THIS MORNING: New CBE chief to meet senior bankers today + High inflation across the world could be with us to stay
Good morning, everyone, and happy Wednesday. We bring you a busy issue this morning with no single theme running through it — and far more good news than bad. Not a bad way to start looking toward the weekend…
WATCH THIS SPACE- CBE Governor Hassan Abdalla will reportedly meet with senior bankers today, his first such meeting since being appointed acting chief last week. Abdalla, a veteran banker and former chief of AAIB, was tapped last Thursday to run the bank after Tarek Amer stepped down unexpectedly the day before.
The two-day regional summit in New Alamein came to an end yesterday: We’re not going to pretend we know much about what was discussed, given the lack of public messaging post-meeting. We have (a bit) more in Last Night’s Talk Shows, below.
The second Egypt- and UN-led regional climate roundtable takes place in Bangkok tomorrow: The one-day event will see climate negotiators from the Asia-Pacific region discuss climate finance with private- and public-sector stakeholders ahead of the COP27 summit in November. This is the second of five regional roundtables being organized by Egypt and the UN. The first took place in Ethiopia last month.
The big central bank meet at Jackson Hole starts tomorrow: Fed chairman Jerome Powell will deliver a speech on Friday and investors will be keeping a close eye for hints about how far the central bank could raise rates when it next meets in September.
WATCH THIS SPACE-
EGP WATCH- The EGP slipped another 0.1% to 19.22 against the USD yesterday, leaving it down 21.8% since the devaluation in March. The currency has edged closer to record lows against the greenback this month as speculation increases that policymakers could choose to further devalue the currency. Tarek Amer’s sudden resignation added to the uncertainty in the markets, which are currently pricing in another 22% decline over the next year.
FOOD SECURITY- Ukrainian grain exports could reach two-thirds of their pre-war levels in August: The UN-brokered safe corridor to export grain through Ukraine’s Black Sea ports could boost the country’s agricultural exports to 4 mn tons in August, up from 3 mn tons in July — though still short of the 6 mn tons it was shipping abroad before Russia’s invasion, Reuters reports, citing a Ukrainian agricultural official. The partial return of Ukrainian grain to the markets this month has helped loosen tight global commodities markets, easing inflationary pressures and assuaging some of the concern over brewing grain shortages across Africa and the Middle East. Ukraine and Russia accounted for the vast majority of grain exports to Egypt prior to Moscow’s invasion.
Our wheat stocks seem to be rising — and we’re buying direct from Russia. The state had a six-month strategic reserve of wheat on hand in June, a figure that earlier this month had risen to 7.2 months. We have reportedly added an order for 240k tons of Russian wheat this past Monday outside the usual tender system (more on that in the news well, below).
PSA #1- Only e-invoices will be accepted as proof companies have paid VAT on goods and services starting in April 2023, according to a FinMin statement out yesterday. All businesses will have joined the system by December this year, paving the way for the Tax Authority to fully phase out use of paper invoices, according to the statement.
What e-invoicing system? The government is working to digitize all B2B and B2C invoices, a move designed to give the government greater oversight over tax and reduce the size of the informal economy. The Tax Authority launched a pilot in late 2020 and has been gradually extending the system since then. All B2B and B2C invoices across the country are expected to be fully automated by December.
THE BIG STORY ABROAD-
This is exactly what Twitter didn’t want to happen as it prepares for its court showdown with Elon Musk: Twitter made headlines yesterday after its former security chief accused it of lying about its security problems and failing to protect user data. The whistleblower is the service’s former chief of security (and prominent hacker), Peiter Zatko. He filed an 84-page complaint detailing the company’s issues with privacy, digital and physical security, content moderation and bots — one of the key question marks raised by Tesla CEO Elon Musk before he tried to walk back from his USD 44 bn bid to take over the company. Twitter CEO Parag Agrawal responded to the accusations in an email to employees, saying that it is a “false narrative that is riddled with inconsistencies and inaccuracies.” The story is everywhere from Reuters and Bloomberg to the Wall Street Journal, CNN, the BBC and beyond.
Also everywhere in the business press: The passing of famed b’naire hedge fund manager Julian Robertson at age 90 due to heart complications. The American investor was known for his years at the helm of Tiger Management, which was ranked among the world’s top hedge funds before it closed in 2000. He is also remembered by his legacy “Tiger Cubs” — a string of prominent hedge fund managers who had earlier worked under his leadership. (Reuters | Financial Times | CNN | Bloomberg | CNBC)
Are Facebook developers building the Metaverse on Windows 95? USD 10 bn spent and all it took was a selfie for some to start writing off Mark Zuckerberg’s Metaverse pivot. The consensus among the tech Twitterati: Metaverse graphics make the 20-year-old Second Life look cutting edge. Cue memes.
THE LONG VIEW-
Is the era of low inflation well and truly behind us? Big-time bond investors think high inflation is here to stay no matter what central banks do as globalization goes into reverse, Bloomberg writes. Rising interest rates around the world will help put a ceiling over soaring inflation rates but widening geopolitical fault lines, weakening global supply chains and rising wages will put the good old days of 2% inflation out of reach, they tell the business newswire. “The last 20 years of the great moderation — that’s fully behind us now,” said an economist at Pimco, one of the world’s biggest bond traders.
This means that the Fed could be raising rates for longer than the markets expect: “The view in the market that central banks will be in a position to cut rates in a number of countries will be challenged in due course,” said Ivailo Vesselinov, chief strategist at Emso Asset Management.
CIRCLE YOUR CALENDAR-
B Investments has just under a week to respond to Adnoc’s bid for TotalEnergies Egypt: Private equity outfit B Investments has until next Monday, 29 August, to decide whether or not it wants to preempt Adnoc Distribution’s bid to acquire 50% of TotalEnergies Egypt. Adnoc agreed last month to buy the stake in a USD 203 mn transaction, which would see it acquire the entirety of B Investments’ c.15.4% stake in the fuel distributor and a 34.6% stake from Total Energies Marketing Afrique.
PSA #2– Climate tech entrepreneurs have one month to apply to the global ClimaTech Run competition: Tech startups that address climate and environmental issues have until 22 September to apply for the competition, which offers startups a top award of USD 100k and the chance to present their product at COP27, according to a cabinet statement. The competition is hosted by USAID-backed Business Egypt and backed by the international cooperation, environment and communication ministries.
PSA #3– Your deadline to catch a 65% break off late payment fines for your taxes is coming up on 31 August. The waiver applies to late payment fees for customs tariffs, income, real estate, and sales taxes, VAT, and stamp duties among others. The remaining 35% of your due payments will need to be paid before next March.
Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.
*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.
In today’s issue: As Egypt looks to capitalize on and regulate a burgeoning yacht tourism industry in the country, the Madbouly government greenlit the regulations managing yacht activity in domestic ports earlier this month. These regulations, coupled with a digitization push and our already-favorable geographic positioning, could help bring in a steady source of FX income by positioning Egypt as a global yacht tourism destination.