Home > Insights > The European Central Bank (ECB) cuts interest rates by 10 bps to 0.50% raising hopes that Egypt Central Bank
Monday, 16 Sep 2019

The European Central Bank (ECB) cuts interest rates by 10 bps to 0.50% raising hopes that Egypt Central Bank


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Economic Outlook

Economic Outlook

  • The European Central Bank (ECB) cuts interest rates by 10 bps to 0.50% raising hopes that Egypt Central Bank will have room to cut rates. 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.
  • Egypt August inflation figures could give Egypt Central Bank room to cut rates by 150 bps between now and the end of 2019. And if it goes ahead with further cuts, there is little risk of substantial outflows from Egyptian debt as real interest rates are still attractive compared to other emerging markets.
  • The Egypt government and the World Bank have signed a 500 MM USD facility agreement to extend social safety net for three years.The bank will provide this additional facility on top of the initial 400 MM USD loan granted in 2015 to support the Takaful and Karama cash subsidy programs.
  • The unemployment rate among Saudis decreased to 12.3% in Q2-2019 compared to 12.5% in Q1-2019. However, the unemployment rate of the total population, including non-Saudis, decreased in Q2-2019 to 5.6%, compared to 6% in Q1-2019.
  • Saudi Arabia has launched Madinat Al Wouroud project situated on 6.3 million shares, including 4,775 villas. The government revealed that there are 67 projects currently underway across many areas in Saudi Arabia, comprising 122,000 residential units.
  • UAE-based investors have lined up a number of new projects including five freeeconomic zones for investment in Bangladesh. Noting that Bangladesh requires 24 BN USD investment in infrastructure annually, to achieve its Vision 2021.
  • UAE GDP increased by 2.8% y-o-y in Q1-2019, reaching nearly 376.98 BN AED (102.64 BN USD). In April, the International Monetary Fund (IMF) stated that UAE GDP is likely to grow to 2.8% by the end of 2019.
  • Kuwait trade surplus decreased 97.06% y-o-y during the first four months of 2019/2020, recording 44.8 MM KWD (147.66 BN USD). Revenue reached 6.3 BN KWD (2-.7 BN USD) in the four-month period ended 31 July, while expenses and liabilities hit 5.63 BN KWD (18.5 BN USD) in the same period.
  • The Arab Monetary Fund (AMF) stated in its latest report that the weakness of the global economy will impact the external demand and that the Arab economies are expected to grow by 2.5% in 2019 and 3.0% in 2020.
Political Events

Political Events

  • Saudi Arabia has cut oil and gas production following drone attacks on two major oil facilities run by state-owned company Aramco losing about 5.7 million barrels per day of output or about 5% of world supply, an assault that US has blamed on Iran. Noting that global oil prices could immediately increase sharply by 5 to 10 USD reaching 100 USD a barrel oil.
  • US Deputy Energy Secretary Dan Brouillette met with Oil Minister Tarek El Molla in order to have a bilateral cooperation initiative aimed at strengthening Egypt energy production, storage and distribution capacity.
Stock Market

Stock Market

  • The Financial Regulatory Authority (FRA) is expected to give the green light to begin short selling on the EGX in November. Trial runs will be announced with brokerages who have acquired short-selling licenses like Shuaa Securities, Arqaam, EFG Hermes, CI Capital, the Arab African International Securities, Prime Holdings, HC Securities, Cairo Capital Securities, and Premiere Securities.
  • Saudi Aramco picked Bank of America, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan Chase, and Morgan Stanley to work on listing the world's most valuable company. Noting that the company could, for the time being, shelve plans for a foreign listing in favor of offering a 1% stake on Tadawul.
Companies Transactions

Companies Transactions

  • Actis has reached an agreement to take over the management of two buyout funds raised earlier by the private equity giant Abraaj which are Abraaj Africa Fund II and Abraaj South East Asia Fund II. Consequently, Actis acquired a portfolio of companies in Africa and Southeast Asia including Cleopatra Hospitals Group, Egypt largest hospital chain and logistics company Ninja Van.
  • The European Bank for Reconstruction and Development (EBRD) and the Sawiris Foundation for Social Development (SFSD) are partnering up to support the development and expansion of SMEs in Egypt, focusing on those of young people and women.
  • UAE Dana Gas has received offers from companies interested in buying its 500 MM USD Egypt portfolio. Noting that the company has hired investment bank Tudor, Pickering, Holt & Co. (TPH) to advise it on the sale of its Egypt assets announcing that it could sell all of its assets in Egypt, depending on the offers it receives.
  • The Cairo Airport Company is carrying out studies to establish a fourth passenger terminal at Cairo International Airport in an effort to reduce traffic in the other three terminals.
  • Apple is launching Apple TV Plus on 1 November, a television streaming service that will compete with the likes of Netflix and Hulu. Apple TV Plus is priced at 5 USD a month, almost a third of Netflix's 13 USD a month price tag.
  • Social Development Bank (SDB) has signed an agreement with Saudi Arabia Ministry of Health to launch 300 startups in the medical sector, with a funding portfolio of over 500 MM SAR (133.3 MM USD) for the next five years.
  • Emaar Properties, a leading global real estate developer based in UAE, was ranked the 14th among the world's strongest real estate firms in 2019. The brand value of Emaar was estimated at 2.7 BN USD (around 9.9 BN AED), which is the most valuable brand on Brand Finance's real estate ranking for 2019.
  • DTZ Qatar is re-branding as Cushman & Wakefield Qatar, following a global merger between top global real estate consultants DTZ and Cushman & Wakefield. Globally, Cushman & Wakefield manages over 3.6 Billion square feet of property and had a revenue of 8.2 BN USD in 2018.
  • Qatar's Commercial Bank plans to raise 600-700 MM USD in debt over the next six to 12 months looking into dollar and euro bonds to raise the debt. The bank has previously expressed interest in a variety of funding sources, including Kangaroo bonds, as well as Taiwanese and Japanese bonds.
  • A consortium comprising Orascom Construction (OC) and Siemens has signed an agreement with the Iraqi government to rebuild two gas-powered energy plants in the war-torn city of Baiji, north of Baghdad.
Sports and Culture

Sports and Culture

  • Egypt PeopleToPeople campaign has been named "the best promotional movie in the Middle East" by the World Tourism Organization (UNWTO) showing Egypt citizens as welcoming, proud, and eager to show their country.
  • Image Nation Abu Dhabi critically acclaimed film 'Free Solo' has won seven Creative Arts Emmy Awards, adding to a list of honors that already includes an Academy Award for Best Documentary Feature.

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