Today’s Trading Playbook
KEY THEMES
As we had expected, investors punished the stocks we mentioned yesterday for the potential negative impact from the increased natural gas prices which will become effective today. Please refer to our TAKEStock published yesterday for more details. However, it was not as bad as feared, perhaps because investors are still digesting the news and the impact higher natural gas prices would mean for each stock. Or perhaps investors are betting that companies might take some measures to alleviate their now-higher production costs by potentially raising their selling prices down the road. But such a move could eventually translate into higher inflation in the future. Higher inflation, in turn, could mean higher interest rates as we step into 2022. As we said before, we do not expect the Central Bank of Egypt (CBE) to change stance on interest rates for the rest of 2021, specifically in its last MPC meeting on 16 December. That said, if the environment becomes inflationary, we would expect the CBE to start raising interest rates some time in 2022. Then we would prefer to play such a scenario by going long banks in general and CIB [COMI] and Credit Agricole Egypt [CIEB] in specific.
Now, on to the top news and analysis for the day.