Tuesday, 6 December 2016

Reserves are up, PMI is down — and Sunday is a day off

TL;DR

What We’re Tracking Today

** This coming Sunday (11 December) could be a national holiday after all. The Egyptian Exchange will be closed on Sunday in observance of the Prophet Muhammad’s Birthday, per an emailed statement we received yesterday, but there’s still no official word from Cabinet on whether it’s a national holiday.

Obour Land has issued its intention to float, guides on EGP 9.00-9.68 per share with subscriptions for the offering opening this morning. Cheese maker Obour Land ITF’ed yesterday, announcing it will offer 80 mn shares (or c. 40% of its existing share base) on the Egyptian Exchange. Some 56 mn shares have been earmarked for an institutional offering, while the remaining 24 mn shares will be offered to retail investors in Egypt. Shares on offer through the Reg S / Rule 144A-compliant transaction are all being sold by members of the founding Sherif family.

How big is Obour Land: The company had a top line of just north of EGP 1 bn in 9M2016 (claiming 25% y-o-y growth), EBITDA of EGP 153 mn in the same period, and a bottom line of about EGP 110 mn, good for a net margin of 10.4% in the first nine months of the year. Obour Land claims a 39% share of the carton-packed white cheese market and has 27 current SKUs, with plans to diversify into juice and milk products.

What’s the timeline? The subscription period for the offering gets underway today (December 6). The institutional bookbuilding process should close on Friday, December 9. Bookrunner CI Capital will announce pricing of the offering on Sunday, 11 December. The subscription period closes on Moreover, the subscription period will close on 13 December, and the first day of trading is slated for Thursday, 15 December.

Need more information? There’s a fair bit more in the company’s intention to float (pdf). CI Capital is sole global coordinator and bookrunner, Matouk Bassiouny is legal counsel to the issuer, while Norton Rose Fulbright is international counsel. Grant Thornton prepared the FV report.

Otherwise, how slow a news day is it? Slow enough that we’re going to indulge our love of year-end content once more this morning:

iSheep, take a walk on the Android side: We iSheep still think we get the best of both worlds (amazing hardware + Google’s services) on our iPhones, but it’s still interesting to have a look at the Google Blog’s lists of “the most popular apps, games, music, movies, TV shows and books globally in 2016” in the Google Play Store. There’s a top five for each, headed by: Face Changer 2 (app), Pokemon Go (game), Stressed Out, by Twenty One Pilots (song), Deadpool (movie), Game of Thrones (TV show), and Deadpool Kills the Marvel Universe (book — and yes, we’re taking that last one as a comment on the state of humanity).

If the words “Sears Christmas Wish Book” give you chills (of the right sort), know this: The Verge’s 2016 Holiday Gift Guide is the new Sears Wish Book (it was never the “Christmas” Wish Book, so far as we can tell — contrary to our failing memory). As good children of the 1970s and 1980s, we can tell you: The best part about a digital wish book is that there’s no fighting over who gets to look at it, and when. The worst part about a digital wish book: We’re too old to fight with our (similarly elderly) siblings over who gets to read the print edition, and when.

Also worth a look this morning: The Financial Times’ ranking of top European business schools is now out. London Business School tops the ranking for the third year in a row, followed by HEC Paris, Insead (France), IE Business School (Spain) and the University of St. Gallen (Switzerland). The FT’s overview of the package is here, while the full rankings are here — both are behind paywalls, as usual.

Add to the list of jobs that could disappear in the future: Shopkeeper. There will never be a substitute for high-end service from a human being, but the future of shopkeepers looks a little grimmer this morning after Amazon announced the launch of “Amazon Go,” a service that lets you pull stuff off the shelf and walk out of the store — without checking out. Apparently, a bunch of sensors, cameras (they call it “computer vision” not “creepy spycams”) and “deep learning” will figure out what you took off the shelf and charge your account accordingly. Have a look at Amazon’s landing page explaining the program, or check out coverage (pun only slightly intended) at the Financial Times (paywall) or Business Insider, which has wall-to-wall coverage of the launch (here and here) and what it could mean for America’s job market.

Closer to home: Slovenian President Borut Pahor and a business delegation conclude their two-day visit to Egypt, and the even Building a Sustainable Future for Solar in Egypt takes place today at the Sonesta Hotel, Cairo.

What We’re Tracking This Week

If we had the energy to do anything with our 28-hour-long weekend, we would be at RiseUp Summit at Ahmed El Alfi’s wonderful Greek Campus. Check out the entrepreneurism summit’s website, which features an updated agenda and a full list of very interesting speakers.

Also: We’ll admit to being intrigued (on behalf of the resident nine-year-old, who is a budding cartoonist) in Egypt Comix Week, which runs through Saturday at locations around Cairo and Alexandria.

Citi’s 2016 Global Healthcare Conference runs tomorrow and Thursday in London, while the KarmSolar Annual Forum, a RiseUp satellite event, is slated to take place on Thursday at Al Falaki Theater, Downtown Cairo. Registration information for the KarmSolar event: annual.forum@karmsolar.com

On The Horizon

The African Development Bank will vote on issuing second tranche of USD 1.5 bn loan on 12 December.

There’s are a number of conferences coming up next week, but we’re most excited about our friends at Al Borsa / Business News hosting their Third Annual Egypt Automotive Summit at the Semiramis InterContinental Cairo on Tuesday, 13 December.

Enterprise+: Last Night’s Talk Shows

In one of his most quotable episodes so far, Kol Youm’s Amr Adib said “it was the government that is damaging tourism” in reference to pictures taken by Japanese tourists of the dilapidated Aswan train station. Other choice barbs: “They have money for a new capital, but not for a train,” “tourism used to bring us money like roz,” random pot-shots at the (frankly very good) This is Egypt tourism promotion campaign (watch, runtime 3:55; his borderline-racist impression of the Japanese is at 1:31).

Adib’s rant had an effect: Kamel El Wazir, head of the Armed Forces’ Engineering Authority, subsequently called in to say President Abdel Fattah El Sisi, who reportedly followed Adib’s coverage on the night before, had ordered the authority to fix the station (watch, runtime: 3:34).

Adib also discussed video of what purports to be rotten tomatoes being used at a Heinz factory in Sixth of October (more on that in Basic Material + Commodities): “I hope all of this might be false … so as to not damage the company’s reputation,” he said (watch, runtime: 10:57). Adib backed another campaign to support the locally-manufactured products, named “Men Enharda Masry” (watch: runtime:1:57).
Lamees Al Hadidy spoke at length of the fertilizer industry’s push to raise prices in the wake of the float, which has sent production costs through the roof as a primary feedstock — natural gas — is priced in in USD. Sherif El Gabaly, head of the chemical industries division of the Federation of Egyptian Chambers of Commerce, called in to complain that “The government is pricing fertilizers at EGP 2,000 per tonne, while the cost of production has now reached EGP 3,000 per tonne.” (watch, runtime: 9:03).

Also on Lamees’ agenda: Talks between the government and the pharma industry on a price agreement have broken down, says industry official Alaa Ouf (watch: runtime: 4:00), and the poultry industry’s crisis is limping to a close amid the government’s decision to reverse its temporary tariff cut. All the industry could say last night is that there are vague plans to create a company that will import production inputs (watch: runtime: 6:09).

Finally, on Al Qahera Wel Nas, Ibrahim Eissa applauded the State Commissioner’s Authority on upholding a court ruling annulling the transfer of Tiran and Sanafir to Saudi Arabia, which he characterized as “a sale.” (More on the decision in the Speed Round) (watch, runtime: 38:29).

Speed Round

Speed Round is presented in association with

Net international reserves at the Central Bank of Egypt increased by USD 4.02 bn m-o-m to USD 23.06 bn at the end of November. Central Bank Governor Tarek Amer had hinted that the bank was targeting to get reserves to reach a value of around USD 25 bn.

No recovery in PMI: Egypt’s non-oil private sector’s downturn gathered pace in November with the Emirates NBD PMI compiled by Markit showing a drop to 41.8 from 42.0 in October. Operations were impacted largely by increased cost pressures as the currency weakened. “Raw materials were reported to have become largely unaffordable and in short supply, contributing to further sharp falls in output and purchasing. Meanwhile, with a number of firms passing higher costs through to charges, new orders also dropped markedly. As a result, some companies cut back on staff numbers in an effort to control costs.” The drop in the PMI reading was the strongest since July 2013. Emirates NBD senior economist Jean-Paul Pigat says: “The ongoing downtrend evident in November’s survey highlights that there will be no quick fixes to Egypt’s economic difficulties, even following the EGP devaluation earlier in the month. In this environment, it is crucial that authorities remain committed to their IMF-supported reform program in order to anchor investor confidence.”

OPEC invites non-member producers to talks in Vienna: OPEC invited 14 non-member crude oil producing countries, including Egypt, to talks this week in Vienna aimed at securing wider cooperation with production cuts, according to Bloomberg. Together, the non-OPEC member invitees account for about a fifth of global production. JBC Energy said in a note: “It remains unclear to us which other non-OPEC producers might be willing to commit to or even claim production cuts … Although OPEC officials spoke of a 300,000 barrel-a-day contribution from Russia towards an overall 600,000 barrel-a-day non-OPEC cut, we remain quite skeptical that this will actually happen.”

Please, Dear God, let the Powers That Be ask us to draft Egypt’s response to OPEC’s entreaty. Please…?

The board of Russia’s Rosneft will meet tomorrow (7 December) to discuss the potential acquisition of up to 35% of the Shorouk offshore concession from Eni, AMAY reported. Eni had sold a 10% interest of the concession, which contains Zohr natural gas field, to BP in November and plans to lower its stake in the field to 50%.

The Health Ministry will not be raising medicine prices until the exchange rate stabilizes, Health Minister Ahmed Rady said at a press conference on Monday, Al Borsa reports. Straying from the more conciliatory tone reported in the media during talks with pharma companies on raising prices since the float, Rady went on to state that pharma companies have been raking-in the profits until recently “and so must now stand with the state.” Medicine prices are tightly controlled by the Health Ministry.

Ministry denies “10-50” price increase offer: The ministry has denied reports we noted on Sunday that Rady had earlier offered to let prices of 10% of all medicines rise up to 50% every six months, AMAY reported. The ministry did acknowledge that talks are taking place all week with goal of hammering out an agreement by Thursday. After the backlash in the media following word of Rady’s offer, it’s not surprising the minister took a tough line yesterday, going so far as to lambaste 10 manufacturers for allegedly not showing up for talks.

VAT exemption could be in the cards: Rady did say he might speak with the Finance Ministry about exempting all production inputs for the industry — not just active ingredients — from the value-added tax.

The state of the talks now: We may have a case of he said, she said here as pharma sources tell Al Borsa that it was the companies that rejected Rady’s offer. At previous meetings, foreign companies were insisting on 60% price increase across the board, sources said, while domestic companies could have lived with 15-20% of pharma products rising in price every three months, unnamed sources tell Daily News Egypt. Sources tell the newspaper that a number of execs from international manufacturers will meet in Dubai to discuss developments in the case. Until the Health Ministry issues its statement on the state of the talks on Thursday, expect to see more of jockeying in the media.

Will the Universal Healthcare Act become reality in 2017? That was Health Minister Ahmed Rady’s contention at a yesterday’s press conference, according to AMAY. We had previously reported that the ministry would be done with its assessments of the comprehensive health insurance policy by November, which will reportedly have employers pay a sum total equal to 3% of an employee’s salary while 1% is deducted from their paycheck.

There’s more detail out on Banque Misr’s plans to raise a five-year syndicated loan guaranteed by the central bank. Reuters cites unnamed sources as suggesting the loan, an amortising facility, is expected to be about USD 350 mn and offers a margin of 500 bps over LIBOR. “The bank has mandated ADIB Capital and Credit Suisse to arrange the transaction, which was launched to syndication in the second half of November,” David Barbuscia writes for the newswire. Sources said the central bank’s guarantee is a positive factor, but that the “proposed five-year maturity was unusual for financial institutions, which generally raised syndicated loans with shorter tenors.” Another source said having Credit Suisse as one of the arrangers indicates “that the lead banks have the capacity to underwrite and hold a large part of the requested amount” and that Banque Misr should not have trouble closing the transaction.

Price of subsidized bread isn’t rising: The Supply Ministry denied rumors that it plans to increase the price of subsidized baladi bread, saying it will continue to provide citizens with bread through the smart card system, Al Masry Al Youm reports. The announcement comes amid persistent rumors that fuel prices will rise once more by the beginning of the new year.

In other commodity news: The Cabinet Information and Decision Support Center denied rumors that the Health Ministry is refusing to sell some 5 mn packs of children’s formula it has reportedly stashed in warehouses, Al Masry Al Youm reported. The ministry has excess inventory after its recent import drive and has built strategic stockpiles, the newspaper says.

State Commissioner’s Authority: Tiran and Sanafir stay. The State Commissioner’s Authority issued a report recommending upholding the annulment of the Egyptian-Saudi border demarcation agreement that handed the Red Sea islands of Tiran and Sanafir to Saudi Arabia, according to Al Masry Al Youm. Meanwhile, the High Administrative Court adjourned to December 19 the hearing on the government’s appeal against the verdict annulling the transfer, Ahram Online reported. Prominent lawyer Khaled Ali said the report from the Commissioner’s Authority has yet to be submitted to the court.

MOVES- Yesterday appears to be Mohamed El Sobky last day in office as his term has expired. As head of the New and Renewable Energy Authority (NREA), El Sobky oversaw the contentious roll out of the feed-in tariff program. Mohammed Omran has been appointed NREA’s interim chief as of today by Electricity Minister Mohamed Shaker. El Sobky will reportedly go back to teaching engineering at Cairo University, Al Borsa reported.

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Egypt in the News

Coverage of Egypt in the international press focuses largely on foreign affairs this morning. Of particular note: Republican Senator Lindsey Graham has told Israel that he is going to “aggressively promote legislation next month aimed at cutting funding to two key allies of the Jewish state – the Palestinian Authority and Egypt,” according to a report in the Jerusalem Post. It could be the first test of relations between US president-elect Donald Trump and President Abdel Fattah El Sisi and will surely try the patience of those in the Republican establishment that had expected a return to an interests-based, America-first foreign policy in Washington.

Meanwhile, Al Monitor writes that the rift between Cairo and Riyadh has left Israel concerned, wire coverage of the State Commissioners’ suggestion that Tiran and Sanfir should remain Egyptian is getting wide pickup, and both Russia and China moved against Egypt, New Zealand and Spain at the UN Security Council, nixing a motion that would have called for a weeklong truce in Aleppo.
Finally, the deepening Sino-Egyptian relationship (outside of the UN veto, at least) is a cornerstone of China’s effort to attract new allies in regions once dominated by US and European interests, writes Zaynab El Bernoussi for Project Syndicate.

An OPEC agreement that raises energy prices could benefit Egypt by improving “the moribund traffic in its Suez Canal and provide badly needed foreign currency,” Tamsin Carlisle writes for Platts blog The Barrel. The Canal tolls were “high compared to the extra cost of bunker fuel needed for longer voyages around the [Cape of Good Hope] as the price of the heavy marine fuel has fallen by about two-thirds since mid-2014.” Carlisle says “when OPEC announced its plan to cut oil output, oil prices rose, and more importantly bunker fuel prices delivered to the Suez Canal have hit a high not seen in more than a year, Egypt’s Sisi administration and must have breathed a collective sigh of relief.”

Worth Reading

The inexorable march of the exchange traded fund: The Financial Times is following in the footsteps of the Wall Street Journal in launching a series of stories on the rise of passive money. The scene-setter piece is here, but we’re most intrigued by the FT’s notion that exchange traded funds will ultimately be good for active fund managers.

Writes the FT: “It appears that many of the professional investors decrying the rise of the ETF have failed to identify the irony in their complaints: that those who live and die on their ability to exploit market distortions and mispriced assets are so troubled by products they argue are creating exactly the type of distortions they aim to profit from. The rise of the exchange traded fund, far from resulting in the death of the discretionary investor, may, in fact, present an increasingly fecund environment to find undervalued securities.”

If you’re a fund manager anywhere in the world this morning, you want to read “Why active fund managers should cheer the rise of ETFs.”

Have a few extra minutes? Bookmark the FT’s landing page for the series so you can get future installments, or head over to the Wall Street Journal (paywall) for its series on the same subject.

Digging the dancing king: Are Saudi-Qatari relations at a new high? That’s how most Egyptian newspapers are choosing to regard this video of King Salman dancing to traditional song during his visit to Qatar (watch; runtime: 0:26). When he wasn’t doing the Macarena, the king and Emir of Qatar reportedly discussed regional affairs.

Diplomacy + Foreign Trade

Foreign Minister meets heads of IMF and World Bank: Foreign Minister Sameh Shoukry met with International Monetary Fund Managing Director Christine Lagarde on Monday, during his visit to Washington DC, to followup on Egypt’s USD 12 bn dollar loan agreement and discuss the country’s progress on its economic reform agenda, Al Mal reported. Shoukry also met with World Bank Executive Director Merza Hasan to talk about the organization’s various development programs in Egypt.

Shoukry also attended the 13th annual Saban Forum at Brookings’ Center for Middle East Policy, titled “Challenges for the Trump Administration in the Middle East.” The forum also featured remarks by Israel’s Prime Minister Benjamin Netanyahu, Defense Minister Avigdor Lieberman, and US Secretary of State John Kerry. In his speech, Shoukry said Egypt’s approach to address the “legitimate calls for change” is through “orderly change” and that “compromising the integrity and the stability of the institutions of nation states in the Middle East is not the way to achieve the much needed and much desired change… The challenge, therefore, is to achieve change within the nation states, not on the ruins thereof.” When asked if he believes the Syrian people could accept Assad as their leader he said: “I would think this process should be all inclusive and should take into account the interests of all participants, all segments of Syrian society, but it’s up to the Syrians to decide their future and the manner in which they are governed.” The transcript of Shoukry’s comments can be found here.

The International Cooperation Ministry has reached an agreement with the Islamic Development Bank on their cooperation strategy that runs until 2019, Al Borsa reported. The cooperation strategy includes support to human resources development, infrastructure projects, and the services sector.

Energy

Egypt requires 6.5 bcf/d of natural gas next summer -EGAS

Egypt will require 6.5 bcf/d of natural gas to meet domestic demand in the summer of 2017, EGAS told Al Borsa. Demand will be divided between 4.4 bcf/d to power stations, 1.2 bcf/d to homes, cars, and industry, and 900 mcf/d to energy intensive industries. Domestic production of natural gas is expected to reach 5 bcf/d by the end of 2017.

Prime Minister and Petroleum Minister meet with Shell’s Sami Iskander

Prime Minister Sherif Ismail and Petroleum Minister Tarek El Molla met with senior Shell executive Sami Iskander on Monday to discuss existing and potential opportunities in oil and gas exploration in Egypt, Ahram Gate reported. Iskander, formerly chief operating officer of BG, is now executive vice president at Shell responsible for joint ventures.

Apache slashes cost of production in Western Desert

Apache cut production costs at its Western Desert concessions to USD 4.5 per bbl in 1Q16-17 from USD 5 per bbl in FY15-16, the head of Apache’s JV, Khalda, Mohamed Abdel Azim told Al Borsa. The company had saved USD 155K per day by slashing cost of production to USD 5 per bbl from USD 6 last year, and reduced spending by USD 22 mn through 30% discounts on equipment and services.

Five out of nine companies meet feed-in tariff requirements so far

The Electricity Ministry has certified that five out of the nine companies looking to participate in phase one of the feed-in tariff program have met the requirements, unnamed officials tell Al Borsa. The ministry hired German consultancy firm Fichtner to review whether the companies have met the conditions for the program. The government will announce the final lineup on 4 January, as we had previously noted.

Daba’a nuke talks still ongoing

Remember way back in the day (last month) when the Electricity Ministry promised that the Daba’a nuclear power plant contracts with Rosatom would be signed in a ceremony attended by Vladimir Putin? Well, we’re back to code green (in the final stages of negotiations), and we’ll be informed on the new date when talks conclude, according to Electricity Minister Mohamed Shaker, AMAY reports.

Basic Materials + Commodities

Government reverses decision to lift poultry imports

The Ismail government has reimposed customs duties on poultry imports, Al Borsa reports, after pressure from industry to reverse a temporary elimination of the levies. A statement from cabinet confirmed the government’s commitment to supporting the local industry and ensuring the availability of affordable basic commodities to consumers. The Supply Ministry is reportedly days away from signing an agreement with the Egyptian Poultry Association to buy 15,000 tonnes of chicken from local producers at higher prices than before, according to the newspaper.

Olivee Company begins operations at EGP 250 mn olive oil factory

The Olivee Company for Production & Agricultural Manufacturing has begun operations at its new EGP 250 mn olive oil factory, head of exports Ahmed Ismail told Al Borsa. The factory raises the company’s annual capacity to 25k tonnes from 15k tonnes last year, he added. 95% of production goes to export to balance increased production costs and USD-based imports, he said. The company is looking to expand into Saudi Arabia, UAE, Libya, and Sudan, as well as into other non-Arab markets.

Supply Ministry issues tender for 50,000 tonnes of sugar

The General Authority for Supply Commodities issued a tender for 50,000 tonnes of white sugar on Monday for delivery on 31 December, AMAY. the move comes as reports continue to surface on ongoing sugar shortages.

Manufacturing

Licenses to renew automatically each year under Industry Permits act

Licenses issued under the Industry Permits Act will automatically be renewed at the end of each year as opposed to the currently system of issuing temporary 3-5-year permits, said the head of the Industrial Development Authority Ahmed Abdel Razik. The act, which aims to cut wait times for industrial licenses to as little as 30 days, will also guarantee investors will receive licenses simply by applying for them if they can prove their facilities meet health, safety and environmental regulations, he added, according to Al Borsa. Last we heard, the law had been introduced to the House of Representatives.

Health + Education

Vacsera and India’s Fabtech sign agreement to build USD 19 mn bird flu vaccine plant

Vaccine-producer Vacsera signed an agreement with India’s Fabtech to build Egypt’s first factory to produce bird flu vaccines, Al Borsa reported. Health Minister Ahmed Rady said the plant will cost an estimated USD 19 mn and produce an annual 400 mn doses initially before doubling its capacity. Operations are expected to begin in 18 months’ time in Six October City.

Real Estate + Housing

SODIC contracts Sasaki for 655 feddan New Heliopolis master plan

SODIC has contracted international design firm Sasaki to draw up a master plan for the 655 feddan project in New Heliopolis done in partnership with Heliopolis Company for Housing and Development, the Heliopolis Company said in a bourse statement. SODIC plans to launch the project in 2H2017, the statement said.

Tourism

Tourism Urbanization Company approves tasking Steigenberger with Movenpick Hotel Cairo Pyramids management

The Tourism Urbanization Company board has approved contracting Steigenberger to manage the Movenpick Hotel Cairo Pyramids, the Tourism Company said in a statement to the EGX.

Tourism Development Authority hosts European MPs during two-day visit

The Tourism Development Authority will be hosting a delegation of eight MPs from the EU Parliament in Cairo from 6-8 December, Al Shorouk reports. The visit is part of an initiative to boost tourism in Egypt and affirm the country is safe from security threats.

Telecoms + ICT

Raya Holding invests USD 18 mn into call centers

Raya Holding will invest c. USD 15-18 mn into its call centers to add 4,000 seats in the coming two years, CFO Samer El Waziri told Al Mal. The company is looking to build call centers in the Borg El Arab and Assiut technology parks.

Automotive + Transportation

ARTOC Auto says it is still Skoda’s agent in Egypt “according to Egyptian law,” suggests it is planning legal action

A senior company representative contacted us to clarify that ARTOC Auto remains Skoda’s agent in Egypt “according to Egyptian law,” denying an Al Borsa report that the car manufacturer parted ways with the distributor. ARTOC Auto says it has invested USD 325 mn in the Skoda business and “will continue to protect its rights insofar as all parties are concerned legally and according to international regulations.” The company also stated it “does not accept abusive, illegal or corrupt actions by any party, and works only via legal and internationally recognized frameworks.”

Banking + Finance

Banks to boost interest rates on Suez Canal investment certificates

The Finance Ministry has issued a directive to banks that issued Suez Canal investment certificates to increase their yields by 350 bps to reach 15.5%,Al Mal reported. Unnamed sources noted that the move is meant to deter investors from withdrawing money they put in the Suez Canal certificates and place them in high-yielding certificates that offer interest rates of up to 18-20%.

Other Business News of Note

Public sector companies could be allowed to sell assets without NIB, treasury’s approval

Public Enterprise Minister Ashraf El Sharkawy said there are legislative proposals that would allow public sector companies to sell assets without having to obtain approvals from the Finance Ministry and the National Investment Bank (NIB), Al Mal reported. A 2012 law had required the approvals prior to selling company assets as they were used as collateral for the NIB’s receivables. The move has the potential to invite graft among some companies.

Eva Cosmetics planning to establish factory in Sudan

Egyptian cosmetics company Eva Cosmetics is planning to establish a factory in Sudan “soon,” Al Borsa reported, but stopped short of specifying an investment cost.

Law

Arab International Federation for Arbitration announces first Egypt-based court for international arbitrations

The Arab International Federation for Arbitration announced setting up its first international arbitration court in Egypt, Ahram Gate reported. The court will be led by NDP-era House of Representatives speaker Ahmed Fathy Sorour. Egypt was chosen for its membership in the Council of Arab Economic Unity.

Sports

Zamalek boycotts football temporarily

The Zamalek football club is temporarily boycotting football (missing the existential irony completely), Al Shorouk reports. The kicker (pun not intended): It had nothing to do with them. The decision was taken by the club’s board following Sunday’s match between Misr El-Makasa and Al Ahly, where a controversial penalty kick was awarded to the latter. In a letter to the Egyptian Football Federation, the board says the call brings to question refereeing practices in the league. In the meantime, the club will spend its time off as the Mortada Mansour Fan Club (FC).

On Your Way Out

Security forces have reportedly arrested an employee at a Heinz Egypt plant in Sixth of October and impounded 62 tonnes of what they claim are “rotten and expired” production inputs, a source told Ahram Online. The arrest followed a video that purports to show “below-standard tomato processing at a Heinz factory.” Al Shorouk says the person arrested is a company director and that prosecutors passed samples of the impounded goods to health authorities for inspection. The story, broken in a video report by tabloid journalist Mona El Iraqi for Mehwar TV, prompted Heinz to deny what it called “unfounded allegations” in a statement on their official Facebook page. The company reassured consumers that they “can continue [enjoying] Heinz products in complete confidence.” The statement added that “the pictures linked to this story do not belong to our Kraft Heinz factory and do not represent the exacting quality standards we follow during our production process.”

Egyptian startups to face natural selection after float shock: Tarek Fahim, managing partner at VC firm Endure Capital, tells Wamda’s Radwa Rashad that the next step for Egyptian startups would be one of “‘natural selection’, where Egypt’s economic challenges would weed out the unmotivated and overly-optimistic among the country’s entrepreneurs.” He believes startups that “focus on creating a more regional market as opposed to a local one” should manage to weather the EGP flotation shock. Fahim says in times like these “investors had to get personally involved in a startup to help it meet market expectations … focus less on metrics and ROI and more on entrepreneurs’ real experience as well as their own ability to provide resources and day-to-day support, when venturing into a startup in Egypt.”

In other VC news, Menagurus has signed a preliminary agreement to fund three Egyptian startups taking part in the RiseUp Summit on Thursday, said Menagurus co-founder Hisham Abdel Ghaffar who didn’t name the target companies. The firm plans to invest EGP 100 mn in up to 20 startups in Egypt, Saudi Arabia and Lebanon in three to five years, he tells Al Mal. The company looks to invest EGP 3.3 mn for a 30-45% equity stake in its target companies.

By The Numbers

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EGP / USD CBE market average: Buy 17.67 | Sell 18.05
EGP / USD at CIB: Buy 17.5 | Sell 17.75
EGP / USD at NBE: Buy 17.5 | Sell 17.75

EGX30 (Monday): 11,426.5 (-1.76%)
Turnover: EGP 1.498 bn (244% above the 90-day average)
EGX 30 year-to-date: +63.09%

THE MARKET ON MONDAY: The benchmark index dropped by 1.8% on Monday’s session. Monday’s top performing stocks were Heliopolis Housing, GB Auto, and Edita. On the downside, the worst performing stocks included Orascom Telecom Media and Technology, Pioneers Holding, and Qalaa Holdings. The market turnover was EGP 1.5 bn and foreign investors were the sole net buyers

Foreigners: Net long | EGP + 81.0 mn
Regional: Net short | EGP – 2.6 mn
Domestic: Net short | EGP – 78.4 mn

Retail: 66.5% of total trades | 68.5% of buyers | 64.5% of sellers
Institutions: 33.5% of total trades | 31.5% of buyers | 35.5% of sellers

Foreign: 20.3% of total | 23.0% of buyers | 17.6% of sellers
Regional: 6.9% of total | 6.8% of buyers | 7.0% of sellers
Domestic: 72.8% of total | 70.2% of buyers | 75.4% of sellers

TASI: 7,106.2 (-0.3%) (YTD: +2.8%)
ADX: 4,301.0 (+0.9%) (YTD: -0.1%)
DFM: 3,407.8 (-0.3%) (YTD: +8.1%)
KSE Weighted Index: 372.0 (+0.8%) (YTD: -2.5%)
QE: 9,932.3 (-0.8%) (YTD: -4.8%)
MSM: 5,616.8 (+0.1%) (YTD: +3.9%)
BB: 1,172.7 (-0.3%) (YTD: -3.5%)

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04-06 December (Sunday-Tuesday): Solar-Tec exhibition, Cairo International Convention Centre. 04-06 December (Sunday-Tuesday): Electricx exhibition, Cairo International Convention Centre. 05-06 December (Monday-Tuesday): Slovenian President and business delegation visit Egypt. 05-10 December (Monday-Saturday): Egypt Comix Week, various locations, Cairo and Alexandria 06 December (Tuesday): Building a Sustainable Future for Solar in Egypt event, Sonesta Hotel, Cairo. 07-08 December: Citi’s 2016 Global Healthcare Conference, London, UK. 08 December: KarmSolar Annual Forum, a RiseUp Summit satellite event. Al Falaki Theater, Downtown Cairo. Registration: annual.forum@karmsolar.com 09-11 December (Friday-Sunday): RiseUp Summit, Downtown Cairo. 10-13 December (Saturday-Tuesday): Projex Africa and MS Marmomacc + Samoter Africa, Cairo International Convention Centre. 11 December (Sunday): Prophet Muhammad’s Birthday (national holiday). 11-13 December (Sunday-Tuesday): The Middle East Fire, Security & Safety Exhibition and Conference (MEFSEC), Cairo International Convention Centre, Cairo. 12 December (Monday): African Development Bank votes on issuing second tranche of USD 1.5 bn loan. 13 December (Tuesday): Business News’ Third Annual Egypt Automotive Summit, Semiramis InterContinental, Cairo. 13 December (Tuesday): Amwal Al Ghad’s top 50 most influential women in Egypt women forum, Four Seasons Nile Plaza Hotel, Cairo. 20 December (Tuesday): World Bank board of directors votes on second tranche of USD 3 bn loan. 29 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates. 14-16 February 2017 (Tuesday-Thursday): Egypt Petroleum Show 2017 (EGYPS), CIEC, Cairo

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