Today’s Trading Playbook
KEY THEMES
Yesterday, we published our MACROView note in relation to the widely-anticipated upcoming MPC meeting tomorrow. In general, interest rates are likely to remain the Central Bank of Egypt’s (CBE) main weapon of choice to tackle the current economic challenges as we head to another MPC meeting, during which we expect the CBE to increase interest rates by 100-150bps. Through this, the CBE will be sending a strong signal to the market, underscoring its ability to (1) bring down inflation to pre-pandemic levels and (2) bring real interest rates back in the positive territory by next year to encourage investment back into the local debt market, thus boosting foreign reserves and supporting the Egyptian pound (EGP). Meanwhile, we expect a cumulative 400-450bps overall move in 2022. Finally, we expect such policy action will stabilize the FX rate, which should in return slow down the inflation train. For more details, check out our MACROView note from yesterday.
Now, on to the top news and analysis for the day.
Top News & Analysis
MACRO
The Egyptian government intends to fully exist from as many as 79 industries over the next three years as part of plans to restructure the economy in favor of the private sector. (Hapi Journal)
Egypt’s rising oil import bill could wipe out any gains from higher natural gas export this year, according to the Minister of Petroleum Tarek El-Molla. (CNBC)
Automobile manufacturer Stellantis is interested in assembling electric vehicles in Egypt. (Enterprise)
CORPORATE
The option to convert Amazon's [NASDAQ: AMZN] investment into a 4.255% stake in valU, a subsidiary of EFG Hermes Holding [HRHO], is valid for 5 years and if exercised will be regardless of the price of HRHO’s GDRs or local shares at the time of exercise. (Company disclosure)
Rameda [RMDA] announced its partnership with the International Finance Corporation (IFC) to support RMDA's strategy to align with the best standards and practices of environmental sustainability and increase its production efficiency. (Company disclosure
Upper Egypt Flour Mills [UEFM] reported audited consolidated 9M 2021/2022 results, showing an increase in net profit to EGP99.7mn (+17% y/y). (Company disclosure)
Nozha International Hospital [NINH] announced its Q1 2022 results, reporting an increase in net profit to EGP18mn (+9% y/y). (Company disclosure)
Egypt Poultry [EPCO] announced its consolidated Q1 2022 results, reporting an increase in net loss to EGP2.7mn (-22% y/y). (Mubasher)
Arafa for Investment [AIVC] narrowed its net losses in 2021/22 to USD5.5mn vs. USD6.8mn a year earlier. Meanwhile revenues grew to USD184mn (+57%y/y). (Company disclosure)
Egypt Free Shops’ [MFSC] standalone net earnings during 9M 2021/22 rose 49% y/y to EGP136mn on the back of a 30% y/y growth in top line to EGP652mn. (Mubasher)
Canal Shipping Agencies [CSAG] reported preliminary 9M 2021/22 results with net income of EGP143mn (-7% y/y). (Company disclosure)