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WHAT WE’RE TRACKING TONIGHT

THIS EVENING: PMI rises again in July, but remains in contraction territory

Good afternoon friends, and HAPPY THURSDAY. We’re finally at the tail-end of the week, although there remain a few loose ends to tie up as the Central Bank of Egypt’s Monetary Policy Committee is set to review interest rates at its meeting later this evening.

THE BIG STORY TODAY

Private sector contraction softens again in July: The contraction in Egypt’s non-oil private sector slowed to its softest pace in almost two years on the back of uptick in market demand, according to S&P Global’s purchasing managers’ index (pdf). The country’s PMI rose for the fourth consecutive month, reaching 49.2 in July, up from 49.1 in June. This is the highest reading since August 2021 but remains below the 50.0 mark that separates growth from contraction, making July the 32nd consecutive month that business activity has been in decline.

THE BIG STORY ABROAD

It’s a mixed bag of news today, but the Trump Indictment continues to pick up some traction on CNN and Associated Press as they discuss expectations for the former president’s court arraignment for attempting to undermine Joe Biden’s ascension to the presidency and the attack on the US Capitol. Warren Buffet’s take on Fitch Ratings’ downgrade of the US’ credit rating is topping headlines on CNBC, as he asserts that the long-term foreign currency issuer default rating downgrade to AA+ from AAA does not change the standing of the greenback. Meanwhile, the outlook on the EU economy is not looking good, notes the Financial Times, adding that the US’ “soft landing” is gearing more confidence in the US rather than in Europe.

HAPPENING TODAY-

It’s interest rate day: We anticipate that The Central Bank of Egypt will leave interest rates unchanged after its policy meeting this evening, which is the consensus of analysts and economists we spoke to last week.

The Greek PM is in town: President Abdel Fattah El Sisi will hold talks today with Greek prime minister Kyriakos Mitsotakis in El Alamein, according to Mitsotakis’ office.

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

Shell to drill new gas wells in the Med: Shell is set to begin drilling new gas exploration wells at its concession areas in the Mediterranean in September.
Demand for gold bars and coins in Egypt more than tripled y-o-y in 2Q 2023 as savers searched safe havens amid the ongoing currency crisis. Figures included in a World Gold Council report out yesterday show that Egyptians bought 10.4 tons of gold during the three-month period, up from 3.3 tons in the same time in 2022.
Higher rates fuels strong net income, revenue growth at HSBC: HSBC Holding Plc’s net income surged 102% y-o-y to USD 18.1 bn in 1H 2023 on the back of rising central bank rates around the world.

MARK YOUR CALENDARS- The Enterprise Finance Forum is taking place on 18-19 September at the St. Regis Hotel in Cairo. This flagship forum is the latest in our must-attend series of invitation-only, C-suite-level gatherings that allow senior members of our community to openly and frankly discuss critical issues in key sectors of the economy.

TAP OR CLICK HERE if you want to express interest in attending. We’ll be sending out the first batch of invitations soon.

Do you want to become a commercial partner? Ping a note to Moustafa Taalab, our head of commercial, or fill out this form and we’ll be in touch.

STAY TUNED for more detail about our agenda.

DID YOU MISS THE ENTERPRISE EXPORTS AND FDI FORUM? Tune in to the Enterprise Podcast and listen for yourself: The Enterprise Podcast is back with another installment of our forum series, where we bring you audio recordings of what was said on stage at the Enterprise Exports and FDI Forum,which took place in May.

WANT TO LISTEN? Head to: Apple Podcast | Spotify | Google Podcast | Anghami. We’re releasing a new episode every Sunday morning.

IN THIS WEEK’S EPISODE-We ask some of the biggest multinationals and suppliers operating here — namely, in logistics, e-commerce, and FMCG — what it is they’re looking for in a local partner, product or service and what are some of the pain points they’ve had to cope with. We were joined on that panel by Khaled Morsy, CEO of DB Schenker Egypt, Omar Elsahy, General Manager at Amazon Egypt, Tarek Kamel, Chairman and CEO of Nestlé Egypt and Sudan.

☀️ TOMORROW’S WEATHER- Temperatures will stay at 38°C at the highest in the morning tomorrow and drop to a cooler 24°C when the sun sets, our favorite weather app tells us.

AI aids breast cancer detection + Electrified concrete can power your appliances

Radiologists are using artificial intelligence to increase breast cancer detection by 20%, without raising the number of false-positive readings, Sweden’s Lancet Oncology Journal reported yesterday. In addition to higher detection rates, the study — conducted with the participation of 80k women within the Mammography Screening with Artificial Intelligence (MASAI) trial — also showed AI assistance meant doctors spent half the time on the same workload. After being randomly divided into two groups, participants in the control group were assigned a traditional reading performed by two physicians while the intervention group’s mammograms were read by doctors with the assistance of AI. Interestingly, the use of AI did not increase the incidence of false positive results, the project’s lead researcher, Dr Kristina Lång told Euronews.

AI won’t replace physicians just yet:Despite growing fears over AI taking over jobs, Lång maintained that the use of AI was not intended to replace physicians: “The design of [the] screening protocol emphasizes the central role of the radiologist,” she told the news outlet. An important factor that is crucial to curbing overdiagnosis or overdetection if AI is left to its own devices, scientists Nereo Segnan and Antonio Ponti warned, the article added.

Electrified cement can make your home a literal power-house: Researchers discovered that building materials such as cement can store electricity that covers half the daily power capacity of a concrete-built home, according to Science. Electrified roadways can also supply electric cars with power as they are driving, with the use of supercapacitors — cement devices with nonflammable electrolytes. Supercapacitors remain limited in their power output and currently come in the form of batteries that can only light up LED bulbs, but researchers are working on raising their performance and output capacity.

Carbon black is the key component: If carbon black, a widely-available substance that was previously used as black pigment, is mixed with cement (which is a poor conductor of electricity), and is used in building homes it can operate an average household for a day as it can save 10 KW-hours of electricity, according to Proceedings of the National Academy of Sciences. Since concrete is a poor electrical conductor, carbon black fills in this gap, as it is a good conductor of electrical power and when mixed in with cement powder collects into threads that act as wires. For powering cars: Copper coils embedded in the roadways are the suggestion to provide cars with electricity, a concept that is already developing in Germany and the Netherlands.

Uncover the truth with Seen So’al on Shahid

? ON THE TUBE TONIGHT-
(all times CLT)

Seen So’al is an Arabic social program that unpacks current issues. With its motto being “the question is the key for improvement,”the host — Saudi media figure Ahmad Al Shugairi — brings us informative answers to big questions, whether they are social issues, or center on lifestyle, industry, and food. Al Shugairi approaches his subject matter by proposing the topic, interviewing experts, and touring different places to help the viewer visualize and relate more to the focus of the episode. Al Shugairi has a unique presenting style that makes the topic quick to understand by posing the typical questions most people would wonder. The program comes in two installments, with 27 episodes that run for 20 minutes each. Season one is filmed entirely in Saudi Arabia, featuring its notable strides in developing different sectors. Meanwhile, the second one was shot in different locations across the Arab world, the US and Europe to tackle current issues like food security, aviation, emergency services, the latest edition of the World Cup, and many more. You can watch Seen on Shahid and Netflix.

Zamalek faces Saudi Arabia’s Al Nassr in their most significant challenge in the Arab Club Champions Cup in the final qualifiers round at 6pm tonight. Zamalek has three points, which has put them in third place after Al Nassr (four points) and Al Shabab (4 points). The victory of one of them will have them ascend to the next round.

Other matches include:

Al Wahda (KSA) v Raja CA (Morocco) (4pm)
CR Belouizdad (Algeria) v Kuwait (4pm)
Al Shabab (KSA) v Monastir (Tunis)

Other Arab Club Champion’s matches to catch on Saturday:

Al Sadd (Qatar) v Al Shorta (Iraq)
Al Ittihad (KSA) v Al Hilal (KSA)

We’re just 10 days away from the return of the English Premier League — which also means the return of the Enterprise Fantasy League, where the excitement continued until the last stretch of the previous season.

Join the fantasy league and compete with the rest of the Enterprise reader community by clicking on this link or entering the code abd0f7.

The Women’s World Cup is entering the elimination phase: Watch the Round of 16 in the Women’s World Cup with the following matches on Saturday and Sunday:

Switzerland v Spain (Saturday 8am)
Japan v Norway (Saturday 11am)
Holland v South Africa (Sunday 5am)
Sweden v USA (Sunday 12pm)

Friendlies:

Aston Villa v Lazio (9:30pm)

Manchester United v Lens (Saturday 2:45pm)
Atletico Madrid v Sevilla (Sunday 5am)

Akher Zafir is back again: The Jordanian rock band is back in Egypt to hold a performance on Saturday, 19 Augustin Bibliotheca Alexandrina as a part of the summer carnival. You can reserve your tickets through their website. They will also be performing in Cairo at ElSawy Culturewheel in Zamalek on Monday, 21 August at 8pm, with tickets available for purchase from the venue’s website.

Russ is coming to New Alamein. American pop star Russ will be performing as part of the New Alamein Festival on Friday, 25 August. Tickets are available on Tazkarti.

Get ready for a fancy event with exquisite music at the Omar Khairat concert at Royal Maxim Palace Kempinski on Tuesday, 28 August. The concert will start at 6:30pm until 10:30pm. Get your tickets on TicketsMall.

DJs Kygo, Tiësto, Kungs and Frank Walker are performing on Saturday, 28 October at the Giza Pyramids. The concert will be part of the next edition of the four-day Palm Tree Music Festival (PTMF) which will be held from Thursday, 26 October until Sunday, 29 October.

Get your running shoes ready for the 2023 edition of the ElGouna Half Marathon, which is scheduled to take place on Saturday, 11 November. You can sign up for the marathon from here — and catch the lowest registration price with the early bird special which starts today and ends Saturday, 30 September.

Economics Explained runs through a wealth of topics in a straightforward way that appeals to subject matter experts and the uninitiated among us. Each episode takes a deep dive — with the backing of news, data, and statistics — into issues and questions like global debt, what a world might look like without China, and whether soaring inflation is finally tapering off. Some episodes bring on board a guest economist for commentary and flavor on the topic at hand. Each episode ranges from 10 minutes to 40 or 50 minutes, although both the short and long episodes follow a quick pace that keeps the content engaging and interesting. You can listen to Economics Explained on Spotify, Anghami and Apple Podcasts, or watch the episodes on their YouTube channel.

Matt Haig’s Notes on a Nervous Planet is an introspective examination of the anxieties and pressures we experience when our phones are constantly feeding us notifications and news. There are many reasons to worry, but they can be opportunities to pause and reflect on our own lives in the context of the modern world. The book is a skillfully written and atypical self-help, full of bites of psychological insights, designed that way to cater to modern-day readers whose attention is already stretched painfully thin. It examines how our hyper-connected planet influences our mental health, forcing readers to assess their own relationships with technology. It may be a bit repetitive at times, maybe to reinforce specific points, but it may also make the narrative seem unnecessarily stretched out at certain points. All in all, it is an essential reminder to slow down and reconnect with ourselves amidst the overwhelming noise of the modern world.

What the markets are doing on 3 August, 2023

EARNINGS WATCH-

Sidi Kerir Petrochemicals’ net income after tax rose to EGP 1.21 bn in 1H 2023, rising 158% y-o-y, according to its earnings release (pdf). The company’s revenues for the period jumped 69.2% y-o-y to EGP 6.56 bn.

MARKET ROUNDUP-

The EGX30 was almost flat at today’s close on turnover of EGP 1.72 bn (11.5% below the trailing 90-day average). Regional investors were net sellers. The index is up 19.5% YTD.

In the green: Sidpec (+3.0%), Oriental Weavers (+2.1%), and Beltone Financial (+2.0%).

In the red: Eastern Company (-1.4%), Juhayna (-1.0%) and E-finance (-0.9%).

Tracking Egyptian consumer behavior among rising inflationary pressures

Where Egyptians are putting their money as inflation + a weaker currency bite: With rising inflationary pressures cutting down on disposable income among Egyptians, consumer behavior has shifted to prioritize their spending and make more strategic choices to sustain their lifestyles, according to NielsenIQ’s 1Q 2023 State of the Retail Nation report (pdf). While the value of consumer spending is rising, more or less the same volume of products are being bought, leading to the Egyptian FMCG market seeing a sales value growth of 45.3% y-o-y.

The key takeaway: Egyptian consumers are spending more on the same amount of goods, but are less willing to spend on out-of-home purchases such as dining and entertainment, clothing, and home improvement. However, they are spending more (not necessarily willingly) on utilities, fresh produce and fresh groceries, health and wellness goods and services, transportation costs, and education.

REMEMBER- Inflation has been accelerating for the past several months, rising at its fastest-ever rate in June on the back of the impact of multiple currency devaluations combined with higher seasonal demand. Annual urban inflation hit 35.7% y-o-y during the month, while Core inflation — which strips out volatile items such as food and fuel — accelerated to 41.0% in June from 40.3% the month before.

WHERE IS THE MONEY GOING? Food and groceries constitute the largest portion of Egyptian consumer expenditures. Categories like dairy and snacking have seen sales volumes decline, but the consumption of ambient food and beverages (products that can be stored unrefrigerated) has increased ever so slightly, indicating a shift towards essential spending and a preference for in-home consumption. This includes the reduction of expenses going towards out-of-home dining and entertainment as well.

Over 50% of Egyptian consumers report their top concern as the increasing food and grocery prices, which constitutes the largest portion of their expenses. This has led to a significant shift towards the consumption of local products, seen in 43% of the categories tracked by NIQ. This is especially true within consumption of categories like detergents, noodles, biscuits, skincare, cheese, and ice cream. This shift is supported by the cost competitiveness of Egyptian manufacturers, 58% of which are cheaper compared to their global counterparts.

Other concerns plaguing Egyptian consumers are, in descending order, utility costs, economic downturn, and fuel and transportation expenses, although the FMCG market volume remains stable. On the whole, Egyptian consumers are less pessimistic than the global average: Whereas nearly half of global consumers (48%) expect current recessionary trends to persist for longer than one year, that figure falls to 37% in Egypt. That doesn’t quite mesh with the findings of our 2023 Enterprise Reader Poll, which found that 38% of respondents see conditions improving over the course of 2023, while 37% don’t see that happening — and a quarter are uncertain about what the year holds in store.

Egyptian consumers limiting their discretionary spending, with 50% cutting expenditures going towards holidays, food delivery/takeaway, and out-of-home entertainment. However, 39% of the consumers understand that they will be spending more on education, putting us 10 points ahead of the global average. More than 30% of the consumers also expect to spend more on fresh grocery products as well, which comprises the highest portion of Egyptian consumer expenditures.

To put this in perspective, 53% of the Egyptian consumer population only have enough income to spend on food, shelter, and basic needs (compared to 58% of consumers in Turkey and 24% of consumers in Saudi Arabia). As such, we will continue seeing the trend of nimble spending, wherein consumers seek more affordable shopping channels and local brands, as well as shopping only when necessary and increasing at-home consumption, says NIQ’s North Africa and Levant MD Nihal Elkoussi. These shifts are all designed to “gain the most effective control” of how consumers’ disposable income is used.

THE ENTERPRISE ENTERTAINMENT CALENDAR

AUGUST

2-3 August (Wednesday-Thursday): Fintech Revolution Summit, Cairo Festival City.

3 August (Thursday): Massar Egbari concert, Bibliotheca Alexandrina, Alexandria.

3 August (Thursday): Medhat Saleh and Reham Abd El Hakim concert, New Alamein Festival 2023, New Alamein.

4 August (Friday): Mounir and Hamid El Shaeri concert, New Alamein Festival 2023, New Alamein.

5 August (Saturday): Elissa and Tamer Ashour concert, New Alamein Festival 2023, New Alamein.

8 August (Tuesday): Jadal concert, El Sawy Culturewheel, El Zamalek, Cairo.

10 August (Thursday):Omar Khairat concert, the New Alamein Festival 2023, New Alamein.

10 August (Thursday): Carole Samaha and Bahaa Sultan concert, New Alamein Festival 2023, New Alamein.

10 August (Thursday): Jadal concert, Bibliotheca Alexandrina, Alexandria.

11 August (Friday): Amr Diab Summer Concert, Golf Porto Marina, North Coast.

13 -19 August(Sunday-Saturday): El SawyCulturewheelbook fair, ElSawy Culturewheel, Zamalek, Cairo.

12 August (Saturday): Massar Egbari concert, El Sawy Culturewheel, Sheikh Zayed, Cairo.

21 August (Monday): Akher Zafeer concert, El Sawy Culturewheel, El Zamalek, Cairo.

22 August (Tuesday): Omar Khairat Live Concert, Royal Maxim Palace Kempinski, Cairo.

25 August (Friday): Russ Concert, New Alamein Festival 2023, New Alamein.

SEPTEMBER

21-23 September (Thursday-Saturday) L’Etape Egypt by Tour de France, Sharm El Sheikh

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

28 September (Thursday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER

6 October (Friday): Armed Forces Day.

13-20 October (Friday-Friday): El Gouna Film Festival (GFF).

28 October (Saturday): Djs Kygo, Tiësto, Kung and Frank Walker concert, Giza Pyramids.

NOVEMBER

11 November (Saturday):El Gouna Half Marathon 2023, El Gouna.

15-24 November (Wednesday-Friday): Cairo International Film Festival (CIFF).

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

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THIS EVENING: PMI rises again in July, but remains in contraction territory

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What the markets are doing on 3 August, 2023

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Tracking Egyptian consumer behavior among rising inflationary pressures

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