Good afternoon, friends. We’re in for a chilly week with some fog coming our way, so stay safe on the roads.

THE BIG STORY TODAY-

Egypt’s non-oil business activity expanded at its quickest rate in over four years in January, buoyed by a solid increase in output and sales volumes, according to S&P Global’s latest Purchasing Managers’ Index (pdf). Egypt’s headline figure rose to 50.7 in January, up from 48.1 in December — representing the index’s highest level for Egypt since November 2020. This marks only the second time the country's non-oil activity rose above the 50.0 mark that separates contraction from growth since November 2020.

Behind the numbers: This growth was driven largely by cooling cost pressures, which softened the rate of output price inflation and supported a pick-up in sales. Additionally, the ceasefire agreement between Israel and Hamas likely strengthened market confidence. Four of the metrics that factor into the headline PMI figure — new orders, output, supplier delivery times, and stocks of purchases — showed positive readings. The fifth indicator, employment, stabilized during the month.

Despite positive results, overall business sentiment in Egypt is still uneasy: Business expectations in Egypt slipped to a historically low level in January, “showing that firms are still uncertain about economic stability over the longer term,” S&P Global senior economist David Owen said.

THE BIG STORY ABROAD

Trump’s escalating trade war with China is still occupying the headlines in the international press this afternoon, as Beijing unveils its first round of retaliatory measures in response to the sweeping 10% tariff on all Chinese imports by the new US administration.

China is rolling out targeted tariffs on select US imports, including a 15% levy on American coal and LNG, and a 10% tariff on crude oil, farm equipment, and some large-engine vehicles. Beijing is also launching an anti-monopoly investigation into Google and has placed US firms PVH Corp and Ullumina on notice for potential sanctions. The tariffs, which will impact an estimated USD 20 bn worth of US exports, are set to take effect on Monday, 10 February.

The measured response suggests that China is leaving room for negotiations, as Beijing's tariffs cover a fraction of the USD 450 bn worth of Chinese goods targeted by newly inaugurated US President Donald Trump, and the delayed implementation provides time for potential talks between the two governments. “The measures are fairly modest, at least relative to US moves, and have been calibrated to send a message to the US,” said Capital Economics' Julian Ecans-Pritchard in a note. Trump is set to speak with Chinese President Xi Jinping later this week. (FT | Reuters | BBC | Associated Press | NYT)

HAPPENING TODAY-

Investors and VCs are gathering for the two-day Egypt VC Summit, which is taking place at the Sofitel Cairo Downtown Nile, according to a statement (pdf) from the organizers. Hosted by the Egyptian Private Equity And Venture Capital Association and German development agency GIZ, the event brings together global and regional investors to attend talks, network, and partake in roundtable discussions. You can check out the agenda on the website for the event.

** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

• Investment once again topped the agenda of Investment Minister Hassan El Khatib’s second day in Kuwait, which saw him take part in a series of high-profile meetings aimed at strengthening Egyptian-Kuwaiti economic ties and drumming up investments.
• It looks increasingly likely that the long-awaited capital gains tax on EGX transactions may never come, with the government holding intensive discussions to resolve the issue and potentially replace it with a 0.15% stamp tax on all EGX transactions.
• Egypt has reportedly signed agreements with Shell and TotalEnergies topurchase a total of 60 LNG shipments in 2025 for around USD 3 bn. The agreement entails supplying around five shipments per month, each carrying between 160-165k cubic meters of LNG.

⛅ TOMORROW’S WEATHER- Buckle up for some unstable weather starting tomorrow, says the Egyptian Meteorological Authority. Early risers will experience some fog as the mercury rises to a maximum of 19°C in the morning before dropping to 12°C in the evening.