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Sunday, 26 September 2021

THIS MORNING: MPs return from Sahel next week; Winter opening hours in effect on Thursday; China is everywhere in the global press this morning.

Good morning, wonderful people, and welcome to a new workweek. We hope you enjoyed the fall weather this weekend as much as we did.

THE BIG STORY THIS MORNING for thousands of readers waiting to get jabbed: Walk-in vaccination clinics are apparently a thing, with the first of the centers set to open this morning. We have more in this morning’s Covid Watch, below, and hope to have an update this afternoon.

The latest sign summer is really, truly over: The House of Representatives and Senate are getting ready to go back to work after summer recess. President Abdel Fattah El Sisi has decreed that the House will reconvene for its new legislative season on Saturday, 2 October. The decree also states that the Senate will go back into session on 5 October (just in time for the Sixth of October holiday).

We’ll have more later this week on business-relevant legislation we think will be high on the Madbouly government’s priority list when the House gets back to work. Holdover bills from the last session include amendments to the old rent law as well as the personal status law. The government has also telegraphed that it may be looking to impose new regulation on the real estate industry, though much of what has been in the public eye so far is stuff that officials could likely enact through regulatory change rather than an act of parliament.

Shops and restaurants will have to close a little earlier from the end of this week when winter opening hours come into effect. The Local Development Ministry announced last week that fall hours will come into force on Thursday, 30 September, meaning shops and malls will close one hour earlier at 10pm (11pm on Thursdays, Fridays and national holidays) while cafes and restaurants will shutter at midnight rather than 1am. As during the summer, essential services such as grocery stories, supermarkets and pharmacies are exempt from the rules and can open and close their doors when they want.

ATTENTION YOUTUBERS AND BLOGGERS- The taxman is coming for you. Youtubers, Instagrammers, bloggers, vloggers and other online content creators have been instructed by the Tax Authority to register to pay income tax. All content creators who earn over EGP 500k a year will also have to charge and remit 10% VAT on the “services” they offer — read: product placement and other branded content. So a content creator is effectively being recognized as a business and will have to pay income tax on their total business income (on things like Youtube ads) and separately charge VAT for folks paying them directly for services. We have more in Last Night’s Talk Shows, below.

It’s (the start of) the end of an era in Europe this week: German voters are going to the polls today in a national election that Reuters writes is “too close to call … ​​with the centre-left Social Democrats (SPD) mounting a strong challenge to retiring Chancellor Angela Merkel’s conservatives.” Merkel, who has been in office since 2005, plans to step down after the election but could still be around for weeks or months to come as a caretaker while parties sort out a possible coalition government. The WSJ has a look at what Merkel’s time in office has meant.

HAPPENING THIS WEEK-

White House National Security adviser Jake Sullivan will visit Cairo this 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.

The deadline to register for the AUC Business School’s Private Equity Diploma is coming up on Tuesday, 28 September.

ITIDA’s DevOpsDays Cairo 2021, will take place on Wednesday, 29 September.

The Cairo International Fair opens on Thursday, 30 September at the Cairo International Conference Center. It runs through 8 October.

The Egypt Projects 2021 construction expo also opens on Thursday at the Egypt International Exhibition Center and wraps on Saturday, 2 October.

Dubai’s Expo 2020 opens on Friday, 1 October. The event, which takes place somewhere on the planet once every five years, runs for six months and will be open seven days a week. You can learn more here.

PSA- Next week is a short workweek. You can expect to have a three-day weekend 7-9 October in observance of Armed Forces Day, which is on 6 October.

A BIT FURTHER OUT- The first phase of the planned electric rail line between Salam City and Tenth of Ramadan City will be inaugurated at the end of October, Prime Minister Mostafa Madbouly said in a cabinet statement. The line, which connects Adly Mansour station to the new administrative capital, will open next month for a three-month trial, Madbouly said.

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

THE BIG STORIES ABROAD are all very China-focused. Look for many of these to have an impact on everything from equities to crypto and general business / risk sentiment in the days to come.

#1- Evergrande (obviously): The embattled property developer (named the world’s most indebted company), which helped drive a selloff in global equities last week, continued to make headlines for all the wrong reasons. Global holders of the company’s USD bonds had reportedly not received an interest payment from the property giant by Thursday’s deadline, people familiar with the matter told the Wall Street Journal (paywall). Evergrande was supposed to pay USD 83.5 mn to investors on Thursday, but the company does have a 30-day grace period before bond holders can call a default.

Meanwhile, it’s EV unit (don’t ask us why it has one) is saying that there is no certainty that it can pay its debts and has “suspended paying some of its operating expenses,” China Evergrande New Energy Vehicle Group said in a regulatory filing (pdf) to the Hong Kong exchange on Friday.

Evergrande’s situation is made more precarious by reports that Beijing is reluctant to bail it out, with the central government reportedly telling local officials to make preparations for a “possible storm” and social unrest.

Want the abridged Evergrande backstory? This Twitter thread is a great place to start.

#2- Crypto ban: The People’s Bank of China has declared that all cryptocurrency transactions are illegal — and warned all of China’s financial institutions and payment firms from processing all cryptos, including BTC, ether and tether. It is now illegal for overseas exchanges to provide services for residents in China through the internet, China’s central bank said in a memo (Chinese) on Friday.

Crypto has fallen as a result, with the price of BTC falling more than 8% to just under USD 41,370 on Friday. BTC prices recovered slightly on Saturday, rising to USD 42,674.

#3- Hostage diplomacy: Chinese authorities have released two Canadians detained more than three years ago in an apparent quid pro quo for the freeing of Huawei CFO Meng Wanzhou, who was allowed to return to China on Friday after spending years under house arrest on criminal fraud charges. The Financial Times, Washington Post, and Wall Street Journal all have coverage.

#4- More Chinese CEOs in the klink: China has “kicked up its campaign to tame … debt-laden companies, as the authorities punished the corporate chiefs of two troubled companies,” arresting the two top executives of the HNA group, “a transportation and logistics conglomerate that bought up businesses around the world before quickly collapsing under heavy debts,” the New York Times writes.


IMF boss Georgieva denies faking China Doing Business rankings, blames ex World Bank head: Embattled IMF chief Kristalina Georgieva has denied pressuring staff to artificially improve China’s ranking in the World Bank’s 2018 Doing Business report, and has pointed the finger at the office of former World Bank head Jim Yong Kim. “Let me be clear: the conclusions are wrong. I did not pressure anyone to alter any reports,” Georgieva said on Friday, adding that she had blocked a proposal from a staffer in Kim’s office to combine Hong Kong’s data with China in the report, which would have given a huge boost to China’s position. Georgieva will “soon” give a statement to the IMF’s executive board. The Financial Times and Reuters have the story.

** IN CASE YOU MISSED IT from Thursday’s edition of EnterprisePM:

  • Mercedes-Benz is closer to resuming car assembly in Egypt: Mercedes-Benz received a 20k sqm plot of land in the Suez Canal Economic Zone, which will be used as a logistics base that will distribute cars locally and re-export them.
  • Egypt, US strengthen bilateral ties: Egyptian Foreign Minister Sameh Shoukry and US Secretary of State Antony J. Blinken met on the sidelines of the UN General Assembly to discuss regional issues.
  • Huge week for sci-fi geeks: From the adaptation of Isaac Asimov’s Foundation which was out with two episodes on Apple TV+, to the 2021 remake of the sci-fi classic Dune hitting theatres, it was definitely sci-fi geeks’ weekend.

TODAY’S WEATHER- This weekend’s good weather looks set to continue, with our favorite weather app telling us that Cairo will see a daytime high of 32°C and overnight low of 21°C today. Don’t expect the mercury to rise above 33°C this week.

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