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Sunday, 3 October 2021

TONIGHT: Auto sales up in August; EgyptAir completes maiden flight to Israel; Georgieva in trouble; OPEC+ could increase production; Global economy faces headwinds.

We’re kicking off a shortened workweek today, with the nation getting Thursday 7 October off in observance of Armed Forces Day. We can also expect to have a Thursday off later in the month thanks to the Prophet Muhammad’s Birthday, which is formally observed on Monday, 18 October.

THE BIG STORY OF THE DAY

#1 Auto sales up in August: Car sales continued to rise in August, growing 15% y-o-y to reach 18.3k, industry data revealed today. Total vehicle sales — which include buses and trucks — saw stronger growth during the month, rising 18% to 24.5k units from 20.8k in August 2020.

HAPPENING NOW-

The Cairo International Fair continues today at the Cairo International Conference Center, running through 8 October.

It’s day two of Techne Summit, with the three-day investment and entrepreneurship event in Alexandria held under the auspices of the CIT ministry bringing together some 600 startups.

For the first time ever, EgyptAir is flying to Israel: EgyptAir completed its maiden flight to Israel earlier today, landing at Tel Aviv’s Ben Gurion Airport, Israel speaks Arabic, according to an Israeli government statement. The state-owned carrier will operate four weekly flights between the two countries, it said. The flight comes a few weeks after Israeli Prime Minister Naftali Bennett and President Abdel Fattah El Sisi met in Sharm El Sheikh, the first time leaders from the two countries have met publicly in Egypt in more than a decade.

THE BIG STORIES ABROAD- The pressure is building on IMF chief Georgieva: Hundreds of former World Bank employees have called allegations that IMF head Kristalina Georgieva manipulated data in favor of China “a form of institutional corruption” and called for “decisive” action by the Fund’s executive board as it prepares to launch its investigation this week, the Financial Times reports. A report commissioned by the World Bank recently accused Georgieva of pressuring staff to artificially boost China’s ranking in the Doing Business report when she was chief executive of the bank. Georgieva has denied all accusations, and instead pointed the finger at staffers working in the office of former World Bank head Jim Yong Kim.

Former World Bank employees want her out: In a letter handed to the Fund, the 331 former employees — which included one former managing director, two former executive directors and four former vice-presidents of the bank — wrote that the findings “constitute a form of institutional corruption” and “represent gross abuse of management oversight authority.” The report has brought “unprecedented reputational risks” for the bank, they wrote, calling on the IMF to take “decisive and substantive action to restore public confidence.”

Her fate could be decided this week: The IMF’s executive board will launch an investigation into the allegations this week by interviewing Georgieva and the law firm responsible for the report, sources tell Reuters.

All of this is happening at an inopportune time for the IMF and World Bank, which will hold their annual meetings next week on 11-17 October. Georgieva will face the board on Tuesday, the same day in which she is due to give a virtual speech about the upcoming event, two sources said.


Bloomberg is warning of a harsher global economy in the fourth quarter: The outlook is less than ideal as we head into the final stretch of the year, as the delta variant, spiralling food and fuel prices, the supply-chain crisis, worker shortages, the China slowdown, and US budget rows all combine to threaten the recovery and increase fears of a coming stagflation situation, analysts and researchers at a number of global banks tell Bloomberg.

Calls for a delay in the stimulus tapering are growing louder: With a question mark hanging over whether high inflation will be as transitory as central banks insist, their turn toward a more hawkish policy might not be the cure the global markets need, some are insisting. “Central banks are playing with fire by tapering to avert inflationary pressures without being fully sure of where we stand in the cycle,” one chief economist at French investment bank Natixis told Bloomberg.

China’s Evergrande is facing another big debt test — we think: The Chinese developer, whose debt crisis saw global markets take a nose-dive earlier this month, is facing a USD 260 mn principal payment coming up on Monday. If Evergrande defaults on the bond, it risks a cross-default on its other bonds, Bloomberg writes. But given the opaque nature of private placement debt, the details of which are not listed publicly, it’s hard to get a sense of just what Evergrande’s liabilities are — adding to jitters over the company’s demise and potential contamination in the rest of China’s development sector. Evergrande was supposed to pay USD 83.5 mn to investors a few weeks back, but the company does have a 30-day grace period before bond holders can call a default.

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

  • E-Finance could be one of the EGX’s biggest IPOs in years: State-owned fintech firm E-Finance is looking to raise up to EGP 3.6 bn from its upcoming IPO in October in what would be the biggest offering on the EGX in years.
  • EFG Hermes eyes minority stake in Ignis Energia: The group is in talks to acquire a significant minority stake in Spanish renewable energy company Ignis Energia in a transaction that would value it at around EUR 1 bn.
  • Egyptian debt is well-placed to weather a Fed taper: Emerging-market debt — including Egyptian bonds and T-bills — could become less attractive to investors but analysts say that Egypt is one of the better placed emerging markets to weather a potential storm.

FOR TOMORROW-

The Union for the Mediterranean’s ministerial climate conference takes place tomorrow in Cairo. Chaired by the EU Commission and the Jordanian environment ministry, the hybrid event will bring together ministers from the 42 European and Mediterranean countries to discuss collaborative efforts to protect biodiversity, reduce emissions and maintain food security. Check out the agenda here (pdf).

Also attending the conference: VP of the EU Commission Frans Timmermann is in Egypt for a two-day visit starting tomorrow while a number of European officials will hold talks with their counterparts at the Egyptian Foreign Ministry, the EU said in an emailed statement.

OPEC+ could agree to add more crude than expected when it meets this week: Oil producers are considering accelerating the end of supply curbs as prices continue to tick upwards, unnamed sources told Reuters. The OPEC+ alliance of producers earlier this year agreed to increase output by 400k bbl/d each month but sources say that they could exceed this, with one suggesting that a one-off 800 bbl/d increase is possible. This comes as oil prices hit a three-year high amid concerns that the global gas crunch will impact the crude markets.

🗓 CIRCLE YOUR CALENDAR-

The final quarter of 2021 is here. Get these dates in your diary:

  • PMI: September’s purchasing managers’ indexes for Egypt, Saudi Arabia and the UAE will land on Tuesday, 5 October.
  • The Senate will convene for its 2021-2022 legislative season on Tuesday, 5 October.
  • Egypt and Saudi Arabia are set to ink contracts to start linking their electricity grids on 5 October, with implementation of the project set to begin in 2022, Electricity Minister Mohamed Shaker said Thursday, Al Mal reports.
  • Foreign reserves: September’s foreign reserves figures will be out sometime during the first week of October.
  • Public schools are back in session this coming Saturday.
  • Inflation: Inflation figures for September will be released on Sunday, 10 October.
  • IMF + World Bank meetings: The IMF and the World Bank will hold their annual meetings during the week beginning 11 October.
  • Interest rates: The Central Bank of Egypt will meet to review interest rates on Thursday, 28 October.

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

☀️ TOMORROW’S WEATHER- It’s another day of surprisingly warm 32°C weather tomorrow, with the mercury dropping to 19°C at night, according to our favorite weather app.

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