Today’s Trading Playbook
KEY THEMES
Annual urban headline inflation is still gaining momentum from volatile food items, reaching its highest since January 2020. Coming above our expectation of 6.2%, annual headline inflation accelerated to 6.6%. Despite the surge, we have reasons to believe that inflation expectations are still anchored around the CBE’s target and no policy shift is expected soon. Such reasons are (1) Inflation readings are still within the CBE’s target of 7% ± 2%, (2) The rise in headline inflation readings is the result of the unfavorable base-year effect and volatile food inflation, and (3) Non-food inflation fell for the second month in a row.
Furthermore, the core numbers were subsequently released, showing that annual core inflation inched to record 4.8% in September compared to 4.5% in August. Meanwhile, monthly core inflation recorded 0.4% last month, compared to a 0.3% drop in August and 0.1% in September 2020. For more details on our views about inflation, you can read our MACROView note published yesterday.
Elsewhere, Qatar National Bank Al-Ahli [QNBA] has kicked off the earnings season as always, with 9M 2021 consolidated bottom line inching up 6.5% y/y to EGP6bn. Better bottom line came enhanced thanks to lower provisions (-10.4% y/y) of EGP1.3bn, along with marginal growth in net interest income to EGP11.2bn (+1.3% y/y). NIM came marginally stable at 5.2%, yet ROAE retreated slightly to 19.1% in 9M 2021 vs. 21.0% in 9M 2020. Given its current ROAE profile, QNBA is currently traded at an unjustified low P/BV of 0.77x, affected by steep illiquidity, coupled with the current atmosphere towards large cap in general.
Now, on to the top news and analysis for the day.