Tuesday, 23 May 2017

EGX falls most in world yesterday as business digests a 200 bps interest rate hike

TL;DR

What We’re Tracking Today

Egyptian stocks fell the most in the world yesterday among the indices tracked by Bloomberg in the wake of the central bank’s unexpected 200 bps hike in policy rates. Capital Economics’ Jason Tuvey says the move “appears to be the result of pressure from the IMF,” and global emerging markets icon Mark Mobius spoke for many of us here in Egypt when he called the rate hike “a little bit premature” and asked “Rates are so high now, how can a businessman survive?

With the rate hike winning the ire of the business community, IMF Mission chief to Egypt Chris Jarvis came out with a statement in support of the CBE, telling Al Borsa last evening that the move is in line with the government’s goal to lower inflation. He added that the IMF has confidence in the central bank and its monetary policies and will continue to work with it on keeping inflation low. We have a full wrap on reactions to the rate hike — which was, in effect, “the only” business story in Egypt yesterday — in Speed Round, below.

Finance Minister in London ahead of new eurobond sale: Finance Minister Amr El Garhy flew to London on Monday with Deputy Minister Ahmed Kouchouk for meetings ahead of a planned USD 2 bn eurobond issuance, sources tell Youm7. El Garhy had broken news of the eurobonds to Reuters last week; the sale comes after the success of Egypt’s USD 4 bn eurobond offer in January.

Microfinance legislation in the works? We’ll be heading down to visit the folks at the Central Bank of Egypt today for Governor Tarek Amer’s press conference. We’re expecting the announcement of measures to push financial inclusion, though reporters will doubtless be pressing on the rationale behind the rate hike. A number of senior banking executives are expected at the conference, according to Youm7.

The Education Ministry sent a sharp message yesterday as it capped tuition hikes for this year and next at the international and private schools that fall under its jurisdiction. More in Speed Round and Last Night’s Talk Shows.

Military aid to Egypt and Israel will remain unchanged despite headlines declaring“Trump’s Budget Proposes Converting Some Military Grants to Loans.” That’s the take-home message from Reuters, which notes White House’s director of the Office of Management and Budget Mick Mulvaney saying assistance to Egypt and Israel will go untouched despite their being the largest recipients of US military aid under the terms of the Camp David Accords. Aid to Jordan will also be preserved, writes the Wall Street Journal, which broke the story, saying total US military assistance includes, “USD 3.1 bn for Israel, about USD 350 mn for Jordan and about USD 1.3 bn for Egypt.”

The Wall Street Journal’s fantastic series on quants continues this morning with installments headlined:

What We’re Tracking This Week

Public service announcement for Giza residents: Water service will be cut for 24 hours from Wednesday to Thursday morning in certain areas of Giza due to construction on the Rod El Farag Axis project, the Holding Company for Water and Wastewater announced yesterday, Al Masry Al Youm reports.

On The Horizon

EGX trading hours during Ramadan will be from 10:00 am to 1:30 pm, the bourse said yesterday. The shortened trading day kicks into effect on Sunday.

Ramadan kicks off at sundown on Friday night, as matters now stand.

Gold tender results before the end of next week: The Petroleum Ministry plans to announce the results of its global gold exploration tender before the end of next week, an official from the Mineral Resources Authority told Youm7 on Monday.

The Contractors’ Compensation Act could be coming to a plenary session vote at the House by 29 May and go into effect before the end of June, Federation of Egyptian Contractors chief Hassan Abdel Aziz speculates. The bill — which will compensate contractors for losses incurred on government contracts after the EGP float — had been approved by MPs in March and passed on to the Council of State for a final revision.

Enterprise+: Last Night’s Talk Shows

As it should have been, the CBE’s decision to hike interest rates by 200 bps on Sundaydominated the airwaves last night.

On Kol Youm, Amr Adib spoke to National Bank of Egypt (NBE) Vice Chairperson YehiaAboul Fotouh, who believes the hike will only negatively affect “large clients” including manufacturers with significant debt. He also suggested the hike will force many companies to tighten their payment terms. Aboul Fotouh also said that the decision will help banks attract liquidity, since it makes deposits more attractive, with interest rates that could climb to highs of 13% on one-year CDs (watch, runtime: 7:03).

Banque Misr Chairman Mohamed El Etreby told Adib that the hike will not affect high-yield CDs, which will remain fixed at 16% and 20% rates, nor will it see banks raise rates for small business financing offered under the central bank’s SME initiative. The interest rate hike will not impact the central bank’s mortgage finance initiative either, he reportedly told Al Masry Al Youm earlier in the day. Banque Misr however is yet to decide if it will increase its own interest rates on deposits and savings, but it very well might, El Etreby said (watch, runtime: 2:08).

Adib also spoke to Acumen-BPE Chairman Hany Tawfik on his opposition to the ratehike. Tawfik explained that the central bank has other tools to employ to attract liquidity, arguing that the hike is likely to further inflationary pressures and add some EGP 60 bn to the government’s debt service burden, which he sees reflecting on the budget deficit (watch, runtime: 3:52).

Economist Hany Genena, on the other hand, said the hike was justifiable, saying that it was a preemptive move to avoid another FX crunch later on in the year, as it’s expected to help bolster foreign currency inflows. Genena acknowledged that market growth will suffer temporarily due to the CBE’s decision, but said that it was necessary to make sacrifices now to avoid falling into old pitfalls later (watch, runtime: 4:08). In the meantime, the government needs to strengthen the social safety net to cushion low income earners.

Elsewhere, Supply Minister Ali El Moselhy told Al Hayah Al Youm’s Lobna Asal that he promised MPs he would speak with his colleagues in cabinet about increasing monthly subsidy card allowances to help welfare beneficiaries keep up with rising inflation (watch, runtime: 2:24).

Lamees also spoke to Supply Minister Ali El Moselhy about the Ahlan Ramadansupermarket expo, which was launched yesterday by El Moselhy, Prime Minister Sherif Ismail, and Trade Minister Tarek Kabil with over 200 companies participating, according to Al Ahram. El Moselhy told Lamees that the expo will continue to run throughout the holy month instead of wrapping up on 26 May as was originally planned (watch, runtime: 8:26).

Meanwhile on Yahduth Fi Misr, Sherif Amer discussed the new caps on private schooltuition increases with Education Minister Tarek Shawky, who said that the decision — which came after a discussion at the cabinet table — is meant to protect parents from “random” and “unjustified” increases of up to 20-30%.

Speed Round

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Voices in the wilderness? The central bank’s decision to increase policy rates by 200 bps on Sunday is probably “good news” for the EGP, Renaissance Capital’s chief economist Charles Robertson believes, the Financial Times reports. The move came later than hoped, Robertson says, but it shows “commitment to getting inflation back down again, after months where it has consistently been running high. Currency stability — which should be supported by the higher interest rate — will help drive down month on month inflation. Currency appreciation should help more.” RenCap still believes the EGP continues to be the cheapest EM currency, as it compares the current exchange rate to a “fair value” closer to EGP 14-15 per USD 1.

Proving there is one in every barrel, the Federation of Egyptian Chambers of Commerce is down with the rate hike. The Federation’s General Secretary Alaa Ezz described the move as “necessary medicine” to help curb inflation and “the only right move,” Al Borsa reports. He added that the inflation was a bigger threat to investors than a mere 200 bps spike in interest rates, which he downplayed as only a ‘marginal’ hike. Despite the shock to the EGX yesterday, Ezz believes the decision will not negatively impact foreign investors considering the higher rates of return.

People actually running business in Egypt were “in shock” following the hike, Ihab Farouk writes for Reuters’ Arabic service. “We don’t understand the logic of this decision,” Prime Holding economist Eman Negm said, telling Reuters that the rate hike may have the opposite effect of worsening inflation levels by raising borrowing costs for companies. An unnamed investment banker went a step further, calling the decision — taken under the recommendation of the IMF, according to an unnamed government official — “disastrous … what happened is a big mistake, but no one wants to listen.” A Cairo-based banker told the wire service, “It is clear that the IMF is going by the book while Egypt is different to other countries … so what works elsewhere does not necessarily work here. There are different dynamics, such as that less than 10 percent of the population is banked.”

Hani Berzi, CEO of top snack food maker Edita and head of the Food ExportersCouncil, says the rate increase was “an unpleasant surprise” that adds to the borrowing costs and increases pressure on state finances. Others in his industry shared his view, with the head of the food industries division of the Federation of Egyptian Industries (FEI), Ashraf El Gazayerli, saying the decision will be reflected in higher production costs and will slow down market activity and investment decisions. He tells Al Borsa that the move would exacerbate food inflation.

The fear was reflected in the auto industry as well, as Alaa Saba from the Automotive section of the Federation of Egyptian Chambers of Commerce says the rate increase will feed into an increase in inflation in the future. He says “if I have to borrow now it’ll cost me over 18% … this will feed into higher prices for everyone.” Bavaria Auto Group board member Khaled El Saad tells Al Borsa that this will negatively impact sales as 70% of car buyers borrow.

The Federation of Egyptian Industries (FEI) issued a statement yesterday saying the hike was poorly timed and puts extra pressure on Egyptian industry. The higher interest rates will hamper the ability to expand and attract new investments, FEI head Mohamed Elsewedy says, according to Al Borsa. Elsewedy called on the central bank to allocate funds to provide credit to Egyptian manufacturers at reduced interest rates to support their competitiveness.

OTMT boss Naguib Sawiris said the move would give foreign investors pause, as it reflects a lack of stability in monetary policy considerations, Al Mal reports.

Emerging markets icon Mark Mobius won our hearts when the Templeton Emerging Market Group executive chairman told Bloomberg that raising rates “go[es] well and good when the environment is healthy. But in an environment like in Egypt now, it is not a healthy situation at this stage… Unfortunately, people believe that if you raise interest rates, you lower inflation and inflation expectation… This is not necessarily the case.” Echoing Berzi’s comments, Mobius says: “Rates are so high now, how can a businessman survive?” And agreeing with RenCap’s notion that the rate hike will support the EGP, Mobius suggests that a weaker EGP is preferable at this stage to “get exports going.” Salah Shamma, head of Investment, MENA Equity, Franklin Templeton Investments (ME) told Reuters that he expects the rate hike to support the EGP and continue to attract foreign inflows, which should replenish the country’s foreign reserves and find its way to the local banking sector. Pharos Holding breaks down the decision here (pdf).

The banking community did not immediately hike rates. Official reactions from the sector have been muted as senior banking executives were reportedly locked in meetings all of Monday to study the impact of the decision, Daily News Egypt reports. Top state-owned banks the National Bank of Egypt and Banque Misr will await until their Alco (assets and liabilities committees) meetings sometime on Wednesday, according to Al Masry Al Youm. Banque Misr’s head Mohamed El Etreby said the hike in interest rates would have no impact on 18-month CDs issued by banks following the EGP float with yields of up to 20%. A notable exception to this wait and see plan was Banque Misr raising interest rates on VIP savings deposits 200 bps, Al Mal reports.

The Ismail government put on its best poker face, with the sole comment of note being one from Deputy Finance Minister Mohamed Maait, who said the inflation rate spike would not impact the FY2017-18 budget currently being discussed by the House of Representatives, Al Borsa reports. Speaking of the House, opinions appear to be divided between its budget and economic committees. Budget Committee member Mohamed Fouad called for an inquiry into the move, stating that it foreshadows a monetary crisis. The interest rate hike appears to have found support from House Economic Committee member Ashraf El Araby, according to Al Mal.

Meanwhile, average yields on Egypt’s five-year and 10-year treasury bonds jumped at an auction on Monday, according to the Finance Ministry. The yield on the five-year bond rose to 18.760% from 17.357% at the previous auction, while the yield on the 10-year bond increased to 18.652% from 17.244%.

Tuition hikes at privately-owned international schools will be capped at 14% next school year and 7% every year thereafter, according to a decision by Education Minister Tarek Shawki, AMAY reported on Monday. Private Arabic and language schools will be allowed to raise their tuition fees between 7-11% each year based on their tuition grades. The decision is meant to prevent private schools from what have been described as unfair increases to tuition fees by up to 20%.

Ras Sudr icon Kiteloop razed on the order of Tourism Development Authority; kitesurfing camp has loyal domestic and international following. Egyptian kiters and beach-goers were shocked at the news yesterday that Kiteloop, a kitesurfing camp in Sinai with a cult following at home and internationally, has been razed to the ground. In a phone call with Enterprise last night, Karim Khashab, 35, one of four entrepreneurs who built the company starting in 2011, explained that security forces appeared yesterday on their beach with bulldozers and completely demolished 20 guest rooms and the kitesurfing school and facilities. “We weren’t even given a chance to evacuate or remove our valuables,” he explains. With the exception of some furniture and a few appliances, it was a total loss, Khashab says, estimating the damage to be in the EGP 6 mn range at a minimum.
So what happened? Khashab says he and his partners had been renting the land for the past six years. In June 2016, they were served with a demolition order on the grounds that their landlord was in default with the Tourism Development Authority. Although Kiteloop submitted an official request to settle itself what was owed on the land, the TDA would not allow them to do so. What’s completely baffling to Khashab is that he says two days prior to the incident, the landlord himself appeared at the TDA to let them know that he was ready to settle. Even if there was a conflict over the land, wouldn’t it have made more sense to slap a padlock on a tax-paying business until the issue was resolved — instead of headlines going viral on social media and giving a poor image of Egyptian tourism and investment internationally?

Rebuilding: Khashab, a former finance professional turned kite surfer / certified IKS kitesurfing judge, has hosted international tournaments and thousands of international kiters at Kiteloop, which had become a global kitesurfing destination because of its perfect wind conditions. He and his partners are determined to rebuild, and he says they’ll continue to try and settle outstanding payments to the TDA. Check out images of the destruction and additional commentary on Cairo Scene and Facebook.

Tanmeyah, one of the nation’s largest private-sector microfinance providers, is lookinginto introducing mobile payments to its platform as part of its expansion plans in the coming period, Chairman Amr Abouleish tells Al Mal. The move comes amid rising demand for SME funding, Abouleish says.

The House of Representatives appears to be moving against raising water prices during discussions of the FY2017-18 budget, according to Al Shorouk. The House Housing Committee issued a statement through its head Alaa Waly condemning proposed hikes in water prices announced last month by the chairman of the Holding Company for Water and Wastewater Mamdouh Raslan. Waly said that any decision by the government to raise water prices must go through Parliament first. He added that the House is waiting on the government to rework the Drinking Water and Wastewater Act, where parliament recommended articles that end raising prices on drinking water.

A suspected bombing at an Ariana Grande performance in the UK city Manchester left 19 dead and at least 50 others injured overnight, police officials said, according to Reuters. Terrorism is suspected.

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Image of the Day

Yes, ladies and gentlemen, these rats are alive and kicking. For the coming months of summer, the San Francisco Dungeon is offering people a chance to dine alongside live rats and get a true feel of what the Bay area was like some 200 years ago. For a USD 50 premium, Dungeon dwellers can sip some coffee or water at Rat Cafe, while eating a breakfast pastry surrounded by rats provided by the Rattie Ratz group, “a local nonprofit dedicated to rat adoption and welfare,” says Buzzfeed. Fret not, a spokesperson from the Dungeon says, the rats won’t be going where food is being cooked. Not that that helps us in anyway. Did we mention that you get 15 minutes to “interact” with the rats once you’re done with your coffee?

Egypt in the News

Topping coverage of Egypt on a slow news morning is the nation’s top billing among the Sunni Arab alliance that US President Donald Trump was promoting during his Middle East tour.

Having the US support forming a NATO-like pact between the Arab states would be a “terrible mistake,” Rashid Khalidi writes for The Guardian. He says the US would be taking sides in a sectarian conflict and would alienate Shia populations and Iran. The Washington Post appearing to have suffered collective writer’s block: The best its writers can muster is to ridicule El Sisi, Trump and King Salman’s opening of the new Global Center for Combating Extremist Ideology.

Never one to miss an opportunity for some political payback for the thrashing he took in the Republican primaries last year, Sen. Marco Rubio took to CNN’s State of the Union to criticize Trump’s speech in Saudi Arabia and for not pressing human rights with El Sisi and GCC leaders (watch, runtime: 15:38).

Amira Sayed Ahmed asks if Egypt is serious about enforcing a bill that criminalizes the release of public religious edicts without a license, in a piece for Al-Monitor. The bill comes with a fine and a potential jail sentence and restricts issuing fatwas to four official entities. Salafists are concerned about the bill, who say it limits their freedom of expression.

Forcing a change to the religious discourse is not the way to counter terrorism, researcher Georges Fahmi argues in a piece published by The Conversation Africa and picked up by The Huffington Post. Youth empowerment politically and economically is the way to go, in addition to refuting Salafi ideas. In a study that is yet to be published, 95% of jihadists partook in violence for reasons other than rigid religious ideas. “Most were spurred to extremism by their political and social conditions,” he posits.

Families living in the Zabaleen districts of Cairo are trading their health for livelihood, Hazem Badr writes for SciDev. Badr says the residents are vehemently opposed to the proposed garbage collection kiosks project by the government.

Worth Watching

Egypt wants to see more investment from the Chinese government and private sector and worked to drive home that message at the Belt and Road Forum, Investment and International Cooperation Minister Sahar Nasr said in an interview with China’s CTGN Arabic in Beijing last week. The minister said that China is currently the 21st biggest investor in Egypt, and that she hopes to see it among the top in the near future. The Egyptian delegation at the Belt and Road Forum focused on showcasing investment opportunities such as the New Administrative Capital, in addition to breaking down the country’s economic and legislative reforms, including the newly passed Investment Act, the minister said. She also discussed her ministry’s efforts to arrange financing for private sector companies and Egypt’s role in founding the Asian Infrastructure Investment Bank. You can watch the interview in full here (runtime 29:50).

Diplomacy + Foreign Trade

Eritrea says its deepening ties with Egypt do not mean that it will be looking to disrupt the construction of the Grand Ethiopian Renaissance Dam (GERD), President Isaias Afwerki said, according to Bloomberg. “The claim by the Ethiopian regime that the relation between Eritrea and Egypt is targeting the millennium dam is unfounded,” Eritrea’s Information Ministry says. The Ethiopian government had claimed that “forces receiving support from Egypt and Eritrea are trying to destabilize the country.”

A US trade delegation will visit in October to explore investment opportunities, US-Egypt Business Council Chairman Omar Mohanna tells Al Borsa. A free trade agreement will be signed between Egypt and the US “in the coming period,” he added. US ambassador to Egypt R Stephen Beecroft had said on Sunday an Office of the United States Trade Representative visit to Egypt will “lay the groundwork for a resumption of talks” on the agreement.

Meanwhile, a delegation of high-ranking Asian Infrastructure Investment Bank (AIIB) officials landed in Cairo on Monday to discuss potential investment opportunities with various officials, Al Ahram says. In addition to meeting Finance Minister Amr El Garhy and Deputy Ahmed Kouchouk, the delegation is also set to meet with officials from the SCZone, CBE, electricity and public enterprises ministries, World Bank, and European Bank for Reconstruction and Development, as well as executives from EFG Hermes.

…And there’s more: a delegation of Bulgarian and Serbian companies is set to visit Cairo in September, Egyptian Council for Sustainable Development Chairman Motaz Raslan tells Al Borsa. The delegation will explore investment opportunities including in manufacturing, tourism, trade, agriculture, and electrical equipment.

President Abdel Fattah El Sisi invited French President Emmanuel Macron to visit Egypt during a phone call yesterday, according to an emailed presidency statement. The two leaders discussed the ongoing investigation into the EgyptAir MS804 plane crash, as well as regional issues such as the situation in Libya.

Irish MP Eoin Ó Broin has urged the Irish government to bring a case against Egypt to the International Court of Justice to release of Ikhwani Egyptian-born Irish citizen Ibrahim Halawa. The Sinn Féin representative in the Irish Dail said the government cannot take Egypt at its word that the trial will conclude soon and should drop its diplomatic approach, The Times reports.

Energy

Eight firms submit offers for Egypt-Saudi interconnection project -sources

Eight international firms submitted technical offers for the Saudi-Egyptian electricity interconnection project, Electricity Ministry officials tell Daily News Egypt. The pool of bidders reportedly includes Saudi’s NCC, China’s State Grid Corporation, Korea’s Hyundai, India’s KEC International Limited, Energy China, and India’s Kalpataru Power Transmission. Egyptian Electricity Transmission Company Chairman Gaber El Dessouki was in Riyadh earlier this month to follow up on the project, which will see Egypt and Saudi exchange up to 3 GW of electricity. Trial operations are set to start in 2019.

11 global companies to submit offers for EUR 250 mn Gabal Al Zeit wind farm

11 international companies will be presenting offers for the EUR 250 mn Gabal Al Zeit wind farm at the end of May, an unnamed source tells Al Mal. According to the source, Vestas, Axion, and Siemens are among the companies expected to compete for the 250 MW project. The French Development Agency, Germany’s KfW, and the European Investment Bank are among the global institutions financing the project.

ABB to establish USD 10 mn power transformer factory

ABB is planning to establish a USD 10 mn power transformer factory in 10th of Ramadan City, the company’s power products unit manager Mohamed Salem tells Al Borsa. The factory is expected to have a production capacity of 10k transformers per annum.

Basic Materials + Commodities

Egyptian interest in US wheat is just temporary -Reuters

US wheat exports to Egypt will stay rare, despite the most recent transaction in which Egypt bought 115k tonnes of US wheat, Reuters says. The purchase was just a stopgap measure to ensure enough supplies were present until offerings from Egypt’s favored sources in the Black Sea region were more readily available, traders say. Reuters expects Egyptian interest in US wheat will dry up once supplies from the Russian harvest begin arriving at export ports this summer.

Gov’t targets increasing grape exports by 25% y-o-y this season

The Agriculture Ministry wants to increase grape exports by 25% y-o-y to 126k tonnes during the current season that spans May to November, Al Borsa reports. An agreement signed by the ministry last year with Chinese companies is expected to boost grape exports, food producer Belco’s Chairman Sherif El Beltagui says. China imported only about 20 tonnes of grapes from Egypt in 2015, but this can increase to 20k if the right promotion campaigns are implemented, says El Beltagui.

Health + Education

Orascom Construction, BPE Partners among those said to have qualified for 200 schools PPP project

Al Borsa released the names of the companies it says have qualified for the 200 schools PPP construction project. 43 companies have been qualified for the project that has an estimated value of EGP 3 bn. Among the qualified companies, it says, are BPE Partners, Al Madaen Holding, Carillion, a consortium led by the UK’s Bridge Capital, and the Orascom Construction and Sheraton Heliopolis Schools consortium. The complete list can be found here.

Real Estate + Housing

Housing Minister launches first phase of EGP 50 bn iCity October

Ground broke yesterday on the first phase of the EGP 50 bn iCity October development, Al Borsa reports. The residential project is being developed by the New and Urban Communities Authority in partnership with the Mountain View and Saudi’s SISBAN JV.

Tourism

Tourist arrivals up by 48.6% y-o-y in March

The number of incoming tourists increased in March by 48.6% y-o-y to 654.9k tourists, according to CAPMAS statistics, Al Borsa reports. 31.9% of the arrivals were from Western European countries, with Germany topping the list. Tourists from the Middle East followed, with 24.6% of all arrivals. With Russian tourists still absent, Eastern European tourists made up 21.6% of the visitors, mainly from Ukraine.

Telecoms + ICT

CIT Ministry in talks to free up additional 4G frequencies

The CIT Ministry is negotiations with security entities to clear up additional frequencies for MNOs to use in providing 4G services, Al Mal reports. CIT Minister Yasser El Kady says the ministry will deliver the frequencies to MNOs once it is done redistributing them and after the agreements for domestic roaming are signed with Telecom Egypt.

Automotive + Transportation

Committee studying alternatives to automotive directive to submit report next week

The joint CBE-auto industry committee studying alternatives to the automotive directive will submit a report to bank Governor Tarek Amer next week, Al Borsa said on Monday. Back in April, it was announced that the committee — which has the backing of detractors of the automotive directive — had completed its report, the results of which did not differ all that much from terms of the directive. The Trade Ministry had said earlier this month that it plans to revise some unspecified sections of the directive after the EU’s ambassador to Cairo confirmed that it violates FTAs with the EU. The bill proposes giving local assemblers and manufacturers payouts and tax breaks to protect them against what are perceived as unfair advantages enjoyed by European, Turkish, and Moroccan imports.

Banking + Finance

EG Bank to borrow USD 20 mn from EIB for SME financing

EG Bank signed an agreement with the European Investment Bank (EIB) for a USD 20 mn loan to finance SME projects, the bank said, according to Al Mal. The funding’s details and maturity were not disclosed.

Other Business News of Note

VAT hikes movie production costs by EGP 2 mn per movie -Cinema Chamber head

Applying the value-added tax (VAT) increases the cost of movies filmed in Egypt by an average of EGP 2 mn, the Federation of Egyptian Industries’ Cinema Chamber head Farouk Sabry tells Al Borsa. The Chamber has been pushing for lowering the VAT rate, but the Tax Authority refused. The Chamber is also looking to get approvals to waiver fees for shooting in touristic sites for Egyptian productions and lowering them for foreigners’.

PureLife Filters to establish USD 1.3 bn chemical industries factory

PureLife Filters is planning to establish a USD 1.3 bn chemicals plant in Ain Sokhna, company chairman Sayed Habish announced yesterday, Al Mal reports. Habish says the investment is backed in part with Saudi and Japanese funding and disclosed no further details on the project.

Legislation + Policy

MPs draft legislation to promote and organize medical tourism

A parliamentary subcommittee is preparing a draft law to promote and organize medical tourism in Egypt, House Health Committee member Shadia Thabet said, Al Mal reports.

Egypt Politics + Economics

PM Ismail at the House for Tiran and Sanafir talks

Prime Minister Sherif Ismail met with MPs at the House of Representatives on Monday to discuss the Tiran and Sanafir islands’ sovereignty handover agreement with Saudi Arabia, AMAY says. The discussion extended to the “agreement’s legal and political dimensions,” as well as the House’s right to deliberate on it after it was rejected by the Supreme Administrative Court, according to MP Ahmed Zeidan, who disclosed nothing more about the meeting.

National Security

British, French delegations inspect security at Cairo Airport this week

A delegation from the UK’s Civil Aviation Authority is in Cairo till Thursday to inspect security procedures at Cairo International Airport, according to Al Masry Al Youm. Such a visit is conducted every three months. This comes as a French Civil Aviation Authority delegation is set to begin its inspection of Cairo Airport today. These follow a Canadian delegation’s inspection last week.

Army Chief of Staff Mahmoud Hegazy meets with UK Chief of Defense Intelligence

Armed Forces Chief of Staff Mahmoud Hegazy met with the UK Chief of Defense Intelligence Philip Osborn in Cairo yesterday, according to a statement from the Armed Forces. They discussed regional matters and bilateral military cooperation including information exchange.

On Your Way Out

Sahel season getting hit? Rental prices in Sahel are being hit by an unusual slowdown, according to Al Mal. In a limited review, Al Mal says it found that usual hotspots like Marina are seeing very weak rental demand. Initial estimates forecast a slower-than-usual summer season, particularly following slow activity in Sham El Nessim and before Ramadan.

The Giza Pyramids came in 43rd place in a list of the 100 most photographed landmarks worldwide, with over 258K pictures on Instagram, Sony Mobile research found, according to a press release. The Eiffel Tower came in first with 4.7 mn pictures on Instagram, while Burj Khalifa was fifth 1.5 mn.

Clash, In the Last Days of the City win at Arab Critics Awards: In the Last Days of the City” won best film at the Cannes film festival’s first Arab Critics Awards, while “Clash” walked away with the awards for best director and best screenplay, Ahram Online reports. This year is the inaugural edition of the Arab Critics Awards, whose jury is comprised of 26 film critics from 15 countries.

Denys Johnson-Davies dead at 94: If you’ve read Naguib Mahfouz in English, odds are good it was translated by Denys Johnson-Davies. Same goes for Yusuf Idris and countless other Egyptian and Arab writers and poets. Johnson-Davies did more than most to make Arabic literature accessible in the English language. An obituary in Ahram Online reports that he died yesterday. Read Johnson-Davies’ obituary of Naguib Mahfouz for the Guardian, check out the Ahram Online obit, or have a look at how the New York Sun took note of his 2006 “The Anchor Book of Modern Arabic Fiction,” which was the first time we encountered the claim that “the first Arabic novel dates from 1929.”

By The Numbers

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Pharos Holding - http://www.pharosholding.com/

EGP / USD CBE market average: Buy 18.0215 | Sell 18.1253
EGP / USD at CIB: Buy 18.05 | Sell 18.15
EGP / USD at NBE: Buy 17.95 | Sell 18.05

EGX30 (Monday): 12,648 (-2.5%)
Turnover: EGP 1.6 bn
EGX 30 year-to-date: +2.5%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session down 2.5%. Yesterday, all EGX30 stocks ended in a negative territory except for Porto Group and Eastern Co. that ended the day almost flat. CIB, the index heaviest constituent ended down 1.1%. Monday’s worst performing stocks were: Cairo Oils & Soap down 8.9%, Ezz Steel down 8.9%, and Qalaa Holdings down 8.5%. The market turnover was EGP 1.6 bn, and foreign investors were the sole net buyers.

Foreigners: Net Long | EGP +399.0 mn
Regional: Net Short | EGP -47.7 mn
Domestic: Net Short | EGP -351.3 mn

Retail: 47.3% of total trades | 48.6% of buyers | 46.0% of sellers
Institutions: 52.7% of total trades | 51.4% of buyers | 54.0% of sellers

Foreign: 24.7% of total | 36.4% of buyers | 12.9% of sellers
Regional: 8.5% of total | 7.1% of buyers | 9.9% of sellers
Domestic: 66.8% of total | 56.5% of buyers | 77.2% of sellers


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PHAROS VIEW

Against All Odds, CBE Raised Policy Rates by 200 Basis Points

Following yesterday’s nominal interest rate hike, Pharos projects the annual inflation rate to reach 14.2% in FY2018-19. This is in line with the MPC’s announced target range of 10-16% by 4Q2018. However, this remains above the IMF’s projection of 10.9% and 8.1% in FY2018/19 and FY2019/20, respectively. Tap here to read the full report.

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Calendar

22-23 May (Monday-Tuesday): North Africa Mobile Network Optimisation Conference, Cairo.

27 May (Saturday): First day of Ramadan (TBC).

07-09 June (Wednesday-Friday): 19th Annual Africa Energy Forum, Copenhagen, Denmark.

26-28 June (Monday-Wednesday): Eid Al-Fitr (TBC).

30 June (Friday): 30 June, national holiday.

15-19 July (Saturday-Wednesday): SSIGE’s GeoMEast 2017 International Congress and Exhibition, Sharm El Sheikh.

23 July (Sunday): Revolution Day, national holiday.

03-05 August (Thursday-Saturday): Watrex Expo Middle East, Cairo International Exhibition & Convention Center.

26 August (Saturday): 27th Egyptian-Jordanian Joint Higher Committee meeting, Amman Jordan. (TBC).

02-05 September (Saturday-Tuesday): Eid Al-Adha, national holiday (TBC).

17-19 September (Sunday-Tuesday): Pipeline-Pipe-Sewer-Technology Conference & Exhibition, Intercontinental Citystars Hotel, Cairo.

18-19 September (Monday-Tuesday): Euromoney Egypt conference, venue TBD.

20-23 September (Wednesday-Saturday): 2017 Automech Formula car expo, Cairo International Convention Center, Nasr City, Cairo.

22 September (Friday): Islamic New Year, national holiday (TBC).

03-05 October (Tuesday-Thursday): J.P. Morgan’s Credit and Equities Emerging Markets Conference, London, UK.

18-19 October (Wednesday-Thursday): Middle East Info Security Summit, Sofitel El Gezirah, Cairo.

06 October (Friday): Armed Forces Day, national holiday.

18-20 October (Wednesday-Friday): AfriLabs annual gathering with the theme “Smart Cities,” The French University, Cairo. Register here.

01 December (Friday): Prophet’s Birthday, national holiday.

03-05 December (Sunday-Tuesday): Solar-Tec, Cairo International Exhibition & Convention Centre.

03-05 December (Sunday-Tuesday): Electrix, Cairo International Exhibition & Convention Centre.

08-10 December (Friday-Sunday): RiseUp Summit, Downtown Cairo.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594). Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2016 Enterprise Ventures LLC.