Monday, 6 September 2021

TONIGHT: Egypt is the second hottest M&A market for Middle East investments + Fed taper delay gives global markets a boost. ALSO: It’s 80s night on the tube this week.

Good afternoon, ladies and gentlemen, and welcome to a stacked day of business and finance news both foreign and domestic.

THE BIG STORIES TODAY SO FAR-

#1 Egypt attracts second most inbound M&A transactions from the Middle East in 1H2021, recording 18 transactions valued at USD 1.8 bn during the first half of the year, according to a Baker McKenzie report. Global M&A activity saw a 120% increase over the six months compared to 1H2020, while activity in the Middle East increased by 59%.

#2 The Finance Ministry has issued a statement (pdf) denying that it will impose new taxes on capital gains after a document circulated by FinMin caused speculation as to whether the long-shelved capital gains tax would be making a comeback in January 2022. The FinMin did not address when the tax could be reintroduced, but explained that the circular was issued in order to clarify pre-existing regulations, and did not constitute the issuance of new tax legislation.

#3 Consumer finance provider Contact Financial and Abou Ghaly Motors will join forces to launch Abou Ghaly Finance in the coming months, offering finance solutions for car purchases through a fully digitized process, Contact Financial CEO Said Zater told us. Separately, the company is also planning to soon launch e-payment services, and is expecting to receive its license this month.

^^ We’ll have chapter and verse on all three stories in tomorrow’s edition of EnterpriseAM.

** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

  • Egypt’s non-oil private sector shrinks in August: Business activity in Egypt’s non-oil private sector contracted for the ninth straight month in August. But a record surge in corporate spending and a pick-up in demand softened the decline.
  • Elsewedy returns to Ghana: Elsewedy Electric for Transmission and Distribution of Energy signed a USD 16.7 mn EPC contract to build a substation for Ghana’s state-owned electricity company.
  • Four Egyptian startups secure USD 125k seed funding: ShipBlu, Amenli, Pylon and Odiggo have secured USD 125k each in seed funding by US accelerator Y Combinator.

SMART POLICY- Capmas will conduct a survey on family health in Egypt, Capmas head Khairat Barakat told Youm7. The survey will focus on the health of mothers and children, in addition surveying families on fertility and family planning. Survey preparations have already kicked off in August and field work should begin by next month. Preliminary results should be out by April 2022. The survey’s data will be used in sketching out health policies and programs that tackle overpopulation. This is the first time for the agency to do such a survey.

The move is likely part of Egypt’s plans to control Egypt’s overpopulation, which include an initiative announced back in March aiming to bring the birth rate down from 3.4 to 2.4 children per woman by 2030. The government’s family planning strategy will include financial incentives for having fewer children, in addition to providing contraceptives and other family planning tools at no cost. That’s not counting the Two is Enough initiative, which aimed to get 20 mn families on board by mid-2021, while MPs are also working on the overpopulation problem by legislating new family planning rules.

This certainly isn’t going to help tourism: The Economist Intelligence Unit’s The Safe Cities Index 2021 ranked Cairo the 57th safest city out of 60 major metropolises. The countries are graded in terms of safety based on five indicators: digital security, health, infrastructure, personal security and environmental security. Cairo ranked below average in all categories, but scored particularly badly in the environmental security category — which measures sustainability and climate adaptation following the pandemic — coming in second to last, ahead of Kuwait City. Its smart city plans were also noted. This is the index’s fourth edition, with Denmark’s Copenhagen being labeled the safest city in the world in 2021. Egypt came in the 53rd place in 2019.

STARTUP WATCH- Three startups took home EGP 150k each after the conclusion of the Agri-Digital Startup Competition yesterday, held collaboratively between GIZ and Ain Shams University’s Innovation, Entrepreneurship, and Creativity Hub (IHub), according to a statement. The winning startups were farm monitoring solutions provider ReNile, agricultural community platform Croposa, and an e-commerce platform Cotton Town. Thirty six teams in the startup stage and 41 teams in the idea stage participated, with an additional three winners in the idea stage winning EGP 10k each.


HAPPENING NOW- EU stocks breathe a sigh of relief over the Fed possibly delaying Taper Tantrum 2.0: European stocks have been on the rise on the first day of trading following a poor US jobs report out last Friday. The Stoxx Europe 600 was up 0.63% (bolstered by rising tech stocks) as of dispatch time, closing in on a record high, according to Bloomberg. Analysts tell the news outlet that last week’s US jobs report, which showed the smallest gains in new jobs in seven months, has markets thinking that the US Federal Reserve will likely delay it’s expected tapering. The FTSE was up 0.59% as of dispatch time, while US markets are closed for Labor Day.

This is good news for us (for now): We could be at risk of outflows if the Federal Reserve starts to unwind its bond-buying program sooner. Statements by Fed head Jerome Powell last month signalled that the central bank could begin rolling back its program as early as this year, which would be followed by an uptick in interest rates, potentially putting some pressure on the EGP carry trade.

Taper tantrum who? That said, Egypt’s world-beating real interest rate will help it weather an uptick in global rates, S&P Global Ratings said in a report yesterday. It did warn, however, that the country faces some risk from capital outflows unless it acts to reduce its debt costs.

IN OTHER MARKET NEWS-

Abu Dhabi National Oil Company (ADNOC) is planning to sell at least 7.5% of its drilling unit’s shares on the ADX, in what could be one of the largest IPOs in the UAE, Bloomberg reports. Previous reports put the value of Adnoc Drilling at USD 10 bn, meaning this IPO could raise some USD 750 mn. This comes as Abu Dhabi tries to revive its IPO pipeline, with sovereign wealth fund Mubadala also planning to list up to 40% of its subsidiary Emirates Global Aluminum.

THE BIG STORY ABROAD- Afghanistan again: The Taliban announced that it completed its Afghanistan takeover, saying it captured the province of Panjshir, Reuters reports. The National Resistance Front of Afghanistan, which is based in the province, shared a tweet denying the Taliban’s claims.

FOR TOMORROW-

Euromoney Conferences will host the GlobalCapital Sustainable and Responsible Capital Markets Forum 2021, which kicks off tomorrow and features Vice Minister of Finance Minister Ahmed Kouchouk. The conference will run until Wednesday.

🗓 CIRCLE YOUR CALENDAR-

It’s day two of the Arab Labor Conference, which is running through to 12 September at the InterContinental CityStars Hotel in Heliopolis. Government officials, ambassadors, trade union reps and business owners’ association delegates from 21 Arab countries are participating in the gathering.

It’s also the second day of the Arab Security Conference at the Nile Ritz-Carlton in Downtown Cairo. The cybersecurity conference will run until tomorrow.

Also taking place this week:

☀️ TOMORROW’S WEATHER- Tomorrow will be the warmest day of the week, with highs of 37°C in the daytime and lows of 24°C at night. We’re not even sure if there’s anyone left in Sahel, but for those of you still out there, expect the mercury to max out to 31°C during the day and to drop to 23°C at night, our favorite weather app tells us.

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