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Wednesday, 27 October 2021

TONIGHT: EgyptAir flight to Moscow u-turns + new military chief of staff named + minimum corporate tax plan coming in the US Senate and Sudan updates.

It’s another busy day as we wind down from the last work week of October, ladies and gentlemen. Heading into Halloween, we’ve got the MPC meeting tomorrow, new appointments, and Sudan may have been neutralized as an ally in the GERD talks by the AU. But first…

HAPPENING NOW- An EgyptAir flight heading to Moscow from Cairo u-turned 20 minutes after takeoff “​​after a threatening letter was found” on one of the seats, according to a statement. It remains unclear what the letter said, but the national flag carrier said the “necessary measures are being taken” after the aircraft landed again in Cairo Airport. We sincerely hope this incident doesn’t get in the way of air traffic between Egypt and Russia, particularly as demand among Russian tourists for trips to Sharm El Sheikh and Hurghada is picking up after direct flights were reinstated just a few months ago after a six-year hiatus.

Maybe a new flight to Luxor from Sharm El Sheikh will keep ‘em coming? EgyptAir is now operating direct flights between Luxor and Sharm El Sheikh, with the first flight between the two cities in six years landing earlier today, according to a Tourism Ministry statement. The weekly flight is designed to diversify visitors’ touristic experience, allowing them to enjoy both coastal and cultural destinations.

THE OTHER BIG STORIES TODAY

We have a new military chief of staff: President Abdel Fattah El Sisi has tapped Lieutenant General Osama Ahmed Askar as the new Armed Forces chief of staff, according to an Ittihadiya statement. Askar succeeds Lieutenant General Mohamed Farid, who will now become the presidential advisor for a Decent Life initiative, the presidency said.

Alexandria Medical Investment subsidiary TAT Medical Services just retracted its offer to acquire 100% of Alex Medical Services, according to a Financial Regulatory Authority statement (pdf). The decision comes a few months after TAT Medical upped its bid back in June. TAT is the second to exit the heated (and protracted) bidding war for Alex Medical, after Speed Medical pulled out earlier in May.

We now know who the two US companies that have agreed to work with the Military Production Ministry to manufacture desalination tech in Egypt. MPS Infrastructure and Aquatech signed an agreement forming a consortium with the National Authority for Military Production that will see them set up facilities to manufacture equipment used in desalination and wastewater treatment plants, in a statement (pdf) out this morning. This came as part of Cairo Water Week, a series of events put on by the government to raise awareness about Egypt’s growing water insecurity and drum up international support for its 20-year strategy to increase its water resources.

^^ We’ll have more on these stories and others in tomorrow’s EnterpriseAM.


More Israel-Palestine mediation: Intelligence chief Abbas Kamel will meet Palestinian Islamic Jihad leader Ziyad al-Nakhalah in Cairo today to discuss the ceasefire between Israel and Palestinian factions, including Hamas, in the Gaza Strip, according to the Israeli press. Egypt recently played an instrumental role in brokering a ceasefire between Israel and Hamas following a period of intense violence in Gaza, and has since met with multiple Hamas delegations and representatives to discuss peace with Israel and the reconstruction of the Gaza Strip.

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

FOR TOMORROW-

Interest rate decision day a’ coming: The Central Bank of Egypt will meet tomorrow to decide on interest rates, and despite global inflation on the rise — buoyed by skyrocketing energy prices — all 12 analysts polled by Enterprise see the central bank leaving rates on hold for another meeting. The CBE’s Monetary Policy Committee will meet one more time after tomorrow this year on 16 December.

The carry trade remains the name of the game, with the analysts citing the need to maintain portfolio inflows. The need to prioritize portfolio investments over rising inflation, which jumped to a 20-month high of 6.6% last month, is particularly important when weighed against the possibility of the ECB and the Fed considering a higher interest rate environment to curb inflation there. With interest rates globally on an upward trajectory, policymakers need to ensure fixed-income securities remain attractive to foreigners, supporting unchanged policy rates, Beltone’s Alia Mamdouh told us.

Speaking of which, it will also be Eurozone interest rate day tomorrow, with policy watchers banking on the European Central Bank keeping interest rates on hold as it has been pushing the line that global inflation will be temporary. If this happens, that will be good news for us and other EM debt looking to stay competitive.

Next week will be the US Federal Reserve’s turn, as its Federal Open Market Committee will meet to review interest rates on 2-3 November. The Fed is widely expected to keep interest rates steady in order to start tapering its asset purchases this month.

And there could be news on the global inflation front, as oil prices appear to be plateauing. After jumping to multi-year highs on Monday — Brent crude futures rose to USD 85.99/bbl — futures fell 1% today to USD 85.54.


ALSO HAPPENING TOMORROW- The Middle East Angel Investment Network’s Angel’s Oasis retreat runs tomorrow and Friday in El Gouna, with separate pricing for in-person and virtual attendance.

THE BIG STORIES ABROAD-

US Democrats unveil minimum corporate tax plan: The 200 largest companies in the US may soon face a minimum 15% corporate tax rate under proposals announced by Democratic senators yesterday to help fund the Biden administration’s Build Back Better agenda. The proposed legislation would apply to companies with a bottomline of USD 1 bn or more and would no longer avail a loophole for calculating taxes after deducting credits and other breaks. Meanwhile, the bill would also help encourage companies engaging in research and development and would provide credit for using clean energy and other practices the government is looking to endorse. (AP | Washington Post | New York Times | Bloomberg | Wall Street Journal | FT)

The minimum corporate tax proposal comes as the OECD is pushing ahead with an international tax agreement that would impose the same minimum 15% rate globally. The landmark agreement was formally endorsed at the G20 Meeting of Finance Ministers and Central Bank Governors earlier this month. Egypt signed on to the agreement back in July.

SUDAN WATCH- Sudan has been suspended from the African Union (AU) “until the effective restoration of the civilian-led Transitional Authority,” according to a communique released following a meeting of the AU’s Peace and Security Council. The EU also condemned this week’s military coup in a statement supported by the UK, US, Norway and Switzerland, saying it would continue to recognize the transitional government.

Where does that leave the stalled GERD negotiations? We assume that this means that Sudan can kiss goodbye its seat at the AU-led GERD talks — if they ever materialize. There was talk a few weeks back that the AU could soon be sending delegations to Egypt, Sudan and Ethiopia to restart mediation efforts to resolve the dispute over the hydropower dam. Last month, the UN Security Council urged all three parties to return to negotiations under the auspices of the AU.

And professionals that led the protests against Al Bashir are mobilizing: Doctors and state oil workers are joining the thousands-strong protests against Monday’s takeover, while organizers have announced a "march of mns" in Khartoum on Saturday to defy the putsch.

CIRCLE YOUR CALENDAR-

📆 It’s almost the end of October. Here are dates for some key news triggers next month:

  • PMI: October’s purchasing managers’ indexes for Egypt, Saudi Arabia and the UAE will land on Wednesday, November 3.
  • Foreign reserves: October’s foreign reserves figures will be out sometime during the first week of November.
  • Inflation: Inflation figures for October will be released on Wednesday, 10 November.

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

☀️ TOMORROW’S WEATHER- Leave your jackets at home tomorrow, as our favorite weather app tells us that the mercury will rise to 34°C during the day. At night, temperatures will fall to 19°C.

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