Tuesday, 27 October 2015

Food-ordering website Otlob sold to Germany’s Rocket Internet for “bargain price”


Otlob sold to Germany’s Rocket Internet for “bargain price.” (Speed Round)

Centamin puts Egypt back on gold mining map. (Speed Round)

Big Oil sweats Egypt’s ability to repay debt amid FX crunch (Speed Round)

Welcome home, Ian Gray? Unconfirmed report Gray will return as Vodafone Egypt Chairman. (Speed Round)

Italy pushing for tripartite gas export agreement with Egypt, Israel? (Energy)

You already found your passion, you’re just ignoring it. (Worth Reading)

Telcos looking at alternatives to infrastructure system (Telecommunications)

By the Numbers + What does the CBE’s management shuffle mean?


Devaluation watch: The CBE will hold today its second its FX auction for the week.

Runoffs for the first round of parliamentary elections in Egypt will begin today and run until Wednesday, with Egyptians abroad having started voting yesterday. “Almost half of those vying in the run-offs are party members, something that will help political parties reach parliament,” said Yousri Azabawy, a political researcher at Al-Ahram Centre for Political and Strategic Studies, Ahram Online reports. A separate report states that 4k Egyptian expats have voted in the runoffs thus far.

The two-day Solar Projects Egypt conference opens today at the Fairmont Towers, Heliopolis, with registration starting at 8:00 am Cairo local time and the Chairman’s opening remarks at 8:50.

Housing Egypt Summit also begins today at the Novotel Cairo Airport, with registration at 8:00 am followed by opening remarks at 9:00. The gathering runs for two days.

President Abdel Fattah El Sisi begins today his tour of the UAE, Bahrain, and India, reports Al-Ahram. The president will visit the UAE first to discuss regional developments, before travelling to India, where he is scheduled to attend the third annual India-Africa Forum Summit. His last stop will be Bahrain.

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Daylight savings time ended in the U.K. on Sunday, with clocks falling back an hour. North America will follow suit this weekend — something to keep in mind when planning your conference calls. The best way to sort out who’s on what time? Go visit Time and Date. (And no, Egypt will not “fall back” this year. We abolished all that, remember?)


01 November (Sunday): Turkish general elections.


Amr Adeeb devoted the lion’s share of Al Qahera Al Youm to coverage of the President Abdel Fattah El-Sisi’s handling of the crisis in Alexandria.

Adeeb: President El-Sisi was not in a friendly mood during his emergency meeting with Cabinet today. He was mournful and stern, ordering his ministers to take decisive measures to prevent the recurrence of future disasters… Military officers are spearheading the recovery effort in Alexandria. Local officials are either idle or are nowhere to be found… I call on the presidency to hold a monthly press conference, allowing the public to stay abreast of important developments.”

Ibrahim Eissa, on the other hand, had harsh words for Interior Minister Magdy Abdelghaffar after State Security allegedly ordered the cancellation of several high-profile academic seminars.

Eissa: “There are signs that we are running, not sprinting, to the pre-January 2011 period. A series of academic talks, including a seminar by ex-Presidential advisor Dr. Essam Heggy, were cancelled by the State Security apparatus for no apparent reasons. This is a very dangerous development. The Interior Ministry should not have any ability to prevent academic conferences from taking place. The Egyptian people cannot allow these egregious violations against freedom of speech, a guaranteed right in the 2014 Constitution. The Interior Minister should apologize to the Egyptian people immediately.”

Lamis El Hadidy, host of CBC Egypt’s Hona El Assema, thanked “Tourism Minister Hisham Zaazou for inviting international artist, Yanni, to perform in Egypt. These kinds of performances improve Egypt’s image abroad and encourage tourists to visit our country. I hope that the government allows international movie studio to film their movies more easily in Egypt in the near future.”

(Yanni, Lamis? Really? Elevator music at the Pyramids, and you cheer? The Greek entertainer arrived in Cairo on Monday evening and is scheduled to perform at the Pyramids on the 30 and 31 October, according to Youm7. Both shows will be broadcast live “in support of Egyptian tourism.” You have been warned. Happy Halloween, y’all.)

Sami Mahmoud, an official from the Tourism Ministry, called-in with additional insight on Yanni’s visit and the government’s plans to revitalize the tourism sector. “Inviting Yanni to perform in Egypt is an important part of the ministry’s promotional strategy and sends message that the country is safe and stable. We intend to kick-off the ‘This is Egypt’ promotional campaign on October 31… Egyptians of all stripes will be able to participate in the campaign by using social media.”


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Otlob sold for “bargain price” to Germany’s Rocket Internet: Otlob, Egypt’s food-ordering website and gift to introverts who hate speaking on the phone, was sold to Rocket Internet-owned Foodpanda Group at what Wamda’s Rachel Williamson calls “an almost firesale price” of USD 12 mn. Otlob was owned by OTVentures, which became A15. Sawari Ventures’ Wael Amin says that at such a valuation, as much as USD 250 mn was left on the table “because of a lack of investment in the company during the 2000s.” He said that had “Otlob grown at similar rates as regional peers … the Egyptian company could have been the largest startup exit MENA had ever seen.” However, Otlob had failed to “market itself well over the years” and was squeezed by “razor-thin margins.” The good news is that the company has reportedly managed to see substantial revenue growth and managed to triple its orders following a management shakeup in 2014, and now, “indications for the company under Rocket’s helmsmanship are good.” As for us? We’ve never been fans of Otlob. We’ll continue to use Elmenus.com (the website and the app) and call-in our own order.

What’s Rocket Internet? One of the more successful (and controversial) copycat outfits on a global scale. It first burst into English-language media’s consciousness back in about 2012 and has continued to make headlines since. (Recommended reading here, here and here whether you’re just curious or wondering whether you’d like to sell out to them, too.)

Centamin is putting Egypt back on the gold mining map –Globe and Mail: Centamin is picking up buy recommendations from analysts and putting Egypt back on the gold mining maps, Canada’s Globe and Mail says. “Egypt is one of the least explored gold areas in the world and has huge potential for mines. With Sukari we have a world-class deposit,” Centamin’s CEO, Andrew Pardey says. The piece notes that Centamin is now using its strong cash flow to explore for gold in Ethiopia, Ivory Coast, and Burkina Faso.

IOCs concerned about dollar shortage, fear delays in debt repayment: Big oil is becoming more concerned over the government’s ability to repay debts to them, Al Mal reported. The concerns arose after outgoing CBE Governor Hisham Ramez flagged the debt repayment as one of the drivers behind the FX crisis Egypt is currently facing. Sea Dragon’s country manager says the Oil Ministry’s policy of borrowing in USD to repay the companies is hardly optimal, as a proportion of this borrowing goes to financing fuel imports. He added that the companies had previously agreed to a one-time repayment in EGP, but are not willing to accept such an arrangement again as their investment outlays are all dollar-denominated. Another unnamed oil company executive reiterated the concerns following Ramez’s remarks and said they reflect the urgency of the situation Egypt is facing.

Welcome home, Ian? Vodafone Egypt is set to appoint Ian Gray as its new chairman, Youm7 claims, citing an anonymous source. If true, Gray will succeed Hatem Dowidar, who is now chief operating officer at the group level for Etisalat in the UAE. Gray was CEO of Vodafone Egypt from 2002-07 and then served as its chairman from 2010-14. He is currently the chair of the Egyptian British Business Council and of the Egyptian British Chamber of Commerce.

President Abdel Fattah El Sisi summoned Cabinet for an emergency meeting yesterday morning to discuss the developments following the flash floods in Alexandria, Al Mal reported. The government’s explanation for its failure? It is too much water for us to handle, 3.2 mcf of rain fell on the city in three hours, six-times more than the usual average for a whole day. El Sisi used the occasion to hammer ministers on the need to be better prepared for crises before moving on to discuss public transportation, education, and the energy needs of industry.

Update: The websites of the Cabinet Information and Decision Support Center (IDSC) and the Cabinet remain offline after a group calling itself Anonymous Raba’a claimed they’d hacked them. As we noted on Sunday, the hack apparently took place last Thursday.

Following reports that the CBE has exempted exporters to six Arab countries from the restrictions on dollar deposits at banks, the CBE has issued directives to make it so. The central bank set five conditions to have banks accept dollar-deposits, starting with the deposited amount being a match with the volume of the depositor’s usual business activity. Depositors should also have proof of exports from the Customs Authority showing the value of the exports as well as the obtained clearance and have it approved by the General Organization for Export and Import Control (GOEIC). That proof of exports should also be approved by the International Trade section of the Trade and Industry Ministry and submitted to the bank. The directive covers deposits by companies trading with Libya, Syria, Sudan, Palestine, Iraq, and Yemen. (Read the directive in Arabic, pdf)

EGAS will begin laying gas pipelines to supply the three Siemens power plants in the coming days, a project it expects will cost EGP 2.2 bn, said EGAS head Khaled El Badei. The plan has set a tight schedule in order to meet the government-mandated deadline of summer 2016, Al Ahram reports. GASCO will begin laying down the pipelines with an eye to completing this phase in four months. Supplies of gas will be incrementally increased over time, until the arrival of the third FSRU, which will help the plants reach their consumption capacity of 700 mn cubic feet per day.

Co-production of M1A1 Abrams Tanks resumed: Egypt and the United States announced the resumption of the co-production of the M1A1 Abrams Tanks, the U.S. Embassy in Cairo said. In its press release, the Embassy said that “the Tank Plant provides jobs for over 2500 Egyptians and supports the capacity of the Egyptian Armed Forces to defend the country” and Ambassador Beecroft said the plant outside Cairo is the only one in the world that produces new M1A1 tanks. We reported last week that an agreement to resume production had been reached.

Two senior Brotherhood officials arrested: Monday Hussein Ibrahim, the secretary general of the now-dissolved Freedom and Justice Party, the political arm of the Muslim Brotherhood, along with Brotherhood member El-Refei Hassan were reportedly arrested on Monday, according to state news agency MENA as reported by the AP. The two were reportedly hiding out in Marsa Matrouh. State-run news agency MENA claims the two confessed they were trying to reach Libya.

Tremors from a 7.5 magnitude earthquake originating in Afghanistan on Monday were felt as far away as Qatar, Doha News reports. At least 200 people in Afghanistan and northern Pakistan were killed in the quake, Reuters reports, with that number expected to rise as communications come back online.

Omani FM meets Syria’s Assad in Damascus -Syrian state TV: Oman’s foreign minister Yusuf bin Alawi bin Abdullah visited Syrian President Bashar al-Assad in Damascus, Reuters reports, citing Syrian state television. Oman has previously acted as a mediator in the region, including with Iran. “Syrian state media SANA reported the two discussed ‘the ideas proposed at the regional and international levels to help resolve the crisis in Syria,’” according to Reuters.

Sorry, Carnivores: The World Health Organization has indeed classified processed meat as carcinogenic alongside smoking, alcohol, asbestos, and plutonium, BBC reported. This includes bacon, sausages, cold cuts and cured meats. The report also highlights that while red meats are “probably carcinogenic.” there’s still a lack of evidence to support the claim and that red meats also have nutritional value. So realistically speaking, how dangerous is it? Is eating basterma really as bad as smoking a cigarette? Well, no, as put by Professor Tim Key, from the Cancer Research UK and the University of Oxford: “This decision doesn’t mean you need to stop eating any red and processed meat, but if you eat lots of it you may want to think about cutting down.” An Egyptian health ministry committee is now tasked to gather reports from existing industries on the processed meat industry to consider new warnings for consumers, ministry spokesman Khaled Megahed said.

CLARIFICATION: In our note about a decree issued on Sunday evening amending the prisons act, we stated that solitary confinement may not exceed 15 days. While this is true under normal circumstances, what failed to mention that the decree allows for periods of solitary confinement for up to 30 days as punitive action for inmates who violate rules. Other such punitive action which may be taken includes suspending privileges, downgrading an inmate’s accommodations, or placing convicts in “highly guarded, specialized rooms” for up to six months.

Regarding the new clause regulating the issuing of permits of foreign delegations, consulates, and embassies to visit foreign-born inmates being held in Egyptian prisons, reciprocity applies: Foreign dips get to visit only if an Egyptian foreign service officer could do the same in the dip’s country.

The new decree has been met with criticism from Egyptian rights activists, as noted by the AP, who criticize a new amendment which “allows prison officers to use force against prisoners who resist orders based on laws or prison regulations, beyond the previously authorized use of force for self-defense and to prevent an escape attempt. ‘This is a legal cover to all forms of violence that could occur inside prisons,’ said Mohamed Abdelaziz, a rights lawyer and director of al-Haqanya legal center.


The ScanPyramids project- Scanning the pyramids for clues on their origins: Coverage in the foreign press on a newly-announced initiative to scan the pyramids has startled trickling in, first with a note of it in Forbes last week, to a number of reports in the past two days. The project involves an international team of scientists, engineers and architects from Egypt, France and Japan who will search for undiscovered areas of the pyramids of Giza using “non-invasive technologies such as radiography, drone-mounted scanners and thermal imaging.” Creating a “three-dimensional model of the exterior,” the researchers also aim to try and solve how exactly the structures were created with non-modern methods, as well as to provide a lasting record of the pyramids in view of the corrosive impact of climate change. (Read) The story also appears in an AP report as well as Engadget and first broke in Ahram Online early last week in an interview with antiquities minister Mamdouh Eldamaty

Three journalists detained in five days; their location undisclosed, CPJ says: Journalists Mahmoud Mostafa Saad, Hisham Jaafar and Hussam el-Sayed were arrested by authorities in a span of five days, with at least two now held at undisclosed locations, the Committee to Project Journalists (CPJ) announced in a statement on Monday. (Read CPJ report)

Michael Wahid Hanna writes for Foreign Affairs Getting Over Egypt: Time to Rethink Relations,’ (paywall) regarding the need for the U.S. administration to reconsider its relations with Egypt amid political, economic and security concerns. Hanna cites unnamed U.S. official sources who say Egypt in recent years has “delayed granting permission for U.S. aircraft over Egyptian airspace,” complicating American military planning. He specifically argues for U.S. military aid for Egypt to drop from USD 1.3 bn to USD 500 mn per year. Hanna concludes: ‘Business as usual’ will do nothing to alter Egypt’s negative trajectory and will further bind the United States to an unreliable partner.”


You don’t need to find your passion. “The common complaint among a lot of … people is that they need to ‘find their passion.’ … You already found your passion, you’re just ignoring it. Seriously, you’re awake 16 hours a day, what the [redacted] do you do with your time? You’re doing something, obviously. You’re talking about something. There’s some topic or activity or idea that dominates a significant amount of your free time, your conversations, your web browsing, and it dominates them without you consciously pursuing it or looking for it. It’s right there in front of you, you’re just avoiding it. For whatever reason, you’re avoiding it.” (Read)


The Stanford marshmallow experiment is recreated here, where children are told they may either have one marshmallow now, or two if they can wait. (Watch, running time: 2:43)


Plan to revamp 29 MFA notary offices to throughout the country: The Foreign Affairs Ministry announced on Monday its plan to revamp 29 notary offices throughout the country, with the goal of improving services to citizens. The offices are typically used by Egyptians to notarize their official documents, such as university degrees, by the ministry ahead of their travelling abroad to work. (Read in Arabic)


Italy looking to form Egyptian, Israeli, Italian gas export agreement?
Eni is sending representatives to Israel this week to discuss a joint natural gas export cooperation scheme between Egypt, Israel, and Italy, i24 News reports. The representatives will meet with Israeli Prime Minister Benjamin Netanyahu and Energy Minister Yuval Steinitz to discuss joining forces on exporting gas to Europe. Eni, which is partially owned by the Italian state, has expressed interest in forming an “east Mediterranean gas hub” channeling the different gas sources from the Middle East to Europe, said Eni’s Chief Executive Claudio Descalzi. (Read)

Egypt extends agreement with Aramco by one month
The drop in international energy prices drove EGPC to extend its import agreement with Saudi Arabia’s Aramco to four months instead of three, Al Shorouk reported. The USD 1.4 bn agreement will now expire in mid-December. Aramco is contracted to supply Egypt each month with 500k tonnes diesel, 220k tonnes of fuel oil, and 150k tonnes of gasoline. (Read in Arabic)


40% increase in pharmaceutical production costs due to USD shortage
The FX crunch has sent production costs for pharmaceutical companies up a staggering 40%, according to Osama Rostom, a member of the Chamber of Pharmaceuticals at the Federation of Egyptian Industries. As we had previously reported, the rising cost of production does not mean that the price of the medications will increase accordingly due to a mandatory pricing policy by the Ministry of Health. (Read in Arabic)

Reports that university faculty’s salaries will be reduced untrue, IDSC says
The Information and Decision Support Centre (IDSC) denied rumors that salaries of university faculty members will be reduced by 10%. IDSC said it was informed by the Higher Education Ministry that the new is untrue, Al Masry Al Youm reported. The confusion arose when some universities received notices from the Finance Ministry regarding the application of some tax rules, an issue that will be discussed with the Finance Minister and the Prime Minister.

Egypt seeks greater cooperation with Germany in research and education
Higher Education Minister Ashraf El Sheihy expressed his desire for stronger ties with Germany in developing the scientific and technical capabilities of Egyptian educational institutions, at a meeting with the head of the German Academic Exchange Service (DAAD) in Egypt. At an earlier meeting with Manpower Minister Gamal Soroor, the two ministers discussed plans to develop a technical and vocational college under the German model. (Read in Arabic)

Transportation academies will now be consolidated into one institution
The Transportation Ministry plans to consolidate all transportation education institutes into the Egyptian Academy of Transport, Science and Technology, said Transport Minister Saad El Geyoushi. Speaking at a tour of the Academy, El Geyoushi stated that this will help establish a strong professional base for the transportation sector. According to Railway Technology, the Academy was formed by the Ministry in collaboration with French technology group Thales. (Read in Arabic)

10-year old Cairo student receives 40 lashes from teacher
10-year old student Bibawi Faragallah was flogged 40 times with an electrical wire at his Qabaa school in Nozha last week. According to the boy’s father calling-in to a news program on satellite channel Dream 2, “When my son asked the pupil sitting in front of him to lower his head so that he can see the blackboard, the teacher closed the door of the classroom and flogged him 40 times with the wire,” Egypt Independent reported. Education minister El-Hilali El-Sherbini noted the incident on Saturday, Ahram Online reports, however there have been no statements thus far regarding the teacher being terminated or disciplined.


MNHD has yet to decide on new loans
Madinet Nasr Housing & Development (MNHD) has not yet settled on a bank to provide it with a loan and is still considering offers from various banks, refuting media reports that it is negotiating solely with NBE for an EGP 875 mn loan to fund the Taj Sultan development. (Read in Arabic)

Tourism Development Authority receives requests to invest in North-West coast of Egypt
Offers for investment have been pouring into the Tourism Development Authority (TDA), after it received control of 154 mn sqm territory in the North-West coast of Egypt, said TDA head Serag El Din Saad. This land will be appraised by the New Urban Communities Authority (NUCA) ahead of issuing development tenders. Saad adds that due to the size of the area, joint TDA-Matrouh Governorate Committees have been formed to resolve disputes over governorate jurisdiction and to reach resettlement and compensation agreements with the original inhabitants. (Read in Arabic)


JWT and tourism ministry promotional campaign to officially launch on Saturday
Despite what could be called a soft-launch of the #ThisIsEgypt campaign last week with Morgan Freeman at the pyramids, the Tourism Ministry will officially launch the campaign on Saturday, ahead of the World Travel Market (WTM) exhibition in London next week, which runs from 2-5 November, showcasing the campaign internationally. That has not stopped private citizens from already using the hashtag in social media to promote Egypt to the outside world. The ministry also seems on planning to partner with other, unspecified celebrities visiting Egypt in the future to help promote the country. Tourism minister Hisham Zaazou aims to increase the number of tourists received to 10 mn by the end of the year. (Read)

Suez Canal Authority receives offer to develop tourist marina at West Port Said
The Suez Canal Authority received an offer to turn one of its Suez Canal Development Axis plan ports in West Port Said into a tourist marina. The plan calls for the development of six ports including Al Arish, Al Adabiya, and Sokhna. Dar El Handasah head Yahia Zaki stated that 31 companies are vying for the plan’s projects, mostly in the infrastructure development sector. (Read in Arabic)


Telcos try to set up alternatives to the current infrastructure system
The three major telcos are devising alternatives to the current system of telecom infrastructure utilization, in hopes of liberating them from total dependence on Telecom Egypt’s (TE) infrastructure, according to information obtained by Al Borsa. One suggestion was that each telecom would form a JV with the state which would install and operate infrastructure in designated areas in Egypt. Another alternative would be for the Telecom Ministry to form a competing subsidiary to TE which would run infrastructure. The third suggestion involves restructuring agreements with TE to be fixed price for 15 years, and forming a joint committee that will set up future agreements. (Read in Arabic)


Hurdles to the insurance industry in Egypt discussed at Moody’s Insurance Roundtable
Moody’s first roundtable on insurance credit risk in Egypt took place on Monday, with representatives of the EFSA in attendance, to discuss why the insurance sector in Egypt hasn’t been living up to its promise. Moody’s places the blame on declining income, high unemployment and deficiencies in the regulatory framework. The agency also reported that while Egypt is second only to Morocco in terms of insurance market size in the region, the whole region contributed just 0.2% to the global market in 2014. (Read in Arabic)


60 black market currency dealers arrested
The government intensified its crackdown on the parallel currency market, culminating in the arrest of around 60 currency traders in central Cairo who are part of a larger Al Ataba ring. According to an apprehended dealer speaking to Al Borsa, the crackdown caused a halt in the parallel market. Another dealer reported that the exchange rate in the parallel market dropped 4% since last Thursday—the day Tarek Amer was named the new CBE chairman. (Read in Arabic)

EPMC cuts signal from Okasha’s Faraeen channel
The Egyptian Production Media City (EMPC) issued a statement on Monday announcing that it has cut off the signal from the Faraeen TV channel, owned by Tawfik Okasha, for non-payment of arrears. “[Faraeen] did not respond seriously to our warning,” EPMC said in the statement. “The channel’s president [Okasha] announced on air that he will not pay.” (Read EMPC statement in Arabic)


Egypt set to receive delivery of Mistral warships in first half of 2016
France will deliver two Mistral warships to Egypt in the first half of next year, according to the French Ambassador to Cairo speaking to state news agency MENA, Ahram Online reported. The sale agreement for the ships were signed at a joint press conference earlier this month.

Daesh cell caught allegedly plotting attack on the Pyramids and Media City
Security forces have arrested six foreigners and one Egyptian suspected of belonging to a Daesh cell. The seven men were apprehended for allegedly scoping out the Pyramids, the Egyptian Media Production City and a number of other government sites. They are currently being held for 45 days pending an investigation. Authorities did not disclose the nationalities of the foreign suspects. (Read in Arabic)

Security forces kill leading Daesh militant; three killed in Ismalia gunfight
Security forces reportedly killed a high-level member of North Sinai Daesh affiliate Wilayat Sina on Monday, following a gunbattle, reports AMAY. The militant reportedly played a leading role in the assassination of Nour Party secretary general and parliamentary candidate Dr. Mostafa Abdelrady, two days earlier. Separately on Monday, there were reports of three militants killed in a gunfight in Ismailia, according to the interior ministry. The militants reportedly opened fire and threw explosives when approached by security forces, resulting in the injuries of two police officers and one soldier.

Three Egyptians were killed and eight injured in an explosion that occurred at an Amman customs checkpoint earlier on Monday, according to an official MFA statement, AMAY reports. The MFA and the Egyptian ambassador to Jordan are monitoring the latest developments on the Egyptians injured and killed in the incident.


Strong orders received for Oman’s first sovereign sukuk
Oman’s first issue of sovereign sukuk has received strong orders ahead of final pricing, Reuters reported. Oman is issuing the equivalent of USD 520 mn worth of five-year ijara sukuk and has drew a total of approximately USD 873 mn in orders reportedly. The results of the sale allocations will be announced on 3 November. Oman is also said to be considering a second sukuk issuance next year. (Read)

Suicide bombing in Saudi kills two
A suicide bombing in Saudi Arabia has killed at least two and injured 19 others in the latest in a string of attacks on Shiite mosques, Al Arabiya reports. Saudi security forces found a car they suspect may be connected to the bombing, which took place in Najran province on Monday evening. Daesh has since claimed responsibility for the attack, Reuters reports, with the group saying it was targeting “rejectionist Ismailis,” in reference to the Ismaili sect of Shia Islam. “‘As the Magreb prayer ended and the worshippers came out of the main door, a man entered the mosque and blew himself up,’ Mohammed al-Askar, a doctor from Najran told Reuters.”


Committee tasked with managing assets tied to the Ikhwan has frozen the assets of 25 businessmen accused of being members of the banned group, including the notorious Emad Al Gelda. The committee also seized assets and funds of his tourism company, which will now be managed by Misr Tourism, AMAY reports. In 2010, Al Gelda was convicted of bribing officials to access information on key petroleum reserves for his petroleum company.

The strike at the Misr Spinning and Weaving Company in Mahalla has entered its seventh day, domestic media report.

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QUICK FACT: Egypt imported oil products worth USD 1.3 bn in June 2015.

USD CBE auction (Monday, 26 October): 7.9301 (unchanged since Sunday, 18 October)
USD (CBE market rate): Buy: 8.0057 | Sell: 8.0301
USD parallel market (Sunday, 25 October): 8.25 (-0.25 since Thursday, 22 October, Reuters)
EUR (CBE market rate): Buy: 8.8191 | Sell: 8.8484

EGX30 (Monday): 7,577.53 (-0.99%)
Turnover: EGP 542.9 mn
EGX 30 year-to-date: -15.1%

Foreigners: Net Long | EGP +22.9 mn
Regional: Net Short | EGP -28.7 mn
Local: Net Long | EGP +5.8 mn

Retail: 69.9% of total trades | 71.3% of buyers | 68.4% of sellers
Institutions: 30.1% of total trades | 28.7% of buyers | 31.6% of sellers

Foreign: 14.7% of total | 16.9% of buyers | 12.6% of sellers
Regional: 10.3% of total | 7.6% of buyers | 12.9% of sellers
Domestic: 75.0% of total | 75.5% of buyers | 74.5% of sellers


What does the CBE’s management shuffle mean?

The experience of outgoing governor Hisham Ramez, coupled with limited resources, suggests that the end game for the de-facto peg is in sight and tighter liquidity conditions are ahead of us. On 15 and 18 October 2015, the CBE launched a third round of EGP devaluation and, given governor-designate Tarek Amer’s experience in jointly managing a major currency crisis in 2003 (with Dr. Farouk Al Oqda), we expect the ongoing realignment in the exchange rate to continue and likely at a faster pace.

Given Mr. Amer’s experience with a similar situation in 2003-04, we will likely see a two-pronged FX policy in the rest of 2015. Specifically, we expect to see 1) a major near-term EGP devaluation versus the USD coupled with 2) liquidity draining operations possibly through open market operations (to raise policy rates), reactivation of reverse repo transactions and/or higher reserve requirements on eligible EGP deposits (which were slashed from 14.0% pre-revolution to 10.0% post revolution).

Most importantly, Mr. Amer’s experience in relying on market-based tools suggests that selected FX controls will likely be abolished in the near-term. In specific, we believe an immediate removal of FC cash deposit limits (USD 10,000/day and USD 50,000/month) as particularly critical to ease the current FX shortage and gradually encourage conversion to EGP, particularly if the EGP weakens materially and interest rates on the EGP remain high.

What does this mean for equity markets and who benefits? Tap here for our full analysis.

WTI: USD 43.83 (-0.34%)
Brent: USD 47.46 (-0.17%)
Gold: USD 1,163.50 / troy ounce (-0.23%)

TASI: 7,319.15 (+0.59%)
ADX: 4,413.96 (-1.31%)
DFM: 3,553.03 (-1.27%)
KSE Weighted Index: 391.74 (-0.01%)
QE: 11,721.90 (+0.67%)
MSM: 5,932.95 (+0.18%)


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