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Thursday, 23 September 2021

THIS MORNING: Fed taper in November + rate hikes in 2022; Markets rebound; Biden NatSec adviser Sullivan to visit Cairo next week; Egypt to host 2022 Ministerial Gas Forum.

Well, friends, we’ve nearly made it through another workweek together, and our reward is another very busy news morning, with everything from M&A to taxation in the spotlight — and the promise of very nice weekend weather ahead.

Tax: Domestic investors in the EGX (international shareholders are exempt) will want to pay really close attention to our story on the capital gains tax — it’s coming into effect on 1 January. Also big is news that the state is piloting its business-to-consumer e-invoicing system, which will eventually require all retailers to report sales in real-time to the taxman.

M&A: A so-far unconfirmed report suggests Saudi’s STC is lining up financing to make another run at Vodafone Egypt. Vodafone and (large) minority shareholder Telecom Egypt deny talks are back on.

We have chapter and verse on all of this and more below.

Fed taper in November + rate hikes in 2022: Federal Reserve boss Jerome Powell said that the central bank could begin unwinding its huge bond-buying programme in November, while policymakers signalled that they could move to raise interest rates next year. Speaking at the end of the central bank’s two-day policy meeting yesterday, Powell said that an announcement “could come as soon as the next meeting,” which will take place on 2-3 November.

This is what most economists were forecasting: Recent polls have shown a majority of economists think the Fed will start to reduce its USD 120 bn a month in asset purchases before the end of the year, and start to raise interest rates next year.

Any rate hikes will be gradual: With its benchmark overnight rate currently at near-zero, the Fed is not expected to raise rates to 1% until 2023 and then 1.8% in 2014.

Markets celebrate: The Fed meeting boosted shares in the US, where all three major indexes saw gains following several days of Evergrande-fuelled volatility. The S&P 500, Nasdaq and Dow Jones all gained 1% during yesterday’s trading session, despite the hawkish tone. “Given the recent volatility, it’s likely that investors are viewing the taper projection and potential 2022 rate hikes as a vote of confidence that the recovery is on track,” one strategist told Bloomberg.

And the good news over at Evergrande yesterday is fuelling a rebound in commodities: A Bloomberg index of 23 commodities ended four days of declines to rise 1.4% yesterday as investors’ concerns about a default at China’s second-largest real estate firm abated, Bloomberg says.

The story is everywhere in the global business press this morning: Reuters | Bloomberg | FT | Wall Street Journal.

Evergrande avoided default yesterday after striking an agreement with its creditors to delay an interest payment, and its shares surged in trading earlier today as the company’s chairman tried to reassure investors. But the FT is warning that it’s not done and dusted, writing that “deepening worries over Evergrande have ignited selling in a USD 428 bn corner of the Asian debt market, underscoring how the crisis at the Chinese property developer is spreading to other assets.” The salmon-colored paper says to keep an eye on a “crucial payment deadline” later today.


French envoy to return to Washington after Biden call smooths over submarine row: French President Emmanuel Macron will send his US ambassador back to Washington, according to a joint French-US statement, after US President Joe Biden on Wednesday called to soothe French anger over the signing of the Indo-Pacific “Aukus” pact between the US, Australia and the UK. Biden struck a conciliatory tone in the statement, appearing to admit that Paris should have been kept in the loop on the pact, which earlier this week saw Australia dump a longstanding agreement to buy French submarines in favor of new nuclear subs from the US and UK.

WHAT’S HAPPENING TODAY-

Egypt will host the 2022 Ministerial Gas Forum: Organized by the International Energy Forum and the International Gas Union (IEF-IGU), the event will take place in Egypt during the second half of 2022, and will have on its agenda the post-covid economic recovery, the current surge in natgas prices, and climate change, the IEF said in a statement yesterday.

And we will also play host to the AfdDB’s annual meeting in 2023: The African Development Bank’s board has agreed that its five-day annual meeting will be held in Sharm El-Sheikh from 22 to 26 May 2023, the Central Bank of Egypt said in a statement (pdf) yesterday

It’s Day 2 of the Cityscape real estate investment conference at the Egypt International Exhibition Center. The event runs until 25 September.

** IN CASE YOU MISSED IT — top stories from yesterday’s edition of EnterprisePM:

  • Egypt has infrastructure ready to store up to 4 mn doses of Pfizer’s covid-19 jab, according to Health Minister Hala Zayed, who noted that the country is prepared to receive a batch of Pfizer over the weekend.
  • The EGX30 snapped a five-day losing streak, ending the session up 0.9% at the closing bell at the same time as global markets sighed in (muted?) relief after China Evergrande appeared to have negotiated an agreement with its bondholders.
  • How are Egypt and global business leaders coping with the stresses of 2021? Let’s just say that it’s not as well as we’d like.

CIRCLE YOUR CALENDAR-

In town next week: White House National Security adviser Jake Sullivan will visit Cairo next week as part of a brief Middle East tour that will take him to Saudi Arabia and the UAE, sources with knowledge of the matter tell Axios.

Conference season continues next week with ITIDA’s DevOpsDays Cairo 2021, which is being organized together with Software Engineering Competence Center, DXC Technology, IBM Egypt and Orange Labs. The event will take place on Wednesday, 29 September. Other events include:

  • Egypt Projects 2021 construction expo, which will take place at the Egypt International Exhibition Center on 30 September-2 October.
  • The Cairo International Fair, which will take place on 30 September-8 October at the Cairo International Conference Center.
  • The deadline to register for the AUC Business School’s Private Equity Diploma is coming up on 28 September.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

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