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Thursday, 3 March 2022

THIS EVENING: Non-oil business activity contraction slows down despite inflation concerns + CBE issues updates to L/Cs FAQ sheet + 20k Ukrainian tourists stranded in Egypt

We’ve got a pretty hefty day of news to close out a very busy week, ladies and gentlemen. And while Ukraine continues to dominate headlines globally (more on that below), here at home, our tourism sector is beginning to feel the direct impact of the conflict…

Some 20,000 Ukrainian tourists are stranded in Egypt, with arrangements currently underway to fly them to Europe, Reuters reported, quoting Ukrainian embassy officials in Cairo. Most of the tourists are staying at three-star hotels at no charge at Red Sea resorts Sharm El Sheikh and Hurghada, while a few others are in Marsa Alam, embassy deputy chief Yevhen Zhupeyev said. The embassy is working with authorities in Egypt and tourism companies for returns to third countries in Europe, he said.


#1- Non-oil business activity contraction slows down despite inflation concerns: Egypt’s non-oil business activity continued to decline for the fifteenth consecutive month in February but at a slower pace than the previous month, according to IHS Markit’s purchasing managers’ index (PMI) survey (pdf). The gauge inched up to 48.1 in February from 47.9 in January but remained below the 50.0 mark that separates expansion from contraction. Putting a damper on the slowdown was inflation, with price pressures weighing on business confidence and consumer demand and spending. This drove output sentiment down to its weakest in the guage’s history, IHS Markit says.

#2- CBE issues updates to its L/Cs FAQ sheet: The central bank issued this morning updates (pdf) to its response to importers’ inquiries on its rules requiring them to get letters of credit (L/Cs) for their purchases. The updates appear to allow banks to transfer down payments for imported goods to foreign sellers while the importer awaits their L/Cs. The updates also clarify rules regarding buying and transacting from freezones and special economic zones.

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

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

  • Diplo settings on neutral: Egypt was among 141 nations who called for a Russian withdrawal from Ukraine at a UN General Assembly meeting yesterday, but released a statement rejecting some forms of economic sanctions.
  • Gulf Capital knows how to make an entrance: UAE’s Gulf Capital plans to invest some USD 250 mn in Egypt over the next five years, targeting companies in the tech, fintech, e-commerce and healthcare sectors.
  • Homzmart ups its design game: Homzmart has acquired Berlin-based MockUp Studio, a tech-enabled interior design startup, for an undisclosed sum as the Egyptian company aims to add core technology to its business.

THE BIG STORY ABROAD- Day 8 of the Russian invasion of Ukraine sees the conflict shift to the key Ukrainian port city Mariupol after Russian forces seized the southern city of Khreston yesterday amid a slow progress to Kyiv. Shelling against Mariupol stretched overnight in what the city’s deputy mayor told BBC was "near to a humanitarian catastrophe". The city located on the Azov Sea coast might see more attacks, as pro-Russian forces said “targeted strikes'' were possible, Russian Interfax news agency reported, quoting Donetsk separatist commander Eduard Basurin.

Next stop for the Russians appears to be Odessa: Russia was sending four amphibious assault ships to land troops near the Southern port city of Odessa, Ukraine’s military headquarters said on Thursday, according to Bloomberg.

Meanwhile, a large Russian military convoy advancing on capital Kyiv appears to still be stalled, the British defense ministry said in an intelligence update, adding that the column “has made little discernible progress in over three days” as it remains over 30km from the center of the city. It credits Ukrainian resistance for slowing it down.

THE CASUALTIES- At least 34 citizens were killed and 285 injured in eastern Kharkiv in the past 24 hours, Ukraine’s emergency services said in a statement on Facebook. Officials have put its civilian death toll at around 2k yesterday since the beginning of the invasion. The UN Human rights office confirms a death toll of 227 and injuries of 525 since the start of the crisis, yet acknowledging that the the “real toll is higher”

More people are fleeing Ukraine, with the tally topping 1 mn since the beginning of the invasion, the UN High Commissioner for Refugees Filippo Grandi said, according to a press release by the UN Refugee Agency.

On military casualties, Ukrainian President Volodymyr Zelensky said in a video address (watch, runtime: 1:41) on Thursday that 9,000 Russian soldiers were killed as he warned them that “wherever they go, they will be destroyed”. The same number is reported too by the Ukrainian General Staff of the Armed Forces in a statement on Facebook. But Russia downplays the casualties, despite acknowledging losses for the first time with 498 of its paratroopers killed and around 1.6k injured since the start of the war. Moscow claims it killed 2.9k Ukrainian soldiers, with Ukraine remaining tight-lipped on its military casualties.

ON THE DIPLO FRONT- Russia remains defiant: Russia will continue with the operation until “the end,” Russian foreign minister Sergei Lavrov said, according to Reuters, accusing the West of preparing for war against his country. Lavrov compared the US to Hitler and Napoleon, accusing the US of “trying to impose their own view of the future of Europe on us”, Sky News reported.

Lavrov downplays nuclear fears: He further lashed on statements by US President Joe Biden and British foreign minister Liz Truss, who he said echoed statements on nuclear war, which “are not in the heads of Russians” despite President Vladimir Putin ordering nuclear deterrence forces on high alert.

…And sees a path for diplomacy: Lavrov also said that there was no doubt that a solution of the crisis would be found, saying that a second round of talks were to begin between his country and Ukrainian officials, without specifying a time.

Meanwhile, Georgia and Moldova joined Ukraine in pressing for European Union membership, Reuters reported, quoting an EU official that said that the bloc is set to receive membership applications from the two countries. The applications were due “imminently”, the official said.

Moscow was slapped by more sanctions from the UK, which announced in a press release that Russian aviation and space industry firms will be barred from access with any UK-based insurance services. The additional sanctions “will limit the benefits Russian entities receive from their access to the global insurance and reinsurance market,” the government said.

THE MARKETS- Russian stocks will be cut from emerging markets indexes, with the MSCI and FTSE Russell removing Russians stocks from widely-tracked emerging markets indexes effective March 9. The MSCI ruled that the Russian equity market was currently “uninvestable and that Russian securities should be removed from the MSCI Emerging Markets Indexes”, according to a press release. FTSE Russell will remove Russia constituents listed on the Moscow Exchange at a zero value on March 7, Bloomberg reported. Meanwhile, the London Stock Exchange (LSE) suspended trading in 28 depositary receipts for Russian companies, the stock exchange’s CEO David Schwimmer told Bloomberg Television on Thursday.

Oil prices continued to surge as Russia sanctions bite, with Brent crude futures rising 2.3% to USD 115.5/bbl as of dispatch. This comes after prices jumped over 5% towards USD 120/bbl earlier in the day, Reuters reports. The price is up nearly 20% over the week, while U.S. West Texas Intermediate crude soared to a high of USD 116.57, the highest since September 2008.

Commodities are on course for their biggest jump over the Russian-Ukrainian crisis since the mid-1970s, Bloomberg reported, with its gauge of raw materials, which have so far escaped Western sanctions, growing 8.6% as of Wednesday.


Contemporary art and culture center Darb1718 is hosting its 3031 Art Festival from tomorrow until next Saturday, 12 March on its premises in Fustat, Old Cairo. Unique collections of multidisciplinary art will be on display along with live music, dance, theater performances, and interactive workshops. Guest speakers Adsum Art Consultancy will be on hand to discuss investing in art. Catch a full day of activities from 1:00pm–9:30pm on weekends and weekdays from 4:00pm–10:00pm


Key news triggers to keep your eye on over the next few weeks:

  • Foreign reserves: February’s foreign reserves figures will most likely be announced today or next week.
  • Inflation: Inflation figures for February will be released a week from today, on Thursday, 10 March.
  • Interest rates: The Central Bank of Egypt (CBE) will hold its next monetary policy meeting on Thursday, 24 March.

The Diarna Handicrafts Fair kicked off last Thursday and runs through 7 March at Cairo Festival City from 10am until 10pm daily.

PodFest Cairo kicks off on Saturday at AUC’s Tahrir campus. The half-day podcasting conference runs from 2pm to 6pm. Admission is without charge and there’s no need to register, but you’ll need to show proof of vaccination.

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

☀️ TOMORROW’S WEATHER- Friday will be a bit more of the same, with a daytime high of 20°C and nighttime low of 10°C, our favorite weather app tells us. Saturday will be warmer as the mercury rises to 24°C during the day and drops to 15°C at night.

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