Back to the complete issue
Monday, 13 September 2021

Economic headwinds are coming from the East as well as the West

Economic headwinds are coming from the East as well as the West: Fissures in China’s economic recovery could drag down riskier emerging markets, Bloomberg reports. Production slowdowns as a result of the spread of the delta variant, the government’s regulatory crackdown on parts of the private sector, and the potential default of Chinese property giant Evergrande are all putting strain on the Chinese economy, analysts say.

China’s slowdown could cause knock-on effects in developing countries, including the upping of risk premiums on EM assets, due to its heavy weighting in EM indexes. “It’s going to be the rest of the world’s problem and it has already started to show up in a lot of the emerging-market countries,” said one EM and Asia Pacific analyst. “I expect China’s slowdown to accelerate from here.”

That said, the impact has so far been confined to countries in China’s direct orbit, like Thailand and Korea, as investors continue to benefit from a strong carry trade and what are seen as undervalued equities in EMs elsewhere.

ALSO WORTH NOTING-

The UAE will spend USD 6.5 bn to entice citizens into the private sector, offering a package of incentives to try and persuade 75k Emiratis to join private companies in the next five years, Bloomberg reports. As in many Gulf countries, UAE graduates often hold out for the better pay, benefits and working hours of public-sector positions, while most private-sector jobs are held by expats. But with unemployment rising sharply from 2.2% in 2019 to 5% in 2020 due to the pandemic, the state is now set to offer monthly stipends for private-sector workers with children as well as supplemental income and bonuses to try and reverse the trend.

Residency rules relaxed: The policy switch comes a week after the country announced it would relax residency rules in a bid to attract more high-skilled foreigners to the country.

Down

EGX30

11,037

-0.2% (YTD: +1.8%)

None

USD (CBE)

Buy 15.66

Sell 15.76

None

USD at CIB

Buy 15.66

Sell 15.76

None

Interest rates CBE

8.25% deposit

9.25% lending

Down

Tadawul

11,342

-0.7% (YTD: +30.6%)

Down

ADX

7,819

-0.5% (YTD: +55.0%)

Down

DFM

2,897

-0.4% (YTD: +16.3%)

Down

S&P 500

4,458

-0.8% (YTD: +18.7%)

Up

FTSE 100

7,029

+0.1% (YTD: +8.8%)

Up

Brent crude

USD 72.92

+2.1%

Down

Natural gas (Nymex)

USD 4.94

-1.9%

Down

Gold

USD 1,792.10

-0.4%

Down

BTC

USD 45,265

-0.3% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 0.2% at yesterday’s close on turnover of EGP 867 mn (43.4% below the 90-day average). Local investors were net sellers. The index is up 1.8% YTD.

In the green: Raya (+3.9%), Mopco (+2.4%) and Palm Hills (+1.6%).

In the red: MM Group (-2.9%), Eastern Company (-2.5%) and Cleopatra Hospitals (-2.2%).

Asian markets are mostly in the red in early trading this morning and futures suggest that European shares will follow them later this morning. US stock futures are currently in the green.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.