Today’s Trading Playbook
KEY THEMES
With the Federal Reserve keeping interest rates on hold for now, the world is still debating whether the current inflationary environment is transitory in nature. Back home, input costs are increasing which was reflected in Egypt’s PMI October reading. Please read our PMI note published yesterday.
After the Egyptian government raised natural gas rates for the manufacturing sector effective 1 November, we learn that residential and commercial natural gas prices will also be raised effective with the November bill. This is in line with our view that we could soon be seeing higher inflation rates in Egypt as a result of higher input costs, including natural gas, which would feed into other sectors one way or another. Thus, we reiterate our call on Egypt banks that we made back on Monday.
POSITIVE
COMI, EGAS: If we were to pick two stocks that should benefit from the above, we would pick CIB [COMI] and Egypt Gas [EGAS]. The former should benefit off potentially higher interest rates in 2022 and beyond, while the latter could benefit off higher residential and commercial natural gas prices down the road. We will look forward to EGAS’s disclosure to better understand the impact, be it direct or indirect.
Now, on to the top news and analysis for the day.