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Sunday, 19 March 2023

THIS MORNING: We’ll do whatever it takes to secure Saudi investment -Maait

Good morning, friends, and welcome to the last workweek before Ramadan. We hope you had a wonderful weekend.

The tone this morning: A bit of optimism amid a flood of investment and privatization news, as the tl;dr stack above suggests. The investment news centers on logistics, infrastructure and manufacturing — all themes we love to see.

WATCH THIS SPACE #1- Fresh Saudi investment — whatever it takes: Egypt is “keen to support everything that is required to increase Saudi investments,” Finance Minister Mohamed Maait said in a statement picked up by Bloomberg. The statement came after Maait attended last week a financial conference in Riyadh where he met with his Saudi counterpart Mohammed Al Jadaan, according to the business information service outlet. Maait also met with a group of Saudi investors who expressed interest in increasing investments in Egypt; they also want to see additional protections against double taxation between the two countries.

Resolving the United Bank impasse? Maait’s comments come in the wake of reports that talks between the two sides regarding the sale of United Bank had ground to a halt due to disagreements about the lender’s valuation. Saudi’s Public Investment Fund (PIF) opened talks to acquire United Bank last year, but PIF want to agree on a valuation in local-currency terms, with the USD amount payable determined at the time of the transaction according to the exchange rate at the time of execution. The Central Bank of Egypt, which owns 99.9% of the bank, has reportedly insisted on a USD-based valuation from the beginning. Reports suggest the bank was valued at something in the USD 600 mn range.

Riyadh is yet to pull the trigger on its pledge last year to invest bns of USD: Saudi Arabia has so far invested USD 1.3 bn in listed state-owned companies, a fraction of the USD 10 bn it originally pledged to support the economy through the crisis triggered by the war in Ukraine. Al Jadaan in January said future financial support to countries would no longer be given unconditionally and would come with strings attached.

WATCH THIS SPACE #2- Could 40 soon be the new 30? Pressure is continuing to mount on the EGP in the offshore markets, with derivative contracts widening further from the official rate at the end of last week, according to Al Arabiya. Twelve-month non-deliverable forwards (NDFs) — contracts used to forecast the value of the currency over the next 12 months — rose to a record 39.19 on Thursday, while in the parallel market the USD rate rose to between 34.5-35.55. In the credit markets, the spread on the cost of insuring the country’s debt rose to almost 1500 bps — the second-highest level on record, according to the news outlet.

EGP WATCH- The official EGP-USD rate continued to hover below the 31.00 mark, and has remained unchanged at 30.96 since 9 March.


The Finance Ministry’s two-day Public-Private Partnerships MENA Forum starts today at the Nile Ritz-Carlton. The forum will gather local, regional, and international leaders and PPP specialists. Topics will include PPP policies, regulatory frameworks, and long-term financing for national projects, according to the Finance Ministry.

Another US official is in town: Assistant Secretary of State for Near Eastern Affairs Barbara Leaf is on a three-day trip to Egypt as part of a wider regional tour that will see her travel to Lebanon and Tunisia, the US embassy in Cairo said. Leaf kicked off her trip on Wednesday with Jordan before landing in Egypt yesterday.

Israel-Palestine summit to take place in Sharm El Sheikh today: Palestinian and Israeli officials are meeting in Sharm El Sheikh today as part of a five-party meeting with Egyptian, Jordanian and US officials. This is the second such meeting in recent weeks: A pact made in Jordan last month did little to calm tensions in the West Bank, with members of the Israeli government almost immediately walking back on the agreement and Israeli settlers attacking a Palestinian village after two Israelis were shot by Palestinian gunmen.

It’s already off to a not-so-great start: Palestinian militants fired a rocket into southern Israel yesterday evening, the Israeli military said, according to the Associated Press. There were no casualties, but the attack raises the possibility of a fresh spate of violence between the two sides just days before the start of Ramadan.

The House is back in session today after a three-week break. Here’s what’s on the agenda: MPs will today discuss and vote on the new round of wage and pension hikes, which were approved by the House Manpower Committee last week. The measures were announced earlier this month and come as the government tries to mitigate the impact of soaring inflation on households. Lawmakers will also vote on the bill to grant temporary licenses to informal industrial projects, and two loan agreements: a USD 301 mn facility from Japan to help finance Metro Line 4 and a USAID grant for higher education.


Higher education minister to face MPs on Tuesday: Higher Education Minister Ayman Ashour will face questions from MPs on the performance of state-owned universities and the shortage of doctors and medical supplies in university teaching hospitals, among other things.

It’s Fed week: The Federal Reserve will hold its two-day policy meeting on Tuesday and Wednesday.

Fresh off brokering a Saudi-Iran accord, Xi has his sights on peace in Ukraine:

Chinese President Xi Jinping will hold separate talks with Vladimir Putin and Ukrainian President Volodymyr Zelenskiy this week, according to the Wall Street Journal. The Chinese president will fly to Moscow for the first time since the war broke out for face-to-face talks with Putin and will likely speak to Zelenskiy virtually, people familiar with the matter told the newspaper. This comes a few weeks after Beijing published a 12-point plan for restarting peace talks and ending the war.

The US isn’t yet on board with a ceasefire: “A cease-fire now is … effectively the ratification of Russian conquest,” White House national security spokesperson John Kirby said Friday. “And of course, it would be another continued violation of the UN Charter.”


Sisi-Erdogan summit in 2H 2023? President Abdel Fattah El Sisi and his Turkish counterpart, Recep Tayyip Erdogan, will for the first time hold direct talks in a summit to take place during the second half of the year, Al Arabiya reported yesterday, citing sources it says have knowledge of the matter. This came after Turkish Foreign Minister Mevlut Cavusoglu’s historic visit to Cairo and meeting with his Egyptian counterpart Sameh Shoukry. We have the full rundown in the Diplomacy section, below.

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


UBS to the rescue? Swiss banking giant UBS is in talks to acquire embattled lender Credit Suisse as Swiss authorities race to prevent its collapse, the Financial Times reports, citing people familiar with the talks.The boards of the two largest Swiss banks are meeting this weekend to discuss the plans, which are being fast-tracked by the Swiss central bank and its financial regulator to save Credit Suisse before the markets open on Monday.

ICYMI- The collapse of three banks in the US earlier this month has triggered panic in the markets about the financial stability of banks across the world. Credit Suisse — whose slow decline since the 2008 financial crisis has accelerated in recent months following a series of heavy losses — saw its share price plunge to record lows and suffered CHF 10 bn in daily withdrawals as depositors panicked about its solvency. The Swiss central bank handed it an emergency USD 54 bn loan last Wednesday which failed to stem the bleeding.

Trump in cuffs this week? Former US President Donald Trump said yesterday that he is expecting to be arrested on Tuesday on charges of paying an a performer some USD 130k in hush money. Trump called on his supporters to protest against his arrest in a post on his own social media platform Truth Social. “Protest, take our nation back,” he wrote. (Reuters | AP | CNN | Bloomberg | New York Times | BBC)

Good news: We’re not heading back to the dark days of the 2022 global grain shortages (at least not yet anyway): Russia, Ukraine and the UN have reached an agreement to renew the Black Sea grain initiative, which will allow Kyiv to continue to export food through its Black Sea port, according to Reuters. The UN was aiming to secure an agreement to extend it by another 120 days but Russian objections to Western sanctions mean that it will only remain in place for 60 days. Moscow is conditioning further extensions on the removal of some of the sanctions.


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