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Monday, 23 Sep 2019

The Central Bank of Egypt (CBE) is expected to cut benchmark interest rates by 50-150 bps


Insights MENA

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Economic Outlook

Economic Outlook

  • The Central Bank of Egypt (CBE) is expected to cut benchmark interest rates by 50-150 bps varying between 0.5% and 1.5% by next Thursday 26 September Monetary Policy Committee (MPC) meeting. Almost all the economists cited that the primary driver towards the cut will be the unexpected fall of the inflation rate in August 2019, which dropped to the lowest level in six-and-a-half years.
  • The Central Banks of Saudi ArabiaUAE and Qatar cut their key interest rates on Wednesday, following the U.S. Federal Reserve decision to slash rates for the second time this year. Meanwhile, the Central Bank of Kuwait kept its benchmark rate unchanged at 3%. Kuwaiti dinar is pegged to an undisclosed weighted basket of international currencies, unlike other Gulf countries whose currencies are pegged to the U.S. dollar.
  • Egypt tops the list of most attractive African countries to invest in for the third year running, according to South Africa's Rand Merchant Bank's 2020 investment report, due to be released next January.
  • Egypt Ministry of Environment is working on a strategy to curb the use of single-use plastic bags, whose local production has reached 2 million tons per annum. The European Union has granted the ministry 2 MM USD to fund scientific studies for the initiative.
  • There are around 100,000 direct employment opportunities in the civil aviation sector in Saudi Arabia, according to the General Authority of Civil Aviation (GACA).
  • Saudi Arabia economic growth in 2019 will be significantly less than the country had expected because of OPEC-led oil output cuts, but the attack on Aramco had "zero" impact on revenue, according to the country's finance minister.
  • Saudi Arabia joined the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS) for publishing government financial and economic data. This standard will increase level of data access to financial markets to help make investment decisions in the country.
  • UAE has been ranked 61st with 69.84 points among the GCC states in 2019 Social Progress Index. Noting that UAE was rated higher than Russia, Qatar, Jordan, Turkey, Oman, India, and China. However, the country's ranking fell 16 places from 45th position in 2018.
  • UAE monetary base increased to 386.3 BN AED (105.2 BN USD) by the end of August, around 1.7% up compared to 379 BN AED (103.2 BN USD) by the end of 2018. This growth is driven by an improvement across all the components of monetary base.
  • Kuwait budget surplus shrank 90.49% y-o-y reaching 247.65 MM KWD (815.4 MM USD) in the first five months of 2019/2020, after deducting future generations' reserve. The country allocated 735.89 BN KWD (423 BN USD) to the future generations' reserve in the five-month period ended 31 August.
Political Events

Political Events

  • U.S. President Donald Trump has approved sending American troops to bolster Saudi Arabia air defenses after Saturday's attacks on the kingdom's oil facilities, which Washington has blamed on Iran, according to the Pentagon.
  • Twitter has permanently suspended 271 accounts based in Egypt and UAE, citing a "multi-faceted information operation" targeting Qatar and Iran, according to the social media platform. The accounts were created and managed by DotDev, a tech company operating in Egypt and UAE, according to Twitter.
Stock Market

Stock Market

  • .EGX30 ended Thursday's session down 0.2%CIB, the index's heaviest constituent, ended down 1.3%. EGX30's top performing constituents were Heliopolis Housing up 3.5%, TMG Holding up 2.6%, and Palm Hills up 2.4%. Thursday's worst performing stocks were Juhayna down 2.5%, Crédit Agricole down 2.4%.
  • .TASI increased sharply on Thursday ahead of their 4th tranche inclusion in FTSE Russell and the 2nd and final tranche entry in S&P Dow Jones emerging market indexes starting on September 23, which are expected to attract billions of dollars in passive funds.
Companies Transactions

Companies Transactions

  • Cairo-based tuk-tuk and motorcycle ride-hailing startup Halan plans to begin operations in Ethiopia before the end of 2019. The company will begin operations in Adama, some 150 km away from the capital city of Addis Ababa, where it aims to recruit the 1k vehicles currently in operation before launching countrywide.
  • CI Capital Holding for Financial Investments has completed together with other investors the acquisition of a 60% interest in Taaleem Management Services for 1.2 BN EGP from Thebes Education Management Holdings B.V.
  • Arab Dairy Products Co. (Panda) announced that Dutch Friesl and Campina International Holding has completed the due diligence process for the acquisition of the Egyptian dairy firm. It is noteworthy that Pioneers Holding Company for Financial Investment holds a 70% stake in Panda.
  • State-owned EGAS expects to sign seven new gas exploration agreements with international companies worth at least 712 MM USD in Q4-2019. Noting that Egypt natural gas production hit a record 7.2 bcf/d in September, up from 7 bcf/d in June.
  • Epson has partnered with Evantagrate, interactive experiences creator, to participate in The Saudi Event Show, taking place from September 25-26 in Riyadh.
  • Saudi state oil company Aramco has hired UBS Group and Deutsche as book runners for its initial public offering (IPO), in a sign that the deal is moving ahead despite the recent attack on Saudi oil facilities.
  • Saudi-based The Red Sea Development Company (TRSDC) has signed up Huta Hegerfield and Saud consulting Services to undertake a major ground-work improvement project for the Coastal Village at the Red Sea Project site.
  • In UAE, the Emirates Nuclear Energy Corporation (ENEC) has signed an MoU with the French National Radioactive Waste Management Agency (Andra) on the sidelines of the 63rd Annual Regular Session of the IAEA General Conference in Vienna, Austria.
  • Dubai Meraas Holding has formed a 5 BN AED (1.4 BN USD) strategic joint venture with Canada's Brookfield Asset Management to own and operate retail destinations in UAE.
  • Qatar Ahli Bank has completed a new 5-year bond transaction, raising 500 MM USD in the third bond issuance under its 1.5 billion Euro Medium Term Note (EMTN) Program. The 5-year bond has been assigned A2 credit rating with a stable outlook by Moody's and carries a coupon rate of 3.125%.
  • Qatar Petroleum and Shell agreed on establishing a partnership to accelerate the development of liquified natural gas (LNG) fueling infrastructure around the world in order to meet the needs of marine customers and help to reduce global emissions.
Sports and Culture

Sports and Culture

  • Egypt jumped nine places to rank 65 in the World Economic Forum's 2019 Travel and Tourism Competitiveness Index. Egypt rose from the 74th spot in 2018 comes amid improved promotion and marketing efforts, making it the most improved country in the MENA region.
  • Al Ahly Football Club secured a 3-2 victory over rival Zamalek to win the Super Cup title, registering the 11th Super Cup title for Al Ahly. Moreover, the Egyptian Football Association (EFA) has appointed Hossam El Badry as the national football team's new head coach, succeeding Javier Aguirre.

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