Egyptian bank CIB a ‘huge opportunity’ after stock fall

Egyptian bank CIB a ‘huge opportunity’ after stock fall
The stock is down by more than 16 percent since the start of the year. (Supplied)
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Updated 14 June 2021

Egyptian bank CIB a ‘huge opportunity’ after stock fall

Egyptian bank CIB a ‘huge opportunity’ after stock fall
  • It comes after the lender’s stock fell to its lowest levels since 2016 last week

DUBAI: Egypt’s Commercial International Bank (CIB) is a top pick of Neem Brokerage because of its attractive price-to-book ratio.
It comes after the lender’s stock fell to its lowest levels since 2016 last week. The stock is down by more than 16 percent since the start of the year.
“We see it is a huge opportunity,” Allen Sandeep, research director at Neem Brokerage told Bloomberg TV on Sunday.” Although I don’t rule out some remnants of the MSCI rebalancing for the next couple of days. This is one of the most attractive investment plays. You are looking at a price to book ratio of 1.1 which is a 50 percent discount to where the stock has traded historically on average.”
It is one of a number of companies in Egypt that offer attractive price-earnings ratios compared to other emerging market peers, according to the broker.
Sandeep also highlighted the value of Egyptian industrial companies such as ElSewedy Electric with a strong backlog of contracts. Its stock is almost 19 percent lower than at the start of the year.
Telecom Egypt also offered significant yields and attractive price-to-earnings ratios, Sandeep said.


Euro area’s unemployment edges down slightly, Korea’s growth decelerates: Economic wrap

Euro area’s unemployment edges down slightly, Korea’s growth decelerates: Economic wrap
Updated 12 sec ago

Euro area’s unemployment edges down slightly, Korea’s growth decelerates: Economic wrap

Euro area’s unemployment edges down slightly, Korea’s growth decelerates: Economic wrap

The seasonally adjusted unemployment rate in the Euro area recorded a slight decrease of 0.1 percent to hit 7.3 percent in October, according to data by the Eurostat. 

In addition, the EU’s unemployment rate remained unchanged from September’s level of 6.7 percent, meaning a 0.8 percent fall compared to the same period last year. 

Italy jobs

The seasonally adjusted jobless rate in Italy rose by 0.2 percent from a month earlier to reach 9.4 percent in October, based on data from Italy’s National Institute of Statistics. This signalled a 0.6 percent decline from last year’s October. 

Korea’s economy 

Korea's gross domestic product grew by 0.3 percent in the third quarter compared to the previous period, decelerating from a 0.8 percent increase in the second quarter, a report by the Bank of Korea showed. 

This was also lower than the corresponding period’s growth last year when it stood at 2.2 percent.

On an annual basis, the expansion rate turned to 4 percent in the third quarter from negative 1 percent in the same period of 2020, the Bank of Korea said. 

Monthly consumer prices in Korea rose in November by 0.4 percent compared to the previous month, according to official data. Meanwhile the yearly inflation rate recorded a reading of 3.7 percent.

Brazil’s output 

Brazil’s output growth also slowed in 3Q, as the economy expanded by an annual rate of 4 percent compared to 12.3 percent in the previous quarter, data released by the country’s official statistics agency revealed.

On a quarterly basis, Brazil’s economy shrank by 0.1 percent. This is a somewhat improvement from the second quarter’s decline of 0.4 percent

Japan’s consumer confidence

The seasonally adjusted series for the consumer confidence index of Japan remained unchanged from October’s level of 39.2, according to the country’s Cabinet Office.


Oil trims weekly decline on OPEC+ omicron contingency plan

Oil trims weekly decline on OPEC+ omicron contingency plan
Updated 25 sec ago

Oil trims weekly decline on OPEC+ omicron contingency plan

Oil trims weekly decline on OPEC+ omicron contingency plan
LONDON: Oil rose for a second day on Friday after OPEC+ said it would meet again to review output if the omicron COVID-19 variant impacts demand.

Prices were still headed for a sixth week of declines on concern the steady increase in supply from the Organization for Petroleum Exporting Countries and its allies including Russia would lead to a surplus in the coming months.

Brent crude was 1.7 percent higher at $70.84 as of 10:26 a.m. Riyadh time following a 1.2 percent gain on Thursday. WTI, the US benchmark, gained 1.9 percent to $67.73 after adding 1.4 percent yesterday.

While the market was surprised by the OPEC+ decision on Thursday to go ahead with its plan to add 400,000 barrels a day of supply in January, the group said it would meet again before its next scheduled meeting on Jan. 4 to reconsider its plans if deemed necessary.

Traders bet against the group eventually pausing its production increases,” analysts from ANZ Research wrote in a research note.

Still, Brent was headed for a 2.6 percent weekly decline, while WTI was set to close 1 percent lower in the week, both on a six-week losing streak.

The market has been focused on the potential impact of omicron on the global economy and oil demand if countries impose new lockdowns.

The UK tightened mask-wearing rules this week and advised at-risk groups not to travel, while South Korea announced on Friday that people visiting restaurants and cinemas and other public spaces will have to show vaccine passes.

The omicron coronavirus variant threatens to fuel soaring inflation in the United States by further pressuring supply chains and worsening worker shortages, Cleveland Federal Reserve Bank President Loretta Mester told the Financial Times.

However, Asian stocks rose on signs the omicron variant could be less severe than the previous dominant strain, delta.

Scientists in South Africa, where the mutation was first discovered last month, said symptoms for vaccinated infected patients appeared to be mild, while a handful of US omicron cases identified also displayed moderate symptoms.

India’s health ministry said on Friday the severity of the COVID-19 disease from the omicron variant in the country could be low because of vaccination and high exposure to the Delta variant.

“Given the fast pace of vaccination in India and high exposure to delta variant as evidenced by high seropositivity, the severity of the disease is anticipated to be low,” it said in a statement. “However, scientific evidence is still evolving.”

Saudi economy to grow strongly in the fourth quarter, to rise 7.3 percent in 2022: Capital Economics 

Saudi economy to grow strongly in the fourth quarter, to rise 7.3 percent in 2022: Capital Economics 
Updated 41 min 37 sec ago

Saudi economy to grow strongly in the fourth quarter, to rise 7.3 percent in 2022: Capital Economics 

Saudi economy to grow strongly in the fourth quarter, to rise 7.3 percent in 2022: Capital Economics 

Saudi Arabia is set to experience strong economic growth in the fourth quarter of 2021, thanks to oil production hitting its highest level since April 2020, according to a report from Capital Economics.

Some 9.76 million barrels per day were produced in October, broadly in line with pre-virus levels of output, analysts at the London-based economic consultancy firm said. 

Although the whole economy Purchase Manager Index did edge down to 57.7 points in October, there seems to have been a broad-based rise in output from all sectors in the third quarter, which is likely to extend into the fourth quarter.

Growth in local deliveries of cement – a proxy for construction activity – picked up in October.

October point of sales transactions data were also very strong, although this appears to have eased a touch in early November.

“Overall, we think that the Saudi economy will have expanded by 2.5 percent over this year as a whole," the report said. 

Growth is expected to accelerate to 7.3 percent in 2022 as oil production is set to increase under an agreement reached by the The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+.

This growth is much stronger than the consensus currently anticipates, Capital Economics analysts noted in the report.


Brazilian Nubank downsizes IPO price range

Brazilian Nubank downsizes IPO price range
Updated 56 min 22 sec ago

Brazilian Nubank downsizes IPO price range

Brazilian Nubank downsizes IPO price range

Brazil-based fintech Nubank has cut its valuation target by about $9 billion in its planned initial public offering in New York.

The cut brings their market capitalization to about $41.5 billion, down from the previously expected $50 billion plus, the Financial Times reported. 

The digital lender is planning to sell 289.2 million shares at $8 to 9$ each, down from an earlier bracket of $10 to $11.

The decision of lowering the price came as global equities are concerned over the new omicron variant. 

Despite the lowered valuation, Nubank would still be ahead of the most valuable digital bank in the world, European fintech Revolut, valued at $33 billion — and more than its largest Brazilian rival, Itau Unibanco, priced at $37.5 billion. 

Founded in 2013, Nubank is expected to rank among the top ten US flotations. 

Having more than 48 million users across Brazil, Mexico and Colombia, it started by offering zero-free credit cards and then moved into saving accounts, personal loans, investments and insurance. 


Turkey appoints a new finance minister amid plunge in currency

Turkey appoints a new finance minister amid plunge in currency
Updated 03 December 2021

Turkey appoints a new finance minister amid plunge in currency

Turkey appoints a new finance minister amid plunge in currency
  • Plummeting to record lows against foreign exchanges, Turkey’s beleaguered lira has lost about 45% of its value so far this year, toppling household savings

ANKARA: In an overnight decision on Dec. 2, Turkish President Recep Tayyip Erdogan appointed Nureddin Nebati as the country’s new minister of treasury and finance in place of Lutfi Elvan, adopting orthodox policy rather than monetary easing.

Elvan, having disagreed with Erdogan over the decrease of interest rates, reportedly stepped down from the post voluntarily. He was a figure acclaimed by market players despite fluctuations in the country’s economic management.

How the new minister, known as a loyalist, will be received by investors remains to be seen.

Plummeting to record lows against foreign exchanges, Turkey’s beleaguered lira has lost about 45 percent of its value so far this year, toppling household savings.

On Nov. 30, the lira plunged as low as 14 to the US dollar, and hit 15 to the euro, rendering it the worst performing currency of all emerging markets. The Central Bank of Turkey quickly intervened by selling substantial amounts of foreign exchange reserves to prop up the lira, Bloomberg reported.

Nebati, who served three years as a deputy finance minister before taking on this role, became the country’s third finance minister in just over a year.

He is known as a bureaucrat and a former businessman close to Erdogan, and he ardently supports keeping rates low in the face of soaring inflation, as they both believe that high interest rates result in high inflation.

However, according to Wolfango Piccoli, co-president of Teneo Intelligence in London, the appointment is expected to pave the way toward considerable spending in the months ahead to boost the government’s ratings ahead of the 2023 elections.

“Fiscal discipline, which has traditionally differentiated Turkey from most emerging markets, is soon likely to become history,” he told Arab News.

Experts anticipate that the economy could be accelerated through cheap credits.

Piccoli believes that the government will announce two support programs to prop up exports and the job market, along with additional initiatives to be disclosed in the months ahead in order to consolidate the government’s position.

“It is likely that the government can use its funds to provide loans to businesses as well,” he added.

The new minister, coming from a political science background in academia, took part in the youth organizations affiliated with Erdogan’s Justice and Development Party, or AKP.

“My God, make it easy, do not make it difficult. My God, make its outcome useful. Give us truth in our work, make us successful,” Nebati tweeted upon his appointment.

Before becoming a AKP lawmaker between 2011-2018, he was also an active figure on the board of the pro-government Islamist business association, MUSIAD. He is also known as a figure very close to Erdogan’s son-in-law, Berat Albayrak.

“In the recent past, former minister Lutfi Elvan had hinted that improvements in the current account balance should be handled with structural changes in the production structure rather than with rate cuts,” said Selva Demiralp, a professor of economics at Koc University in Istanbul, and a former economist at the Federal Reserve.

“Meanwhile, the government insists on the argument that rate cuts will be used as a way to stimulate exports and reduce imports. With the appointment of the new minister, it looks like there will be better coordination between monetary and fiscal policy in keeping interest rates low,” she told Arab News.

In a recent interview wtih state-run broadcaster TRT, Erdogan said that more interest rate changes should be expected in the coming period and Turkey would turn a surplus in 2022, while he warned that there is no “turning back” from the new policy path.

“In this way, there will be an improvement in exchange rates ahead of the elections,” he said.

According to the latest official data on Tuesday, the Turkish economy grew by 7.4 percent year-on-year in the third quarter, thanks to exports, manufacturing and retail demand.

In another speech to Parliament last month, Erdogan hinted at a forthcoming change of finance minister, saying “I’m sorry to our friends who defend (high) interests but I cannot and will not walk the same path as them.”

Elvan was the only one who did not join the crowd in applauding these remarks.

According to economist Demiralp, more rate cuts will push deposit rates further into negative territory, which may bring another wave of dollarization and increase the pressures on the lira.

“Thus, it would limit the banks’ ability to transmit further rate cuts into their borrowing and lending rates. When the monetary transmission mechanism comes to a halt, the government may reconsider its easing cycle,” she said.

On Thursday, the central bank governor met with domestic and international investors and economists via videoconference.

Since September, the central bank has cut rates by 400 basis points to 15 percent against inflation that reached about 20 percent.

The recent steps taken by Ankara to mend ties with its previous regional competitors are also seen as part of a larger attempt to reap economic gains and attract investments from such overtures.