Economists at Goldman Sachs saying that there is a current danger and the Federal Reserve will need to tighten monetary policy at every policy meeting starting in March

Newsletter

24 Jan 2022

For our top talks abroad today, Economists at Goldman Sachs saying that there is a current danger and the Federal Reserve will need to tighten monetary policy at every policy meeting starting in March, which a more hawkish approach than Wall Street currently expects. Currently, Goldman Sachs economists, led by Jan Hatzius, in a weekend report to clients, expect interest rate hikes in March, June, September and December and the central bank to announce that it will begin reducing its position in July. But they said inflation pressures mean risks tend to be higher than our base scenario, and there is a possibility that officials will act at each meeting until the inflation picture change. The economists added: “This raises the possibility of an additional rate hike or an earlier statement on the financial position in May, and more than four increases this year, we can see a number of potential factors driving the shift to rate hikes in successive meetings.” Federal Reserve Chairman Jerome Powell and his colleagues meet this week on 25-26 January amid expectations that they will signal their willingness to raise rates from near zero in March. (Bloomberg)

Meanwhile for Europe, Minutes from the ECB’s December meeting show divisions among policy setters about how quickly price pressures would fade, although agreement that a slower pace of policy tightening than in the US was still justified.
In the UK, inflation hit a 30-year high of 5.4% y/y in December (5.1% in November) on rising energy costs, strong demand and supply chain issues. Meanwhile unemployment fell to 4.1% in the 3 months to November (-0.4% points q/q) and job vacancies surged to record levels, signaling a tight labor market. The government announced that most COVID restrictions would be removed from later this week, including work from home guidance. (Zilla Capital)
We believe UK inflation is set to rise further and could reach above 6% in April when utility costs are scheduled to rise sharply.
Worried about inflation’s possible persistence this year, the Bank of England is set to hike interest rates again in early February, which will add to the squeeze on household incomes. Oil price expectations for 2022 have changed dramatically in recent weeks, with markets pricing in much tighter fundamentals based on supply shortages and robust demand. Talk of oil at 100 USD/bbl amid dwindling OPEC+ spare capacity has increased after prices topped 88 USD last week. (Zilla Capital)
Moving to our Egypt talks, the Egyptian Federation for Financing Medium, Small, and Micro Projects (EFFMSMP), under the auspices of the Central Bank of Egypt (CBE), will organize a three-year program to raise the efficiency and promote microfinance associations operating in the Egyptian market.
The program aims to build and raise these associations’ institutional capacities to qualify them to obtain financing and reach the largest segment of financially marginalized groups and to integrate them into the formal economy. The program aims to upgrade 41 microfinance associations of category “C” with financing portfolios amounting to 10 million EGP to enable them to rise to higher categories. (Arab Finance)
Egypt is considering issuing sustainability bonds in 2022 to finance the presidential Decent Life (Hayah Karima) initiative in order to reach the country’s sustainable development goals (SDGs), Minister of International Cooperation Rania Al-Mashat uncovered.
The announcement took place on the sidelines of a meeting between Al-Mashat and the UN Resident Coordinator in Egypt Elena Panova and UN-appointed expert and adviser Antonio Vigilante to chart a vision for cooperation between the UN and Egypt over securing funding for Decent Life’s inclusive development projects. It is worth noting that Egypt has allocated 150 billion EGP in the current FY 2021/2022 budget to finance Decent Life projects. (Arab Finance)
Egypt’s gross local public debt inched up to 4.7 trillion EGP, representing 81% of the country’s gross domestic product (GDP) by the end of fiscal year (FY) 2020/2021, compared to 4.3 trillion EGP in FY 2019/2020.
On the other hand, Egypt’s total external debt increased by 11.6% by the end of FY 2020/2021 to 137.9 billion USD, compared to the end of FY 2019/2020. The country’s external debt to GDP ratio inched up in to 34.2%, which is within the safe limits as per international standards. In FY 2020/2021, Egypt’s debt service recorded a total of 15.8 billion USD, 11.7 billion USD of which were repaid in loan instalments, while 4.1 billion USD were paid out in interest. (CBE)
Egypt’s garment exports hiked by 41% in 2021, recording 2 billion USD, compared to 1.45 billion USD in 2020, Head of Apparel Export Council of Egypt (AECE) Marie Louise revealed.
Louise noted that these figures are the highest for Egypt’s garment export sector, and it is a historical increase that has not been achieved before. She revealed that 23 new factories joined the AECE in 2021 and the council succeeded in re-attracting 11 small- and medium- sized factories belonging to the readymade garment sector under a clear policy of the council aiming to facilitate conditions of the export process. She also added that services provided by the council are being expanded, such as promotional and marketing services. (Mubasher)
Mostafa Waziri, the Secretary-General of Egypt’s Supreme Council of Antiquities, and Kim Hyun-Mo, the Head of the South Korean Cultural Heritage Administration (CHA), have penned a memorandum of understanding (MoU) for cooperation between the two countries in the fields of antiquities and museums.
The newly signed agreement came within the framework of the current official visit of the South Korean president to Egypt. The deal aims to contribute to establishing policies for the sustainable preservation of cultural property, supporting mutual cooperation in the fields of antiquities and museums, as well as exchanging experts and expertise between specialists from both countries. (Arab Finance)
Turing to our EGX and companies talks, Arab Dairy Panda Company for dairy products announced yesterday, its success in covering the second phase of the subscription to increase the issued capital by 100%.
Arab Dairy said in a disclosure sent to the EGX, that this stage was subscribed to with 86.9 thousand shares, representing the remainder of the first stage. In January 9, the company announced that it had covered the first phase in the subscription to increase the issued capital by 99.9%, with the opening of a second phase. Arab Dairy said in a disclosure sent to the stock exchange at the time, that the number of covered shares in the first phase amounted to 129.9 million shares, while 86.9 thousand shares were not covered. (Al-Mal)
The Financial Regulatory Authority (FRA) has approved the publication of the prospectus of the public and private offering of up to 45.8% of Macro Group Pharmaceutical’s (Macro Capital) issued capital at a maximum price of EGP 6.05.
The Egyptian Exchange (EGX) previously announced that its Listing Committee approved the listing of issued capital for Macro Group Pharmaceutical (Macro Capital). Noting that the tranche allocated for the private offering amounts to about 251.2 million shares (representing the majority of the offering), and is available to bodies and individual investors of high net worth as well as those with experience in the field of securities. While the tranche allocated for the public offering is approximately 13.2 million shares, it is available to the public, both natural and legal persons. (Al-Mal)
MB for Engineering and Contracting has launched the pilot operation of the largest electric vehicle charging station in Egypt with a capacity of 330 kilowatts per hour.
The station has been inaugurated in cooperation with Wataniya Petroleum through its subsidiary SHA7EN, according to a bourse filing on Sunday. As part of a network of stations that will be constructed across Egypt, the station is capable of charging 14 vehicles simultaneously. Meanwhile, the company announced its intention to launch charging stations across five governorates in the first half (H1) of 2022. (Mubasher)
And finally, Fintech firm MNT-Halan has launched a buy-now-pay-later (BNPL) service in its app. The new service follows the company’s comprehensive digital ecosystem that includes small and micro business lending, payments, consumer finance, bill payments, e-commerce, and delivery, all of which are backed by Neuron, the company’s proprietary technology.
According to the new service, users are given all the tools they need to purchase, pay and have delivered anything they want when they want it. Merchants benefit from accelerated growth in their business and increased customer loyalty by offering payment flexibility. Customers are also able to use their credit limits both online and in stores. (AL-Mal)