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Wednesday, 20 July 2022

“Dire level” of pessimism among US fund managers as economic concerns rise

Funds are worried about where stocks are headed + pile into cash: Stock allocations among heavyweight investors are at the lowest level since the Lehman collapse in 2008 as funds pile into cash on rising fears of recession, the Financial Times writes. Fund managers this month cut their net overweight position in equities to the lowest level since October 2008 and raised cash holdings to a 21-year high, according to a Bank of America survey of 259 fund managers. The bank’s bearish chief investment strategist, Michael Hartnett, spoke of a “dire level” of pessimism about the direction of the market as rising interest rates put pressure on economies around the world.

With broad expectations that corporate earnings will fall going forward, the outlook for equities stinks: 79% of respondents told BofA that they see corporate profits falling. “We are going to see big downgrades to earnings forecasts and there is no monetary policy support to help markets, so it is difficult to be optimistic,” Luca Paolini, chief strategist at Pictet Asset Management, told the Financial Times.

EARNINGS- Yesterday was a good day, at least: A host of companies yesterday reported results that beat forecasts, causing the benchmark S&P 500 index to have its best day in almost a month, jumping 2.8% during trading, Reuters reports. Halliburton and toymaker Hasbro both reported larger-than-expected profits. Johnson & Johnson and IBM also beat revenue expectations but saw their share prices fall after warning that the red-hot USD will hit full-year profits. Netflix, which reported its results after the closing bell, rose more than 7% in after-hours trading after its subscribers fell less than anticipated in 2Q.

Is the pandemic-fuelled housing boom on the turn? A higher interest rate environment globally, coupled with the looming threat of recession, could put an end to two years of a sellers’ market in developed economies when it comes to housing, the Financial Times reports. There are signs that house-buying activity in major economies including the US, UK, and Canada is slowing, with analysts predicting price falls in scores of countries. Closer to home, housing price growth slowed in Dubai in June, according to ValuStrat.

Let’s not get ahead of ourselves — this is no repeat of the 2008 crash (yet). Most market-watchers aren’t worried about seeing a housing crash on the scale of the subprime mortgage crisis more than a decade ago. But if central banks do tip the rate-sensitive housing market into a steeper decline, it will cause knockon effects in construction and commodities sectors and could deepen any recession, they tell the Wall Street Journal.

Dedollarizing Russian oil: Turkey and India could both ditch the USD to pay for Russian oil, Bloomberg and Reuters report. Moscow is reportedly asking India to make payment in AED as it looks to minimize the impact of Western sanctions, while Turkey is considering moving to other currencies to bolster its dwindling foreign reserves.

Pan-African venture fund reaches EUR 110 mn first close: Africa-focused private equity firm AfricInvest and venture capital firm Cathay Innovation have completed the final close of their Cathay AfricInvest Innovation Fund (CAIF) at EUR 110 mn, the firms said in a statement (pdf) yesterday. CAIF will offer ticket sizes of EUR 1-10 mn for growth stage startups, and} up to EUR 1 mn for select seed-stage firms across sectors including fintech, healthtech, edtech, AI, and agtech.




+1.9% (YTD: -24.4%)



Buy 18.88

Sell 18.96



Buy 18.90

Sell 18.96


Interest rates CBE

11.25% deposit

12.25% lending




+1.8% (YTD: +4.3%)




+0.5% (YTD: +9.7%)




+0.5% (YTD: -0.3%)


S&P 500


+2.8% (YTD: -17.4%)


FTSE 100


+1.0% (YTD: -1.2%)


Euro Stoxx 50


+2.2% (YTD: -16.5%)


Brent crude

USD 107.27



Natural gas (Nymex)

USD 7.26




USD 1,710.70




USD 23,660

+9.3% (YTD: -49.5%)


The EGX30 rose 1.9% at today’s close on turnover of EGP 1.2 bn (31.7% above the 90-day average). Local investors were net buyers. The index is down 24.4% YTD.

In the green: CIRA (+10.3%), Orascom Development Egypt (+4.8%) and GB Auto (+4.4%).

In the red: Cleopatra Hospitals (-5.1%), Madinet Nasr Housing (-3.5%) and Sidi Kerir Petrochemicals (-1.0%).

Asian markets are uniformly in the green this morning on the back of yesterday’s Wall Street rally and China’s decision to leave its benchmark lending rate unchanged. Futures suggest shares in Europe, the US and Canada are all set to open in the green at the start of trading later today.

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.

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