EnterprisePM — Is Moscow about to greenlight direct flights to Egypt’s seaside hotspots?

Hello, everyone. We’re now over the mid-week hump and coasting straight toward the what we hope will be a three-day weekend.

THE BIG STORY this afternoon? It’s got to be talk that Moscow may soon allow the resumption of direct flights from Russia to Egypt’s seaside resorts, possibly giving a very nice boost to our tourism industry, which continues to struggle thanks to the global pandemic. We have chapter and verse in Speed Round, below.

HAPPENING NOW- Prime Minister Moustafa Madbouly and 11 members of his cabinet are flying now to Libya for talks, according to a Cabinet statement. Among those heading west are the ministers of international cooperation, communications and information technology, health, transport, civil aviation, oil, electricity, manpower, trade and industry, education, and housing, among others. While in Tripoli, the PM is expected to meet with the prime minister-designate of the new interim Government of National Unity, Abdel Hamid Al Dabaiba.

** CATCH UP QUICK on the top stories from today’s edition of EnterpriseAM:

• GDP growth for Egypt this year: Fitch forecasts Egypt’s economy will grow at a 2.9% clip this year.
• Mobile wallet users will soon be able to access loan and saving services in real time under new regulations the Central Bank of Egypt (CBE) issued yesterday.
• Senate opposes Thanaweya Amma overhaul: The amendments would change the way students are assessed. The proposal will now be debated by the House of Representatives.

THE BIG STORY ABROAD- The latest exchange in what the talking heads are calling the Second Cold War as Chinese leader Xi Jinping “called for a new world order, using a speech at China’s flagship business event to launch a veiled attack against US global leadership and to warn against economic decoupling.” The story leads the front pages everywhere from the Financial Times to Reuters.

China is stepping up the heat as the US ambassador to Moscow heading home for “consultations,” according to an embassy statement. The move comes four days after the Kremlin suggested that Washington should recall him. Moscow has already recalled its ambassador to Washington, Reuters notes. Washington and Moscow have recently exchanged sanctions triggered by the Biden administration’s finding that Russia has interfered in American elections, engaged in cyber hacking, and is threatening neighbouring Ukraine.

YOUR STATUTORILY REQUIRED afternoon covid update: There’s mixed news on two of the most-hated (in some circles) aspects of the pandemic.

#1- Twitter is on fire with calls for governments to scrap mandatory mask requirements in outdoor spaces. Leading the charge are pro-mask advocates including Zeynep Tufekci. The argument? That passing someone outside on the sidewalk (even if they’re running) isn’t a big risk at all, so the requirement we all mask outdoors desensitizes us to the vastly higher risk of indoor transmission. Tufekci (the professor and public intellectual who has gotten more right about covid-19 than most), notes that “Masks outdoors make sense only for *extended* contact in very close proximity (especially if talking) but indoors, they make sense even if beyond the six feet. The main transmission mode is clearly aerosols, not droplets, and hence those are different.” Her call is spreading and has been picked up everywhere from the New Republic to the Washington Post.

#2- The World Health Organization isn’t down with vaccination passports, saying in a statement after a meeting yesterday that governments should “not require proof of vaccination as a condition of entry” to a country “given the limited (although growing) evidence about the performance of vaccines in reducing transmission and the persistent inequity in the global vaccine distribution.”

#3- CLOSED DOORS- The US will extend its ‘Level 4: Do Not Travel’ list to include around 80% of countries as the covid-19 pandemic continues to surge worldwide, reports Reuters citing a statement from the US State Department. The US already has 34 countries listed as due to their risk to travellers, and the 80% figure means adding nearly 180 countries. Egypt is currently at Level 3, which the State Department defines as “reconsider travel.” It is unclear whether we’ll be nudged up a level in the coming days.

#4- OPEN DOORS- Is KSA serious about reopening next month? Maybe so. The latest sign: National flag carrier Saudia is tweeting to ask whether its passengers have “prepared their bags.”

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The iSheep among us are all jazzed up about Apple’s spring event tonight. Pundits think the iPhone maker will unveil AirTags and a new iPad Pro with an improved display and faster processor, among other new products. The headline: Spring Loaded. The event will stream at 7pm on Apple’s website and on YouTube.

Cheech and Chong ask: Are you celebrating 4/20 today? (Ask your teenager if that doesn’t mean anything to you). Also: Earth Day is Thursday, April 22.

Renaissance Capital virtual conference titled RenCap ESG – a New Focus for EM kicked off today and will run until Thursday. The conference will include three panel discussions exploring environmental, social and governance issues in investing. Panels will be live streamed.

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MUST READ #1- Jeff Bezos’ final CEO note. The Lex Luthor body double has penned his last letter to shareholders as CEO as he prepares to hand over the day-to-day reins to top lieutenant Andy Jassy and become executive chairman, focusing on “new products and early initiatives.” What makes this a must-read? Everything from Bezos’ notion that we should all produce more than we consume through to his thoughts on how “differentiation is survival.” It’s accessible, clear, visionary and to the point everything a good CEO’s note should be.

MUST READ #2- What Nobel laureate Robert Schiller thinks the popular culture of the “Roaring Twenties” can tell us to watch for now as bears call for an end to the stock market’s very, very long bull run in the west. His argument: “The current widespread fascination with the rising market accompanied by recent concern about a possible downward spiral and strained stock market valuations echo those of 100 years ago,” but we also have more reasons to be optimistic today than our ancestors did a century ago. Read: Looking back at the first roaring twenties.

Because we have nothing better to worry about: Both the New York Times and the Wall Street Journal think your love of skinny jeans may “date” you. See: A new ‘denim cycle’? After a decade, jeans move from skinny to loose and Skinny jeans and 9 other styles that date you.

This year could see the second-largest increase in energy-related carbon emissions since 2010, driven by a resurgence in the use of coal in Asia, according to the International Energy Agency’s latest report. Global energy-related CO2 emissions could jump by 4.6% y-o-y to reach 33 bn tonnes in 2021, reversing 80% of the decline seen in 2020. Almost 70% of the projected increase in global energy demand is expected to come from emerging markets, while China alone is expected to account for over 50% of the increased global demand for coal, which is expected to grow by 4.5% this year. Natural gas on the other hand is set to grow by 3.2% in 2021, propelled by increasing demand in Asia, the Middle East and Russia.

Tesla under fire over bizarre car crash: Two US federal agencies are investigating a Tesla Model S crash in Texas that left the two passengers dead, but with neither behind the wheel, CNBC reported. Preliminary police reports said no one was in the driver’s seat when the car veered off the road. Tesla CEO Elon Musk has since claimed that data logs showed the car’s autopilot feature was not turned on. Musk stressed that both the autopilot feature and full self-driving technologies are meant to be used with “active supervision.”

US regulators have already been cracking down on driverless vehicles: The National Transportation Safety Board (NTSB) called for stronger federal requirements on the design and usage of automated driving technologies on public roads last month. Tesla has been testing its Level 2 Autopilot system — where vehicles have some automated functions but require drivers to remain attentive and keep their hands on the wheel — in its cars “with limited oversight or reporting requirements,” NTSB chief Robert Sumwalt said.

???? ON THE TUBE TONIGHT-

The political thriller Miss Sloane is now out on Netflix. Jessica Chastain plays Elizabeth Sloane, a Capitol Hill lobbyist (good lord…) at a conservative firm who switches sides after being asked by her boss to support a new gun lobby, a move which comes at a high personal cost. Chastain was nominated for an Academy Award for her role in the film, with this review likening her to “every mastermind serial killer on ‘Criminal Minds.’” The New York Times and Empire are also fans.

⚽ Chelsea are playing Brighton tonight at 7pm in the English Premier League.

Serie A will see Verona go up against Fiorentina at 8:45pm.

In Umm El Donia, the Egypt Cup is on tonight, with Misr Lel Makassa to face off against Ceramica Cleopatra at 9:30pm.

Liverpool forward and national star Mo Salah has been named the captain of the Egyptian national team, the Egyptian Football Association said in a statement. The selection comes as Egypt is vying to qualify for the 2022 World Cup in Qatar.

???? EAT THIS TONIGHT-

One of the best parts of the Iftar table are the appetizers. From sambosak (samosa, if you’re on the other side of the controversy), mombar, wara2 3enab, and kobeba, Splatter offers a mezze platter that includes all our favorites and more. From cheese and fruit platters, to traditional Ramadan mezzes, to its signature seafood platter boasting mussels, shrimp, crab, salmon, and herring, these aesthetically pleasing platters are sure to become the centerpiece of any dining table.

???? OUT AND ABOUT-

El Sawy Culturewheel is hosting the standup comedy show Ostor Yarab tonight at 9pm, featuring nine local comedians in a two-hour performance.

Singer Shahira Kamal will be performing her recent EP album "Dokki ya Mazzika” at The Room New Cairo tonight at 9pm. Kamal was the voice on the Cairokee song Kol Haga Betaady.

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???? TOMORROW’S WEATHER- More decent weather ahead. Expect highs of 31°C during the day and nighttime lows of 15°C tomorrow, our favorite weather app tells us.

Direct flights from Russia to Egypt’s seaside tourist resorts could make a comeback in less than a month, after a near five-year ban, Russia’s deputy foreign minister, Mikhail Bogdanov told reporters in Moscow, according to Russian news agency Interfax. “Everything is going according to plan,” and the resumption is due to be announced “in the near future,” Bogdanov said. It is “practically a foregone conclusion,” he added. (Stop us if you’ve heard this before…) Masrawy also had the story.

Charter flights to Red Sea destinations could resume as early as 10 May, with Russian airlines already offering “pre sales” to tourists, an aviation source told the Russian news agency separately. The airlines are currently seeing a high level of interest in Egyptian destinations, especially amid restrictions on travel to Turkish resorts, which are also popular among Russian tourists, the source said. “At least two airlines are working on these scenarios,” with each planning to offer flights from a different Russian city, they added.

This isn’t the first time we’ve heard this: There have been multiple reports in the past five years that a resumption of flights was “imminent,” including a report that predicted planes would be in the air last May. The issue remains on Egypt’s agenda, with President Sisi personally raising the issue with Russian President Vladimir Putin in the past.

Russia has maintained a ban on direct flights to Red Sea resort towns since the Metrojet crash in Sinai in 2015. Earlier this month, aviation experts told Interfax that the airports of Sharm El Sheikh and Hurghada were cleared by the Russians after security experts from Moscow completed safety checks.

News of the possible flight resumption comes on the heels of talks between Foreign Minister Sameh Shoukry and his Russian counterpart Sergey Lavrov in Cairo last week during which, “it was possible to reach an agreement [on the resumption of flights],” Bogdanov told reporters in Moscow yesterday. Shoukry and Lavrov did not make any announcements regarding the resumption of flights following the meeting, having focussed instead on Moscow’s bid to mediate the Grand Ethiopian Renaissance Dam (GERD) talks.

Healthcare investment firm Seha Capital is the latest to throw its hat in the ring for Alexandria Medical Services as Abu Dhabi Commercial Bank(ADCB) looks to offload its 51.54% stake, Alex Medical said in an EGX disclosure (pdf).

The company is now officially being courted by four bidders: EGX-listed Cleopatra Hospitals Group (CHG), Alexandria for Medical Investment Company (the majority shareholder of Mabaret Al Asafra Hospitals Group in which South Africa’s Tana Capital holds a minority stake), a consortium of Speed Medical, Sharif El Akhdar’s LimeVest and Saudi’s Tawasol Holdings (already a 26% shareholder in Alex Medical), as well as Seha.

Investors offered an average price of EGP 50.77 per share, according to the disclosure, with sell-side advisor, CI Capital saying it had received non-binding letters of intent from the four bidders.

Final binding offers are expected to be submitted to CI Capital by the third week of May, after bidders wrap up due diligence. The closing date will soon be determined by ADCB, who will be exiting the company.

Advisors: EFG Hermes is acting as CHG’s financial advisor, while Arqaam Capital is advising the Mabaret Al Asafra-Tana consortium (aka Alexandria Healthcare Investments). Zilla Capital is advising Mabaret Al Asafra’s shareholders. Prime Capital is advising the Tawasol-Speed Medical-LimeVest consortium. CI Capital is the sell-side advisor.

Background: Reports in the local press last month suggested that an offer is on the table from the Mabaret Al Asafra-Tana consortium that values Alex Medical at nearly EGP 650 mn. The Tawasol-Speed Medical-LimeVest consortium had also reportedly made an offer earlier this month of EGP 38.09 apiece.

Real estate startups Isqan.com and Qasatli have partnered up to provide installment plans to online homebuyers, Isqan said in a press release (pdf). The partnership will see the listings platform Isqan and home finance provider Qasatli offer plans of up to seven years for ready-to-move homes, signaling that the second housing market is becoming interesting to both tech and non-bank financial services players.

How will it work? Qasatli, a real estate consultancy that has contracts with developers including Porto Group, already offers tailored payment plans for homes through an online platform. It will make those home finance services available through Isqan’s platform, which is used by homebuyers eyeing existing properties listed on Isqan. Described by Isqan as the “first of its kind in the region, the program will apply to resale units – aiming to make the process quicker, easier and more accessible.”

Isqan raised a six-figure USD seed investment from Egygab Holding CEO Mohamed Gaballah earlier this year, to support its plans to “digitize the entire real estate industry in Egypt.” The company, which was founded in 2020, also said at the time that it was eyeing another financing round towards the end of this year to continue expanding and growing its product offerings.

OUR ANALYST OF THE WEEK- Amr Elalfy, head of research at Prime Holding (Linkedin)

My name is Amr Elalfy and my slogan has always been “analyst by trade, human by experience.” As an analyst I always try to dissect matters and create a clear picture to communicate to clients, but I also tolerate making mistakes. I learned with time that mistakes can be beneficial if you learn from them.

I’ve been working as an analyst for the past two decades. I attended high school in the US and got my bachelor’s degree from Baruch College. My first job was actually at a hedge fund in New York called King Street Capital Management. Two years later I decided to come back to Egypt to take care of my family — I’m an only son. I jumped around many firms after coming back, but the first job I landed was at Prime Securities as an investment analyst. I then went on to CIBC, which is the precursor of CI Capital, before moving to Vodafone Egypt.

I felt like a fish out of water when I wasn’t in the capital markets world, so when I got a call to come back to CI Capital, I quickly moved back to the field. After six years at CI Capital, I went to Mubasher Financial Services followed by Shuaa Securities to start up both firms’ research departments from scratch. Finally, I came full circle and started working for Prime Holding once again. My specialties are the telecom and banking sectors in Egypt, but as head of research I end up covering everything.

The best part of my job is being able to voice my opinion. Once upon a time, my dream was to become a journalist, so in a way I think being an analyst is similar to being an investigative reporter where you dig deep and find the necessary tools to come to a conclusion and communicate it to the world. I also really appreciate the exposure to different sectors in the economy in a way that allows you to understand them well enough to move to them later on — the way I did when I moved from covering the telecom sector to working at Vodafone Egypt.

The worst part of my job is that it’s very hectic and a “lifestyle job” — which is what I call it. It’s never a nine-to-five job and can go on 24/7. You have to be alert to what’s going on and fast enough to come up with an instant opinion.

One of the silver linings of the pandemic was it showed that we can do our jobs from anywhere. I always say that what we sell is our time, minds, and ideas and you can do that from an office, your kitchen table, the beach, or a coffee shop.

I don’t like travelling, so I wasn’t too disappointed when it was stopped. Travelling for work is hectic and can often disrupt your daily routine. So in my case, I appreciate that I can still do my job without travelling. The pandemic also forced many firms and companies to adopt and enhance digital technologies, which makes our life easier.

I don’t have a theory of investment yet, but I hope to come up with one for my PhD, which I am pursuing at Ain Shams University. I studied for my masters at AUC and got my CFA a while later.

I also work as a professor part-time and have taught at AUC, GUC, MIU, and Helwan University, while at the moment I’m teaching at Ain Shams University. I love teaching as it is how I learn the most. You share knowledge, think about how to present concepts, and get asked questions from students you might not have thought of yourself. I even started a podcast to help students better understand the finance and business world called Chimp Talk.

Over the years, I’ve learned that it’s very important to have and stick to a stop-loss when investing. You have to have a maximum loss that you can take and not let it exceed that on any stock. Something else I learned is to be contrarian. When everyone is looking at a certain sector with positive glasses, I try to look somewhere else that they’re not as excited about.

Before recommending a stock, I always look at the risk first. In my head, return may never happen, but risk will always happen.

From the capital markets perspective, 2021 can definitely be the year for Egypt. There are a number of catalysts that I saw as positive, among them are the IPOs in the pipeline, high liquidity, a positive economic growth forecast, and the EGX30 having a lot of room to grow. The only catalyst we’re missing is foreign investors coming back to the market, which I think could happen soon as well. When the dust settles on covid-19, investors will begin to look for countries that continued to grow despite the pandemic.

I recently started playing chess when I’m not working and I’ve found it helps me hone my strategy skills. I even taught my daughters Deema and Lama how to play and we often compete against each other. I also play soccer and I’m a big fan of El Zamalek… I guess I’m in the minority [laughs]. On longer vacations, I like to travel anywhere in Egypt — as long as I can get there without taking a flight, so the Red Sea and North Coast are among my favorite destinations

I often read articles and blogs written by UBS Chief Economist Paul Donovan. I even got to meet him once when he was in Egypt and he signed my book. Another writer I enjoy is Vitaliy Katsenelson — I relate to him on a personal level as he has a similar story to mine, and on a professional level as we both have similar investment styles.

I enjoy podcasts. I listen to Making It, Rule Breaker Investing, and Streetwise.

It’s important to have new beginnings in life, be it personal or professional, as it reinvigorates you and gives you a new outlook and direction.

My ultimate goal in life is to be happy. I also want to impact other people’s lives in a good way, whether it’s through work, teaching, or just on a personal level. I’m aiming to leave a legacy behind.

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The EGX30 rose 1.7% at today’s close on turnover of EGP 1.1 bn (16.8% below the 90-day average). Local investors were net sellers. The index is down 2.1% YTD.

In the green: CI Capital (+5.0%), AMOC (+4.2%) and Sidi Kerir Petrochemicals (+4.1%).

In the red: Fawry (-2.0%), Edita (-1.5%) and Credit Agricole (-0.1%).

Tell your HR department not to evaluate employees by ranking them: The forced distribution model (FDM) first became infamous thanks to General Electric in the 1980s, when the late Jack Welch gained infamy for firing the lowest-performing 10% of employees each year, according to Success Dart. Welch — who was chairman and CEO of General Electric for two decades — used FDM to rank employees based on predetermined parameters quantifying their performance over a period of time. This model grew into a standard appraisal system in many companies worldwide, but its efficacy has been called into question over the past few years.

Why is FDM causing problems? The model can often prove disastrous for a company’s culture or morale, writes Sarah O’Connor in the Financial Times. One of the model’s greatest flaws, she argues, is that it conflates an employee’s absolute performance with their relative performance against their peers. While an employee in a strong team might be meeting all their objectives, they might still be labeled as being an underperformer, especially if they’re a newcomer who’s learning the ropes. Managers also struggle to equitably rank employees playing very different roles in the company structure.

Using FDM for evaluation translated into years of what many employees complained is a toxic work culture at some companies including Microsoft, with good performers avoiding working together for fear of suffering in the rankings and all employees quietly sabotaging their colleagues, according to Vanity Fair. These practices transformed a lean competitive firm led by young visionaries of unparalleled talent into a bureaucracy-laden firm, with an internal culture that unintentionally rewards managers who strangle innovative ideas that might threaten the established order of things.

Governments are also shifting away from this ranking system: The UK looked into FDM for civil servants and found that “a lot of the people in the bottom 10% were not underperforming,” a researcher at the Institute of Government think-tank told the FT. Since then, the UK’s senior civil service scrapped forced distribution in 2019, following Microsoft’s 2013 lead.

April: The government’s fuel pricing committee is scheduled to meet for its quarterly review of prices.

April: EBRD president Odile Renaud-Basso expected to visit Egypt.

20-22 April (Tuesday-Thursday): Renaissance Capital’s conference RenCap ESG – a New Focus for EM will take place virtually.

25 April (Sunday): Sinai Liberation Day.

29 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC — the holiday could be observed on a Sunday or a Thursday).

29 April (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

1 May (Saturday): Labor Day (national holiday).

2 May (Sunday): Coptic Easter Sunday.

3 May (Monday): Sham El Nessim.

13-15 May (Thursday-Saturday): Eid El Fitr (TBC).

16-19 May (Sunday-Wednesday): The Arabian Travel Market (ATM) is taking place in Dubai. ATM is an international travel and tourism event to promote the Middle East as a tourist destination.

25-28 May (Tuesday-Friday): The World Economic Forum annual meeting, Singapore.

1 June (Tuesday): The IMF will conduct a second review of targets set under the USD 5.2 bn standby loan approved in June 2020 (proposed date).

7-9 June (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

17 June (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

17-20 June (Thursday-Sunday) : The International Exhibition of Materials and Technologies for Finishing and Construction (Turnkey Expo), Cairo International Conference Center.

24 June (Thursday): End of the 2020-2021 academic year (public schools).

26-29 June (Saturday-Tuesday): The Big 5 Construct Egypt, Cairo International Convention Center, Cairo, Egypt.

30 June (Wednesday): 30 June Revolution Day.

30 June- 15 July: National Book Fair.

1 July: (Thursday): National holiday in observance of 30 June Revolution.

1 July (Thursday): Large taxpayers that have not yet signed on on to the e-invoicing platform will suffer a host of penalties, including removal from large taxpayer classification, losing access to government services and business, and losing subsidies.

19 July (Monday): Arafat Day (national holiday).

20-23 July (Tuesday-Friday): Eid Al Adha (national holiday)

23 July (Friday): Revolution Day (national holiday).

5 August (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

9 August (Monday): Islamic New Year.

12 August (Thursday): National holiday in observance of the Islamic New Year.

12-15 September (Sunday-Wednesday): Sahara Expo: the 33rd International Agricultural Exhibition for Africa and the Middle East.

16 September (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

30 September-2 October (Thursday-Saturday): Egypt Projects 2021 expo, Egypt International Exhibition Center, Cairo, Egypt.

30 September-8 October (Thursday-Friday): The 54th session of the Cairo International Fair, Cairo International Conference Center, Cairo, Egypt.

1 October (Friday): Expo 2020 Dubai opens.

6 October (Wednesday): Armed Forces Day.

7 October (Thursday): National holiday in observance of Armed Forces Day.

12-14 October (Tuesday-Thursday) Mediterranean Offshore Conference, Alexandria, Egypt

18 October (Monday): Prophet’s Birthday.

21 October (Thursday): National holiday in observance of the Prophet’s Birthday.

28 October (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

1-3 November (Monday-Wednesday): Egypt Energy exhibition on power and renewable energy, Egypt International Exhibition Center, Cairo, Egypt

1-12 November (Monday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

29 November-2 December (Monday-Thursday): Egypt Defense Expo

13-17 December: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

16 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

May 2022: Investment in Logistics Conference, Cairo, Egypt.

27 June-3 July 2022 (Monday-Sunday): World University Squash Championships, New Giza.

Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish below between the actual holiday and its observance.