THIS EVENING: Egypt’s earnings recovery continues + Why being a “Small Giant” is a very good thing
Good afternoon, everyone: One more sleep and then we can push through the workday and slide into the weekend. It’s another busy news day, so we’re going to jump straight in:
THE BIG STORY THIS AFTERNOON- It’s looking more and more as if 2Q marks a turning point our community’s recovery from covid. With earnings season barreling to a close, our friends at EFG Hermes and and developer Palm Hills are the latest in a string of blue chip names to report very strong bottom line growth in the three months ending 30 June. We have the details in this afternoon’s Earnings Watch, below.
HAPPENING NOW- Intelligence chief Abbas Kamel is in Israel to support Egyptian efforts in the peace process, according to Youm7. He will visit Tel Aviv and the West Bank’s Ramallah.
** CATCH UP QUICK on the top stories from today’s EnterpriseAM:
- Blockbuster investment in education: Cairo Egypt Education — a joint venture between CIRA and Elsewedy Capital Holding — is to build a new EGP 2.5 bn private university in New Damietta — and has new K-12 schools in the pipeline to open as soon as next month.
- Raya Holding subsidiary Aman is to issue EGP 500 mn of securitized bonds by the end of the year as the company remains on track to pull the trigger on its initial public offering on the EGX.
- More Egyptians have telecom-backed e-wallets — and aren’t shy about using them, according to a report from the National Telecom Regulatory Authority. Vodafone has the largest market share, followed by Orange, Etisalat and We.
THE BIG STORY ABROAD- Still Afghanistan, with the Financial Times reporting that exiled Taliban leaders are returning home as the group prepares to govern. The US’ NATO allies, meanwhile, are bluntly unhappy about how the US is winding down the alliance’s longest-running mission. While evacuation flights have resumed, the Wall Street Journal reports that the insurgents are blocking routes to Kabul airport.
Two (English-language) Twitter accounts on Afghanistan worth a follow:
Kinda-sorta-former acting central bank governor Ajmal Ahmady, the Harvard-educated banker who the former government couldn’t get appointed on a permanent basis because he allegedly had a poor command of local languages. Ahmady used this thread to discuss why he fled the country last weekend and is tweeting up a storm on what to expect next on the macro front. (It’s not clear right now whether Ahmady has resigned — and the Taliban still haven’t formed a government that could fire him.)
@CombatJourno, whose tweeting has slowed down in the past day. He’s an Afghan journalist named Mustafa whose feed includes heartbreaking documentation of his bid to get his wife and child out of the country.
A must-read for on the ground news: TOLO news.
???? CIRCLE YOUR CALENDAR- “Energy transition in the Middle East” is the subject of a MEED webinar next Tuesday, 24 August. The event will focus on the impact of energy transition in the region, the effects of covid-19 on the renewable energy sector, the potential of green hydrogen as well as a review of Middle East energy policy and investment and the outlook for MENA renewable energy development. You can register for the webinar here.
???? FOR YOUR COMMUTE-
Stop us if you’ve heard this one before: “Junior bankers have seized the upper hand on Wall Street, for now,” Bloomberg Businessweek declares in a feature out today, noting that banks are raising salaries (Goldman Sachs was the most recent to have done so) in the race to attract talent because “potential recruits are balking at 100-plus-hour weeks.” Sure, that’s one way to do it. But even if you (like us) accept that there are lots of snowflakes out there who want plenty of money for very little delivery on their end: There is simply no excuse for 100-hour workweeks. Not in finance. Not in medicine. Not in any profession or at any age. Life is short — you’re not being a snowflake by digging your heels in on 100-hour weeks.
More state than capitalism: China is upping the stakes once again in its Great Capitalist Smackdown, as President Xi Jinping calls for wealth redistribution to “regulate excessively high incomes and encourage high-income groups and enterprises to return more to society.” His comments are the latest in a series of shots by the ruling Chinese Communist Party across the bow of private capital, including new regulations targeting private education and Big Tech that saw USD 1 tn wiped off the value of Chinese stocks in one week last month.
It all looks very much like China is rediscovering its ideological roots after a decades-long affair with the capitalist system, as Xi vows to take away the spoils of economic reform hoarded by China’s super-rich and expand the country’s middle class. According to Reuters, that could start with rescinding a preferential tax rate for internet companies, hiking the levy to 25% from 10% today, as well as a controversial new tax on China’s property market, which contributes 70% to the country’s massive wealth gap. Whatever the measures, they are likely to be harsh and uncompromising, meaning investors, businesses, and the independently wealthy would be best advised to tread carefully. As one entrepreneur told the FT: “The party wants to have a stronger say in your business and they want you to be more obedient.”
As some sectors fall out of favor with the Chinese government, others are on the rise—chief among them renewable energy. China’s green stock index has risen 55% over the past three months as investors shift to industries they think can avoid the wrath of the regulators. Advanced manufacturing and localization of technology also stand to benefit from the state’s new anti-Big-Tech tack.
Over in the US, Big Tech led the exodus from the office at the start of the pandemic — and now it wants its people back at their desks. That could open a space for smaller outfits that are willing to accept the additional challenges of managing a more-remote workforce, Elaine Moore argues in this opinion piece for the Financial Times. We’re still with Apple’s Tim Cook on this one: He asked staff to return to the office three days a week starting in September (a date likely to be postponed at least a month thanks to the fast spread of the delta variant in the US). “For all that we’ve been able to achieve while many of us have been separated, the truth is that there has been something essential missing from this past year: each other,” Cook said in a memo seen by the Verge. “Video conference calling has narrowed the distance between us, to be sure, but there are things it simply cannot replicate.”
???? ON THE TUBE TONIGHT-
Apple TV’s short-form sports docuseries Greatness Code is a work of art. The show showcases the untold stories of major athletes including LeBron James, Tom Brady, Alex Morgan, Shaun White and Usain Bolt. Each episode (all under six minutes) explores a pivotal moment that defined the athlete’s career by offering intimate and descriptive monologues by each athlete with footage visualized in a dramatic greyscale. With music scores from renowned musicians and stunning visual effects, the artistic miniseries is a bite-sized motivator for viewers, showing how a single event or decision can become a turning point in someone’s life.
⚽AFCON draw: Egypt will face three-time African champions Nigeria in their group’s first match in the twice-delayed African Cup of Nations (AFCON) in Cameroon. The draw for Africa’s biggest football event, which will take place next January after being postponed twice over wet weather and covid concerns, saw lesser threats Sudan and Guinea-Bissau join Egypt and Nigeria in Group D.
???? OUT AND ABOUT- (all times CLT)
The quick-footed can probably still catch today’s mandala drawing workshop at the Monalisa Art Zone in Zamalek, running from 5-8pm. The cost is EGP 150 excluding materials — check the Facebook page to find out how to register and what you need to bring.
It’s retro pop night tonight over at Cairo Jazz Club in Agouza, with BubbleGum Kollectiv spinning tunes designed to send you bopping all the way back to the ‘90s. Reservations can be made through the CJC Facebook page until 8pm.
And Room Art Space and Cafe in Garden City is hosting a stand up comedy night featuring the Comedy Bunch, starting 9pm tonight. Tickets are EGP 150 and can be purchased directly through the branch or through the link on the Facebook page.
???? UNDER THE LAMPLIGHT-
Don’t buy the VC hype: There is nothing wrong with building a “lifestyle” business — many of which will still be around and creating value for their owners and communities generations after the latest hot tech business raised its Series DDD…
Why staying small is the next best thing for business is the subhead of Paul Jarvis’s book Company of One. The idea may sound counterintuitive, as firms are always in a constant scramble to scale up operations and teams. “By staying small, one can have freedom to pursue more meaningful pleasures in life,” argues Jarvis pointing to large firms’ struggles with employees, long meetings, funding, and expansions. Company of One sees success as a constant cashflow that keeps the business running sustainably while foregoing a constant headache. It’s a bit of a hippy prospect to go against the system that constantly demands more productivity, more output, and more growth, but maybe there’s merit to being an entrepreneur that is satisfied with the place they’re in now.
Want to dive deeper? The idea isn’t new: The classic work on the subject is the exceptionally readable Small Giants: Companies that chose to be great instead of big, by Bo Burlingham, which profiles 14 businesses. Without resorting to case studies, Burlingham talks with founders about why they “quietly rejected the pressure of endless growth, deciding to focus on more satisfying business goals.”
It’s one of a handful of business books we keep around in large quantities to give to friends thinking of starting their own business. Also worth a moment of your time: Check out the related organization by the same name (co-founded by Burlington).
☀️ TOMORROW’S WEATHER- The heat wave continues. Expect a daytime high of 40°C and nighttime low of 28°C in Cairo. Sahel will remain breezier, with a daytime high of 32°C and an overnight low of 25°C, our favorite weather app tells us.