TONIGHT: It’s PMI day + Subsidized baladi bread might get a price raise. ALSO: Egypt has more medals in sight.
Good afternoon, nice people — who hope Tuesday has been kind to you, heat wave and all. The heat and humidity are set to continue for the indefinite future, with temperatures at 40°C or above for most of the next two weeks.
THE BIG STORY THIS AFTERNOON: Egyptian companies are adding jobs for the first time in some 20 months, according to the IHS Markit purchasing managers’ index (PMI) for Egypt. Still, the headline PMI declined 0.8 points m-o-m to 49.1 in July, heading away from the 50.0 mark that separates growth from contraction. Sluggish domestic demand led to a dip in output and new orders that saw the index register its seventh contraction in eight months, after a strong June raised hopes of continued recovery. We have chapter and verse in this afternoon’s Speed Round, below.
ALSO, FROM THE DEPT. OF SMART POLICY: President Abdel Fattah El Sisi grabbed firmly onto what pundits had previously regarded as the “third rail” of Egyptian politics, saying that it is time to increase the price of subsidized bread. Subsidized baladi bread has sold for 5 piasters a piece for decades now. El Sisi also discussed vaccination targets and childhood obesity in the speech at the opening of a state-owned complex that will help produce school meals for some 13 mn children nationwide. We’ll have full coverage of the subsidy story in tomorrow’s EnterpriseAM. You can watch El Sisi’s full address here (runtime: 16:36).
HAPPENING NOW- It’s day two of the Africa Food Manufacturing exhibition at the Egypt International Exhibition Center. The event wraps up tomorrow.
** CATCH UP QUICK on the top stories from today’s EnterpriseAM:
- A new EGX index for publicly-traded government treasuries made its debut today, paving the way for investors to access index-tracking bond funds and other products linked to those gauges. The availability of sub-indices has the potential to unlock bns of inflows from passive funds that track them.
- Tobacco companies are still whining about the terms of the country’s second tobacco license. While Philip Morris wants to bid, rivals JTI-Nakhla Tobacco, British American Tobacco Egypt and Al Mansour International Distribution Company say it would lead to the creation of an e-cigarette monopoly and not make the cigarette industry “sustainable.”
- The Health Ministry is warning that a fourth wave could be coming in September: The warning comes as countries around the world are progressively bringing back social distancing measures to help stop the spread of the more transmissible Delta variant.
CORRECTION- The International Monetary Fund is making available USD 650 bn in special drawing rights (SDRs) to support emerging economies struggling with the impact of covid-19, not USD 650 mn as we reported this morning. Fat fingers, small keys. Our apologies, folks. H/t to reader Ahmed Th.
THE BIG STORY ABROAD- Online gaming might be next on China’s crackdown list after state-owned media went after Tencent, describing its gaming arm as “spiritual opium” (the latter being a particularly loaded term in Chinese culture given its association with foreign meddling and social degeneration). The comments fueled investor concern that the firm could come under regulatory pressure as part of China’s ongoing crackdown on tech, leading shares of the firm to fall as much as 10.8% in Hong Kong in early trading. Tencent’s online gaming business contributed to 30% of its total revenues in 1Q2021. The company was quick to damage control, saying that it would add new restrictions limiting how long minors can play its online games on normal days and holidays. The Financial Times, Reuters, and the Wall Street Journal are all leading with the story.
Speaking of China’s crackdown… bn’aire investor Ray Dalio suggests Beijing is on the right track — and that Westerners have misunderstood the implications of what China is trying to achieve, he says in a LinkedIn blog post. His argument is that China is a state capitalist system that puts the needs of the majority of the population ahead of the sensitivities of the capital market. While the West sees China’s crackdown on tech and education as the latest sign that it is “anti-capitalist,” Dalio says the “same moves happened many times in many capitalist markets” and US monetary policy interventions are often sharper and more sweeping than those in China. His only issue with the world’s second-largest economy: Policymakers are not transparent when it comes to the reasoning behind their decisions.
ALSO- PepsiCo will sell its juice businesses including Tropicana in North America to private equity outfit PAI Partners in a transaction worth about USD 3.3 bn. The cola-maker will retain a 39% stake in the business. The news was first reported by the Wall Street Journal, but it’s now everywhere in business media.
YOUR STATUTORILY REQUIRED COVID-19 STORY- We have yet another variant to worry about, inventively named Delta Plus, because it’s an offshoot of the Delta strain that first appeared in India that has also picked up a spike protein mutation that first appeared in the South African variant. The variant was first discovered in India and is now in South Korea after having made appearances in North America, Asia and Europe.
🗓 CIRCLE YOUR CALENDAR-
It’s interest rate week: The Central Bank of Egypt will meet this week to review interest rates. All 12 analysts we surveyed expect the central bank to leave rates on hold, with inflation and rising global commodity prices weighing heavily on their decision.
Other news triggers to keep an eye on in the coming couple of weeks:
- Foreign reserves: July’s foreign reserves figure should land next week.
- Inflation: Inflation data for July will be out on Tuesday, 10 August.
🚙 FOR YOUR COMMUTE-
Crypto as a national currency is a “step too far” -IMF: The International Monetary Fund (IMF) is warning that widespread use of crypto assets in nations would threaten “macroeconomic stability” and harm financial integrity. The comments from the world lender come just a month before El Salvador is set to roll out a BTC-based financial system on 7 September where the crypto will be used to pay for everything from hair cuts to taxes. While the IMF didn’t mention the Latin American country by name, the warning suggests that relations could be complicated between the two sides during the critical negotiating phase of a USD 1 bn loan in favor of El Salvador, writes the Financial Times. The World Bank also shied away from the country, refusing a request from El Salvador last month to help it roll out the new system over “environmental and transparency shortcomings”.
📺 ON THE TUBE TONIGHT-
This Rose Byrne-led series is about finding empowerment in the most unconventional of ways. A dutiful housewife in 1980s San Diego, Sheika Rubin seemingly has it all together. Physical follows Rubin as she lets her inner, sassy personality be known as she forays into the world of aerobics. The sport gives her confidence and happiness, and eventually business success as she decides to combine her newfound passion with the burgeoning technology of videotape to start a revolutionary business. The end result is the start of something we’re all familiar with now, but was radical at the time: the female lifestyle guru.
🏅 TODAY IN THE TOKYO OLYMPICS-
Egypt’s handball team is going to the semifinals for the first time in history after they beat Germany 31-26 in the quarter finals right before dispatch.
Mohamed Ibrahim Kicho will compete for wrestling bronze in the men’s Greco-Roman 67kg class after making it to the semifinals, but falling in the final seconds.
Mohamed Metwaly also has a shot at bronze in the men’s Greco-Roman 87kg. Both wrestlers will play tomorrow with their opponents still TBD.
Mostafa Amr Hassan has qualified for the next round of the men’s shot put after finishing in third in today’s Group A event and recording a season best score of 21.23.
Mohamed Magdi Hamza is out of the running after coming in 12th place in the men’s shot put Group B games.
Egypt failed to qualify for the next round of artistic swimming women’s duet, after Leila Ali and Hanna Hiekal came in 19th place in the technical routine.
Meanwhile, Nayel Nassar, Mouda Zeyada, and Abdel Said are representing Egypt in the equestrian individual jumping qualification round with the event still live as we head into dispatch.
WHAT TO WATCH tonight and tomorrow-
- 2:05am: Ihab Abdelrahman El Sayed will compete in the athletics men’s javelin qualification round.
- 2:37am: Momen Mahran will participate in the canoe sprint men’s K-1 200m heat 2 round.
- 4:01am: Samaa Ahmed will compete in the canoe sprint women’s K-1 500m heat 4 event.
- 8:00am: Maha Gouda is up in the women’s 10m platform diving preliminary round.
🍕 EAT THIS TONIGHT-
Ultimate Sahel vibes with a side of pizza: Mariolino is Seashell Playa’s newest addition — and the Italian restobar is a sight to behold. Their interiors boast a ton of beige and white and plants galore, all located on a great spot on the beach. You can opt for the classics including their bresaola and bufala pizzas or go for a more culinary-curious experience with their octopus carpaccio. They have huge colorful salads on their menu, as well as delicious grill options and chocolatey desserts. All in all, Mariolino is a great place to end your day of fun in the sun.
🎤 OUT AND ABOUT-
Lamasatt Art Gallery will host the exhibition Out Of Box today at 7pm, featuring contemporary works of art that show innovation and creativity.
Massar Egbari will perform a livestream “store-front concert” next week as part of the launch of Vatreena, a new music venue at the renovated Cinema Radio created by Al Ismaelia and Freedom Music Egypt.
💡 UNDER THE LAMPLIGHT-
A revised edition of one of the most important books in behavioural economics to be written in the past two decades is out today. Nudge is positioned as one of the more influential books on how humans make decisions, in business and government. Written by Nobel Prize-winning economist Richard H. Thaler and Cass R. Sunstein, the book has introduced the concept of “choice architecture” using nudge units that aim to include behavioural insights into policies and programs. The duo have been in and out of government organizations for over the past decade and are using what they learned to create a revised version of their original 2009 book to include new discussions about topics such as covid-19, health, personal finance, retirement savings, credit card debt, home mortgages, medical care, organ donation, and climate change. You can check out Nudge: The Final Edition on Amazon.
☀️ TOMORROW’S WEATHER- The mercury will be at 43°C in Cairo tomorrow setting us up for another week of heat and humidity, our favorite weather app tells us. Sahel is not too far off, with temperatures of 37°C tomorrow.