Back to the complete issue
Wednesday, 10 November 2021

TONIGHT: Inflation unexpectedly dipped in October + TransMea, Cairo ICT are on their final day + Goldman has heart eyes for our equities

It’s a sprint to the weekend, ladies and gentlemen, with inflation cooling down, updates on the Vodafone subsidiary shuffle and new regulation approved by cabinet.

But first, some good news…

Our stocks are among Goldman Sachs’ top picks for 2022, Bloomberg reports, with strategists at the investment bank recommending going long on Egyptian equities. EGX30 stocks — like those of many emerging markets — are widely seen as undervalued right now, creating the potential for gains in the mid-term.

The EGX30 fell 0.9% today on turnover of EGP 821.2 mn (45% below the 90-day average). Regional investors were net buyers. The index is up 5.9% YTD.

Elsewhere in emerging markets, Goldman strategists tip USD-denominated Mexican and Russian shares, on the back of attractive valuations and the fact that the two countries are well-insulated from macro trends.

The big picture, per Goldman: Globally, demand will continue to outstrip supply, inflation is set to keep accelerating, and China’s growth could slow further. Equities and hard liquidity are currently preferable to bonds, which are “struggling.”

THE BIG STORIES TODAY-

Inflation unexpectedly cooled: Annual urban inflation slid in October to 6.3% from its 20-month high of 6.6% in September, as the rate of inflation in food and beverage prices and education dipped from the month prior, according to figures released by Capmas today. The decrease went against analysts’ expectations of inflation continuing its upward trend through 4Q2021 on the back of the recent hike in fuel prices and a 28% rise in factories’ gas bills, compounded by a surge in global commodity prices.

Vodafone Global nods to Vodacom buying out its stake in Vodafone Egypt: Vodafone Group has agreed to transfer its 55% stake in Vodafone Egypt to Vodacom Group, its sub-Saharan African subsidiary, in a EUR 2.72 bn transaction, according to a company statement. The move will “simplify” the management of its African holdings, according to the UK-based mother company. The acquisition is expected to conclude before 31 March 2022.

The Madbouly cabinet just made it easier for home owners to register their properties under amendments to the Real Estate Registry and the Income Tax Act approved at its weekly meeting today. Under the changes registration will no longer need lengthy on-ground inspections by notaries and pain-staking documentation that trace provenance. Instead, notaries will accept official documents submitted by the homeowners and skip the pre-approval phase.

The registration process will also no longer be linked to pre-paying the 2.5% property disposal tax or a flat-tax rate on older contracts.

^^We’ll have more details in tomorrow’s AM Edition.

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

  • The US and Egypt wrapped up their two-day strategic talks with the two sides agreeing on “deepening” cooperation, but without Washington giving Egypt formal public backing on the Grand Ethiopian Renaissance Dam.
  • OTO Courses nets investment worth USD 400k from EdVentures: Egyptian edtech platform OTO Courses has secured an investment worth USD 400k (c. EGP 6.3 mn) from Nahdet Misr for Publishing’s VC arm, Edventures.
  • South Africa and London-based fintech company JUMO is considering an expansion into Egypt, after raising USD 120 mn in its latest funding round.

HAPPENING NOW- Tanzania’s President Samia Suluhu Hassan is in town for a three-day visit, according to an Ittihadiya statement. She is scheduled to hold talks with President Abdel Fattah El Sisi on strengthening economic links between Egypt and Tanzania, the East African reports. Hassan is also set to witness the signing of eight unspecified agreements, including one contract.

It’s the last day of the TransMea transport conference. The first two days of the exhibition saw Egypt sign a total of 21 new transport infrastructure agreements, with the Cairo Metro taking the spotlight and accounting for the majority of the big contracts signed at the conference. Want to catch up? We had a detailed breakdown of all the agreements and what they each entail in this morning’s edition of Hardhat, our weekly infrastructure vertical.

Cairo ICT is also on its final day today. A number of companies have been unveiling their most recent technologies at the expo, including Visa, which presented its digital payments technology earlier today (pdf) and Banque Misr, which showcased its online banking system (pdf).

FOR TOMORROW-

Anghami SPAC merger deadline is almost here: Tomorrow is Anghami’s deadline to pull the trigger on a merger with blank-check firm Vista Media Acquisition Company and list on the Nasdaq. The company had previously extended the deadline in August.

🗓 CIRCLE YOUR CALENDAR-

The two-day Africa Fintech summit kicks off next Tuesday, 16 November. The summit looks at innovation in the fintech ecosystem, venture capital and other forms of investing, and will also discuss the rise of healthtech.

Calling all Egyptian entrepreneurs aged 23-35: You have exactly two weeks to apply for the acceleration exchange program Meet Silicon Valley for a chance to travel to California for a 10-day program to meet with tech executives and investors.

☀️ TOMORROW’S WEATHER- Temps look set to remain well below the 30s: Look for a daytime high of 26°C and a nighttime low of 18°C tomorrow.

THE BIG STORY ABROAD-

The biggest ever sell-off in Chinese international junk bonds intensified this week, the Wall Street Journal reports, with yields topping 25% as prices bottom out. The historic selloff has eradicated a third of bondholders’ wealth in six months. Most of China’s high-yield or “junk” bonds are concentrated in its property market, which is struggling to emerge from turmoil sparked by the Evergrande crisis, compounded by regulatory restrictions on borrowing and a slowdown in house sales. Many of the country’s property developers have defaulted on bond payments in recent weeks.

Where do things stand with Evergrande? The crumbling property giant has been hanging by a thread for weeks, but the dramatic default that was prophesied has not yet come to pass. Most recently, Evergrande managed to raise USD 145 mn by selling a 5.7% stake in media firm HengTen Networks Group in an attempt to meet USD 148 mn in overdue payments this week.

Crackdown of some of the “biggest companies” in the US coming in weeks: Over in the US, the Department of Justice appears to be looking at a crackdown within weeks that will involve “some of the biggest companies” operating in the US, senior law official John Carlin told the Financial Times. Potential targets include companies that had violated the terms of deferred prosecution agreements, which postpone criminal charges for a set period of time to allow a business to prove that it could remedy the wrongdoing in exchange for a financial penalty, Carlin says. He says the move comes as part of the Biden administration’s pledge to crackdown on corporate wrongdoing.

Draft of final COP26 pledge asks countries to try again next year: The first draft (pdf) of a conclusive COP26 agreement, released earlier this morning, has asked countries to “revisit and strengthen the 2030 targets in their nationally determined contributions,” by the end of 2022 — when Egypt is expected to host COP27 in Sharm El-Sheikh. The draft proposal does not specify whether the pledges should be improved on an annual basis going forward, potentially leaving that decision to the next conference. The proposal urges richer countries to “scale up” financing for low income countries that will suffer the worst effects from a warming planet but remains disappointingly light on details outlining when and by how much they are expected to do so. The World leaders from the nearly 200 countries in attendance are expected to continue negotiating the final text of a conclusive COP26 agreement before the Glasgow summit ends this weekend, Reuters reports.

Observers aren’t taking this as a good sign: Environmental watchdog Greenpeace has already called the draft “an agreement that we’ll all cross our fingers and hope for the best.” Research group Climate Action Tracker (CAT) has said that current national pledges fail to cut greenhouse gas emissions as significantly as is needed to reach the 1.5 degree celsius cap on warming outlined in the Paris Agreement in 2015. Commitments so far put us on track to reach an average 2.4 degrees celsius of warming above pre-industrial levels by 2100, the group said.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.