El Sisi, Trump to meet today in Washington

President Abdel Fattah El Sisi will meet today with US President Donald Trump on the second day of this three-day visit to Washington, DC. Regional security, terrorism, economic reform and human rights are all on the agenda, Reuters reports this morning, suggesting El Sisi will face light pressure on human rights and weapons purchases from Russia. El Sisi met yesterday with Secretary of State Mike Pompeo. The two are believed to have discussed regional issues including developments in Libya, Syria, Palestine and Yemen, according to Al Masry Al Youm.

The US media is piling on the pressure ahead of today’s meeting, as we note in this morning’s Egypt in the News, below.

Renaissance Capital’s annual Egypt Investors Conference gets underway this morning in Cape Town. EGX Chairman Mohamed Farid will deliver the keynote address on expanding the role of capital markets in Egypt’s economy. Tap or click here to view the preliminary agenda for the event (pdf), which wraps up tomorrow.

It is election day in Israel as our neighbors to the east head to the polls to decide whether right-wing Likud Prime Minister Benjamin Netanyahu gets a fifth term in office. He faces a stiff challenge from centrist Blue and White party leader Benny Gantz, a former chief of staff for the Israeli armed forces. Results should start coming in at 9pm CLT. Expect much scrambling to form a coalition government — no single party in Israel has ever won a majority mandate.

Reading tea leaves in Sudan: Soldiers in at least one incident have moved to protect protestors demonstrating against President Omar Al Bashir, a signal that media outlets including the the FT and Ahram Online (citing sources in Sudan) are reading like proverbial tea leaves.

Other news triggers to keep your eyes on in the coming days:

• Monthly inflation figures are due out tomorrow. Annual headline inflation accelerated to 14.4% in February, up from 12.7% the previous month. In a report earlier this week, the IMF urged Egypt to take it easy with the monetary policy easing to avoid another surge in inflation, Bloomberg noted.
• AmCham is holding its annual HR Day at the Cairo Marriott Hotel tomorrow (Wednesday, 10 April). You can register here.
• The IMF and World Bank are holding their spring meetings on 12-14 April in Washington, DC.
• The UK will, theoretically, leave the European Union on Friday, 12 April. Prime Minister Theresa May has asked for a three-month extension to 30 June.
• First quarter earnings season gets underway in the United States at week’s end as JPMorgan and Wells Fargo report results. The expectation, as we noted last week, is for corporate earnings in the US and Europe to fall in 1Q for the first time since 2016.
• The House of Representatives will vote on the proposed constitutional amendments on Tuesday, 16 April.

A bad sign for upcoming tech IPOs as Pinterest IPO goes to market below last valuation: Social media company Pinterest will sell 75 mn shares at a price between USD 15-17 in its IPO later this year, according to a regulatory filing. This would value the company at around USD 11.3 bn. The IPO price is a significant discount from the USD 21.54 share price in its last fundraising round in 2017. The move could be “an ominous sign” for other upcoming tech listings (including Uber, Slack and Zoom) that investor interest is waning, the Financial Times says. The decision to IPO below the company’s prior valuation may have been influenced by Lyft’s recent IPO, whose share price fell substantially after listing, the WSJ suggests.

On the subject of IPOs, UAE-based payments and FX company Finablr will list on the London Stock Exchange today in a move that could generate USD 500 mn, sources told Reuters. The company will reportedly sell 25-30% of its shares after rival Network International’s listing was valued at as much as USD 3.1 bn following strong investor demand.

Aramco bond orders keep on rising: Saudi Aramco’s maiden bond issuance is currently 6x oversubscribed, as USD 60 bn of orders are now in the books for a USD 10 bn offering, the WSJ says.

Also on our radar this morning:

• Oil prices hit a six-month high yesterday, with the Brent index reaching USD 71.10 just before midnight. Analysts point to the impact of US sanctions on Iran and Venezuela and the potential fallout from fighting in Libya as fueling the commodity’s rise.
• The US is considering slapping USD 11 bn in trade tariffs on Europe targeting aircraft, cheese and wine after WTO rulings found that the EU had illegally subsidized Airbus, the FT says.
• UK PM Theresa May could offer MPs a vote on a second referendum in an effort to persuade the opposition Labour Party to back her Brexit pact, The Telegraph has revealed.

Food for thought for the (barely) old among us: Why we wish we could once again party like it was 1999. Read: The best year of our lives in the New York Times.

*** QUESTION OF THE MORNING: We asked you yesterday and the answers have been inspiring. So we’re going to ask again every day until the end of the week: Does anyone out there know of homegrown Egyptian businesses that have successfully scaled up and expanded beyond our borders (not necessarily just to shiny Dubai)? We’re looking at great growth stories to feature in a new product we’re developing. Know someone? Drop us a line at editorial@enterprise.press.

Thank you to readers Hossam A.M., Walid H., Nadine B., Ismail T. and Karim A. for the great suggestions.

Extra special thanks to readers Hossam El-S. and Haitham M. for separately making our days brighter with exceptionally kind words.

News of President Abdel Fattah El Sisi landing in Washington dominated the nation’s airwaves last night. Pro-government expats welcomed the president holding Egyptian flags and pictures of the president outside the US Capitol, Al Hayah Al Youm’s Khaled Abu Bakr (watch, runtime: 2:28) and Hona Al Asema’s Lama Gebreil (watch, runtime: 4:38) separately reported from DC. Masaa DMC’s Eman El Hosary also took note (watch, runtime: 3:31). We have a little more in this morning’s Diplomacy + Foreign Trade, below.

Holding down commodity prices ahead of Ramadan: Cabinet Spokesman Nader Saad phoned in with Hona Al Asema’s Reham Ibrahim (watch runtime 3:52) and Al Hayah Al Youm Lobna Asal (watch, runtime: 4:31) to discuss the government’s strategy for keeping commodity prices in check as we head into Ramadan. At the top of the priority list: Ensuring better access for the needy and low income earners to state-run outlets that sell commodities at prices 10-15% below market. We have more in Diplomacy + Foreign Trade, below.

PMI, other indicators all positive: The Emirates NBD Egypt purchasing managers’ index, which gauges non-oil business activity (and which was in contraction territory again last month), is expected to cross a 50.0 reading in the coming months, a point which separates expansion from contraction, Sara Eid, the head of the Finance Ministry’s Fiscal Transparency & Citizen Engagement Unit, told Al Hayah Al Youm’s Lobna Assal (watch, runtime: 2:41). The indicator, which climbed to 49.9 in March, was just 0.1 points shy of expansion territory. It is one of several improving economic indicators alongside a recovering tourism sector, strong GDP growth and a reduction in the budget deficit, Eid added.

Egypt is beating all of its African peers when it comes to eurobond issuances, having raised more than USD 22 bn since the beginning of 2017,Bloomberg says. Egypt has raised more debt during this time period than Nigeria and South Africa combined. Egypt sold on Friday EUR 2 bn worth of six- and 12-year EUR-denominated bonds in an issuance on the London Stock Exchange. The offering was more than 4x oversubscribed, attracting EUR 9 bn in requests from more than 450 investors. The country also sold USD 4 bn n in USD-denominated eurobonds in February in an issuance that was 5x oversubscribed, attracting USD 21.5 bn in bids from 250 investors. Egypt has said it would not tap the international debt market again before the next fiscal year, which begins on 1 July.

M&A WATCH- United Energy Group acquires Kuwait Energy for USD 651 mn: Hong Kong-listed energy firm United Energy Group has closed its USD 651 mn full acquisition of Kuwait Energy — which has operations in countries including Egypt, Iraq, Yemen, and Oman, according to a press release from Shalakany Law Office (pdf). The transaction wrapped up late March after the target signed the agreement on 23 September last, the law firm said. The move is part of the acquirer’s strategy to push into the Middle East. Shalakany acted as buy-side legal advisor for all Egyptian assets included in the transaction.

Egypt is a significant part of Kuwait Energy: Kuwait Energy’s Egyptian assets — in Borg El Arab, Abu Sennan, East Ras Qattara, and on the tip of the eastern desert — account for a significant portion of the company’s total oil and gas production figures. The assets produced an average of 15k barrels of oil equivalent per day (boepd) in 2017, roughly 55% of the company’s total output.

The potential transaction was first reported last September. It was two months after other reports emerged that United Energy had hired investment bank Perella Weinberg Partners to look into selling down its stakes in Egypt and Iraq. There were also other talks for a possible merger with UK’s SOCO International earlier in 2018 which fell apart. Kuwait Energy lost its CEO and saw a credit downgrade in 2017. The company owes USD 290 mn in loans and arrears due this year. It was due to start repaying a c. USD 150 mn convertible loan last year to an entity controlled by collapsed private equity giant Abraaj.

Snackfoods giant Edita is launching a line of juice-filled stick candies under the BonBon brand in strawberry, orange, and apple flavors, according to an emailed statement (pdf). The introductory SKUS will be priced at at EGP 2 per package. The candies will be produced at the EGP 62 mn E15 facility in Beni Suef. Edita currently has a 9% market share in candy and confectionery. Edita also said it has bought out Confidel LTD’s stake in Edita Confectionary Industries and now holds a 99.98% stake, which “will allow the Company to make full use of economies of scale as it works to capture further gains from the growing demand for candy products.” Said our friend Hani Berzi, chairman and CEO at Edita: “Edita is moving quickly on a number of fronts to take full advantage of remarkable growth in one of our key markets.”

Coming soon: Mall of Mansoura: Marakez Real Estate Investment has purchased a 47-acre plot in Mansoura City from the Internal Trade Development Authority (ITDA) to develop a mall, according to an emailed statement (pdf). The EGP 1.4 bn facility, which is due to open its doors in 2021, is expected to create 10k jobs and feature a range of retail, hypermart, cinema, food / dining and entertainment options along with some 1.5k parking spots. The release did not name anchor tenants, but noted the mall will include international brands as it aims to become a hub for Delta residents, “including the 7 mn people living in Dakahlia.”

This is Marakez’s second foray out of the Greater Cairo Area after the Mall of Tanta, which is expected to open in 3Q2019. The commercial developer is looking to invest over EGP 15 bn over the coming period as part of its expansion plans. “These areas are in need of tangible development and investment to serve the necessities of the local population,” said our friend Dasha Badrawi, executive vice chairman at Marakez.

Siemens Gamesa has selected a consortium of Elsewedy and Marubeni to launch the first phase of 180 MW wind power stations in Ras Ghareb under a BOO (build, own, operate) framework, sources told the local press. The consortium will be in charge of securing the funding for the first phase of the project through Japanese institutions, including the Japan International Cooperation Agency. The tariff at which power generated by the facility will be sold has yet to be decided.

Gov’t mulling renewal of USD 23 bn Aramco agreement: The government is studying whether to renew its five-year agreement to purchase 700k tons of petroleum products per month from Saudi Aramco, a top official at the EGPC told Al Mal. The renewal will likely see the quantities and payment terms stay unchanged, but change the tenor and price. Negotiations could take over a year to wrap up, the official added. The agreement is due to expire in 2021.

Background: The USD 23 bn agreement, signed in April 2016, involved the monthly purchase of 400k tonnes of gas oil, 200k tonnes of benzene, and 100k tonnes of fuel oil (mazut) — worth some USD 300 mn. Egypt has 15 years in which to pay for the cargoes at 2% interest; the financing package comes with a three-year grace period. Aramco has also been supplying Egyptian refineries with 500k barrels of crude since January 2018 in a parallel agreement which the government renews every six months. The state also has import agreements with Kuwait Petroleum Corporation for 1.5 k tonnes of fuel a year and another contract with the Iraqi and Kuwaiti governments for 14 mn barrels of crude a month.

New requirements from Central Bank of Egypt on management of portfolio concentration risk: Commercial banks are now required to set aside additional capital above the base requirement to hedge against concentration risk in their loan portfolios, according to new CBE guidelines (pdf). The ratio for each bank will depend on measurements of key concentration measures, which are either based on extending too much credit to borrowers in a single sector (sectoral concentration) or to a single borrower (individual concentration). Risk management departments also need to develop a clear policy tackling these risks.

The central bank has also made it easier for lenders to factor real estate invoices: Another regulatory decision taken by the central bank yesterdayinvolves excluding real estate bank factoring from a ceiling recently applied to personal debt collection, according to a circular dated 7 April (pdf). This means that banks that collect payments from customers of real estate developers who have factored receivable assets (i.e. postdated checks or invoices for installments) will not adhere to the recently mandated maximum debt-to-income ratio for personal loans. The maximum ratio set in 2016 specified that the value of interest payments for consumer and housing loans must not exceed 35-40% of the borrowers income.

Modern monetary theory: An explainer. Modern monetary theory (MMT) has been getting a lot of attention in the global financial press as of late. The unorthodox set of policy prescriptions gaining traction among Democratic candidates in the US presidential election have been roundly denounced by Keynesians and neoliberals alike. Over the past month though, a debate has arisen in the press about the pros and cons of using MMT’s assumptions to structure a new approach to monetary policy. The theory, which has traditionally derived most of its support from left-leaning politicians, is now beginning to find supporters on Wall Street, according to the New York Times. And Paul Krugman, a long-time MMT skeptic, admitted recently that “policy debates over the next couple of years will be at least somewhat affected by the doctrine of MMT.” For all our readers who aren’t theory-junkies, we’re giving you the low-down on MMT, explaining how it differs from conventional thinking.

The house that Milton built: The established economic theory across much of the developed world emphasizes the need to lower government deficits, restrict public spending and keep macroeconomic decisions out of the hands of elected officials. Control of the money supply rests in the hands of an independent central bank, which sets interest rates accordingly. This approach, brought into the mainstream in the 1970s by Nobel laureate Milton Friedman and his Chicago School acolytes, is what many refer to (sometimes pejoratively) as neoliberalism.

MMT would do away with all of this. Proponents argue that the power to issue currency should be placed in government hands. The monopoly power to issue currency, they say, means that the state is always able to spend money, regardless of how big the budget deficit gets. While that disregard for public debt gets most mainstream economists seeing red, MMT theorists point to Japan (whose debt-to-GDP ratio is at an eye-watering 236.6%) to suggest that governments are able to deficit spend at a far greater level than we suspect. And the potential for runaway inflation? Government should combine preemptive tax increases with tighter financial and credit regulations to hold down prices, MMT theorists say.

This probably sounds like monetary policy branded with the hammer and sickle, but Wall Street analysts are responding positively to elements of the MMT program. Goldman chief economist Jan Hatzius highlighted the fact that private debt, rather than public debt, has been responsible for recent financial crises, stating that he is “more reassured by the US private sector surplus than concerned by the public sector deficit.” Meanwhile Steve Englander, Standard Chartered’s FX chief, suggested that MMT “would be more effective in raising inflation expectations and nominal rates than other proposals that central banks are now considering.”

Stay tuned tomorrow when we look at how MMT could impact emerging markets.

Limestone quarrying has never looked so beautiful: Egyptian photographer Anas Kamal has created a series of striking images showcasing the lives of those toiling in Egypt’s limestone quarries. Check them out here on one of our favourite photography blogs.

The US press is hammering Egypt ahead of El Sisi’s meeting with Trump: Covering all matters of general human rights, peace-brokering with Israel and economic policy, Politico wonders why the US maintains neutrality in what it says is El Sisi’s bid to extend presidential term limits. Human Rights Watch is calling on US Senators to take on Egypt’s human rights record, which also features heavily in coverage from the Washington Post and Time. WaPo zeroes in on human rights advocate Mohamed Soltan, while Time puts the spotlight on novelist Alaa Al Aswany. The Hill, in an opinion piece, focuses on rights of the nation’s Coptic minority.

Foreign Policy in particular is hitting us hard, with a trio of pieces taking aim at our human rights record: one suggests that Egypt’s copts are “treated as second-class citizens”, the second looks at prison conditions while a third calls for Egypt to respond to the events surrounding the death of a US tourist in the Western Desert in 2015.

Other headlines worth noting in brief:

• With cemetery cleanup efforts underway and USD 71 mn earmarked for restoring Jewish sites, Egypt is paying attention to its Jewish history, writes the Times of London (paywall). The efforts are meant to help prop up tourism, adds the Arab Weekly.
• An upcoming referendum on constitutional amendments will intensify a crackdown on criticism, warned Amnesty International.
• The Grand Ethiopian Renaissance Dam, which could take as much as 25% of Egypt’s Nile water, has us downstreamers worried, reports the LA Times.

President El Sisi’s meeting with US President Donald Trump later today topped the front pages of the state-owned press this morning (Al Ahram | Al Gomhuria | Al Akhbar). Expect the war on terror and regional security to feature heavily in their talks.

Machines that can read your mind: Mind reading machines may not be as far off as we think, The WSJ says in the latest piece exploring the capabilities of artificial intelligence and the fascinating albeit unnerving future it holds for us. The secrets of our minds are being unravelled by new brain scanning tools, machine learning and big data analysis techniques.. Terrifying or exciting? You decide.

How to hack group project interviews: Group assessments are a routine part of the interview process in many industries these days and learning how to make them work for you is important. Join in, don’t hog the limelight, and facilitate teamwork, Oxford University career advisor Jonathan Black says. Things then take a turn for the sporting as Kate Hays, head of performance psychology at the English Institute for Sport, weighs in with tips on how to perform well under pressure in a team. (watch, runtime 09:26).

Egypt, Saudi Arabia sign tech cooperation MoUs: Communications Minister Amr Talaat and Saudi counterpart Abdullah Al-Sawaha signed two tech cooperation MoUs during the Saudi-Egyptian Digital Economy Forum in Cairo yesterday, according to a Communications Ministry statement. One MoU was signed between IPG Service Group and Saudi's THIQAH to develop smart solutions and collaborate on business and data services, and another between state owned Misr for Central Clearing Depository and Registry (MCDR) and Saudi’s Baud Telecom Company in the field of electronic signatures.

The Egyptian Natural Gas Holding Company (EGAS) has offered four LNG cargoes for loading from the Idku liquefaction plant for May, sources told Reuters. Tenders for the cargoes, for which buyers would have to arrange shipping, close today, the sources said, without disclosing the quantity.

Irrigation Minister Mohamed Abdel Atti revealed Egypt’s USD 50 bn plan to combat water scarcity through 2037 during Beirut Water Week, reports Ahram Online. The plan aims to overcome water scarcity by encouraging the use of modern irrigation methods, cultivation of fewer water-intensive crops and establishment of desalination plants, among other things. The UN Food and Agriculture Organization warned earlier this week that Arab countries may face a water supply crisis if water-efficient irrigation methods are not implemented.

The Supply Ministry will no longer settle for a three months-worth “strategic” stock of commodities, and has raised the floor to between five and six months, according to a cabinet statement. Five to six months-worth of staples such as wheat, rice, cooking oil, and sugar will now have to be kept in the bank. This is part of a newly laid-out commodity strategy ahead of Ramadan. The Supply Ministry also said yesterday that the country currently has six months worth of rice reserves, according to Reuters. GASC yesterday purchased 114k tonnes of rice in an international tender.

Palm Hills Development (PHD) aims to launch in May a EGP 15 bn residential project in Alexandria, CEO Yassin Mansour told Al Mal. The company also aims to launch a new phase for its 6 October project, Badya, by October 2020.

Egypt’s hotels saw a 39% y-o-y increase in revenue per average room (RevPAR) in January and February 2019, Colliers International said in a report picked up by Zawya. The research house expects RevPAR to grow by 19% in 2019 on the back of a surge in demand coming from relaxed travel sentiment from most source markets. The press release’s figures built on earlier reports from January which saw hotels’ revenue figures rising by 30%.

Marriott International expects to debut its St. Regis brand in Cairo this year as the company plans to add 19 new properties and more than 3,000 rooms to its MENA portfolio in 2019, according to an emailed statement (pdf). The group also plans to invest USD 8 bn to add 100 new properties and 26,000 rooms to its regional portfolio by 2023. Marriott President and Managing Director of the Middle East, Alex Keyriakidis, previously said that the hotel group plans to add more than 1,200 guest rooms in four new hotels in Egypt over the coming period.

Sarwa Capital subsidiary Plus Leasing has begun talks with CIB, the National Bank of Egypt, and the Arab African International Bank for a EGP 600 mn loan as part of plans to boost liquidity to meet its clients’ financing needs, company sources tell Al Mal. The company is looking to secure a loan with a tenor of 3-5 years.

A banking consortium led by Banque Misr has signed contracts to increase its syndicated loan to El Canal Sugar Company to EGP 3.1 bn, marking a EGP 1.35 bn increase, Al Masry Al Youm reports. The additional funding will be used to finance the establishment of a sugarcane factory in Sharqiya. The consortium includes Bank Audi, Abu Dhabi Islamic Bank, Export Development Bank, Banque du Caire, and National Bank of Abu Dhabi, among others.

Three sarcophagi opened live on the Discovery Channel: A team of Egyptologists opened three sealed sarcophagi live on the Discovery Channel on Sunday. The excavation site, just outside Minya, housed three 2,500-year-old sarcophagi from the 26th Dynasty, a wax head, and a cornucopia of paraphernalia, jars, amulets, and statues. Reuters, Newsweek, and the AFP all have the story.