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Thursday, 3 February 2022

THIS EVENING: Macro Group prices IPO + PMI contracts at a faster pace in January + ALSO: El Sisi heads to the Beijing Winter Olympics

Happy Thursday, wonderful people. It’s a busy afternoon as we hurtle towards the weekend (and the nearest TV to watch the Pharaohs at the Afcon semi-finals today).

It’s interest rate day at home + in the eurozone: Analysts participating in our regular rate poll don’t see incoming rate hikes in the US and rising inflation at home as being enough to prompt the Central Bank of Egypt’s (CBE) monetary policy committee to hike interest rates when it meets late this afternoon. Our poll participants tell us they see the policy rate being left unchanged at 8.25% for the next six weeks. Our real interest rate, the highest in the world, leaves Egypt well-positioned to withstand the initial phase of the Fed’s tightening cycle while inflation remains easily within the central bank’s target range.

The CBE meets right as the European Central Bank (ECB) and Bank of England (BoE) wrap up their own policy meetings — each with different outcomes. In the UK, the BoE agreed to a 25 bps rate hike as it looks to rein in its own inflation figures, which the central bank expects to hit 7% in the coming months as a result of low unemployment and higher energy prices. The ECB has decided to leave its key interest rates unchanged, which will remain the case “until it sees inflation reaching 2% well ahead of the end of its projection horizon and durably for the rest of the projection horizon,” the bank said. The meeting came against a backdrop of higher-than-expected inflation on the back of soaring energy and food prices.

THE BIG STORIES TODAY-

#1- Macro Group Pharma has priced its IPO at EGP 4.85 per share, according to a statement (pdf) out earlier today. The company’s final price announcement is at the lower end of the EGP 4.85-5.55 range on which sole global coordinator EFG Hermes had previously guided. Shareholders are offering up to 45.8% of the company for sale (c.264.5 mn shares) in the IPO, with the subscription to the retail offering set to close on Monday, 7 February.

The company expects its shares to begin trading on the EGX “on or around” next Thursday, 10 February, under the ticker MCRO.CA.

#2- Business activity contracts at a faster pace in January: Activity in Egypt’s non-oil private sector contracted for a 14th consecutive month in January, with data signaling a “solid and faster deterioration” last month, according to IHS Markit’s Purchasing Managers’ Index (PMI) survey (pdf). The decline was driven primarily by “weak demand” leading to lower new orders and output levels, which respondents linked to input inflation and supply chain snags. Our PMI reading fell to 47.9 in January — its lowest since April 2021 and below the 48.2 series average.

^^ We’ll have more on these stories and others in Sunday’s edition of EnterpriseAM.

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

  • 10 state IPOs this year? The Madbouly government wants to sell shares in up to ten state-owned companies on the EGX this year, Finance Minister Mohamed Maait said yesterday.
  • Multilateral lender Africa Finance Corporation is looking to partially bankroll our monorail and high-speed train projects with a USD 250 mn facility, CIO Sameh Shenouda said.
  • FRA loosens license requirements for credit rating agencies: The Financial Regulatory Authority has scrapped a requirement for credit rating agencies to be at least 10% owned by international firms in a move meant to increase the number of local credit-rating firms and boost our non-banking financial sector.

HAPPENING NOW- President Abdel Fattah El Sisi is heading to China to attend the Beijing Winter Olympics opening ceremony, which takes place tomorrow, according to an Ittihadiya statement. The trip will also see El Sisi sit down with Chinese President Xi Jinping to discuss bilateral relations as well as regional and international issues of mutual interest.

The Games kick off tomorrow against a backdrop of boycotts and lockdowns. A number of heads of states are boycotting the games over the country’s human rights record. Covid-19 has also been weighing on the games in more ways than one, including athletes forced to sit out after testing positive.

THE BIG STORY ABROAD- It’s a toss-up between the latest in Ukraine and Meta’s disappointing 4Q2021 financials. Neither story has advanced much since we last wrote to you this morning: The New York Times tries to decode Russian President Vladimir Putin’s thought process to guess whether his tactics are successful, while Reuters notes that Moscow is dispatching 30k troops to Belarus for “military exercises” after US President Joe Biden ordered nearly 3k troops to Poland and Romania. Meanwhile, the Wall Street Journal and the Financial Times are each looking at the market fallout from Facebook’s parent company’s weak earnings.

PSA #1- Need to renew your visa to Amreeka? The US is now allowing visa renewals for anybody whose visa has expired within the past 48 months (four years), with an option to request an interview waiver. US Ambassador Jonathan Cohen lays out all the steps in this video guide (watch, runtime: 2:37).

PSA #2- Today is the deadline to submit applications for the US Embassy’s Cultural Property Agreement Implementation initiative that would help Egypt protect cultural property from looting, theft, and illicit trafficking. The guidelines state that concept notes must be sent in today at the latest, while shortlisted applicants will need to submit full applications by 4 May. Each project will receive USD 50-100k, with around USD 500k earmarked for the entire program.

The US embassy is also inviting women to apply to join Fortune Global Women's Mentoring Program which will take place from 8-28 May 2022. The program aims to bring emerging women leaders from around the world to the US to meet and learn from the Fortune Most Powerful Women, which includes executives from Accenture, Johnson & Johnson, and Aetna. The deadline to apply for the program is next Tuesday, 8 February. You can begin your application by signing up here.

🗓 CIRCLE YOUR CALENDAR-

Key news triggers to keep your eye on in the first days of this new month:

  • Foreign reserves figures for January should be out from the Central Bank of Egypt within the next few days.
  • Inflation: Inflation figures for January will be released next Thursday, 10 February.

☀️ TOMORROW’S WEATHER- We might be in for some rain this weekend: Both Friday and Saturday have high chances of rain and daytime highs of 17°C, our favorite weather app tells us. The mercury will fall to 9-10°C at night.

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