The Federal Reserve moved one step closer to the day when it will start slowing its massive monetary support for the US economy
For our top talks today, we need to highlight that the Federal Reserve moved one step closer to the day when it will start slowing its massive monetary support for the US economy. The Federal Open Market Committee declared that it had made “progress” towards its goals of full employment and 2% average inflation, even though it was not yet sufficient to merit any policy action right now. Stressing that any such “tapering” would require additional improvements in the economy. We believe that the path of the economy continues to depend on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.
- With this is mind, we strongly certain that the CBE will maintain its current interest rates during the Monetary Policy Committee meeting scheduled to be held on the fifth of August.
The interest rates are expected to stabilize until the end of 2021. Noting that any action taken to cut interest rates shortly would pose a much greater risk of interest rate hikes for the rest of the year. It is worth mentioning also that with the CBE continuing to tighten its policies due to the COVID-19 pandemic, we think that the CBE is unlikely to back down from those policies, especially with the global economy in general being exposed to a lot of severe pressure.
- By the same token, the Minister of Finance, Dr. Mohamed Maait, stated that the annual growth rate of revenues increased by 12.2%, as well as tax revenues by 12.8% for 2020/2021. This happened as a result of the mechanization procedures that were applied.
On the other hand, we need to highlight that the annual growth rate of expenditures recorded 9% in light of the significant increase in government investment allocations; Which was directed to the implementation of many national projects. In that case, we believe that the general budget achieved, during the fiscal year 2020/2021, has better financial indicators than the target achieved during the previous fiscal year, as the total deficit decreased to 7.4% of GDP during the last fiscal year, compared to 8.0% of GDP during the preceding fiscal year.
- Equally important, the first meeting of the Investment and Business Promotion Committee between Egypt and Japan kicks off last Thursday
in order to strengthen trade, investment and business relations between the two countries. We believe this committee will give a motivation to create more desire among Japanese companies to invest in Egypt, develop partnerships with Egyptian companies, and solve challenges while doing business in Egypt in terms of industrial policy, regulations, incentives, etc
- In the light of investments talks, first, the total investments expected to be injected into the concessions of the GUPCO Petroleum Company would range between 8.5 and 9 billion EGP over 2021/2022.
Also, it’s worth remembering that the UAE's Dragon Oil acquired the assets of the British company BP in the Gulf of Suez concession, in which GUPCO is carrying out operations, in a deal worth 500 million USD last year. We admit that the Gulf of Suez region is a promising concession, and it is still abundant in large quantities of crude oil, and the evidence for this is the large foreign companies' desire to invest in it, through international bids that are offered for research, exploration and production in Egypt.
- Second, the head of the Suez Canal economic zone confirmed the signing of the establishment contract of the Russian industrial zone management company at the end of this year and expanding its scope to include East Port Said and Ain Sukhna.
It is worth mentioning here that Ain Sukhna will allow the entry of a larger number of Russian companies noting that the field is widely opened now because the Suez Canal area is a window not only to Egypt but to Africa and the whole world, due to its unique logistical location.
- Moving to our EGX & companies talks, first, Arzan Capital Holding Limited announced that Arzan VC 2 has invested 1.07 billion USD in the shares of the ridesharing app Swvl, which has entered into a definitive agreement for a business combination with Queen's Gambit Growth Capital.
The market cap value of the shares owned by Arzan VC 2 has now reached 11.226 million USD as the agreement valued Swvl at 1.5 billion USD. Noting that the investment raised the fair value of the financial assets by 2.80 million USD.
- Second, the stock exchange implements a large-scale deal on Edita shares worth 20 million EGP for 2.9 million shares.
Edita’s net profits increased during the first quarter of 2021 to 102.5 million EGP, compared to 83 million EGP, during the comparative period of 2020. The company is trying to expand in the local market and some neighboring markets such as Morocco during the last period, and obtained various local and international loans for the same purpose.
- And finally, Rameda, a leading company in the Egyptian pharmaceutical sector, announced that the largest shareholder, Equinox Pharma Holding Limited, has increased its stake in Rameda by 2.7%, bringing its total stake in the company to 15.4%.
This move clearly reflects Equinox’s confidence in Rameda’s ability to achieve more sustainable growth in the long term, similar to its successes witnessed during the past ten year.
Stay up to date
More Newsletter to Check
SUBSCRIBE TO NEWSLETTER
Subscribe to download our daily economics and business roundup
×
![]()