{"id":595027,"date":"2019-09-15T02:54:59","date_gmt":"2019-09-15T02:54:59","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2019\/09\/15\/what-were-tracking-on-15-september-2019\/"},"modified":"2019-09-15T02:54:59","modified_gmt":"2019-09-15T02:54:59","slug":"what-were-tracking-on-15-september-2019","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2019\/09\/15\/what-were-tracking-on-15-september-2019\/","title":{"rendered":"What we\u2019re tracking on 15 September 2019"},"content":{"rendered":"

It\u2019s another accidental energy issue today<\/b>, as energy-related headlines dominated the news at the end of last week and over the weekend. US Deputy Energy Secretary Dan Brouillette was in town last Thursday<\/b> to launch the US-Egypt Strategic Energy Dialogue with Oil Minister Tarek El Molla and the head of the Electricity Holding Company Gaber El Dessouky. Brouillette unveiled details of the initiative, and discussed regional energy issues and Egypt\u2019s role in the East Mediterranean with a handful of reporters, including Enterprise. We have details of the announcement and the roundtable discussion in this morning\u2019s Speed Round below.<\/p>\n

Brouillette\u2019s stop follows his participation in the Abu Dhabi World Energy Congress<\/b>, where a number of Egypt-related announcements were made. These include details on the sale of Dana Gas<\/b>\u2019 Egypt assets revealed by CEO Patrick Allman-Ward, which we dissect in the Speed Round. Oil Minister Tarek El Molla met up with Eni CEO Claudio Descalzi<\/b> at the conference, where he reiterated the company\u2019s desire to expand its investment in Egypt, the Oil Ministry said in a statement<\/a>. The pair discussed Eni kicking the tires on exploration, marketing and distribution projects in Egypt. El Molla also met with representatives from ADNOC<\/b>, who are interested in getting into selling car lubricants in Egypt, and representatives from Emirates National Oil Company<\/b> to discuss supply airplane fuel. He also met with Schlumberger <\/b>CEO Olivier Le Peuch to talk progress on establishing a database to market Egypt\u2019s energy resources.<\/p>\n

Look for energy to continue to dominate headlines as the Red Sea oil and gas exploration tender ends today<\/b>, with bids from major oil producers expected to be announced later. Shell, ExxonMobil, Statoil, Dragon Oil, Russian Rosneft and Total have all reportedly bidding for 10 oil and gas exploration blocks off the Red Sea coast under a new production sharing contract, which were tendered back in March<\/a> by the South Valley Egyptian Petroleum Holding Company (Ganope), sources told Egypt Today<\/a> on Thursday.<\/p>\n

That doesn\u2019t mean interest rates have taken a backseat <\/b>as reactions toEgypt\u2019s annual headline inflation rate falling to 7.5%<\/a> \u2014 its lowest level since January 2013 \u2014 continue to raise optimism that the central bank\u2019s Monetary Policy Committee will cut rates when it meets on Thursday, 27 September. Beltone Financial is banking that low inflation figures will leave room for another 50-100 bps cut in interest rates. \u201cWe reiterate our view that muted inflationary pressures coupled with the solid macro stance will allow for continued easing cycle this time,\u201d the firm said in a research note last week. The CBE last month<\/a> cut rates by 150 bps, bringing the overnight deposit and lending rates to 14.25% and 15.25%, respectively.<\/p>\n

<\/a><\/p>\n

<\/a> ECB rate cut raises hopes of global monetary easing: <\/b>We expect the European Central Bank\u2019s (ECB) move last Thursday<\/a> to cut interest rates by 10 bps to -0.50% will raise hopes further that the CBE will have room to cut rates. The ECB also announced a stimulus package which will see it buy EUR 20 bn of debt per month as long as needed, starting in November. The announcement has strengthened projections that the US Federal Reserve Open Market Committee will cut interest rates when it meets this Tuesday and Wednesday, 17-18 September.<\/b> With the US-China trade war escalating, equity investors are hoping for support from the Fed and are wondering \u201chow much further the Fed will go\u201d this time, says Reuters<\/a>. Turkey\u2019s central bank cut rates before the weekend beyond what was projected, while other central banks, including the Bank of Japan signaling rate cuts, according to Reuters<\/a>.<\/p>\n

The trend is already helping emerging markets<\/b>: The ECB\u2019s announcement appears to have given investors the boost of confidence needed to invest in emerging markets assets, with Bloomberg reporting<\/a> that EM currencies have posted their longest streak of gains since January, while emerging market ETFs have seen inflows for the second straight week last week. The MSCI Emerging Markets equities index, fell 5% during August.<\/p>\n

\n

Beyond a monetary easing reprieve, emerging markets are also getting a helping hand from an ebb in US-China trade tensions.<\/b> Donald Trump is reportedly considering removing or reducing some tariffs on Chinese imports, in a bid to ease tensions with Beijing, the Financial Times reports<\/a>. Sources stated that US officials were seriously considering dialing back the most recent tariffs, effective 1 September, that hit USD 112 bn of additional products, as well as delaying further planned tariffs.<\/p>\n

China, meanwhile, <\/b>made its own goodwill gesture<\/b><\/a> last week <\/b>by saying it would cancel additional tariffs on imports of soya beans and pork that it intends to purchase from the US.<\/p>\n

That may be little solace to the hedge funds who suffered last month from an EM sell-off<\/b>,which was exacerbated by renewed trade tensions between the US and China. Among the losers highlighted by the FT<\/a>: Robert Citrone\u2019s Discovery Capital Management, which lost 7.6% in August, and London-based emerging markets specialist Pharo Management, whose Gaia fund lost 5.5% this year.<\/p>\n

LSE rejects Hong Kong exchange takeover bid: <\/b>The London Stock Exchange rejected on Friday a potential acquisition offer by the Hong Kong Exchanges and Clearing (HKEX) last week<\/a>, stating that the latter\u2019s offer of GBP 31.6 bn was \u201cunattractive.\u201d In a letter to HKEX<\/a>, the LSE dished some share, stating that it preferred to work with the Shanghai Stock Exchange, and questioning the \u201csustainability of HKEX\u2019s position as a strategic gateway in the longer term.\u201d The LSE also said that it is committed to buying financial-information and terminal company Refinitiv Holdings. Shares in the LSE rose 2% on Friday following the announcement of the letter, according to the Wall Street Journal (paywall)<\/a>.<\/p>\n

\n

Houthi drones hit two Saudi Aramco oil processing plants yesterday<\/b>,resulting in a temporary suspension of operations, the Saudi Press Agency said in a statement<\/a>. The attacks resulted in the interruption of an estimated 5.7 mn barrels of crude oil, 50% of the company\u2019s production, and reduced the supply of ethane and natural gas liquids by some 50%. One of the targeted facilities, the Abqaiq was often described by Aramco as \u201cthe world\u2019s largest,\u201d according to the Associated Press<\/a>.<\/p>\n

Other global headlines worth noting in brief:<\/p>\n