Moody’s is on a downgrade spree: The international rating agency downgraded the ratings of 10 smaller US banks and put six larger lenders on review for a potential downgrade as it warned of weak profitability and funding risks in the US banking sector, Reuters reports citing a Moody’s note. “Many banks' second-quarter results showed growing profitability pressures that will reduce their ability to generate internal capital,” Moody’s said. The move comes months after the US banking sector was hit by the sudden collapse of Silicon Valley Bank and several other small and mid-size lenders as depositors withdrew their money.

The market was quick to respond: The downgrade led to a broad selloff in US equities yesterday, with the S&P 500 Banks index falling 1.1%, says Reuters.

S&P Global moves away from numbered ESG credit scores: The ratings agency will no longer use a 1-5 scoring system to evaluate corporate borrowers' exposure to environmental, social, and governance (ESG) risks, the Financial Times reports, opting instead for a written evaluation only. Moody’s will continue to use its numbered evaluation. The news comes amid a wave of skepticism among investors over ESG reporting amid reliability concerns, as well as attacks from the US political right that have branded ESG as a form of ‘woke capitalism.’

PE firms are sweetening the pot to attract business: Blue-chip private equity outfits are offering incentives including lower management fees to lure wealthy investors amid the toughest year for fundraising since the global financial crisis, the Financial Times reports. PE firms globally raised a total of USD 517 bn in 1H 2023, a 35% decrease from the same period last year. Tighter monetary conditions and a drought of dealmaking and IPO activity means investors now have less to allocate to PE, leading one top exec to warn of the “end of an era” for private equity.

ALSO WORTH NOTING-

  • Demand for Chinese products hits lows not seen since early days of the pandemic: Chinese global exports to the US and EU plunged more than 20% in July, while overseas shipments fell 14.5% y-o-y overall. (Wall Street Journal).
  • Probe hands out mns in fines to Wall Street firms for WhatsApp use: Banks will pay another USD 549 mn combined to settle cases with the US regulator after employees used unofficial communications like WhatsApp, reports Bloomberg.
  • US credit card balances surged to an all time high of USD 1 tn in 2Q 2023 as Americans embrace the plastic. (Bloomberg)

EGX30

17,749

-0.5% (YTD: +21.6%)

USD (CBE)

Buy 30.83

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

19.25% deposit

20.25% lending

Tadawul

11,244

-0.3% (YTD: +7.3%)

ADX

9,990

+1.7% (YTD: -2.2%)

DFM

4,078

-0.0% (YTD: +22.2%)

S&P 500

4,499

-0.4% (YTD: +17.2%)

FTSE 100

7,527

-0.4% (YTD: +1.0%)

Euro Stoxx 50

4,289

-1.1% (YTD: +13.1%)

Brent crude

USD 86.02

+0.8%

Natural gas (Nymex)

USD 2,79

+2.4%

Gold

USD 1,959.40

-0.5%

BTC

USD 29,980

+2.9% (YTD: +80.8%)

THE CLOSING BELL-

The EGX30 fell 0.5% at Tuesday’s close on turnover of EGP 3.07 bn (56.2% above the 90-day average). Foreign investors were net buyers. The index is up 21.6% YTD.

In the green: Oriental Weavers (+3.8%), GB Corp (+2.4%) and TMG Holding (+1.4%).

In the red: Heliopolis Housing (-3.3%), Eastern Company (-2.8%) and Qala Holdings (-2.6%).

Asian markets are mixed in early trading this morning as traders fret over the threat of deflation in China. Futures suggest a similarly ambivalent scene when European and US indexes open later on in the day.

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