{"id":595859,"date":"2019-08-08T04:00:04","date_gmt":"2019-08-08T04:00:04","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2019\/08\/08\/what-were-tracking-on-8-august-2019\/"},"modified":"2019-08-08T04:00:04","modified_gmt":"2019-08-08T04:00:04","slug":"what-were-tracking-on-8-august-2019","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2019\/08\/08\/what-were-tracking-on-8-august-2019\/","title":{"rendered":"What we\u2019re tracking on 8 August 2019"},"content":{"rendered":"

We\u2019re officially on holiday in a few hours\u2019 time:<\/b> Civil servants will be on break to observe Eid Al Adha from Saturday through Wednesday, and resume work on Thursday, according to a cabinet statement<\/a>. The central bank and EGX were less generous with the vacation days: banks and capital markets (and, by extension, most of the private sector) will be back to work on Wednesday morning.<\/p>\n

Enterprise will be off Sunday through Tuesday<\/b>: We will be back in your inboxes at the appointed hour on Wednesday morning.<\/p>\n

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All eyes will be on the EGX today as Fawry\u2019s IPO, the first in around 10 months, comes to fruition<\/b>, with trading on the company\u2019s shares starting today at EGP 6.46 apiece. The e-payments platform\u2019s retail component, which covered 35.4 mn shares, closed earlier this week around 30x oversubscribed. The retail tranche covered 5% of the company\u2019s shares. Fawry also sold 21.2% to strategic investors as part of a pre-agreed transaction: State-owned banks Banque Misr and the National Bank of Egypt were both offered 7% stakes, while EM PE giant Actis was offered 7.2%. The remaining 9.8% was allocated in a private placement to institutional investors, which closed 15.9x oversubscribed.<\/p>\n

The CBE could release July\u2019s inflation figures today.<\/b> Inflation unexpectedly plummeted<\/a> almost five percentage points to 9.4% in June \u2014 the first time Egypt has seen single digit inflation since March 2016. While some research houses have lowered their overall projections for the year, it is widely expected that we see inflation in July rise on the back of last month\u2019s cuts to fuel<\/a> and electricity subsidies.<\/p>\n

Higher inflation means a rate cut will be highly unlikely:<\/b> Investment banks are expecting the Monetary Policy Committee to keep interest rates on hold when it meets on Thursday, 22 August.<\/p>\n

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<\/a> Markets catch their breath after two days of turmoil:<\/b> US equities closed in positive territory and a rally in government bonds ran out of steam yesterday despite rising concerns over global growth, says the Financial Times<\/a>. US stocks fought back after a 2% drop soon after trading opened. The S&P 500 closed up 0.08% and the Nasdaq gained 0.38%. The Dow Jones Industrial Average finished slightly in the red, down 0.09%.<\/p>\n

European stocks also managed to recover after a rough start,<\/b> but \u201csafe haven assets\u201d remained in demand, with both gold and the Japanese yen extending their yearly gains. Germany\u2019s Dax, France\u2019s Cac 40 and the UK\u2019s FTSE 100 all ended in the green.<\/p>\n

But \u201cscary\u201d German industrial output figures stoke recession fears:<\/b> Fresh industrial figures in Germany showed a larger-than-expected drop in output. \u201cThe continued plunge in production is scary,\u201d Bankhaus Lampe economist Alexander Krueger told Reuters<\/a>. \u201cThe longer this continues, the more likely it is that other sectors of the economy will be dragged into this.\u201d<\/p>\n

And so it begins:<\/b> Several central banks cut interest rates yesterday, signalling that perhaps we\u2019re entering a new phase of sustained global easing. New Zealand first surprised markets with a \u201cbigger-than-expected\u201d cut, followed by an out-of-the-blue easing by the Bank of Thailand and an unconventional 35 basis point cut by the Reserve Bank of India, says Bloomberg<\/a>.<\/p>\n

Markets breathe a sigh of relief, however short-lived: <\/b>While markets did breathe a sigh of relief when China stepped in<\/a> Tuesday to stabilize the yuan, signs that investors are becoming increasingly downbeat about growth prospects are showing. Germany\u2019s yield curve has hit its flattest level<\/a> since the financial crisis, signalling that the global bond market is sounding the alarm that... [it won\u2019t last] much longer before a recession strikes.\u201d<\/p>\n

One analyst is getting a little over-excited:<\/b> While many marketwatchers are now predicting a correction, one analyst is going full apocalypse with his forecast. Nomura strategist Masanari Takada is warns that a second market sell-off at the end of August could be \u201cLehman-like\u201d in its devastation, CNBC reports<\/a>.<\/p>\n

Is the party over in Asian EMs:<\/b> EM currencies and bonds have lost about 2% since Trump\u2019s tariff announcement, Bloomberg says<\/a>. Although the decline in Asia currencies eased yesterday, it still isn\u2019t looking particularly good: South Korea\u2019s won hovered near a three-year low Wednesday, while the Indonesian rupiah, the Philippine peso and Malaysian ringgit also dropped.<\/p>\n

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The trade war is increasingly becoming about \u201cthe weaponization\u201d of policy tools<\/b>: \u201cWe\u2019re seeing that with trade, now we\u2019re going to see it on currency,\u201d markets sage and Allianz chief economic advisor Mohamed El Erian told Fox Business on Tuesday, a day after the US labelled China a currency manipulator (watch, runtime: 7:21<\/a>). \u201cIf you look at the strict definition of currency manipulator, China is not there,\u201d El Erian said.<\/p>\n

We need to see fairer trade, fiscal expansion, and more \u201cstructural pro-growth policies,\u201d <\/b>El Erian says. Even if major central banks step in and ease policy, this is unlikely to tackle the underlying problems, he said, in a call-back to his op-ed in FT<\/a> about the increasing ineffectiveness of monetary policy.<\/p>\n

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BDS Egypt tells J-Lo to GTFO:<\/b> Anti-Israel campaign group BDS (Boycott, Divestment, Sanctions) Egypt has called on Orascom Development to scrap Jennifer Lopez\u2019s upcoming concert in New Alamein following her recent performance in Tel Aviv. \u201cThis concert will take place after her previous concert in occupied Palestine days ago, which she insisted on carrying out despite many calls to boycott Israel and cancel the concert,\u201d the group wrote in an open letter<\/a>. \u201cShe showed clear support for the state of occupation and its racist policies towards Palestinians.\u201d<\/p>\n

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In international miscellany:<\/p>\n