Head of macro and finance at HC, Monette Doss commented: âEgyptian inflation remains within the CBE’s target range of 7% (+/- 2%) for 4Q22, and we expect an average of 5.9 % in 4Q21. We believe, however, that rising international prices for oil and other commodities are imposing significant inflationary pressures domestically, especially in light of recent official announcements of the government’s intention to cut its subsidy bill. Globally, monetary tightening is coming, with Federal Reserve officials indicating they could start cutting stimulus spending before the end of the year. At the same time, the Governor of the Bank of England recently announced that the Central Bank should act to counter rising inflation “.
She said: âWe believe the outlook for global monetary tightening is reflected in slight pressure on interest rates on Egyptian 12-month Treasury bill yields, which have risen 13 basis points since early October. We also note that the net international investment position of Egyptian banks widened to $ 4.44 billion in August from $ 1.63 billion in July. This should also put upward pressure on interest rates on Egyptian Treasuries, in our opinion. Currently. However, Egyptian 12-month Treasuries continue to offer an attractive real yield of c3% (given our 2022nd inflation forecast of 8% and 15% taxes for European and US investors). This is compared to the 4% offered by Turkey (based on the recent 9-month Treasury bill rate of 18.25%, zero taxes and Bloomberg 1-year inflation estimate at 14c. That said. , we expect the MPC to keep rates unchanged at its next meeting. â
It is worth mentioning that at its last meeting on September 16, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided to keep rates unchanged for the seventh time in a row. Egypt’s annual headline inflation stood at 6.6% in September, with monthly inflation increasing 1.1% month-on-month against an increase of 0.1% month-on-month in August, according to reports. data published by the Central Agency for Public Mobilization and Statistics (CAPMAS). With the MPC scheduled to meet on October 28, we present our expectations on the likely outcome based on the current situation in Egypt.
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HC Securities & Investment (HC) is a leading investment bank in Egypt and the MENA region. Since its inception in 1996, HC has used its relationship-oriented knowledge, local and regional market knowledge, industry expertise and strong execution capabilities to provide clients with a wide range of banking services. investment, asset management, securities brokerage, research, custody, online trading and private equity through its offices in Egypt and the United Arab Emirates (DIFC). HC Investment Banking has exceptional experience advising large companies in Egypt and the MENA region on mergers and acquisitions, capital market and financing transactions over $ 6.2 billion. HC Asset Management, winner of the MENA Fund Manager Awards 2018, now manages 8 mutual funds for commercial banks and portfolios for institutions and sovereign wealth funds with assets under management exceeding 6.8 billion EGP. HC Brokerage is ranked among the top brokers in Egypt and provides a wide range of services including online research and trading to institutional and retail clients.
Â© Press release 2021