David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Egypt Back in the IPO Game With Revived Sale Plan

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    “At the right price there should be plenty of appetite for any Egyptian IPO,” said Hasnain Malik, a strategist at Tellimer in Dubai. However, he said that, in general, foreign institutional investors are more likely to go for IPOs out of the private sector, whereas sovereign wealth funds will be more interested in government-related enterprises.

    “This is because, for sovereign wealth, the concern over whether their interests as a minority investor are subordinated to those of the government is outweighed by their geopolitical interest in the overall country,” he said.

    The benchmark EGX 30 Index has been on a bullish run, rising over 100% in local currency terms from its July low, and is the third-best performing benchmark globally this year. It jumped 3.9% on Thursday, extending gains to a fifth day, and closing at the highest since May 2018.

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    In the Struggle for Big Oil's Soul, the American Vision Wins Out

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    Shell Plc, BP Plc and TotalEnergies SE have spent the last few years trying to convince investors about the merits of net-zero carbon and investment into renewables. But in 2022 they switched to showering them with tens of billions of dollars earned from pumping oil and gas, just like their US peers. 

    The change of course was triggered by Russia’s invasion of Ukraine, which shifted governments’ focus back to energy security and created a huge gap in Europe’s oil and gas supplies that the majors are well placed to fill. 

    “Oil production will be back above 2019 levels,” said BP Chief Executive Officer Bernard Looney, a change in tone from 2020 when he suggested that peak demand may already have been reached. “Demand for this product is strong.”

    Shell has said it will pause the growth in spending at its renewables unit while expanding gas output. BP slowed the planned decline in its fossil fuel production and scaled back its target for emissions reductions. TotalEnergies is opening new liquefied natural gas import terminals in Europe so it can keep growing a business that expanded by 15% in 2022.

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    Don Mullen Says His Property Fund is the 'Citadel' of US Houses

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    DM: Mortgage originators have been decimated. They’re losing both purchase mortgages, down 30%, and they’ve lost 100% of refi [refinancing]. We’re going to see a consolidation in mortgage origination that will be pretty transformational. Within the single-family rental space, you’re going to see the smaller people fall by the wayside, because it’s so hard to access houses the way they’ve done, and the relatively low level of unemployment is going to put a lot of pressure on their ability to service the assets. I expect to see more consolidation in single-family rentals, with the big guys getting bigger over time. Title insurance companies are struggling right now. Other vendors to that space are struggling. I think you’re just going to see—across the whole homeowner­ship ecosystem—massive consolidation. 

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    Brookfield Has $90 Billion for Deals After Big Fundraising Year

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    Brookfield Asset Management Ltd.’s earnings rose in the fourth quarter as it wrapped up a record year of fundraising that has given the firm more than $90 billion to invest. 

    The Canadian alternative asset manager reported distributable earnings of $569 million, or 35 cents a share, up 6% from the prior year. It’s the first quarterly report for Brookfield Asset as a public company after it was spun out of parent Brookfield Corp. in December. 

    The company raised a record $93 billion in capital last year. “Our fundraising outlook remains strong,” Chief Executive Officer Bruce Flatt and President Connor Teskey said in a letter to shareholders. “In 2023, we expect to have three flagship funds in the market, along with several complementary perpetual strategies and other long-term funds.”

    Brookfield Corp. spun off a 25% stake in the division in an effort to gain a higher valuation by separating the money-management business from its own investment capital. Brookfield Asset managed $418 billion in fee-bearing capital at the end of December across asset classes including real estate, infrastructure, credit, private equity and renewable power.  

    The Toronto-based company plans to more than double that to $1 trillion by 2027, driven by ambitious plans to grow in private credit and insurance. Some of the growth may come through acquisitions, Flatt suggested at a conference in December.  

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    Turkey Halts Stock Trading for Five Days and Cancels Some Trades

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    Borsa Istanbul has also canceled trades that were executed on the morning of Feb. 8 before transactions were suspended, citing low trading volumes. Before those cancellations, the benchmark Borsa Istanbul 100 Index had erased $35 billion in value and was headed for its worst weekly performance since the 2008 global financial crisis. 

    Even with Wednesday’s trades being removed, the two days of selling following the deadly earthquakes in Turkey’s southern region wiped out $21 billion in value. Turkish stocks, which are this year’s worst performers globally, entered a technical bear market on Tuesday after falling more than 20% from their January high.

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    Alphabet Falls Most in 3 Months on Chatbot Accuracy Concerns

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    The scrutiny comes as the battle to build the most accurate and effective search engine is escalating. On Monday, Google introduced Bard, whose underlying technology will eventually be built into Google.com. The next day, Microsoft Corp. said it was integrating a cousin of ChatGPT into Bing. On Wednesday, Google hosted a news conference in Paris where it shared more details about the company’s progress integrating artificial intelligence into search.

    “The general sentiment is that ChatGPT and the Microsoft Bing announcement have created a narrative that Google’s search business model is under threat,” said Mark Riedl, a professor at the Georgia Institute of Technology.

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    Jerome Powell Speaks With David Rubenstein

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    Powell says the labor market report from Friday “underscores the message” he sent last week, that there’s a significant road ahead to get inflation down. There’s an expectation that inflation can come down painlessly, but “that’s not the base case.”

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