed economies, with growth estimated at 6.6% to 5.4% respectively.

Over in the US, investors are reverting to their 2020 picks as covid cases rise. Money is returning to tech stocks, and bond and money-market funds, as concerns about the spread of covid variants begin to outweigh recent optimism about the now-stalling vaccine rollout in the US, Bloomberg reports. In signs of increasing caution, last week the Nasdaq reached new record highs, Moderna, Twitter and Facebook were the best performers on the S&P 500, and bond and money-market funds saw USD 13 bn of inflows compared to just USD 3.3 bn into stocks.

THE CLOSING BELL-

The EGX30 rose 0.9% at yesterday’s close on turnover of EGP 1.5 bn (19.3% above the 90-day average). Local investors were net buyers. The index is down 0.9% YTD.

In the green: GB Auto (+5.5%), Sidi Kerir Petrochemicals (+3.9%) and Abou Kir Fertilizers (+3.1%).

In the red: Sodic (-1.8%), Cleopatra Hospital (-0.9%) and Telecom Egypt (-0.7%).