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Thursday, 4 November 2021

TONIGHT: FRA expands proposed caps on margin trading + the EBRD is more optimistic about our growth. Plus: Egypt signed a coal phase-out agreement at COP26

…and just like that, the first week of November is over. We hope the week has been kind to you — and that you’re looking forward to a relaxing weekend with family and friends.

A special shout-out this afternoon to our Hindu readers, to whom we offer our very best wishes on the occasion of Diwali. We hope, given all that’s happening in the world around us right now, that you’re celebrating the festival of lights with your loved ones. (Today is the first day of the five-day Diwali festival, which is as significant to Hindus as the Eids are to Muslims or Christmas and Easter are to Christians.)

THE BIG STORIES TODAY-

#1- FRA expands proposed caps on margin trading in its latest decision: The Financial Regulatory Authority (FRA) issued a decision today setting new caps on margin trading on shares of listed companies — and from what we’re seeing, it appears the FRA has expanded them from its previous proposals. Newly released regulations would not permit any single investor or their related group to purchase on margin more than 3% of a company’s market cap or 5% of shares on freefloat, whichever is higher. In its previous proposal the FRA had wanted to limit a single investor’s margin trading cap at 1% of the company’s market cap or 3% of its freefloat shares.

A single company would also not be permitted to have over 15% of its outstanding shares held on margin, or 30% of its publicly-traded shares, whichever is higher. In its April proposal, the FRA had suggested that it would limit freefloat shares held on margin to 25%.

#2- The EBRD is getting more optimistic about Egypt’s growth prospects, saying in its latest Regional Economic Prospects report (pdf) that it now expects the economy to grow at a 5.3% clip during the calendar year. This is an upwards revision of 1.1 percentage points from the bank’s most recent forecast in June, which the report says will be underpinned by the CIT sector and rebounding FDI flows.

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

  • Covid passports are now live: The Health Ministry has launched its covid passport app, which acts as proof of covid vaccination, and is designed to replace the paper certificates in efforts to avoid fraud.
  • Private sector activity dips to five-month low: The contraction of non-oil private sector activity in Egypt deepened in October as continued supply chain disruptions abroad caused input costs to rise at their quickest pace in over three years.
  • Heliopolis Housing is reviving its plans to tap the EGX with a secondary offering by mid-2022, after e-Finance’s IPO breathed new life into the state privatization program.

THE BIG STORIES ABROAD

Countries and organizations signed on to several landmark agreements to phase out the use of coal power and end financing for new coal plants at the COP26 summit yesterday, according to a statement. One agreement — the ​​Global Coal to Clean Power Transition Statement — sets deadlines for developed and developing countries, with “major economies” committing to the phase-out in the 2030s and the rest of the world agreeing to taper off their coal use a decade later. Banks and financial institutions also pledged to end financing for new plants, but emerging economies will have access to funding packages to support the “early retirement” of existing plants to make the move away from coal more equitable, according to the statement.

Egypt is one of the signatories of the agreement to phase out coal use — but major emitters China, the US, and India are not. However, China previously agreed to eliminate financing of overseas coal plants, and the US joined other countries in making a similar pledge at COP26. Egypt’s decision to sign on to the agreement comes days after it declined to sign two agreements to end deforestation by 2030 and reduce methane emissions by at least 30% by the end of the decade. Coal has recently been falling out of favor in Egypt, leading to the scrapping of Al Nowais’ planned USD 4 bn, 2.65 GW “clean coal” project, as well as the 6.6 GW Hamrawein coal plant.

So what does this mean for Egypt’s cement industry? The vast majority of cement producers in Egypt rely on coal for at least part of their manufacturing processes, after a number of them outfitted their facilities to run on coal in 2016 in response to the lifting of fuel subsidies. And as one of the most-polluting industries, cement manufacturing has been under pressure to decarbonize by phasing out their coal-based heating processes for biomass fuels. The switch would be extremely costly, however, and would likely drive up prices even further after rising costs of input materials already led cement prices to rise earlier this year.

ALSO FROM COP- Bezos pledges USD 2 bn to restoring nature … after flying to COP26 in a private jet: Amazon’s Jeff Bezos — the world’s second richest man — pledged USD 2 bn from selling Amazon stocks to the Bezos Earth Fund at COP26 in Glasgow earlier this week. USD 1 bn will go toward landscape restoration in Africa and the US, while the other USD 1 bn will go towards raising crop yields. That’s all good and well, but Bezos flew to the climate summit in a private jet (hardly an eco-friendly commute choice). The bn’aire’s pledge comes a few short days after Elon Musk questioned the validity of suggestions that donating from his wealth could help solve world hunger.


Higher energy is weighing on BoE as it keeps interest rates on hold: The Bank of England kept interest rates on hold on Thursday, following in the footsteps of the US Federal Reserve yesterday and the European Central Bank last week. It said that the UK’s continued recovery from the covid-19 pandemic was behind the decision.

Inflation is a big problem and rates will have to rise: “Inflation is above our 2% target…Some of the increase was caused by a rise in oil and gas prices. That put the cost of petrol and utility bills up,” the UK’s central bank said. While the BoE was accommodating this time around, it did say that interest rates will need to “rise moderately” to return inflation to its 2% target. This comes as the Fed has begun unwinding its huge stimulus program this month amid concerns that inflation will remain elevated for longer than previously thought.

And while we’re on energy, the FT is out with quite the pretty infographic explainer charting where Europe sources its gas needs.


MARKET WATCH- Keep an eye out for the OPEC vs. Biden showdown: OPEC+ will decide today whether to heed US President Joe Biden’s request to up oil production as the White House worries that “inflation caused by high energy prices could derail its economic agenda,” writes Bloomberg. (Remember, the US Federal Reserve decided yesterday to begin tapering its stimulus program, citing elevated inflation.) The Biden administration is asking the oil producing countries to hike monthly supply to between 600-800k bbl/day or else stick to the current 400k bbl/day and allow other members to pump extra to compensate, sources were quoted as saying. The cartel seems likely to shrug off the request as many members are already struggling to meet their production targets.

What does this all mean? A bout of volatility in oil markets over the next few weeks “as the conflict between the world’s largest producers and consumers plays out,” the business information service says.

YOUR MANDATORY COVID STORY- The UK became the first country in the world to approve a covid-19 antiviral pill, giving the greenlight to administer molnupiravir in mild to moderate cases, according to a government statement. Molnupiravir is jointly developed by US-based Merck and Ridgeback Biotherapeutics, but the med has yet to get regulatory approval from Washington. Britain's Medicines and Healthcare products Regulatory Agency (MHRA) said the pill was found to be safe and effective at reducing the risk of hospitalisation and death and recommended that molnupiravir be used as soon as possible following a positive covid test. The med works by interfering with the virus’ replication, keeping it from multiplying and intensifying the disease in patients.

The move is being hailed by the global press (including from Reuters) as a huge step in containing the covid-19 pandemic as most efforts until now have focused on vaccine administration.

🗓 CIRCLE YOUR CALENDAR-

The Africa Early Stage Investors Summit continues today, featuring virtual sessions featuring speakers from angel networks, VC funds, accelerators, and the public sector, among others.

Key news triggers coming up:

  • Inflation: Inflation figures for October will be released next Wednesday, 10 November;
  • There’s no MPC meeting this month — the central bank will next meet on 16 December to review interest rates for the final time this year. The CBE has yet to issue its MPC calendar for 2022.

Women entrepreneurs have until this Saturday, 6 November to apply to a new accelerator program launched by NGO Nahdet El Mahrousa offering up to EGP 200k in grants, mentorship, and other business support. Founders and social enterprise leaders working in ICT, creative industries, or on projects that support gender equality are eligible to apply. The program, Rabeha, was launched in partnership with UN Women Egypt, the Egyptian National Council for Women, Global Affairs Canada, and other partners. You can apply here.

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

☀️ TOMORROW’S WEATHER- Expect the mercury to rise to 30-31°C during the afternoon this weekend, while nighttime lows are forecasted to fall in the 19-20°C range, our favorite weather app tells us.

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