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Thursday, 4 August 2022

THIS MORNING: UN publishes COP27 schedule + OPEC just agreed to the least significant supply hike ever

Good morning, wonderful people. Once again we’ve made it through the workweek together. It’s been a busy one, for those of you tuning in from Sahel at week’s end, with plenty of M&A, policy and investment news — and this morning is no exception.

COUNTDOWN TO COP27- We now have a schedule for COP27, courtesy of the UN, which has released a basic itinerary for the 11-day gathering. The conference will kick off on 7 November in Sharm El Sheikh with a two-day summit of world leaders, which will be followed by nine days of discussions on decarbonization, climate finance, adaptation strategies and others.

COP27 now has an official Facebook page: The Foreign Ministry announced the launch of the official Facebook page for the summit yesterday. Check it out here.

And speaking of climate: It’s the final day of the Egypt- and UN-led regional climate roundtable in Addis Ababa, Ethiopia: The event — the first of five regional roundtables being held around the world ahead of COP27 in November — brings together African climate negotiators and global officials to discuss climate finance for three days in the Ethiopian capital. COP27 President Sameh Shoukry, Mark Carney (UN climate envoy and co-chair of the Glasgow Financial Alliance for Net Zero) and UN Deputy Secretary-General Amina Mohamed are among those in attendance.

HAPPENING TODAY-

EGP WATCH- The EGP has continued its slide against the greenback this week. The currency has fallen more than 0.8% during the past four days, closing at 19.15 yesterday from 18.98 and edging closer to the record of 19.54 low set in December 2016. The EGP has now fallen more than 21% against the greenback since March, when the central bank devalued the currency in response to rising external pressures fuelled by the war in Ukraine.

The Madbouly government’s public consultations on its state ownership policy continue today, with experts and think tanks weighing in on the manufacturing sector. Every Sunday, Tuesday, and Thursday see workshops on how privatization plans will affect specific industries. You can find more details on the schedule of the meetings here.


WEEKEND MUST READ- The Financial Times takes a deep dive into the chill that has come over venture capital in recent months. Regular readers will know that we’ve had a keen eye on the global slowdown in VC funding, as some startups in need of capital — including local names — face down rounds, while others look to tighten their belts. Some USD 330 bn of private capital flowed into American tech start-ups last year — double the figure recorded in 2021, which is itself double 2020’s sum. Now, the signs are that the bubble has burst and the days of easy VC money may be over as economic conditions turn hostile. For the salmon-colored paper, it all adds up to a “silent crash” that could spell the end of the boom years — possibly for good.

Reset your expectations: We’ll probably see more major devaluations along the lines of the one seen by Klarna before the VC world comes to terms with a new reality — one where earnings matter more than growth and there aren’t suitcases of bills to throw at risky innovation. “There’s no question, growth at any price is gone for the next few years,” the head of New York VC B Capital tells the FT.

SIGNS OF THE TIMES-

#1- What goes up… The layoffs sweeping the US tech sector have come to stock-trading app Robinhood, which rode the wave of frenzied retail trading in 2021 to become a household financial name. In a blog post Tuesday, CEO Vlad Tenev said the company would slash its headcount by nearly a quarter in response to “reduced customer trading activity.” The company’s share price has fallen 50% this year and it reported a 44% y-o-y drop in revenues in 2Q 2022, as rising interest rates deflate pandemic-era bubble assets such as tech stocks and crypto.

#2-The US’ latest move to hamper China’s semiconductor industry could blow up in its face: The US is reportedly considering imposing restrictions on exports of chip-making equipment to China as it tries to retain its technological supremacy in the critical semiconductor industry, Reuters reports. Unfortunately, a ban isn’t going to pass without inflicting collateral damage on US firms, some industry watchers say, claiming the curbs would be a blow to big manufacturers including Samsung and SK Hyinx, causing further disruption to supply chains and making it harder for the US’ biggest tech companies to get their hands on crucial chips.

THE BIG STORY ABROAD-

There’s single story dominating the narrative in the global press this morning: The US press is focused on the abortion vote in Kansas yesterday, which saw lawmakers in the conservative state back a measure to protect abortion rights in the wake of the Supreme Court’s decision to overturn Roe v Wade. (AP | NYT | Washington Post)

OPEC+’s paltry supply hike yesterday is a topic of conversation: The alliance of oil producers agreed yesterday to increase output by 100k barrels a day in what is one of the smallest production increases in OPEC’s 62-year history.

Putting this into perspective: This amounts to 1/1000th of global demand — the world consumes this quantity of oil every 86 seconds. As such, it will make little difference to oil prices, which have refused to fall significantly below USD 100 a barrel since Russia invaded Ukraine in February.

“That is so little as to be meaningless. From a physical standpoint it is a marginal blip. As a political gesture it is almost insulting,” one analyst said, in reference to US President Joe Biden’s appeal to the Saudis last month to increase production. Reuters and Bloomberg have more.

Also in the business press: The Financial Times reports that SoftBank has raised USD 22 bn by selling down its stake in Alibaba as the great 2022 tech sell-off forces it into damage limitation mode. Meanwhile, the Wall Street Journal says that Walmart is preparing to shed hundreds of corporate jobs, a week after it issued a bleak outlook for the rest of the year as inflation hits consumer demand.

CLOSER TO HOME- Ukraine’s first grain shipment has been cleared to exit the Black Sea. The first Ukrainian grain shipment to make it through a newly-agreed corridor through the Black Sea has passed inspection by Russian, Ukrainian, Turkish, and UN officials and will continue on its journey to Lebanon, the UN said in a statement yesterday. The ship, which departed from the Ukrainian port of Odesa this week, is carrying some 26k tons of Ukrainian grain and should pave the way for more shipments to follow. Ukrainian President Volodymyr Zelenskiy downplayed the importance of the shipment, saying that only time will tell if more grain shipments will follow.


CIRCLE YOUR CALENDAR-

We’re on the lookout for a number of key macro figures this week and next:

  • Foreign reserves figures for July are expected between today and early next week;
  • Inflation data for July will land on Wednesday, 10 August.

The Central Bank of Egypt will meet to discuss interest rates on Thursday, 18 August.

The 19-member board of trustees of the National Dialogue will hold its next meeting on 27 August, where it will choose the rapporteurs for all of the committees and subcommittees of the social, political and economic tracks, and prepare the agenda and topics of discussion for the dialogue.

PSA- Startups have until Wednesday, 31 August to apply for the fall 2022 cycle of EGBank’s Mint Incubator. The incubator, backed by Cairo Angels, offers a three-month program for startups with existing products. Startups can apply for the program here.

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

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