Good morning, friends. Before we get underway this morning, a kind reminder that we have at least one thing to look forward to this week: An extra hour of sleep. Daylight saving time comes to an end this Thursday, meaning we’ll all have to turn our clocks back an hour.

The conflict in Gaza continues to dominate the attention of everyone in Egypt, the region and the world: The slight sense of optimism we got yesterday with the delivery of 20 (yes, 20) trucks of aid to Gaza has been replaced with dread as Israel says it will step up the pace of its indiscriminate bombing campaign from today.

For context: The Israeli military boasted one week into the war that it had dropped almost 1kbombs per day on the tiny enclave.

DIPLOMACY- An insight into the state of Egypt-Israel relations: Israel’s push to resettle Palestinians in Egypt isn’t doing wonders for bilateral relations, with the Associated Press describing tensions between the two countries as “reaching the boiling point.”

Egypt-Israel ties at risk: Former Israeli defense official Amos Gilad said that Israel is risking blowing up its relations with Egypt over the matter, and said that Prime Minister Benjamin Netanyahu needs to speak with the leaders of Egypt and Jordan and publicly disavow the idea of resettling Palestinians in either country.

But the cheerleading continues in many quarters of the west for what would amount to ethnic cleansing. How else to describe a podcast (Planet Money’s The Indicator, no less) bluntly asking how to turn our current economic challenges into a lever to force us to let Palestinians into Sinai? (Listen, runtime: 9:00)

ENERGY SECURITY- A reminder of how the conflict is disrupting our energy sector:There are signs that the closure of the Tamar gas field and the suspension of the EMG gas pipeline between Israel and Egypt is now disrupting our LNG exports. A tanker waiting to load up on the liquefied fuel at the Idku LNG terminal was forced to head instead to Algeria due to the reduced production, Reuters reports, citing shipping data and analysts.

Remember: Egypt’s gas imports from Israel have fallen by around 20% since Chevron was told to halt production at the Tamar gas field in the Mediterranean. The US company also halted gas flows through the EMG pipeline and instead began shipping gas via the Arab Gas Pipeline which runs via Jordan.

And at least one major energy investment is looking shaky: Adnoc and BP’s USD 2 bn bid for Israel’s NewMed Energy may be on ice thanks to the conflict, Bloomberg reports.

THE GLOBAL ECONOMY- Geopolitics is the new boogeyman for the global financial system, according to the US Federal Reserve, which warned on Friday that the eruption of the conflicts in Gaza and Ukraine could trigger “broad adverse spillovers to global markets.” “Escalation of these conflicts or a worsening in other geopolitical tensions could reduce economic activity and boost inflation worldwide, particularly in the event of prolonged disruptions to supply chains and interruptions in production,” the central bank wrote in its biannual Financial Stability Report (pdf).

^^ Head down to the news well for the updates on the weekend’s events, including yesterday’s summit in the new capital and the delivery of food and medical aid to the besieged enclave.

Really, Cairo? As if we didn’t have enough going on right now, yesterday we were treated to the sight of one of the city’s tallest buildings, the abandoned hotel in Zamalek (aka: Zamalek’s Tower of Shame), going up in flames. Thankfully, the emergency services got to it before it got out of control but not before it blanketed nearby residents with thick plumes of smoke.

WATCH THIS SPACE-

#1- Has TMG bought an additional stake in a portfolio of iconic, state-owned hotels? AsharqBusiness is out with a report saying the EGX-listed real estate and hotels giant has upped its stake in the portfolio to 51%. Icon Investments, a TMG unit, led a group of investors back in July in taking a 37% stake in a USD 700 mn transaction. The portfolio includes properties including the Cairo Marriott, Marriott Mena House, the Winter Palace, and the Cecil. We’ll have more on the story tomorrow.

#2- Amoun Pharma might soon no longer be Amoun Pharma: Abu Dhabi sovereign wealth fund ADQ is planning to merge Amoun Pharma and its other pharma companies to create what would be one of the largest companies of its kind in the region, Bloomberg reports, citing sources it says are in the know. The fund is planning to combine Amoun with Emirati firm Pharmax Pharma, Switzerland’s Acino, and Turkey’s Birgi Mefar Group into a single company within the next 12-18 months ahead of a potential IPO, the people said.

#3- EGP for TRY next year? Egypt and Turkey will likely finalize an agreement to use local currencies for bilateral trade in 2024, according to Al Shorouk, which cites a single anonymous government source. The countries’ trade ministries have come to an agreement over the use of the EGP and TRY for trade and the central banks are now in discussions, which according to the source will likely wrap up next year.

The two countries could use local currencies to settle 25-30% of bilateral trade following an agreement, an Egyptian government official said earlier this month. Central bank officials began their discussions last week.

Dedollarization: Egypt is looking to reduce its exposure to the greenback, and since last year has held talks with a number of countries including China, Russia and India about reducing its use in bilateral trade.

#4- Netflix to hike prices in Om El Donia? The streaming service just raised prices on some of its subscription plans for users in the US, UK and France following strong subscriber growth, according to Reuters.

UPDATE-

This is what we’re spending the USD 500 mn in Panda bond proceeds on, according to the Asian Infrastructure Investment Bank, which covered more than half of the issuance:

  • Expanding household fiber connections
  • Upgrading metro lines 1 and 2
  • Upgrading tramway line 1 in Alexandria.

ICYMI– Egypt closed its maiden issuance of CNY-denominated bonds last week, selling USD 500 mn worth of three-year securities at a 3.51% yield.

HAPPENING TODAY-

The Senate is back following a two-week break: Committees will discuss the war in Gaza, foreign investment, post-university medical education and the cotton industry. Senators will hold a two-day debate about a report by the Senate Agriculture Committee on the chemical fertilizers industry.

ALSO- French President Emmanuel Macron will visit Cairo “soon” to talk about Israel’s war on Gaza, Al Hayah Al Youm reported last night (watch, runtime: 7:22). Macron will be the latest in a conveyor belt of world leaders to head here after speaking with President Abdel Fattah El Sisi on Thursday, according to an Ittihadiya statement.

MARKET WATCH-

Global markets are beginning to take notice of what’s going on in Gaza: Global stocks fell, bonds rallied and gold neared USD 2k as unease over the trajectory of Israel’s war on Gaza accelerated risk-off sentiment on Friday. It was a sea of red on equity gauges around the world, with US stocks falling more than 1% to suffer their worst week in a month and the VIX “fear gauge” jumping to its highest level in seven months.

What they’re saying: “The ongoing situation in the Middle East has triggered a surge of volatility in the oil and stock markets, compelling investors to re-evaluate their strategies and shift their focus from riskier assets to ‘safer’ investments,” one analyst told Bloomberg.

Could mounting debt in developed nations cause a financial crisis? Large developed economies are edging closer to a financial market crisis as they juggle to battle high levels of debt, high interest rates, and increased spending which caused a surge in government borrowing costs, Reuters reported. “You can take many, many countries today, and you will see that we are not far away from a public finances crisis,” former European Central Bank economist Peter Praet said. Developed economies saw their debt levels rise to a record USD 307 tn during the first half 2023, according to data from the Institute of International Finance.

CIRCLE YOUR CALENDAR-

The Egyptian Trilogy comedy tour is in London on Wednesday, 25 October. Catch Fady RIzk, Ahmed Ahmed, and Mohamed Salem at the Leicester Square Theater, brought to you by our friends at Somabay.

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

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