Good morning, friends, and happy Halloween — don’t let your sweet tooth get you into too much trouble today.

THE BIG STORY HERE AT HOME remains the EGP. In parallel, you can practically feel the nation’s center of gravity shift to Sharm El Sheikh from Cairo as more and more email auto-replies declare that our readers are heading to Sinai for COP27, which kicks off in just six days.

EGP WATCH- The EGP notched a new record low yesterday as the currency dipped another 5% in the wake of the central bank’s decision to move to a “durably flexible” exchange rate on Thursday. The currency closed the day at 24.1353 to the greenback, according to central bank figures. The EGP has now tumbled 22.1% since Thursday and is down 53.0% since the start of the year, making it one of the worst-performing emerging-market currencies of 2022.

Have we hit bottom? That’s the question on everyone’s mind right now. JPMorgan expects it to close out 2022 at around 23.50 to the USD — suggesting we’ve overshot a little bit. “We expect USD/EGP to remain under pressure in the coming days as it finds a clearing level, but we view [Thursday's] adjustment as sufficient to close most of the external imbalances,” analysts wrote on Thursday in a note picked up by Reuters. Meanwhile, Deutsche Bank thinks the currency will fall closer to 25.00 by the end of December, according to Bloomberg Asharq.

What you think: Enterprise readers told us last month they were planning to use an average figure of EGP 22.12 to the greenback in their 2023 budgets, with some 22% of participants in our Fall 2022 Reader Survey saying they expect the USD to be changing hands at EGP 23-24 next year.

We’ll know a lot more in a couple of hours’ time, so make sure to check in with EnterprisePM this afternoon.

Fourth-quarter earnings could be rough for companies with big FX costs structures: Ezz Steel yesterday warned in a disclosure (pdf) yesterday that it could eat EGP 2.2 bn in currency losses as a result of the float. This would take the company’s full-year FX losses to more than EGP 3.3 bn. Few companies will be as dramatically hit as Ezz, but you can expect to hear a lot of guidance in the coming days about cost pressure everywhere from FMCG companies (who import everything from packaging to key raw materials) to real estate players (we’ll see the effect down the line when deliveries of new build stuff begins).

The float will be a boon for exporters, whether you’re RayaCX and its competitors selling business process outsourcing, making insulation for sale globally, making food products for regional markets. It’s almost as if a laser-like focus on exports (and FDI) could be key to getting us out of our current situation…

And some importers are going to do really well, even if they don’t price gauge: Retailers, automotive and electronics + white goods assemblers, spare parts sellers, car distributors — name an industry that doesn’t have tons of pent-up demand right now because of what was an effective ban on non-food imports since earlier this year…

Yesterday’s treasury auctions didn’t quite go to plan: The Finance Ministry raised less than a fifth of its target in a series of bond auctions yesterday after investors demanded yields of up to 25% following the central bank’s decision to hike rates by 200 bps on Thursday. The ministry had hoped to raise EGP 55 bn from auctions of three-month, six-month, nine-month and one-year t-bills on Thursday and Sunday but ended up selling just EGP 11.4 bn worth after rejecting most of the bids thanks to poor offer prices.

PSA- It’s Nafeza deadline day tomorrow: Importers, exporters and customs agents have just one day left to register to join the Finance Ministry’s digital customs system Nafeza before they can no longer clear goods out of customs at seaports.

WHAT’S HAPPENING TODAY-

The Senate is back in session today: Senators will discuss amendments to a 2017 law that paid out compensation to government contractors who suffered losses in the wake of the economic reforms carried out in 2016. The amendments will “regulate government compensation paid to these contractors,” Senator Ahmed Sabbour said, without getting into specifics.

The Senate Industrial Committee is discussing a new bill aimed at helping unlicensed manufacturers go legit. The draft legislation would hand the General Authority for Industrial Development (GAID) the power to grant unlicensed projects temporary one-year licenses, giving them time to “adjust their conditions in line with environmental and civil protection procedures,” committee chair Mohamed Halawa said.

We have the details on yesterday’s Senate session in this morning’s Legislation Watch, below.

Egypt Energy continues: The three-day energy conference brings together policymakers and business leaders from the regional energy sector to discuss topics including power generation, clean energy, and PPP and foreign investment. The event is taking place at the Egypt International Exhibition Center and runs through tomorrow.

Tomorrow marks the start of a new month. The key news triggers as we slide towards November:

• PMI: We’ll know how Egypt’s private sector fared in October on Wednesday when S&P Global releases the purchasing managers’ index. A 22-month contraction in private sector activity didn’t show signs of abating in September as high inflation continued to weigh on demand and output.
• Foreign reserves figures for October will be released next week.
• Inflation: Capmas and the central bank will release October’s inflation figures on Thursday, 10 November.

FURTHER AFIELD-

MbS heading to India next month? Saudi Crown Prince Mohammed bin Salman could make an official state visit to India while on the way to Indonesia for the G20 Summit next month, Indian newspaper the Economic Times reported yesterday, citing informed sources. The people said the visit would see the two countries deepen energy, investment and security ties.

THE BIG STORIES ABROAD-

Brazil has a new president — Lula is back: Left-wing former president Luiz Inácio Lula da Silva defeated far-right incumbent Jair Bolsonaro in a close-run run-off vote yesterday. With 99% of ballots counted, Lula received 50.9% of the vote to Bolsonaro’s 49.1%, leading the country’ election body to call the race. Lula’s victory is the top story everywhere, from the Associated Press and Reuters to the New York Times and Bloomberg.

Russia’s exit from the UN-brokered grain pact with Ukraine is still big news across the world: The UN and Western powers are calling on Russia to re-enter the agreement, while analysts are warning that preventing Ukraine from exporting its grain will cause a spike in prices and put fresh pressure on global food supply chains. The UN, Turkey and Ukraine are reportedly continuing with the initiative without Russia, and agreed for 16 ships to leave Ukraine today. Everyone is covering the news: Associated Press | Reuters | Bloomberg | FT | NYT.

The Sisi administration is taking note of events: President Abdel Fattah El Sisi met with PM Moustafa Madbouly and Supply Minister Ali El Moselhy yesterday to follow up on the country’s current reserves of strategic commodities, Ittihadiya said yesterday. El Moselhy said that Egypt currently has enough wheat in reserve to last until April, when the 2023 harvest begins. The strategic reserves for sugar are sufficient to last until February, while those of vegetable oils are enough until May, he said.

Egypt is one of the most vulnerable countries in the world to food supply shocks: Egypt — the world’s biggest importer of wheat and heavily reliant on Russian and Ukrainian grain — scrambled to find new wheat suppliers earlier this year when the war removed Ukrainian wheat from the global market and sent food prices soaring.

COUNTDOWN TO COP (6 days to go): COP27 starts next week in Sharm El Sheikh. Big days to look out for include:

• World leaders’ summit: November 7-8 (tons of details here, pdf)
• Finance day: November 9
• Decarbonization day: November 11
• Adaptation and agriculture day: November 12
• Water day: November 14
• Energy day: November 15

A fairly detailed schedule is available for download as a pdf here.

UK PM could u-turn on COP no-show: The UK’s new prime minister, Rishi Sunak, could backtrack on his decision to skip COP27 following backlash at home and abroad, the Financial Times reports. Downing Street said last week that Sunak would not travel to Sharm El Sheikh due to “pressing domestic commitments” but sources close to the PM yesterday refused to rule out a no-show, telling the salmon-colored paper that it will “depend on progress” dealing with the UK’s economic crisis and his government’s upcoming budget statement.

Foreign investment in Egyptian startups is set to surpass USD 500 mn by the end of the year, Communications Minister Amr Talaat told Bloomberg Asharq yesterday (watch, runtime: 0:53).

The year so far: Egyptian startups have raised around USD 460 mn in investment during the first 10 months of the year, according to our in-house tracker.

That’s far short of expectations thanks to the Global Startup Fundraising Apocalypse: Industry players were telling us as recently as spring that Egyptian startups could raise as much USD 1 bn this year, though Talaat was slightly more cautious, saying in July he expected c. USD 850 mn.

MORNING MUST READ-

ICYMI- Missed this week’s Inside Industry? In our weekly vertical exploring all things industry and manufacturing, we looked at the Ebda initiative — a new program aimed at localizing industrial production and lowering the country’s reliance on imported goods.

CIRCLE YOUR CALENDAR-

The Sovereign Fund of Egypt (SFE) will begin the roadshow for its pre-IPO fund at the end of November, Planning Minister Hala El Said told Bloomberg Asharq yesterday (watch, runtime: 2:10). The fund plans to market several state companies — including the military-owned firms Safi and Wataniya — to strategic investors ahead of IPOing them on the EGX at a later date. Several Arab sovereign wealth funds have expressed interest in purchasing stakes in the companies, the minister said.

The Nebu Expo for Gold and Jewelry will be held on 10-12 December, bringing together 50 local companies and 35 international exhibitors from Italy, Turkey, India and the UAE, Supply Minister Ali El Moselhy said.

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