THIS MORNING: Did war just break out in Ukraine?
Good morning, friends, and welcome to THURSDAY. It’s a nail-biter of a finish to the week on a morning that we’d otherwise consider a “slow news day” — were it not for the incessant beat of war drums in the air.
With the US now claiming that Russia will invade Ukraine “before dawn,” Egypt’s cabinet is drawing up a Plan B for wheat + tourism. Ministers are working to develop alternate inbound tourism markets to cushion the impact on our resurgent tourism industry should tensions escalate further, Cabinet said at a meeting held to chew over the economic impact on Egypt of the crisis. We’re also going to be looking at ways to further diversify our wheat imports. The cabinet readout further nodded at the fact that escalating tensions could help drive up energy prices in an already-inflationary world environment.
Why we’re worried: Ukraine and Russia are our friends — they’re our two largest suppliers of wheat and two of our biggest tourism markets. Against a backdrop of rising tensions, state grain buyer GASC has already pivoted slightly away from Ukraine, locking in its latest shipment of wheat from Romania despite Ukrainian suppliers offering a better price.
No longer waiting for Godot? Just minutes before we press “send” on this morning’s issue, the international press is picking up reports from Russian media that President Vladimir Putin has just authorized a “special military operation” in Ukraine’s eastern Donbass region. Putin is quoted as saying he couldn’t tolerate Ukrainian “threats” and warning against third countries getting involved.
The Kremlin had sparked fears tanks could roll at any time when it said yesterday that pro-Russian separatists in two breakaway regions of eastern Ukraine had called on Russia for military backing. Explosions were heard in the separatist stronghold of Donetsk hours after the Kremlin’s announcement, while Russian tanks were seen rolling eastwards toward the city, a witness told Reuters. Kyiv, meanwhile, has pivoted to a war footing, declaring a state of emergency. Putin earlier this week gained legislative approval for a military deployment abroad and formally recognised the separatist blocs as “people’s republics.”
Overnight, the US said it believes Russia would invade Ukraine within hours. US Secretary of State Anthony J. Blinken has said he expects a Russian attack on Ukraine before dawn. The Pentagon’s top official said Russian troops were in combat position and “ready to go.”
As of dispatch time, tanks were not rolling, but we’d suggest you head over to your international news outlet of choice throughout the day to see what’s up. Pundits in our socials (including some folks who are genuine experts on Russia, not rebadged covid experts) believe Putin will stop short of ordering troops to move past the Donbas — for now.
The Associated Press, Reuters, Financial Times, Bloomberg, New York Times, and the Wall Street Journal all have the latest on the rapidly developing situation.
The UN Security Council called an emergency overnight meeting at Ukraine’s request to work on a draft resolution condemning Russia’s actions — but it will almost certainly be voted down, Reuters reports: As one of the five permanent members of the council, Russia has veto power.
US equities extended their fall yesterday as the US and other countries expanded sanctions on Russia, Bloomberg reports. The EGX30 was flat yesterday in exceptionally light trading.
Brent crude has broken the USD 98 barrier, gaining 1.4% after a day in which it had settled flat (just below USD 97) on news the US would not likely seek to sanction Russian energy suppliers.
Major Asia-Pacific benchmarks are all in the red this morning, with selling hitting the Kospi and Australian Securities Exchange particularly hard.
Future suggest the selloff will extend to all major European markets and to Wall Street at the opening bell later today.
Wheat continued its turbo-charged rally: Chicago wheat futures climbed as much as 4.2% during trading to hit a decade-high, and backwardation — when spot prices exceed futures prices, signaling scarcity — was at its most pronounced in at least 15 years.
PSA- Our favourite weather app suggests we’re in for a cooler weekend after the mercury hit 26°C in the capital city yesterday. Look for a high of 18°C today with a chance of a brief shower in the afternoon. The mercury looks set to hit 18°C tomorrow and 19°C on Saturday.
We’re inching closer to local EV production: The government is set to sign two MoUs with two partners, one from China and the second from Germany, to locally produce electric cars in El Nasr Auto’s factory “within the coming days,” Public Enterprises Minister Hisham Tawfik told Al Borsa. This comes after negotiations with Chinese auto firm Dongfeng to locally assemble its E70 cars collapsed in November.
Coming soon: More funding from the EU? The EU is lining up to provide Egypt another EUR 1 bn in grants and loans from entities including the European Investment Bank and the European Bank for Reconstruction and Development, Al Borsa quotes EU ambassador to Egypt Christian Berger as saying yesterday, without providing further information. We’ll be keeping an eye out for more details.
CIRCLE YOUR CALENDAR-
ARE YOU BUILDING A FINTECH STARTUP? You might want to apply for Visa’s global startup competition, the Visa Everywhere Initiative, the payments firm said in a statement (pdf) yesterday. In collaboration with the Central Bank of Egypt’s new Fintech Egypt project, the local contest will see Egyptian fintech players go head-to-head for a monetary award and the chance to advance to the regional and global finals. On offer: EGP 500k for the first-place finisher and a place in the Central and Eastern Europe, Middle East and Africa (CEMEA) regional finals in June.
What you need to know: A full breakdown on the entry criteria, the application process, and the schedule is available online here. The deadline for applications in Egypt is 20 March.
Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.