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Wednesday, 5 January 2022

Potential Egypt tourism recovery has Goldman Sachs bullish on our equities

Expectations of a tourism recovery in the latter half of 2022 has strategists at Goldman Sachs bullish on Egyptian equities, and the Thai and New Zealand currencies, Bloomberg reports. “We think you’re going to see a transition to a recovery driven by services and travel, and leisure would be an important part of that once the latest omicron wave fades,” said Kamakshya Trivedi, co-head of global FX, rates and EM strategy at the investment bank. The rebound in Egypt’s tourism sector — which prior to the pandemic accounted for 12% of GDP — gathered pace through 2021 as international travel began to normalize, with revenues rising 20% y-o-y in the first half of the year, according to central bank data.

Hedge funds were sluggish last year despite talk of revival: Performance concerns, “market jolts” and the emergence of omicron all led to relatively low gains for hedge funds in 2021. Hedge funds gained an average of 8.7% from January to November 2021 — considerably less than the S&P 500 index’s 24% return, the Financial Times reports citing research firm HFR. The lackluster performance came despite talk of a “pandemic renaissance” in the funds, after years of investors strongly favoring private equity and debt. But inflows remained weak last year as investors committed only modest sums, according to the FT.

JPMorgan’s crystal ball is bullish on global stocks: Equities are expected to continue rising in 2022 as “positive catalysts are not exhausted,” JPMorgan strategists said in a note cited by Bloomberg. According to the investment bank, risks to performance will either “fail to materialize or are already priced into stocks.”

That optimism is at odds with most market watchers, who see a wobbly and uncertain year ahead for equities, as inflationary worries and expected rate hikes threaten to scuttle last year’s stimulus-fuelled bull run.

Up

EGX30

11,983

+0.7% (YTD: +0.3%)

None

USD (CBE)

Buy 15.66

Sell 15.76

None

USD at CIB

Buy 15.66

Sell 15.76

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

11,357

+0.3% (YTD: +0.7%)

Down

ADX

8,410

-0.7% (YTD: -0.9%)

Up

DFM

3,216

+0.8% (YTD: +0.6%)

Down

S&P 500

4,794

-0.1% (YTD: +0.6%)

Up

FTSE 100

7,505

+1.6% (YTD: +1.6%)

Up

Brent crude

USD 80.24

+1.6%

Down

Natural gas (Nymex)

USD 3.72

-2.6%

Up

Gold

USD 1,815

+0.8%

Up

BTC

USD 46,193

+0.3% (as of midnight)

THE CLOSING BELL-

The EGX30 rose 0.7% yesterday on turnover of EGP 1.09 bn (14.7% below the 90-day average). Regional investors were net buyers. The index is up 0.3% YTD.

In the green: Egypt Kuwait Holding (+7.4%), AMOC (+6.4%) and Raya Holding (+5.9%).

In the red: Cleopatra Hospital (-1.4%), Ezz Steel (-1.4%) and Orascom Development Egypt (-0.9%).

Most Asian markets are in the red in early trading this morning as traders wait for the release of the minutes from last month’s Fed meeting, when Chairman Jay Powell said the central bank would hike interest rates this year and end its bond-buying programme faster than expected. Futures indicate a mixed open among European bourses while US stocks are on course to fall in early trading.

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 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; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.