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Thursday, 18 August 2022

THIS MORNING: What will happen at today’s Monetary Policy Committee meeting now that Amer has resigned?

Good morning wonderful people, and welcome to a fantastic Thursday morning dominated by one big story: Who will be the next governor of the Central Bank of Egypt?

Whoever it is, the odds are good we’re going to be in safe hands: Egypt has a very deep bench of talented bankers and economists who are well known to the global financial community and to international financial institutions. Investors, the IMF — you name it — are regular visitors to Egypt and have had extensive face time with every one of the leading candidates to be our next governor.

We have a full rundown on the leading candidates, how they might be appointed (given the House is in recess) and some of the issues they’ll be tackling in this morning’s news well, below.

The immediate question: What does this mean for today’s policy meeting? Before yesterday, the consensus was that the Monetary Policy Committee (MPC) would go for a rate hike. Six of eight analysts and economists we talked to were expecting rates to rise, with four forecasting a 100-bps increase. A Reuters poll similarly called a hike, with the median average prediction among 15 respondents being 50 bps.

But Amer’s departure could mean that all bets are off: Several analysts have torn up their predictions in the wake of Amer’s resignation and are now expecting the MPC to keep things on an even keel. EFG Hermes chief economist Mohamed Abu Basha and Naeem Brokerage’s head of research Allen Sandeep do not expect the central bank to make any policy changes in light of the developments, with Sandeep expecting rates to remain as they are until Amer’s successor is in place.

The MPC will likely stay on schedule with today’s interest rate meeting, Fakhry Elfiky, an economist and head of the House of Representatives’ Planning and Budget Committee, told Salet El Tahrir (watch, runtime: 3:50). “Any interest rate hike – such as a 100 bps hike — will impact the public debt ratio, adding about EGP 28 bn to the budget deficit,” Elfiky said.

Who sits on the MPC? The committee is chaired by the central bank governor. Other members, according to the CBE’s website, include deputy governors Gamal Negm (a candidate for the top job) and Rami Abulnaga, as well as Mohamed Omran (former head of the Financial Regulatory Authority), Ashraf Elaraby (an economist and former cabinet minister), and Naglaa El Ahwany (a former international cooperation minister).

WHAT’S HAPPENING TODAY-

Subscription for Expedition Investment’s bid for a chunk of Domty kicks off today. Shareholders in cheesemaker Domty have until Wednesday, 14 September to sell their shares to Expedition Investments, which has offered to acquire 34% of the company for EGP 5 per share. We have the details in this morning’s news well, below.

The Madbouly government will hold another round of consultations on its privatization strategy: Mining companies will voice their thoughts on the state ownership document in a meeting with government officials today. 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.

FELLOW iSHEEP, WATCH THIS SPACE- Apple plans to unveil itsiPhone 14 at a launch event on 7 September, Bloomberg reports, citing people it says have knowledge of the matter.

Keep an eye out in September for key software updates coming to all your Apple gadgets. New updates are coming to iPhones, Apple watches and Macbooks in September. iPadOS 16, which is quite awesome after the most recent public beta, should be out in October alongside the latest iteration of macOS.

THE BIG STORY ABROAD-

That inflation positivity that’s stoking the markets? The Fed doesn’t see it: Federal Reserve policymakers agreed that there was “little evidence” that inflation is softening and it will likely remain “uncomfortably high for some time,” according to minutes (pdf) from last month’s policy meeting published yesterday. Recent signs of peaking inflation has fuelled a large market rally and raised expectations that the Fed could start slowing the pace of the tightening cycle.

But could it actually dial back the pace rate of hikes next month? The minutes do not explicitly signal the Fed will hike below 75 bps at its upcoming meetings, though officials agreed that slowing them down would be necessary “at some point.”

Market reax: US stocks rose after the minutes were published but ended the day in the red, weighed down by disappointing earnings (pdf) from Target. The Dow slipped 0.7% while the S&P 500 fell 0.5%. (Reuters | FT | Bloomberg | WSJ | CNBC)

CIRCLE YOUR CALENDAR-

The 32 EGX-listed companies that failed to meet the 2Q earnings deadline this week have until the end of the month to submit their financials to the bourse, a statement by the EGX read. Authorities have given companies another 15 days from the original deadline on 15 August, putting the new date at 30 August.

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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