KEY THEMES
Annual urban headline inflation edged up in June to 4.9% from 4.8% in May, driven by food prices and base year effect. The acceleration in some core food items in June drove also the core inflation to increase to 3.8% from 3.4% in May. With Inflation figures being broadly in line with our expectations, we believe interest rates will remain unchanged through next MPC meeting and likely until the end of 2021.
Furthermore, the lack of a decisive response by the UN Security Council towards the second filling of Grand Ethiopian Renaissance Dam (GERD), raise number of question marks regarding future steps. This in turn could blur the view for the EGX 30 and large caps in general, in the very short-term at least. Meanwhile, disruptions to the small-cap universe may not be as tough. We note that performance divergence between the EGX 30 and EGX 70 EWI still persists, with the former down some 6% ytd, whereas the latter up around 8% since the start of the year.