Good morning, friends, and welcome to 4Q 2022. We have a blockbuster issue for you this morning, so let’s jump straight in:

THE BIG STORY here at home this morning- The House is back in session, and they plan to keep us all busy. MPs are back from summer vacation, having kickstarted the new legislative session yesterday. We have a preview in this morning’s news well of what’s going to keep us all on our toes for the next nine months

Already passed: Lawmakers yesterday extended for another six months exceptional security measures in parts of the Sinai peninsula that have been in effect since 2013.

PSA #1- Your commute is about to get a lot worse: Public schools and universities began the 2022-2023 academic year on Saturday. Y’all will want to leave the house a little earlier this morning than you have been.

PSA #2- Winter retail hours are in effect: Shops will now close an hour earlier at 10pm (11pm on Thursdays, Fridays and national holidays) after winter trading hours came into effect on Friday. Cafes and restaurants will close midnight rather than 1am. The government first introduced seasonal retail opening hours in 2020.

PSA #3- All businesses in Sharm El Sheikh will be required to issue e-receipts for B2C transactions as of 1 November, the Tax Authority said Friday. The pilot for the system was launched in April for some 100 businesses. All B2B and B2C invoices across the country are expected to be fully automated by December.

IMAGE OF THE DAY- Ever wonder what bores the tunnels through which the Metro glides? Tap or click here to check out Hassan Allam Holding’s 6.7-m Mixshield tunneling boring machine. Built by Herrenknecht, the machine is being deployed on Cairo Metro’s fourth line.

UPCOMING NEWS TRIGGERS- Here are some data points and news triggers to be on the lookout for in this month of pumpkin spice and all things nice:

• PMI: We’ll know how Egypt’s private sector fared in September when S&P Global drops its latest PMI release this Tuesday, 4 October. The downturn in activity looked to be easing in August when businesses told the survey that demand and output were rising on the back of slowing inflation.
• Foreign reserves: The Central Bank of Egypt (CBE) should be out with September’s foreign reserves figures later this week. Reserves remained flat at around USD 33.1 bn in August, having fallen 20% since March due to headwinds caused by the war in Ukraine and tightening financial conditions.
• Inflation to notch new highs? Analysts are expecting inflation to have continued rising in September due to the weakening EGP after reaching highs not seen since November 2018 in August. We’ll find out when Capmas and the CBE release the figures next week.

Expect another downbeat forecast for the global economy when the IMF releases its latest World Economic Outlook on Wednesday ahead of the IMF and World Bank annual meetings next week (10-16 October). Expect to hear more from the IMF’s Kristalina Georgieva, the World Bank’s David Malpass, and co this week in the lead-up to the release.

The Central Bank of Egypt does NOT meet in October to review interest rates. The next monetary policy committee meeting is slated for 3 November.

Eight Austrian water companies are here this week: Headed by Austria’s ambassador to Egypt and the VP of the Austrian Chamber of Commerce, a delegation will meet with government officials and local business leaders on 3-5 October to discuss investment in Egypt’s water, wastewater and desalination projects, the Austrian embassy in Cairo said (pdf) over the weekend.

THE BIG STORY ABROAD-

The UK economy only narrowly avoided a ‘Lehman moment’ in the wake of British PM’s disastrous ‘fiscal event’: Still among the biggest stories in the financial press is the fallout of the chaos unleashed in markets by new British PM Liz Truss and her ostensible numbers man, Kwasi Kwarteng, last week. Market watchers told the Financial Times that the country’s bond markets came perilously close to collapse before the Bank of England stepped in with an emergency bond-buying program on Wednesday. Markets reacted with panic after Truss and Kwarteng plunged them into uncertainty by announcing an unbudgeted cut to the top tax rate at the same time as expanded government spending, in a move that was denounced across the political spectrum and overseas — including by the IMF.

Bye bye, Bolsanaro? Polls suggest former Brazilian president and veteran of the left Luiz Inacio Lula da Silva — known as Lula — could storm to a first-round victory in the country’s elections today. A comeback for Lula and his Workers’ Party would upend the Brazilian political scene, which in recent years has been dominated by the right-wing populism of incumbent President Jair Bolsanaro, Reuters reports. If no clear victor emerges among the 11 presidential candidates today, voting will go to a second round run-off between the top two contenders at the end of the month.

ICYMI- Russia annexes Ukrainian land + Kyiv makes bid for Nato membership: Russian President Vladimir Putin on Friday signed treaties to formally annex four provinces in Ukraine following a series of referendums denounced by Western nations as illegal and staged, according to the Associated Press. Kyiv formally applied for fast-tracked Nato membership in response to the seizure of its territory, a move which is yet to gain vocal support by the military alliance or its members, Politico reports.

THE BIG ENERGY STORY of the morning-

Italy is the latest victim of Russia’s energy politics after state-owned Gazprom suspended gas supplies to Italy citing a “regulatory issue in Austria,” Bloomberg wrote. Italy sourced about three-quarters of its imported gas from Russia last year and is now scrambling, like most European nations, to lock in new supplies.

All of north Africa wants to get in on the game. Algeria is the latest to look to sell to Europe, Bloomberg reports. Algeria will up exports to Italy by almost 20% to 25.2 bn cubic meters, becoming its biggest supplier by providing 35% of its imports, Eni CEO Claudio Descalzi said last week, according to Reuters.

Egypt, Qatar and others will begin shipping more LNG to Italy from spring 2023, Descalzi said, without providing further details. Eni is planning to work with Egypt and others to boost its LNG export capacity, but the challenge appears to be Italy’s capacity to process new volumes on receipt, suggesting it may have to look at floating storage and regasification units (FSRUs), which were part of the landscape here during our pre-Zohr natural gas crisis.

SIGNS OF THE TIMES-

• Mobile networks in Europe could go down this winter: Figures in the telecoms industry are warning that blackouts or electricity rationing could disrupt mobile networks across Europe this winter as the continent faces a historic energy crunch. (Reuters)
• Facebook Meta is slashing its budget for the first time since the company’s founding in 2004 as its share price tanks (-60% YTD) and revenue growth slows amid rising competition. (CNBC | Bloomberg)
• Spare a thought for Logan Paul: NFT trading volumes are down 97% since peaking earlier this year. Data from Dune Analytics picked up by Bloomberg shows that volumes in September fell to just USD 466 mn, down from a record high of USD 17 bn.

*** It’s What’s Next day: We have our weekly deep-dive into what makes and shapes pre-listed companies and startups in Egypt, the UAE and KSA, touching on investment trends, future sector insights and growth journeys.

In today’s issue: We take a look at how B2B e-commerce players are handling pressure on margins from inflation as well as the global VC funding squeeze, whether by reallocating investment or revisiting their business models.