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Wednesday, 1 September 2021

Euro inflation hits 10-year high off of rising food and industrial prices

Euro inflation has hit a 10-year high: Rising energy, food, and industrial prices drove consumer price inflation in the eurozone up 3% this month, beating predictions of 2.7% and significantly above the European Central Bank’s (ECB) 2% target, according to a flash estimate (pdf) from European stats body Eurostat. Analysts don’t expect inflation to peak until November, which is all somewhat inconvenient for the ECB, which has attempted to downplay this year’s inflationary pressures as a passing phase, even as price rises have routinely overshot its predictions.

The ECB still wants to stay loose: Policymakers aren’t likely to tighten policy to curb the price rises anytime soon. They say current inflation is based on the “one-off” post-pandemic recovery and won’t be sustained, pointing to weak underlying readings, including still-muted wage growth. In fact, the central bank is expecting years of sluggish price rises after the initial stimulus kick fades. As its chief economist told Reuters last week, the bank is therefore unlikely to waver from its bond-buying regime when it meets at the end of the week.

Saudi renewable energy giant Acwa Power’s IPO on Riyadh’s stock exchange could go to market very soon, with an eye to raising more than USD 1 bn in proceeds in a transaction that could value Acwa at at least USD 10 bn, unnamed sources in the know tell Bloomberg. While a specific timeframe for when the Saudi sovereign fund-backed energy producer plans to close its IPO remains unknown, an announcement could be made as early as this week, though no final decision has been made and Acwa could still decide against the offering, the sources said. Acwa was earlier expected to pull the trigger on its planned IPO in 1H2021, but then shelved its plans due to the covid disruption.

Acwa is a significant player in Egypt’s wind energy sector and is looking for ways to deploy solar here to power desalination projects.




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The EGX30 fell 0.2% at yesterday’s close on turnover of EGP 1.6 bn (7.8% above the 90-day average). Regional investors were net sellers. The index is up 2.8% YTD.

In the green: Fawry (+5.4%), Mopco (+1.9%) and Credit Agricole (+1.8%).

In the red: Speed Medical (-8.2%), Qalaa Holding (-2.5%) and Egyptian Resorts Company (-2.4%).

Major Asian benchmarks in Hong Kong, mainland China and Korea are all in the green this morning and futures suggest much of Western Europe and North America will follow suit at the opening bell later today.

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