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Monday, 18 October 2021

TONIGHT: It’s Prophet Muhammad’s birthday + the ECA isn’t happy that M&A agreements are happening without its knowledge.

Good afternoon, ladies and gentlemen. The foreign business press today is warning of a potential EM selloff on the back of rising energy prices. It’s been an uncharacteristically slow Monday in the local press today, where the talk is still over the anticipated e-Finance’s IPO.

Trading of e-Finance shares on the EGX is set to begin this Wednesday, the state-owned fintech platform and payments infrastructure provider’s Chairman and CEO Ibrahim Sarhan and the EGX confirmed. The retail component of the IPO officially closed yesterday 61.4x oversubscribed.

The EGX has continued its streak in the green for a tenth consecutive session, with the bourse up 1.1% today.

It’s the Prophet Muhammed’s birthday today and public and private sector workers and the business community at large take this Thursday off in observance. Banks and the EGX will be closed, the Central Bank of Egypt and the bourse have confirmed. Remember — it’s our final long weekend of the year, so put the time to good use.

THE BIG STORIES TODAY (so far)-

#1- The Egyptian Competition Authority (ECA) is not happy that a number of M&A had taken place without it being notified. In a statement today, the ECA warned businesses making EGP 100 mn in annual revenues looking to merge that they must inform the ECA of these transactions or they could be potentially in violation of the ECA Act. The statement did not specifically name the companies alleged to be in violation.

#2- Aspire Capital Holding (formerly Pioneers Holding) has set up its microfinance arm, Kheir Microfinance, the holding company announced in a bourse filing (pdf). The company is currently awaiting the Financial Regulatory Authority to issue the needed licenses to begin operations.

HAPPENING NOW-

EBRD Vice President of Banking Alain Pilloux is in town through Wednesday for a series of high-level meetings (pdf).

CORRECTION- The government is keeping electricity prices for industry fixed for the next few years as part of a package of incentives for the private sector. We incorrectly said in this morning’s EnterpriseAM that natural gas prices would be fixed for four years.

Read more about how the Finance Ministry is lining up new business incentives in Part II of our one on one with Vice Minister of Finance Ahmed Kouchouk, including help for the automotive industry and new export subsidies.

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

  • Foreing investors had heavy appetite for shares of e-Finance, whose shares will officially begin trading on the EGX on Wednesday.
  • No vaccine? No entry into government institutions for you, as of 1 December.
  • Fintech law + PPP Act amendments making their way through parliament: The House of Representatives’ CIT Committee yesterday gave final approval to a draft law to regulate Egypt’s fintech sector, while the House general assembly gave a preliminary nod to proposed amendments to the PPP Act.

THE BIG STORY ABROAD- Former Sec. of State Colin Powell dies: Former US Secretary of State Colin Powell passed away this morning aged 84 “due to complications from covid-19,” despite being fully vaccinated, his family said in a statement. Powell became Secretary of State in 2000, serving under George W. Bush, but resigned in 2004 after acknowledging that evidence he provided to justify the US’ invasion of Iraq in 2003 was false. The story is on the front pages of the Wall Street Journal, the New York Times, and Reuters, among others.

Elsewhere, analysts are wondering if Judgment Day” for EMs is approaching: Emerging markets are attractive to investors as long as they post strong growth to outweigh higher risk, but EMs excluding China are expected to grow more slowly than the US for a third year next year, Jonathan Wheatley writes for the Financial Times. China’s slowdown, meanwhile, may see growth fall to match that of the US, says Bank of America David Hauner. If energy prices cool off to ease global inflationary pressures and China can manage its property-market crisis, the global recovery can push ahead. But if fuel continues to spiral and the Chinese economy plummets, we could see a mass exodus from EM stocks and bonds as investors offload risky assets.

What does that mean for Egypt’s borrowing plans? Egypt’s fiscal position is solid enough to withstand emerging market shocks and selloffs, particularly ones that could result from the US Federal Reserve tapering off its stimulus, Vice Minister of Finance Ahmed Kouchouk told Enterprise last week. And our successful bond issuances have garnered plenty of interest from investors and drawn enough inflows to cushion us from these shocks, Kouchouk says.

Also joining the chorus warning of vulnerability in developing economies is markets sage Mohamed El Erian. The Allianz chief economist and Queen’s College Cambridge president followed up yesterday’s appearance on Fox News with an op-ed in the FT, arguing that current macro challenges threaten to derail long-term development ambitions among low-income, commodity-importing countries. The solution? More vaccines and a restructuring of crushing debt obligations would be a start, El Erian says, echoing the IMF’s most recent World Economic Outlook.


Even with a mounting energy crisis, Europe is apparently still hesitant about accepting a helping hand from Moscow. Russia’s Nord Stream 2 gas pipeline could be Europe’s lifeline amid its energy crisis, but EU officials “want a break” from the bloc’s energy dependence on Russia. “We want to break out from this [Russian energy] dependence,” Morten Petersen, a Danish lawmaker at the European Parliament, told CNBC. The 1.2k km-long pipeline is finished and currently awaiting regulatory approval to start exporting 55 bcm of natural gas to the energy-starved continent — and it’s only “a matter of time” before approval is granted and the gas starts flowing. Last year, almost half of Europe’s natgas imports came from Russia, and the International Energy Agency (IEA) said last month that Russia should increase its supply of natural gas to Europe, as skyrocketing prices threaten a winter energy crisis across the continent.

FOR TOMORROW-

President Abdel Fattah El Sisi will be in Athens tomorrow for a summit alongside Cypriot President Nicos Anastasiades and Greek Prime Minister Kyriakos Mitsotakis. The three officials will review trilateral cooperation, according to a statement from the Cypriot government. This meeting comes shortly after Egypt signed MoUs with Greece and Cyprus to link electricity grids.

🗓 CIRCLE YOUR CALENDAR-

Three days to go until the Cairo International Furniture Show, Le Marche. The four-day event runs from this Thursday, 21 October until next Sunday, 24 October. It is the first and largest furniture, material and home accessories exhibition in the region.

Fall conference season is still going strong. Among the exhibitions and business events here and throughout the region:

  • The GITEX Global at the Dubai World Trade Center kicked off yesterday and runs through this Thursday. The event brings together players in Big Tech to discuss what’s next in areas such as AI, cloud, 5G, cybersecurity, blockchain, and more.
  • Cairo Water Week begins next Sunday, 24 October. The annual event will wrap next Thursday, 28 October.
  • The two-day Intelligent Cities Exhibition & Conference takes place next Wednesday and Thursday, 27 and 28 October.
  • Later this month: 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.

☀️ TOMORROW’S WEATHER- A balmy high of 29°C is forecast for tomorrow, while the mercury will drop to a low of 18°C come nightfall. Ditto for Wednesday, with some added cloudy skies, according to our favorite weather app.

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