Monday, 12 December 2016

Three days of national mourning after attack on Coptic Cathedral

TL;DR

What We’re Tracking Today

** Take our first quarterly reader survey, wherein we ask you, dear readers, to drill down into what USD : EGP rate you’re using in your 2017 budgets, your outlook on the economy, whether you would like to hold more assets outside of Egypt — and what gets you out of bed in the morning. The survey runs from today through Tuesday, 20 December at 5pm. We’ll have the results in our 29 December Year-in-Review edition.

Did you miss our exclusive interview with Central Bank of Egypt Governor Tarek Amer on Thursday? Amer, our first Newsmaker of the Year, spoke for more than two hours over two days. Highlights include:

  • The CBE will do nothing to prop up the EGP, full stop. “Those days are over. History.”
  • The banking system is doing a “marvelous job” managing the FX rate; the free market is now fully in charge.
  • The USD 2-4 bn everyone seemed to want the CBE to inject? If you hadn’t figured it out at this late stage in the game, it’s not coming.
  • The FX rate will become a daily gauge of how the government’s economic policy is performing.
  • Amer acknowledges that the CBE’s role has, in some ways, become non-traditional, extending to serving as an economic advisor to the presidency.
  • We need to stop obsessing about the exchange rate and focus on building the real economy.
  • The IPO program for state-owned companies will kick development of the stock exchange into overdrive — and improve the quality of state assets through private-sector oversight.
  • Regulations now in the pipeline on SMEs, financial inclusion, and payments (among others) will help drive innovation in the banking sector.

Tap here to read the full interview.

We fear we’re among the few this morning waiting for the House of Representatives to start debate today on the draft Media Act, which, among other things, would establish three regulatory bodies to police the media. As Gamal Essam El-Din reports for Ahram Online, each of the three bodies would have 13 members appointed by the presidency:

  • The National Council for Media Regulation would regulate all media outlets — public and private alike — and be charged with licensing as well as “drawing up a code of media ethics, with a focus on respecting public morals and national security concerns;”
  • The National Press Organization would replace the current Higher Press Council and be tasked with appointing the chairmen and editors of state-owned newspapers and magazines outlets;
  • The Egyptian Radio and Television Union (ERTU) would slip into history if the bill passes, being replaced by a National Media Organization that would oversee “state-owned audio-visual media, radio, and digital media institutions.”

On a related note: A house committee began discussion on Saturday of a draft freedom of information act, Ahram Online reports.

The African Development Bank will vote today on releasing the second USD 500 mn tranche of a USD 1.5 bn loan to Egypt. Meanwhile, the World Bank’s board is expected to vote on 22 December to release the USD 1 bn second tranche of its USD 3 bn financing package.

What We’re Tracking This Week

Algebra Ventures will announce the launch of its USD 50 mn venture capital fund on Wednesday, according to an emailed statement. The fund, led by Tarek Assaad, Ziad Mokhtar and Khaled Ismail, has landed USD 10 mn in commitments from each of the Egyptian-American Enterprise Fund, the International Finance Corporation and Cisco, as we have previously reported. The fund will reportedly target series A and B investments primarily in technology startups with a ticket size in the USD 500k to USD 2 mn range.

In other startup news over the weekend: The parent company of recruitment site Wuzzuf has acquired job assessment provider Viriphi for an undisclosed sum, according to a statement released this weekend (pdf). The news comes just weeks after Wuzzuf parent company BasharSoft announced the launch of Forasna, a recruitment platform for skilled labor. BasharSoft recently closed a USD 1.7 mn series A round from Sweden-based Vostok New Ventures and UK-based Piton Capital.

The Ismail cabinet will discuss a final draft of the new Investment Act at its weekly meeting on Wednesday, 14 December. The investment and finance ministries have reportedly been working to get on the same page on the proposed act, and business associations continue to raise objections: The Federation of Egyptian Chambers of Commerce became the latest on Friday to send in requests for changes, Al Masry Al Youm reports.

The US Federal Reserve should raise interest rates a quarter point when it meets on Wednesday, but both the Wall Street Journal and the Financial Times expect its job going forward will be made a bit more challenging until the contours of Trumpian economics become clear.

The National Conference for Egyptian Scientists and Experts Abroad will be held in Hurghada this week, running 14-15 December under the auspices of President Abdel Fattah El Sisi with the slogan “Egypt Can.” Thirty Egyptian expat scientists and experts in areas including civil engineering, business, ICT, renewable energy, and water resources management will be attending.

Al Borsa / Business News hosting their Third Annual Egypt Automotive Summitat the Semiramis InterContinental Cairo on Tuesday, 13 December.

Enterprise+: Last Night’s Talk Shows

The bombing of the Church of St. Peter and St. Paul dominated the airwaves last night. Amr Adib spoke with Prime Minister Sherif Ismail at the site of the attack. “We will work hard to bring justice to the victims,” the PM said, adding that the government will discuss with the House of Representatives what is needed in that regard (watch, runtime: 2:59). Adib also spoke to the Deputy Speaker of the House of Representatives Soliman Wahdan who said the House will push today for military trials in terrorism-related crimes as part of the amendments to the Penal Code (watch: runtime: 2:09).

Lamees El Hadidy also reported from the site of the attack on Sunday, saying she was attacked by bystanders, whom she labelled “infiltrators” (watch, running time: 8:03). Bolous Halim, a spokesman for the Orthodox Church in Egypt, told Lamees that the church always coordinates with the Interior Ministry for additional security before Coptic holidays. Commenting on the gathering of protesters around the church, Halim said: “This is a normal expression of anger in light of the circumstances,” he said (watch, runtime: 9:24).

Ain Shams School of Medicine Dean Mahmoud El Meteny denied rumors of shortages of blood and medical supplies hampered treatment of victims (watch: runtime: 2:34). MP Mahmoud El Sherif also told Lamees that the parliament will consider amending the Anti-Terror Law to toughen up sanctions.

Interior minister hasn’t resigned: Cabinet spokesperson Ashraf Sultan told Sherif Amer on MBC’s Yahduth Fi Masr’ that the cabinet has met — and reports that Interior Minister Magdy Abdel Ghaffar had resigned. Amer reported that Abdel Ghaffar has formed a special committee to formulate a security plan for churches ahead of the Coptic holidays. Amer also hosted MP Mostafa Bakry, who joined other MPs in assuring the public that the House plans to amend the penal code.

According to Al Qahera Wel Nas’ Ibrahim Eissa, security failures and holes since the Alexandria bombings of 2011 have not improved (watch, runtime: 1:14). “Copts are always paying the price for their Egyptian nationality…it is like their fate is to be killed and targeted,” he said (watch, runtime: 1:25).

Speed Round

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Three separate terror attacks in Cairo killed at least 30 people and wounded 59 over the holiday long weekend. According to the Health Ministry’s tally reported by Al Mal, 23 people were killed and a further 49 injured when a bomb went off inside the church of St. Peter and St. Paul, adjoining St. Mark’s Cathedral, the seat of the Coptic Church in Egypt and home to the office of Pope Tawadros II. A disproportionate number of the victims were reportedly women and children. An investigation is ongoing, and the WSJ quotes a security official as having told state news agency MENA that “the explosive was a 26-pound bomb possibly smuggled into the church in a handbag.”

After speaking with the pope, President Abdel Fattah El Sisi offered his condolences to the victims’ families, while reiterating that justice will be served. Celebrations to commemorate the birth of Prophet Muhammad were canceled, Al Borsa reported, and the president declared three days of national mourning. Pope Tawadros II will lead the funeral procession for the victims of the attack today at the Church of the Virgin Mary in Nasr City. Al Masry Al Youm says El Sisi will participate in a ceremony at the Tomb of the Unknown Soldier after the funerals are held.

Two other attacks over the holiday weekend targeted security forces, killing seven people. Six of members of the police service were killed in a bomb attack on a checkpoint near the Pyramids of Giza; a further three members of the security service were injured in the attack, as were four civilians. A second roadside attack on Friday evening in the Delta city of Kafr El-Sheikh killed a civilian and injured three policemen.

Impact on tourism? Industry leaders and gadflies alike are worrying about the impact of the bombings on tourism. Federation of Egyptian Industries head Mohamed El Sewedy said that the bombing was carried out with the intention of harming the industry, Al Borsa reports – a sentiment echoed by industry advocate Tharwat El Agamy. The Egyptian Tourism Authority and the Tourism Ministry are reportedly monitoring the situation.

Who’s responsible? The so-called Hasm Movement claimed responsibility for the Pyramids-area attack, but no group had claimed responsibility for the cathedral bombing at dispatch time this morning. A recently emerged splinter group, Hasm, has claimed responsibility for at least seven other attacks since July, including the assassination of a senior police investigator in Fayoum, as well as unsuccessful attempts on the lives of former Grand Mufti Ali Gomaa and on judge Ahmed Aboul Fotouh, who presided over a 2015 trial of former president Mohamed Morsi. Security forces killed three Hasm gunmen in a raid in Assiut last week. The Ikhwan rang up Turkey’s Anadolu yesterday to deny it had any ties to Hasm.

El Sisi says structural reforms are “no picnic,” believes EGP will strengthen over the coming months. President Abdel Fattah El Sisi used a speech to clerics ahead of the Prophet’s Birthday long weekend to signal his administration is staying the course with tough-but-necessary economic reforms. “This USD issue will not last like this for long … because this is not its fair price. The Egyptian pound, its real price is not 17 or 18,” Reuters quoted the president as saying. “But for the equilibrium we are talking about to be reached we need some months.” The remarks, El Sisi’s first on the economy since the bold 3 November decision to allow the EGP to float, emphasized that the reform program will not be a “picnic,” the Associated Press quoted him as saying. “The decision to carry out reforms … was not easy. The task requires hard work and patience.”

The president’s Mawlid Al-Nabi speech came as inflation accelerated to its highest level in eight years, Bloomberg notes. The annual headline inflation rate increased to 19.43% in November from 13.56% in October, the central bank announced, according to data compiled by CAPMAS. Core inflation increased to 20.73% in November from 15.72% in the previous month. Bloomberg added that El Sisi green-lit the float after having made sure that “basic goods were available at ‘reasonable prices for six months, at least. … We had no other option but to do what we’re doing now.” El Sisi had also ordered the government on Thursday to coordinate further with the private sector on keeping prices low and commodities available, Al Mal reports.

Bloomberg says “some economists expect inflation to rise to 20 percent by the end of the year, and the latest figures support the predictions,” quoting Arqaam Capital’s Reham ElDesoki as noting, “This is not the end of it; inflation will go even higher in the coming few months.” Capital Economics is anticipating inflation will increase to 22% by mid-2017, according to a report cited by Al Mal. The resulting drop in consumer spending will lead growth to plummet to 1% by the end of the FY2016-17 fiscal year, according to the report.

In other macro news this morning: Central Bank of Egypt Governor Tarek Amer says the country has witnessed USD 1 bn in inflows since the float of the EGP, Reuters reports. The newswire quotes an unnamed banker as saying, “We heard that there was about USD 500 mn that went into the stock market and a similar amount into the debt market. This is great news and we expect more to come. Before the revolution foreign investors had around USD 10 bn in the Egyptian debt market so it should eventually reach close to that once confidence has returned.” Egyptian banks have collectively hauled in USD 5 bn since the EGP was floated, said Amer, Al Shorouk reported.

The Finance Ministry is assessing a proposal to increase the income tax rate on the top income bracket to 30%, a source at the ministry told Al Masry Al Youm. The government is considering a number of measures to increase the application of progressive taxation policies, the source says. The proposal being considered increases the top rate to legal persons to 25-30% from 22.5%. Until we see a senior ministry official comment by name, we’re taking stories based on unnamed sources with a grain of salt. The AMAY report comes as the House of Representatives continues to push for a progressive tax system, but Finance Ministry Amr El-Garhy said late last month that tax policy stability is more important than a shift to a progressive tax system, noting, “Attracting investments is more important than a new tax, because any tax that will be implemented incorrectly will be rejected by companies and business leaders, which is anti-growth.”

IMF isn’t in love with our increase in customs duties on non-essential goods: The IMF has taken a dim view of the government’s decision to raise customs duties on over 350 non-essential goods. “While we understand the increases are compliant with Egypt’s obligations to the WTO, increasing import tariffs is usually not the best policy to improve a country’s balance of payments or fiscal position,” IMF’s communications director Gerry Rice said at a press briefing on Thursday. The tariff hikes are not part of the IMF program for which Egypt signed up to lock in a USD 12 bn financing facility. Read the transcript of the press briefing here to see what Rice has to say about the float of the EGP and his expectation that documentation on the USD 12 bn facility will be published “over the course of the next week.”

The rise in net international reserves at the Central Bank of Egypt to USD 23 bn is “positive” for the country’s credit rating, Moody’s Vice President Stephen Dyke told Al Borsa. Dyke said that the credit rating agency will continue to monitor developments regarding Egypt’s foreign reserves and the country’s steps forward in implementing economic reforms.

Obour Land prices IPO at EGP 9.68 per share; international offering is 7.4x oversubscribed. Cheese maker Obour Land has priced its international offering of 56 mn existing ordinary shares at EGP 9.68 per share, putting it at the top end of the EGP 9.00-9.68 range it had announced on 5 December. That puts the company’s initial market capitalization at just north of EGP 1.9 bn, the company said in a statement (pdf). The international offering was 7.4x oversubscribed, having generated c. EGP 4 bn in demand. Subscription to an Egyptian retail offering of 24 mn shares will close tomorrow, with the company’s shares due to begin trading on the EGX on Thursday under the symbol OLFI.CA. CI Capital Investment Banking is acting as sole global coordinator and bookrunner. Beltone Securities Brokerage is acting as a placement agent. Norton Rose Fulbright is international counsel to the issuer and Matouk Bassiouny is local counsel.

CI Capital restructuring Al Ahly SC ahead of a possible float: CI Capital will reportedly advise on restructuring the club by merging its media and sports businesses into a holding company ahead of a possible IPO in two years’ times. CI Capital will also serve as financial advisor on a EUR 200-250 mn loan for Al Ahly Sporting Club to pay for a stadium in Sixth of October City, a project first announced during the 2015 Egypt Economic Development Conference, sources tell Al Borsa.

Meanwhile, Al Borsa reports that a group led by newcomer Solid Capital will close on the acquisition of a 15% stake in CI Capital sometime this week, citing “sources close to the talks.” CIB confirmed to us that as of Thursday evening, no party had filed the letter of intent and credentials presentation the bank is requiring of any bidder prior to opening discussions.

EFG Hermes Leasing has launched a financing solution for the solar power indsutry with KarmSolar, according to a company statement. The solution will target “farms, factories, and households” with a particular focus on solar pumps for agriculture, with a “payment structure designed to benefit the agricultural industry, taking into account the unique seasonality and cash flow cycles of growers and bearing in mind future energy prices and foreign currency rates,” said Ahmed El-Kholy, CEO of EFG Hermes Leasing.

Shoukry looks to forge closer ties to US, denies rift with KSA. Foreign Ministry Sameh Shoukry’s diplomatic blitz, which kicked off last week in the US, continued over the weekend. “Egypt is urging closer cooperation between the U.S. and Russia in confronting terrorism in the Middle East—particularly in Syria—as Donald Trump prepares to become president next month,” Foreign Minister Sameh Shoukry said in an interview with the Wall Street Journal. Shoukry is looking to strengthen ties with the US under the Trump administration and hopes “there would be a unified understanding on the threat posed by Islamist movements to Middle Eastern stability.” He reiterated that the “strains” between Egypt and Saudi Arabia are “overstated,” saying “we have had a long history…and we have a very strong commitment to a common future.”

Shoukry reiterated his remarks about KSA over the weekend at a regional security conference in Manama, noting that Cairo and Riyadh had a “special relationship,” Reuters reports. Chatter in the local media suggests back-channel talks are ongoing. Sources reportedly tell Al Shorouk that Shoukry may meet with the Saudi foreign minister in the first week of January to discuss ways around the current impasse. The Bahraini foreign minister had also reportedly told the newspaper that Egypt and Saudi can “see beyond any temporary misunderstanding” without resorting to mediation.

Other foreign policy-related stories on our radar screen this morning include:

MOVES- Deputy Finance Minister Ahmed Kouchouk has been named an executive director of the Asian Infrastructure Investment Bank, according Al Borsa. Kouchouk confirmed to us that “AIIB is run and managed through a non-resident, 12-member board. Egypt was elected to represent non-Asian and non-European member countries” and explained he will continue to serve as vice-minister for fiscal policies and institutional reform under Finance Minister Amr El Garhy.

MOVES- Emad Sami Hussein has been named as the interim head of the Tax Authority until Finance Minister Amr El Garhy appoints a full-time successor to Abdel Moneim Matar, AMAY reported. Matar, meanwhile, was appointed special commissioner overseeing the implementation of the value-added tax. El Garhy also created the post of deputy head of the authority, appointing Mohamed Abdelsattar Ibrahim.

MOVES- Shell appointed Gasser Hanter as Egypt upstream vice-president and managing director, according to Youm7. Hanter was Shell’s senior MENA government relations advisor and previously country chairman of Shell Iraq operation. Hanter replaces Aidan Murphy, who has managed the company’s operations in Egypt since October 2014.

A handful of international news stories worth noting this morning:

  • If this doesn’t mean Iran is coming in from the cold, we don’t know what does: The country’s national carrier has reportedly reached a USD 16.6 bn agreement to buy 80 aircraft from Boeing in what the country’s aviation ministry is calling the first agreement of its kind in nearly 37 years.
  • Saudi is feeling the heat: “Oil may climb to USD 60 a barrel for the first time in almost a year and a half after Russia and other unaffiliated nations joined an OPEC pledge to reduce production and Saudi Arabia surprised the market by saying it will cut more than previously agreed,” Bloomberg reports.
  • Race is on for a new #2 at Goldman: With Goldman Sachs’ Gary Cohn set to become Donald Trump’s senior economic advisor, the race is on for a new number two at the investment bank. The WSJ is tipping investment-banking co-chief David Solomon and chief financial officer Harvey Schwartz.
  • Trump looks set to nominate the head of Exxon Mobil to run the State Department, but Rex Tillerson “faces bipartisan resistance in Congress over his ties to Russian President Vladimir Putin” amid stunning allegations this weekend about Russia allegedly trying to tilt the election in Trump’s favor.
  • Finally, one of our largest trade an investment partners may soon have a new government: “Italian President Sergio Mattarella asked Foreign Minister Paolo Gentiloni on Sunday to try to form a new government” as a banking crisis looms, Reuters reports.

CORRECTION- The chief executive officer of Centamin is Joseph El Raghy, not Joseph El Garhy, as we noted last Wednesday in a story suggesting that Centamin was holding back on fresh investment in Egypt amid what it reportedly claims are “unfair” terms of an upcoming tender of gold exploration rights. We regret the error — and blame the gremlins of spell-check for this one.

Egypt in the News

Yesterday’s despicable attack on St. Mark’s Cathedral in Downtown Cairo is the lead story on Egypt in the international press this morning. The story is featured prominently in the Financial Times (with a mention of the Friday attacks on police), but doesn’t rate the front page of the New York Times, where a piece by Declan Walsh (apparently back in Cairo after his sojourn in the USA covering the elections) was pushed off at dispatch time by bombings in Turkey that killed 38 and the ongoing tragedy that is Syria.

The story is the lead global piece on the homepage of the Wall Street Journal, while the Guardian carries it under the poignantly simple headline “Egypt: three days of mourning declared after 25 people killed in Cairo bomb.” Al Jazeera, meanwhile, can’t resist its usual twist of the knife: “Anger in Egypt after deadly Cairo church blast: Demands for accountability follow explosion in chapel near St Mark’s Cathedral which left at least 25 worshippers dead.”

An Egyptian play in Israel + a play in New York about Egyptians visiting Israel: The Wall Street Journal (paywall) has a glowing review of “The Band’s Visit,” starring Tony Shalhoub, about a visit to Israel by the fictional “Alexandria Ceremonial Police Orchestra, who have come to Israel from their home in Egypt to perform at the opening of a new Arab cultural center.” The catch: They wind up in the wrong city because of the P vs B thing. Some form of touching hilarity apparently ensues. Meanwhile, Haaretz took note of the Hebrew production of Lenin El Ramly’s Egyptian play “Sa’dun Almajnoon” (“Crazy Sa’dun”) by the Arab-Hebrew Theater of Jaffa. “What is particularly illuminating about this play and its production for an Israeli viewer, is the perception of the 1967 war, from which deterioration began and the hope for a better future was transformed into a sense of defeat. After all, this can be told from the Israeli side as well. In 1967, Israel began to _realize messianic dreams of megalomania. Some segments of the population continue to live in madness to this day.”

Other stories we’re noting this morning:

On Deadline

Al Ahram published an editorial titled “Egypt will beat terrorism,” condemning this weekend’s attacks and decrying them as attempts by terrorist groups, the Muslim Brotherhood in particular, to create sectarian strife at a time when the fight against terrorism is at its peak.

Diplomacy + Foreign Trade

Prosecutor General Nabil Sadek handed over phone records of several Egyptian security officials who had investigated Italian researcher Giulio Regeni one month before he went missing, reports Italy’s La Republica. Sadek also handed over a file on the investigation into two of the police officers allegedly responsible for the killing of purported gang members who were originally positioned as Regeni’s killers. The Italian newspaper noted Sadek plans to indict the two policemen in what could signal “a turning point” in the case.

Energy

Is Shell slashing production on Rosetta, Burullus due to arrears?
Shell will apparently be halting production of 40 mcf/d of gas from the Rosetta field by July 2017, as the anticipated payout from the field would not be worth the costs from any future developments, a senior official from EGAS tells Al Borsa. As we noted last month, outgoing Shell Egypt VP and country chairman Aidan Murphy had hinted that future plans to develop Rosetta and Burullus concessions were possibly tied down to the government’s ability to pay back the arrears. The EGAS source went on to state that the Shell had reduced its investments in Rosetta and Burullus to USD 158.9 mn this fiscal year, from USD 222 mn in FY15-16.

Basic Materials + Commodities

Supply Ministry cancels white sugar tender
The General Authority for Supply Commodities canceled its white sugar tender after receiving only one offer from commodities trader ED&F Man, an unnamed source told Al Mal.

Manufacturing

Samsung is studying the possibility of manufacturing home appliances in Egypt
Samsung is looking at manufacturing home appliances in Egypt, Al Shorouk reports, citing remarks by Tamer El Gamal, the company’s director of home appliances. El Gamal says Samsung is looking to start with the production of washing machines, followed by refrigerators, both growing product categories for the company. CIT Minister Yasser El Kady recently met with executives from Samsung Egypt, including Managing Director, Seung-ho Yun, to discuss the company’s expansion plans here, Al Mal reports. The newspaper says the Samsung bosses noted a desire to expand manufacturing activities here in the near term.

Health + Education

House responds to pharma producers’ calls, agree to parlay with Health Ministry to increase medicine prices
The House of Representatives’ Health Committee has changed its stance on medicine price increases and will approach the Health Ministry with suggestions as to how the state can allow prices to increase and ease pressure on manufacturers, Al Borsa reported. Committee member Magdy Rashed said one option would be a 60% increase in prices over two phases with profit margins capped at 25% select products. Pharma producers rejected last week a reported offer from Health Minister Ahmed Rady to let prices of 10% of all medicines increase by as much as 50% every six months.

Telecoms + ICT

Tecno Mobile, Silicon Waha sign agreement with ICT Ministry to establish smartphone factory
African mobile device manufacturer Tecno Mobile and state-owned Silicon Waha have signed an agreement with the CIT Ministry that could see the opening of a smartphone plant at a state-owned technology park, Al Shorouk reports. We’re presuming the agreement is for an assembly facility. The story notes that the plant would be located in Borg El Arab or Assiut, depending on the incentives the ICT and inevstment ministries provide. Silicon Waha is backed by the CIT Ministry, IT Industry Development Authority and the New Urban Communities Authority.

Automotive + Transportation

EgyptAir to receive first of nine new Boeing 737-800ers
EgyptAir will receive today the first of nine Boeing 737-800 planes it has contracted, Al Borsa reports. The USD 864 mn buy is on a lease financing scheme through the Dubai Aerospace Enterprise. The new aircraft will serve European and Middle East routes.

Auto sales decline 22% Y-o-Y in October
Auto sales fell 22% year-on-year in October, with only c. 18,500 vehicles entering the market, according to data from the Automotive Information Council’s report cited by Al Borsa. Passenger car sales fell 19% for the month, while bus sale were down 44% and truck sales off nearly 22%.

Egypt waiting on South Korea for the final word on funding for fifth metro line
The Transport Ministry is waiting for news of a USD 1 bn loan from South Korea before starting work on the first phase of the Cairo Metro Line 5, an unnamed source from the ministry tells Al Shorouk.

Banking + Finance

Banque Misr to sign USD 1 bn financing agreements with Chinese institutions
Banque Misr is expected to sign for USD 1 bn financing from Chinese financial institutions at the end of this week to shore up its FX liquidity, Al Shorouk reports. Banque Misr will sign an agreement with the China Development Bank for a USD 500 mn facility and a USD 500 mn MoU with the China Export and Credit Insurance Corporation.

ECMA looks to push gov’t on allowing trading of gov’t bonds on the EGX
The Egyptian Capital Markets Association (ECMA) is looking to meet with the Finance Minister and CBE governor to discuss the trading of government bonds on the EGX, Al Mal reports. ECMA’s deputy chairman Mohamed Maher said that the organization had previously reached an agreement with the ministry and the CBE to allow for the trade in government bonds, but no framework has been adopted yet. ECMA also plans to lobby the Investment Ministry to reverse the EGX’s decision to limit the execution of EGX deal market transactions valued at more than EGP 100K to CBE-approved banks. As we noted last month, the securities division of the Federation of Egyptian Chambers of Commerce is suing the EGX over the decision.

EBRD, QNB Alahli partner to provide USD 140 mn to Egyptian SMEs
The European Bank for Reconstruction and Development (EBRD) is partnering with QNB Alahli to support SME financing with a USD 140 mn financing package. According to a statement.

Other Business News of Note

Heinz releases statement on rotten tomato-gate
Heinz Egypt issued a statement through its official Facebook page to hit back at “attempts to depict [the] Kraft Heinz manufacturing facility in Egypt in a negative way … and trying to make Egyptians lose their confidence in a trusted brand,” claiming that footage broadcasted on a television program that purportedly showed “below-standard tomato processing at a Heinz factory” was fabricated and deliberately edited to omit the tomato sorting process. “Heinz Egypt stresses its full confidence in the integrity of the Egyptian judiciary and is taking necessary actions against all parties that have engaged in the deliberate defamation of its brand.”

Legislation + Policy

House to vote on deregulation of natural gas industry “soon”; Consumer Protection + Auction and Tenders Acts also up for review.
The House of Representatives will “soon” be discussing a bill to deregulate the natural gas industry, the head of the energy division at the Egyptian Federation of Industries, Tamer Abu Bakr, told Al Mal. The House received the bill late in November. Meanwhile, the house Economic Committee is set to shortly begin its review of the Consumer Protection Act and has voted to have the Consumer Protection Agency report to cabinet (instead of the Supply Ministry, as is the case today), Al Borsa reported. If passed, the Consumer Protection Act will give cabinet the authority to set fixed prices for certain products over a period of time. Meanwhile, the Council of State (Maglis El Dowla) intends to send the Auctions and Tenders Act to the House of Representatives before the end of December, according to Al Borsa. The tenders act is one of six pieces of legislation the Coucil has recently sent to the House, the newspaper reports.

It’s not our job to hunt down commodity hoarders – ECA
It is not the Egyptian Competition Authority (ECA)’s job to go after traders who hoard basic commodities, it is the role of the Supply Ministry, the ECA said. The ECA was proactively commenting on a proposal in parliament. What the Egyptian market needs, according the ECA, are some amendments to the Competition Law to include international best practices and issues recommended by European partners. The ECA it is willing to discuss the amendments with members of the House of Representatives.

Egypt Politics + Economics

Importers ask PM, CBE governor to intervene on their behalf with banks
Over 100 importers have reportedly signed a memo to the prime minister and CBE governor calling for them to step in and save them “from bankruptcy,” stating that banks have not been refinancing temporary overdrafts on their LCs, Al Borsa reports. Some 65 companies reportedly owe banks EGP 4.6 bn to cover their imports, according to AMAY.

Court of Cassation accepts Mubarak-era politician appeal, orders retrial
The Court of Cassation has ordered the retrial of Mubarak-era politician Safwat El Sherif and his son Ihab El Sherif, overturning a five-year sentence and EGP 209 mn fine against them on corruption and graft charges, Al Borsa reports.

National Security

Morsi’s son arrested in Egypt
Security forces have arrested the son of former President Mohamed Morsi, an official told The AP.

Egyptian Navy to take possession of German submarine
The Egyptian Navy is expected to receive a Type 209/1400 submarine from Germany today, with the flag-raising ceremony to take place in the German coastal city of Kiel, Al Mal reports. The submarine, manufactured by ThyssenKrupp Marine Systems, is one of four Egypt has purchased from Germany.

On Your Way Out

Omar Samra is set to become the first Egyptian in space when he boards the XCOR Aerospace Lynx spacecraft on its voyage to Earth’s outer orbit, Jessica Hill writes for The National. Samra won a competition offering the chance for a place on board one of the world’s first commercial spacecraft and was selected along with 22 other winners. Aside from the competition winners, the flight will have on board passengers including Sir Bob Geldof and DJ Armin Van Buuren, who paid to be on it.

By The Numbers

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EGP / USD CBE market average: Buy 17.9454 | Sell 18.3371

EGP / USD at CIB: Buy 17.95 | Sell 18.35

EGP / USD at NBE: Buy 17.95 | Sell 18.20

EGX30 (Thursday): 11,297.93 (-0.44%)
Turnover: EGP 1.1 bn (158% above the 90-day average)
EGX 30 year-to-date: +61.3%

THE MARKET ON THURSDAY: The EGX30 closed down 0.4% on Thursday, with top performers including Heliopolis Housing (up 10%), Telecom Egypt (+7.4%), and Amer Group (+3.1%). Among the day’s worst performers: Eastern Tobacco (down 9.4%), Domty (-3.3%), and Qalaa Holding (-2.1%). Local investors were the day’s sole net sellers. The market was closed Sunday for the Prophet’s Birthday, a national holiday.

Foreigners: Net long | EGP +90.5 mn
Regional: Net long | EGP +20.5 mn
Domestic: Net short | EGP -111.0 mn

Retail: 70.4% of total trades | 65.6% of buyers | 75.3% of sellers
Institutions: 29.6% of total trades | 34.4% of buyers | 24.7% of sellers

Foreign: 14.2% of total | 18.2% of buyers | 10.1% of sellers
Regional: 6.5% of total | 7.4% of buyers | 5.6% of sellers
Domestic: 79.4% of total | 74.4% of buyers | 84.3% of sellers

WTI: USD 53.94 (+4.74%)
Brent: USD 56.63 (+4.23%)

Natural Gas (Nymex, futures prices) USD 3.56 MMBtu, (-4.99%, January 2017 contract)
Gold: USD 1,161.30 / troy ounce (-0.05%)

TASI: 7,197.9 (+1.1%) (YTD: 4.14%) (Sunday)
ADX: 4,517.2 (+1.9%) (YTD: 4.87%) (Thursday)
DFM: 3,558.7 (+1.8%) (YTD: 12.94%) (Thursday)
KSE Weighted Index: 376.7 (+0.9%) (YTD: -1.3%) (Sunday)
QE: 10,187.9 (+1.3%) (YTD: -2.32%) (Sunday)
MSM: 5,696.3 (+0.5%) (YTD: +5.37%) (Sunday)
BB: 1,191.95 (+0.89%) (YTD: -1.97%) (Thursday)

Calendar

10-13 December (Saturday-Tuesday): Projex Africa and MS Marmomacc + Samoter Africa, Cairo International Convention Centre.

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.

13-14 December (Tuesday-Wednesday): Arab Women Organization’s sixth annual conference, titled “Role of Women in the Arab Countries: Pathways to Reform and Change,” Marriott Hotel, Cairo.

19 December (Monday): LOGIC Management Consulting’s “Egypt Exports” workshop, Four Seasons Nile Plaza, Cairo. Registration information here.

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

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.