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Monday, 11 October 2021

TONIGHT: The IMF and World Bank meetings kick off amidst continued worries around energy and supply chain issues. ALSO, El Sisi is in Hungary today

Good afternoon, ladies and gentlemen, and welcome to another issue jam-packed with supply chain disruptions, green initiatives and Black Mirror-type worries. But first…

THE BIG STORIES TODAY-

#1- Pioneers Holding is now Aspire Capital Holding: The EGX Listing Committee approved Pioneer Holding’s rebranding to Aspire Holding, the company announced in a statement (pdf). The move follows Pioneer splitting into two arms: A real estate investment arm now called Pioneers Properties and Gadwa Industrial Development, which will house its manufacturing investments. Shares in both subsidiaries started trading on the EGX30 today, the companies announced (here) and (here).

Aspire Capital Holding saw its stock price surge 98.1% in today’s trading to EGP 0.42, while Pioneers Properties fell 18.1% to EGP 3.27 and Gadwa fell 2.8% to EGP 1.66.

#2- POLL- ESG reporting is becoming mandatory in Egypt in 2022. Are EGX-listed companies ready for it? In tomorrow’s Going Green, we hear from EGX-listed companies about how they’ve been implementing FRA-mandated ESG reporting before they become required in 2022, what these reporting requirements mean for policy changes within these organizations, as well as whether companies that have already started issuing ESG and sustainability reports have seen a shift in investor sentiment as a result.

#3- Global Ventures wants to do more here: As Egypt has its “fintech moment,” Dubai-based VC fund Global Ventures is looking to ramp up its capital allocations in Egypt. General Partner Basil Moftah talks to us about the tech fund’s plans in the local market, the startup growth metrics it values the most, and its exit strategies.

^^We’ll dive deeper into these stories and more in tomorrow’s EnterpriseAM.

CORRECTION- Al Ahly Capital Holding is the investment banking arm of National Bank of Egypt (NBE), not Al Ahly Financial Investments Management, as we incorrectly reported in this morning’s AM.

HAPPENING NOW-

The Fall Meetings of the IMF and World Bank kicked off this morning, with central bankers, finance and development ministers, private sector leaders, and academics coming together to discuss the post-covid economic recovery. The meetings began with a discussion on the role of capacity development and the rest of the day will see discussions on the outlook for developing economies, creating more equitable workplaces for women, and how covid-19 has impacted fragile states.

The IMF’s October World Economic Outlook will take center stage when it is released tomorrow. You can find the report on its landing page here once it’s released. The report’s release comes on the heels of the World Bank’s October 2021 MENA economic update, in which the bank upgraded its forecast of Egypt’s GDP growth this fiscal year to 5.0%. The report points to stressed and underfunded public healthcare systems as one of the main culprits of the region’s slow and uneven recovery.

A little further afield, the landmark OECD international tax agreement is set to be formally endorsed at the G20 Meeting of Finance Ministers and Central Bank Governors on Wednesday. A total of 136 countries have so far signed up to the agreement, which looks to set a minimum 15% corporate tax rate for companies with revenue of more than USD 125 bn, among other stipulations.


ALSO HAPPENING NOW- President Abdel Fattah El Sisi is in Budapest to attend a summit with the Visegrád Group, according to an Ittihadiya statement. Also known as V4, the political alliance of four countries of Central Europe includes the Czech Republic, Hungary, Poland and Slovakia. This is the second time Egypt has joined the four countries in a summit and the topics of discussion on the table are combatting terrorism and illegal immigration, energy security, developing trade, investment and tourism, and strengthening Egypt’s relations with the EU. The visit will also see El Sisi meet with senior Hungarian officials to strengthen bilateral relations between the two countries.

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

  • New highs for inflation: Increasing food, healthcare, and education costs pushed annual urban inflation in September to a 20-month high.
  • The World Bank upgraded its outlook for Egypt’s GDP growth in FY2021-2022 to 5.0%, up from the 4.5% it penciled in earlier this year.
  • Misr Life Ins. plans to list 25% of its shares on the EGX sometime in 2H2022.

THE BIG STORY ABROAD- As the IMF and WB meetings get underway, supply chain issues and the energy crisis continue to dominate headlines in the foreign press today.

First up, aluminum prices are soaring amidst the global energy crisis: Aluminum options have risen to their highest levels since 2008, reaching USD 4k per tonne as the electricity crisis threatens the production of the energy-intensive metal, according to Bloomberg. Producing one tonne of aluminum uses as much power as what is needed to run an average UK home for more than three years. When countries such as China and Europe began to feel the electricity crunch, aluminum production was one of the first things to be scrapped and the continuation of the crisis does not bode well for the supply of the metal. With the possibility of further supply cuts, investors are anticipating a spike in demand that will push aluminum prices up in the coming months.

We shouldn’t look to gas-rich Qatar for a solution, as it says it can’t do more to boost natural gas production. Any plan to expand output would be further down the road, Qatar’s Energy Minister Saad Al-Kaabi said at a Doha event today, according to Bloomberg. Qatar plans to increase its LNG production by around 50% come 2027 — but that won’t help Europe in its scramble for a near-term solution to the gas crisis heading into a long, cold winter. A planned 50% expansion of output at Qatar’s key North Field would not be brought forward despite calls to do so.

How the global supply chain stole Halloween: Over in the US, global supply chain shortages are hitting Halloween product supplies, leaving shelves empty and frustrating customers with pent-up buying energy, according to the Wall Street Journal. The shortages, which store owners say are partly due to shipping delays and rising costs, come as Halloween spending in the US is expected to hit an all-time high of USD 10.1 bn this year up from a record of USD 9.1 bn in 2017, with activity almost back to pre-pandemic levels, according to the National Retail Federation.


David Card, Joshua D. Angrist and Guido W. Imbens have been awarded the 2021 Sveriges Riksbank Prize in Economic Sciences (the Nobel Prize for economics). Half of the prize was awarded to Card “for his empirical contributions to labour economics” and the other half jointly to Angrist and Imbens “for their methodological contributions to the analysis of causal relationships.” Card’s findings are timely, with results showing that increasing minimum wage does not necessarily lead to fewer jobs. Card’s findings also show how incomes of people who were born in a country can benefit from new immigration, and the availability of education resources have a big impact on student’s future in the labour market. Meanwhile, Angrist and Imbens have “revolutionized empirical research” in economics and other fields by showing how conclusions about cause and effect can be drawn from natural experiments.

🗓 CIRCLE YOUR CALENDAR-

Our next long weekend is coming up: ​​​​The Prophet Muhammad’s birthday falls on Monday, 18 October. We expect a three-day weekend starting Thursday, 21 October. Look for confirmation from the cabinet toward the end of the week.

Conference season ratchets up this month, with a number of exhibitions and business events here and throughout the region taking place this week, including:

  • The Turathna Exhibition at the Egypt International Exhibition Center, Cairo, which will run until Friday, 15 October.
  • Further down the road: The Middle East Angel Investment Network is hosting its Angel Oasis in El Gouna on 27-29 October, with separate pricing for in-person and virtual attendance.

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

☀️ TOMORROW’S WEATHER- Short sleeves look like they’re here to stay: Expect daytime highs of 34°C tomorrow, with the mercury falling to 21°C at night, our favorite weather app tells us.

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