Good morning, ladies and gentlemen. We are closing out this extremely hot week on a high note, with an IMF delegation in Cairo, making us believe the third tranche of our USD 8 bn loan agreement is around the corner. We are also keeping our eyes peeled for the central bank’s decision on interest rates when its Monetary Policy Committee meets up later today.

WATCH THIS SPACE-

#1- Third review on the way? Representatives from the IMF are in town to conduct the third review of our loan program, two government sources told Asharq Business. The review will unlock the third USD 820 mn tranche of our USD 8 bn loan program. The third review is expected to be completed around 15 June, with the fourth review scheduled for September.

Remember: The IMF’s Executive Board signed off on a USD 5 bn extension for Egypt’s extended fund facility and completed its long-delayed first and second reviews of the facility in late March, when it approved a decision to let the state immediately draw USD 820 mn. We unlocked the second tranche in April.

#2- Trading and settlement rules for the soon-to-be-established voluntary carbon market will be released within “the next few weeks,” Financial Regulatory Authority (FRA) head Mohamed Farid said in a statement. Once launched, the market will be the first voluntary carbon market in Africa.

Remember: The EGX in 2022 announced that it would set up the market, which will allow companies in Egypt and Africa working on emissions-reducing projects to sell certified carbon credits, which can then be bought by other companies wanting to offset their emissions. The FRA released its carbon credit verification and certification standards in August 2023.

#3- NUCA to sell land for FX: The New Urban Communities Authority is planning to sell land plots to 34 companies in exchange for foreign currency, after the cabinet greenlit the move. The land is located across eight governorates and will be used for residential, commercial and administrative purposes.

IPO WATCH-

#1- More on Act Financial’s IPO: Investment management firm Act Financial has set EGP 3.65 as the maximum price per share when it makes its market debut between the end of May and beginning of June, writes Asharq Business, citing two sources close to the discussions. Act Financial got the green light last month to list its shares on EGX. The company is looking to raise some EGP 1.3 bn from taking a 30% stake to market.

#2- ACUD IPO pushed back again: The Administrative Capital for Urban Development (ACUD) will be ready to make its EGX debut in 2025, chairman Khaled Abbas told Al Borsa. The company recently pushed back its timeline for selecting an international financial advisor for the offering until 4Q 2024, Abbas said earlier in the week. ACUD was aiming to offer 5-10% of its shares on the EGX in 2Q 2024.

HAPPENING TODAY-

It’s decision time for the central bank: The Central Bank of Egypt’s Monetary Policy Committee (MPC) will meet later today to review rates. This will mark the committee’s first meeting since it delivered a jumbo 600 bps rate hike alongside the EGP float at a special meeting in early March.

To cut, or not to cut: HSBC’s chief economist for Central and Eastern Europe, the Middle East, and Africa Simon Williams told us earlier this week that it's possible, but unlikely that the MPC will start cutting rates today. A cut now “would be premature … given the stress placed on restoring monetary policy credibility in the March IMF program and the importance of anchoring the new FX regime,” he said. .

The polls agree: The MPC is expected to hold interest rates steady as inflation cools, FX inflows pick up, and the EGP exchange rate against the greenback stabilizes, as unanimously forecasted in our interest rate poll of 11 analysts and economists earlier this week.

Goldman’s goes against the grain: Goldman Sachs expects the MPC to cut rates by 150 bps, readjusting its previous forecast of a 2% rate cut, it said in a research note seen by Arab World Press.

PSA-

WEATHER- Make sure your a/cs are on high as we brace for another hot day. Cairo is looking at a high of 39°C and a low of 24°C, according to our favorite weather app.

It’s significantly cooler in Alexandria, with a high of 28°C and a low of 21°C.

And over the weekend, expect to see highs of 34°C and lows of 21°C in the capital.

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CIRCLE YOUR CALENDAR-

#1- A big week ahead for Arab diplomacy? The foreign ministers of Egypt, Saudi Arabia, the United Arab Emirates, Jordan and Qatar will join their 27 European Union counterparts in Brussels on Monday for talks. Look for the war in Gaza and the post-war order there to take center stage.

#2-One for the renewable energy enthusiasts: The USAID-backed Center ofExcellence for Energy is holding a stakeholder’s meeting on Egypt’s energy transition next Sunday at the Cairo Marriott Hotel in Zamalek. You can view the full agenda here (pdf).

#3- GITEX Africa 2024 places Egyptian tech startups at the forefront: Set to take place between 29-31 May, the second edition of GITEX Africa in Morocco will see prominent enterprises, startups, and voices in tech from Egypt play a primary role in the event, according to a press release on the event’s website. The event will feature “some of the most innovative enterprises and startups,” as well as government officials, tech leaders, and industry experts from 130 countries.

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

THE BIG STORY ABROAD-

One story is on every front page this morning: AI darling-of-the-moment Nvidia.

The chipmaker’s 1Q 2024 earnings showed that sales had more than tripled to USD 20 bn, topping analyst estimates and prompting many of them to suggest that the AI boom has legs. Net income was up almost 7x — sending its stock to a record USD 1,004 in after-hours trading.

Why does it matter? “Nvidia’s results have become a way for investors to gauge the strength of the AI boom that has transfixed markets in recent months,” CNBC writes.

MEANWHILE- Saudi Arabia and the US could be “weeks away” from a wide-ranging set of accords that Washington hopes will pave the path for Riyadh to normalize relations with Israel. On the agenda are pacts on security and defense and nuclear power, Reuters reports, while EnterpriseAM Saudi also expects there to be an agreement on artificial intelligence and advanced technologies.

AND- Ireland, Norway, and Spain have said they will formally recognize the state of Palestine. The Irish Times has more and we take note of local reaction in this morning’s Talk Shows, below.

ALSO- An early UK general election: A very wet UK Prime Minister Rishi Sunak called a general election for 4 July, ending months of speculation about when he would make the call. The elections are likely to mark a turning point in the UK government, with the Conservatives likely to lose to the opposition Labour Party — this would mark the end of a 14-year of Conservatives in power. (Reuters | The Guardian | AP)

WORTH READING THIS MORNING- Reuters is out with an investigative piece on how wealthynations are capitalizing on climate funding to developing nations, while the Wall Street Journal looks at the highest-paid CEOs in America last year.

CORRECTION- In the original version of this story, we mistakenly wrote that Act Financial will price its shares at EGP 3.65 for its upcoming market debut. The investment management company instead set the maximum offering price per share at EGP 3.65.

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