Wednesday, 19 May 2021

EnterprisePM — US, EU back Egypt Gaza ceasefire proposal -sources

TL;DR

WHAT WE’RE TRACKING TONIGHT

Well, folks, that’s another work day in the books, and while Egypt’s role in trying to broker a ceasefire in Gaza leads the news, we have plenty of business news as the community shrugs-off the post-Eid blues and gets back to work.

HAPPENING NOW- Outside of Egypt, stonks are having a bad hair day. The EGX30 closed up 0.2% today, but benchmark indexes in Frankfurt, London and Paris joined the EuroStoxx600 in the red today — each of them is down at least 1.3% in trading as we head toward dispatch time. Futures suggest Wall Street will match that slide, with the Dow, S&P and Nasdaq all set to open in the red later this afternoon. Look for tech stocks to lead the decliners.

Also: BTC is back below USD 40k again, hovering just under USD 38k after a brief rally overnight that saw it inch back above the USD 40k mark, according to a price quote at dispatch time. The currency tumbled 14% to fall below the USD 40k handle for the first time since February, continuing a major sell-off that began a week ago, CNBC reports. China’s clampdown on crypto and the Elon Musk guy’s tweets have sent BTC on a rollercoaster ride. Meanwhile, Ether — the second-largest cryptocurrency — fell almost 16% to USD 3k, while the joke that is Dogecoin was also down 16%. The sell-off has erased some USD 270 bn of value from the cryptocurrency market over the past day.

And: Lots of our readers are on video calls right now. It’s day two of Renaissance Capital’s annual MENA Investor Conference and the penultimate day of HC Securities virtual event on Egyptian equities (pdf). Both wrap up tomorrow.

KEEP YOUR EYE ON: Shares of Integrated Diagnostics Holding (IDH) will begin trading on the EGX tomorrow under the ticker IDHC after the London-listed company completes its dual-listing of a 5% stake.

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

  • More share sales in the pipeline: As many as five companies could sell shares on the EGX later this year, EGX boss Mohamed Farid told CNBC.
  • More economic optimism: Renaissance Capital has upgraded its forecast for Egypt’s 2021 economic growth to 4.2% from 2.8%, which it says will be driven by the transport, tourism, and education sectors.
  • Speed Medical is eyeing a 25% stake in healthcare software developer DG Well + is planning to set up a consumer finance arm.

THE BIG STORY ABROAD- France has been pushing for a UN Security Council resolution to end the violence in Gaza, China’s UN ambassador and council president, Zhang Jun, told the Associated Press. The AP says Washington is blocking the security council from issuing a statement calling for a halt to the violence, insisting that “it would not help diplomatic efforts to end the conflict between Israel and Hamas.” France joins Egypt, which has been trying to mediate a ceasefire between Israel and Hamas. Some 219 people have been killed and 1.5k injured since 10 May with no clear sign of a ceasefire in view, Reuters adds. We have more on Egypt’s diplomatic efforts in the news well below.

The most recent violence saw Israeli airstrikes kill six Palestinians after 52 aircraft hit targets in Rafah and Khan Younis.

FOR TOMORROW- The El Gouna International Squash Open 2021 will kick off tomorrow and run until 28 May. Fans will be allowed to enter the stands, with the first few match days without charge and tickets to be sold for the semis and finals. You can also watch the matches live on PSA Squash YouTube page. The event is supported by our good friends at CIB.

ALSO: The CIB PSA World Tour Finals will run on 22-27 June in Cairo.

🚙 FOR YOUR COMMUTE-

For our fellow iSheep: There are lots of new Macs coming later this year, according to Bloomberg’s Mark Gurman, who has owned the market for Apple leaks since he was (literally) in his teens. Gurman says we can look forward to redesigned MacBook Pro, MacBook Air and Mac Pro desktops, all of them with next-generation versions of Apple’s home-grown processors. The faithful can read all about it here.

For the first time ever, bank finance for renewable energy projects could this year outpace funding lenders have made available for fossil fuels. In the past five years, lenders made about USD 3.6 tn in funding available for fossil fuel projects — or triple what they provided to green energy initiatives. Now, Bloomberg says “data covering almost 140 financial-service institutions worldwide shows at least USD 203 bn bonds and loans to renewable projects and other climate-friendly ventures through May 14, compared with USD 189 bn to businesses focused on hydrocarbons.” Read more here and or check out Five takeaways from global banks’ green vs. fossil financing.

Over half of single-use plastic waste “thrown away globally” was traced to just 20 polymer firms, with not more than 2% of feedstock being recycled, the first-ever Plastic Waste Makers Index showed. The Australian study also showed that as many as 100 companies are the source of 90% of global single-use plastic production. Production of these “throwaway” plastics like face masks, medical equipment and shopping bags is set to grow 30% in the next five years, fueling their contribution to global warming and ocean pollution. The biggest culprits: US energy giant ExxonMobil, contributing 5.9 mn tonnes to global plastic waste in 2019, followed by US chemicals company Dow and Chinese petrochemical producer Sinopec.

The UAE’s push for gender representation on boards could be hindered by cultural values, as women shun posts that require staying out late or interacting closely with men, Fatma Hussain, the only female on the board of Aramex, told Bloomberg. The UAE passed a law back in March requiring companies to have at least one female board member and since it became effective in April, only 16 listed firms have added women to its highest ranks including Dana Gas, Du, and Emaar.

Dr. Google will really, truly see you now. Bad news for all of our MD friends frustrated by folks Googling to find their own diagnosis: Google is launching an AI solution to help folks self-diagnose skin conditions, writes The Financial Times. The tool, Derm Assist, will be rolled out in Europe this year before launching globally to aid people suffering from conditions ranging from acne to melanoma. Users will be asked to upload an image of the condition to Derm Assist and an AI agent will generate a list of possible matching conditions, explains a Google blog post.

📺 ON THE TUBE TONIGHT-

The Underground Railroad is out on Amazon Prime. Based on Colson Whitehead’s Pulitzer Prize–winning novel of the same name, the series follows a young black girl named Cora as she escapes her Georgia plantation by using an underground railroad system. Through Cora, audiences get a glimpse of how terrifying the reality of slavery was in the US before the Civil War. The 10-episode show was filmed by Barry Jenkins (Oscar-winning director of Moonlight) and has been commended for its aesthetic style that blends symbols and haunting imagery. The New York Times and Arts Desk give it a thumbs up.

The Premier League is going strong today with six matches: Everton will play Wolves, Newcastle against Sheffield, and Tottenham against Aston Villa, all at 7pm. An hour later, at 8pm, you can catch Crystal Palace going up against Arsenal, Burnley and Liverpool competing, and West Brom against West Ham.

💡 UNDER THE LAMPLIGHT-

Amazon executives Colin Bryar and Bill Carr break down Amazon's principles and practices in Working Backwards. The duo use their experience working up the ranks from the early days of Amazon to shed light on the innovation and culture that was needed for the firm to become what it is today. They reveal Amazon’s fourteen leadership principles used to inform decision making and give insight into how consumers behave — both theories that have been used to come up with growth plans and new products.


🌤 TOMORROW’S WEATHER- We’re looking at daytime highs of 39°C in the capital and nighttime lows of 19°C tomorrow, according to our favorite weather app.

SPEED ROUND: DIPLOMACY

US, EU back Egypt Gaza ceasefire proposal -sources

The US and EU are both supporting Egypt’s efforts to bring about a ceasefire between Israel and Hamas, with Washignton lobbying Israel to stop bombing targets in Gaza, Al Arabiya reported, citing unnamed sources it says have direct knowledge of the matter. Egypt’s proposal would see a ceasefire come into play at 6am Thursday morning, but negotiations are ongoing over the precise time, the sources say.

Claims of agreement: The two sides have apparently agreed to a ceasefire in principle, but details over the terms have not been agreed, an Egyptian security source told Reuters yesterday.

Which Hamas rejected: A senior Hamas figure said yesterday that reports that it had agreed to a ceasefire were false.

Some Palestinian factions have welcomed Egypt’s truce proposal, while an Israeli delegation has been invited to Cairo to discuss the terms, Al Arabiya’s sources said. It is unclear how the Israelis responded to the request.

Israel wants to slam Hamas harder: Netanyahu is holding talks with some of his cabinet members to determine “whether the achievements are enough to bring the message to Hamas,” and would then “assess the conditions for a ceasefire,” a senior Israeli military official told the Wall Street Journal. “We can go more days, more weeks” should Hamas refuse to back down, the source said.

Egypt to step up mediation efforts: Foreign Minister Sameh Shoukry told CNN Arabic (watch: runtime: 1:36) that he phoned Israeli and US FMs Gabi Ashkenazi and Antony Blinken, as well as some European foreign ministers, to join forces in reaching an immediate cessation of violence against civilians in Gaza. “[The situation] necessitates that all efforts are undertaken to achieve a ceasefire, and to avoid the escalation and widening of the conflict,” Shoukry said.

As of right now, the conflict continues: Over 72k Palestinians have been displaced by eight days of Israeli airstrikes on Gaza, while 213 Palestinians and 12 Israelis have been killed.

SPEED ROUND: M&A WATCH

Raya on verge of acquiring GCC call center company

Raya Contact Center is on course to acquire 100% of an unnamed call center company based in the Gulf after its USD 14.2 mn offer was accepted by the firm, Raya said in regulatory filing (pdf). The transaction is still “conditional on the negotiations and successfully executing all the definitive agreements,” Raya said without providing further details. This comes as Raya looks to expand its footprint in the GCC, particularly in Saudi Arabia. Raya submitted its initial offer to acquire the call center back in October. It hasn’t made public the target’s name.

SPEED ROUND: TOURISM

More help for the tourism industry

Subsidized loans designed to help tourism companies fund capex can now cover up to 90% of a project’s renovation costs, up from 75% under the ongoing EGP 50 bn tourism support program, according to a CBE circular (pdf) published today. Tourism companies can use the facilities to fund a larger portion of spending needed to expand hotels or add buses and other vehicles to their fleets.

Opex program gets extended: A parallel initiative giving operators access to 5% interest loans to cover wages, maintenance expenses, and operating costs will also now run its course on 31 December this year after having been previously scheduled to end on 30 June. The central bank had extended a helping hand to those companies at the onset of the pandemic to cover wages, commitments to suppliers, and maintenance besides an original bid to help renovate and upgrade tourism infrastructure

SPEED ROUND: DEBT WATCH

More leasing, please.

GlobalCorp Financial Services is in talks with seven banks to borrow at least EGP 1.4 bn to back its leasing and factoring services, CEO Hatem Samir told Hapi Journal. The company, previously known as Global Finance, is in separate talks with the banks and is looking to obtain between EGP 200-300 mn from each, Samir said. GlobalCorp will channel the finance to companies operating in the real estate, manufacturing, healthcare, and F&B sectors.

About Global Corp: The company was set up in 2015 by local and foreign institutions including private equity outfit Ezdehar and German development bank KfW’s Sanad fund. It provides “structured leasing products and other financial and advisory services” to specific industries including real estate development, transportation, health, education, pharma, F&B, paper, and chemicals and oil services.

GO WITH THE FLOW

Earnings Watch: EFG Hermes, IDH

EARNINGS WATCH- EFG Hermes’ net income more than tripled to EGP 292 mn in 1Q2021, up from EGP 90 mn in the same period last year, the financial services giant said in its earnings release (pdf) this morning. Revenues jumped 30% to EGP 1.3 bn from EGP 965 mn in 1Q2020, driven by “robust results” at its non-banking financial services (NBFIs) platform and investment bank business, Group CEO Karim Awad said (pdf).

NBFI + investment bank revenues rebound y-o-y: Revenues in EFG’s non-bank finance segment rose 22% y-o-y to EGP 441 mn, accounting for 35% of the group’s top line. Its microfinance firm Tanmeyah posted sales of EGP 490 mn — the highest since its inception in 2009, while revenues at ValU tripled to EGP 56 mn. Revenues at the investment bank increased 30% y-o-y to EGP 814 mn. Revenues at EFG’s private equity arm fell 34% y-o-y to EGP 29 mn, which the bank attributed to the incentive fees related to the Vezeeta exit in 1Q2020.

The way ahead: “The variables impacting our outlook for 2021 remain plentiful and difficult to predict. Nonetheless, the group will continue leveraging its comprehensive capacities across its operations and capitalizing on what we hope will be an improving external environment as consumers and businesses adjust to the covid-19 situation, to deliver solid results and sustainable value for the remainder of the year,” Awad said.

Integrated Diagnostics Holding (IDH) saw net income rise 21% to EGP 609 mn in 2020 from EGP 505 mn the previous year, according to a company earnings release (pdf). Bottom line growth was supported by a 19% rise in revenues, which hit EGP 2.65 bn from EGP 2.22 bn in 2019. This came on the back of the covid-19 pandemic, which provided the company with new sources of revenue. IDH set up PCR testing facilities in Egypt and Jordan, and ramped up its house call services.

IDH ups dividend: The company has recommended it pay out shareholder dividends of some USD 0.049 per share, amounting to a total payout of USD 29.1 mn for 2020, up 4% from 2019 despite the impact of covid-19.

Going forward: The company is expecting double-digit revenue growth and a 40% EBITDA margin through 2021 on the back of a continued economic and health recovery in its key markets.


THE CLOSING BELL-

The EGX30 rose 0.2% at today’s close on turnover of EGP 1.82 bn (31.5% above the 90-day average). Regional investors were net buyers. The index is down -0.4% YTD.

In the green: Qalaa Holdings (+3.4%), MM Group (+3.1%) and Edita (+3.1%).

In the red: Orascom Development Egypt (-2.7%), GB Auto (-2.2%) and Heliopolis Housing (-1.6%).

THE MACRO PICTURE

With Egypt as a superstar, global interest in frontier market debt is on the rise

Global interest in frontier market debt is rising as investors search for higher-yielding assets, the Financial Times reports. Craig McLeod, head of emerging markets at electronic bond trading platform MarketAxess, says that the world of low interest rates and diminishing returns in traditional fixed-income markets is pushing investors to look further afield to markets that were once entered only by the most adventurous. “A couple of years ago I would talk to three of the largest asset managers about frontier markets. That’s expanded to nearly all of our clients this year,” he told the salmon-colored paper.

The returns are a lot higher: Investors are increasingly looking to markets like Egypt, Kazakhstan and Serbia, whose short-term bonds provide returns of up to 8%, while local-currency bonds from frontier markets pay an average yield as high as 9%. By contrast, the average coupon rate for bonds sold by conventional EM governments is lower than 5%, according to the JPMorgan GBI-EM global diversified index.

New frontier market bonds, indices: The European Investment Bank this week issued its first-ever bond backed by Georgia’s local currency GEL. TCX, which participated in 100 of the 270 frontier currency-linked bonds sold in 2015, also recently launched an index that tracks bonds issued by EM-focused development lenders such as the European Bank for Reconstruction and Development and the African Development Bank. In both cases, the organizations responded to “growing demand for and larger transactions in local currency offshore markets,” says Matthijs Pinxteren, director of treasury at Dutch development bank FMO.

Eyes on the Fed: While appetite for frontier local currency bonds is currently high, how long this lasts will depend on how investors think the Fed will respond to higher inflation, Renaissance Capital’s global chief economist, Charles Robertson, said. A move to raise rates could precipitate a sell-off in frontier- and emerging-market assets, which we got a taste of earlier this year when yields on US treasuries rose in response to expectations for higher inflation.

Egypt isn’t among the countries most vulnerable to a Fed-induced EM sell-off, according to HSBC, which earlier this year suggested that a Fed rate-hike will spell particular trouble for Brazil, Indonesia, Mexico and South Africa.

Another thing supportive of capital flows to Egypt: Egypt could be re-included in the JPMorgan EM bond index before the year is out, which could see another USD 1.4-2.2 bn enter the country’s local currency bond market. Egyptian bonds could also be cleared through the Belgium-based clearinghouse Euroclear between September and November this year, making it easier for foreign investors to invest in EGP bonds.

For now, prospects are still out there, say Bank of America strategists, who made handsome returns shorting the USD against Ghana’s GHS and Kazakhstan KZT in April.

IMAGE OF THE DAY

Ecuador's famous rock formation known as Darwin’s Arch has collapsed due to “natural erosion,” the country’s Environment Ministry said on Monday. The roof of the arch caved in, leaving behind two vertical stacks. Darwin’s Arch was named after English biologist Charles Darwin and is a popular spot for diving.

OFFICE LIFE

The pandemic is shifting workplace perks towards an individualized, health-attuned culture and away from traditional perks designed to keep employees productive by keeping them at the office, the Financial Times says.

Central to this shift is recognizing younger and older employees have different needs:

Younger employees are looking for support with finances and personal development, argues Manchester University organizational psychology professor Cary Cooper. For these age groups, using traditional perks to get employees to work on-site from the office and boost their productivity is not an effective strategy, says Flex author Annie Auerbach. In the post-pandemic world, these “stay here tactics” — like having ping pong tables and gyms in-house — will make way to a more empathetic managerial vision that is grounded in the understanding that staff members have a life outside their jobs, Auerbach says.

What’s wrong with the job hopping generation? A 2020 report by Gallup found that 21% of millennials changed jobs in the last year, which was three times the number for non-millennials. “The reason they are going from one employer to another is because they are not getting what they are looking for,” says Cooper.

Over 60% of employers are placing more emphasis on perks that promote physical and mental wellbeing, according to UK job rating site Glassdoor. These include apps, private healthcare, and online therapy. The study found that almost nine in ten would be more likely to apply for a job at a company that took care of its employees.

Some companies are tweaking perks to factor in debt relief: Google announced it will match student loan repayments up to USD 2,500 a month from starting this year.

Providing flexible hours is not an advantage. It’s a disadvantage not to: “Companies that don’t have flexibility benefits as standard will really lose out,” says tech consultancy Unleashed CEO Anouk Agussol, arguing that the freedom of choosing when to work weighs a lot more now than it did before the pandemic.

CALENDAR

16-19 May (Sunday-Wednesday): The Arabian Travel Market (ATM) takes place in Dubai.

17-20 May (Monday-Thursday): Avior-HC Egypt Virtual Conference.

18-20 May (Tuesday-Thursday): Renaissance Capital’s annual MENA Investor Conference.

20 May (Thursday): Integrated Diagnostics Holding shares begin trading on the EGX.

20 May (Thursday): Greek Foreign Minister Nikos Dendias will be in Cairo for talks with FM Sameh Shoukry as part of a three-day regional tour amid the ongoing escalation of the Israeli-Palestinian conflict.

20-28 May (Thursday-Friday): Gouna International Squash Open 2021.

24-26 May (Monday-Wednesday): British Egyptian Business Association virtual healthcare week.

26 May (Wednesday): Final day for Africa-based startups to apply for the French government-sponsored AFD Digital Challenge (pdf).

27-29 May (Thursday-Saturday): Informa Markets’ Nextmove real estate exhibition, Cairo International Convention Center, Nasr City.

30 May (Sunday): Al Mal GTM is organizing the Portfolio Egypt conference under the theme ‘Growth under the weight of the pandemic.’

31 May (Monday): Egypt is hosting Trescon Global’s World AI Show with the support of ITIDA.

7 June (Monday): British Egyptian Business Association hosts event featuring Oil Minister Tarek El Molla.

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.

22-27 June (Tuesday-Sunday): The CIB PSA World Tour Finals for 2020-2021 will take place in Cairo.

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

30 June (Wednesday): 30 June Revolution Day.

30 June- 15 July: National Book Fair.

July + August: Thanaweya Amma exams take place.

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.

1 July (Thursday): Businesses importing goods at seaports will need to file shipping documents and cargo data digitally to the Advance Cargo Information (ACI) system.

15 June (Saturday): EGX-listed will have to complete filing their financial disclosures for the period ended 31 March.

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 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.

14-16 February 2022 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

1H2022: The World Economic Forum annual meeting, location TBD.

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.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. 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. © 2021 Enterprise Ventures LLC.