Wednesday, 28 October 2015

EgyptAir in 10-year restructuring bid, plans new aircraft purchases

TL;DR

EgyptAir launches 10-year restructuring bid, plans fleet expansion (Speed Round)

Egypt slides five places in World Bank Group’s Doing Business 2016 Report (Worth Reading)

Legislation to protect domestic auto assemblers could still pass (Speed Round)

CBE seen leaving rates on hold in run-up to Monetary Policy Committee meeting tomorrow (What We’re Tracking This Week)

Prime Minister exonerates former Alex governor El Messeiry of wrongdoing in flood; Ismail says shakeup of governors is “likely” (Speed Round)

FIFA hopefuls descend on Egypt (Sports)

A video leak from the #ThisIsEgypt campaign? (Worth Watching)

By the Numbers + CBE Watch: Facing the Moment of Truth

WHAT WE’RE TRACKING TODAY

Today is the second and final day in the runoffs for the elections to the House of Representatives. Final results for this phase could be out as early as tomorrow. Early reports ahead of official announcements point to low turnout.

Also today: The Solar Projects Egypt conference wraps at the Fairmont Towers, Heliopolis, starting at 8:00 am CLT. Day two will cover best practices, future trends, and construction and procurement models for timely delivery.

The Housing Egypt Summit wraps up place today at the Novotel Cairo Airport.

This publication is proudly sponsored by

WHAT WE’RE TRACKING THIS WEEK

The CBE’s Monetary Policy Committee meets tomorrow to make a decision on interest rates. All five economists surveyed by Reuters expect the CBE to keep interest rates on hold. EFG Hermes’ Mohamed Abu Basha says “overall inflation remains largely tame as reflected in the low level of core inflation” and adds “the recent announcement of the change in governor of the central bank is likely to warrant a stable policy rate before the new governor assumes office later in November.”

ON THE HORIZON

Turkey goes to the polls for its latest general election on Sunday, 1 November. The most recent polls show Erdogan’s AKP gaining support, but still falling short of the threshold required to form a majority government.

LAST NIGHT’S TALK SHOWS

Ibrahim Eissa, on Al Kahera Wal Nas, took the opportunity to warn the government of the impending danger it faces as a result of voter apathy. “There are individuals in the government and media who are arguing that Egyptians’ decision to refrain from voting is normal. They attribute the low turnout to poor weather and other meaningless reasons for which there is no evidence. The real reason Egyptians, in particular youth, are not voting is that they have lost the desire to vote. They have lost faith in the democratic process. The current situation is identical to what we witnessed prior to the January 2011 revolution… Those who are arguing that this is no big deal and that this is normal are lying to themselves and to the people. We are in danger. A frail building does not collapse immediately. Rather, cracks in its foundation appear before it comes crashing to the ground.”

The host called on the government to reinvigorate political life, suggesting the government afford citizens the right to elect governors and other local officials. “Governors should be elected by the people. If citizens are not provided with meaningful legal channels through which to express their grievances–parliament, local municipalities, governorates — then they will resort to the street.”

Lamis El Hadidy, host of Hona El Assema: “Voter turnout was very low today. Women and senior citizens continue to comprise the bulk of voters. I would like to remind viewers that it is this parliament that will pass laws and monitor other branches of government. It seems that people are unaware of the importance of these elections.”

Immigration and Expatriate Affairs Minister Nabila Makram called-in halfway through the episode to update viewers on the status of the Egyptians who passed away on Monday as a result of an explosion at Amman customs. “The bodies [of the deceased] will arrive tomorrow [Wednesday] morning,” she said.

Amr Adeeb and co. held a special episode of Al Qahera Al Youm, covering the run-off phase of the elections. Mirroring Ibrahim Eissa’s comments, Adeeb bemoaned voter apathy and called on the government to allow citizens to elect governors. His suggestion, however, was met with a barrage of objections by co-hosts Rania Badawi and Khaled Aboubakr.

Badawi: “This is very difficult. There are governorates that are dominated by families and tribes… Where will the governor’s allegiance be — with his tribe or the governorate? Also, we are a highly centralized state. The governor will be incapable of making important decisions.”

Shortly afterward, Ashraf Thabet, vice president of the Salafist Nour Party, telephoned-in to express his dissatisfaction over parliamentary elections, which he claims were marred with corruption. “There were individuals who bribed citizens to vote for specific candidates… We ask that the government applies the rule of law to all citizens, regardless of their political affiliation… We are considering the possibility of withdrawing from parliament.”

SPEED ROUND

Speed Round is presented in association with

EgyptAir is launching a 10-year restructuring plan “that will reverse its downturn and propel it towards growth,” according to the national flag carrier’s chairman and CEO, Sherif Fathi Attia, Reuters reports. The plan includes fleet expansion, with new orders, of which 20-30% will be wide-body aircrafts, expected to be placed in 1Q2016. The turnaround could see changes in middle-management and aims to make EgyptAir profitable by the end of the fiscal year.

The Central Bank of Egypt kept the exchange rate unchanged at EGP 7.93 per USD 1 at its FX auction on Tuesday. Traders quoted parallel market rates of EGP 8.30 per USD 1, up from EGP 8.25 on Sunday, Reuters said.

Automotive industry strategy presented to cabinet: In a sign that the package of legislation designed to protect domestic assemblers from unfair European, Turkish and Moroccan competition may not have died with the Mahlab government, there’s a report out yesterday that the ministries of finance and trade and industry have presented a “draft national automotive industry strategy” to the cabinet economic committee for consideration before being sent to the presidency for approval. Chairman of the FEI’s Chamber of Engineering Industries Hamdy Abdel Aziz, speaking to Daily News Egypt, said that one of the amendments introduced stipulates that minimum percentage of local components in locally assembled vehicles increases from 45% to at least 54% over the next 15 years. That’s one of the cornerstones of the policy that now-former Trade and Industry Minister Mounir Abdelnour had suggested would pass “within days” just before the cabinet shuffle. The legislation would change Egypt’s customs regime for automobiles while giving special tax breaks to locally assembled models against a pledge from the industry to go further down the value chain into manufacturing by raising local content minimums.

Nissan to double production capacity in Egypt if FX liquidity issues are resolved: Nissan Egypt told Reuters Arabic it could increase its production capacity in Egypt from its current 30k vehicles annually if issues surrounding the FX shortage are resolved. Nissan assembles three models domestically, but says it struggles with paying for imported inputs. Nissan Egypt’s CEO added that the company is also struggling to repatriate profits.

News of the national auto strategy, Nissan’s interest in ramping up production and this week’s announcement of GB Auto’s agreement with Aboul Fotouh and Chery come as new car sales plunged 18% year-on-year to c. 209,000 vehicles in September as the foreign exchange crunch began to hit the industry. Al Borsa has more, citing industry body AMIC’s September report.

Former Alexandria governor Hani El Messeiry has been absolved of responsibility for the flooding that claimed the lives of five citizens and resulted in widespread property damage. The finding was included in a report submitted to the president by Prime Minister Sherif Ismail, Youm7 reports (Egyptian Streets also has coverage). The city’s sewage systems are apparently not under the authority of the governor, but rather the Sewage Authority, whose head also resigned. In the following video, El Messeiry meets with city officials, including then-head of the Sewage Authority Major General Youssry Henry, on 4 October to insist on being better prepared for flooding following another incident earlier this month. The head of the Sewage Authority says in reply around the 1:10 mark: “flooding [this bad] will never happen again and the situation next time will be a lot better.” (Watch in Arabic, running time: 5 minutes)

Ismail: Possible shuffle of governors, no present plans to hike petroleum product prices: A shuffle of a number of governors nationwide is “likely,” said Prime Minister Sherif Ismail. A meeting of governors to review plans and development strategies will be held soon, he added. In a statement issued on Monday, he addressed criticisms of the government’s alleged inaction in handling the Alexandria floods, stating that the crisis was greater than anticipated, but acknowledged there were mistakes. On a separate note, Ismail added that the government has no present plant to raise the price of petroleum products, Al Ahram reports. The PM also spoke on low voter turnout for yesterday’s runoffs, say that voting (or lack thereof) is a matter of freedom of expression, Al Mal reports.

Gov’t gearing up for inflation fight ahead of pound float? Curbing inflation is the government’s priority, Prime Minister Sherif Ismail said yesterday. The government is working to ensure supplies of staple commodities are available at state-subsidized food outlets and is also trying to grow the network of state-run co-op stores, Al Masry Al Youm reports. The news comes as CAPMAS reports that many strategic supplies are increasingly in low supply, including wheat, corn, oil, milk, and soya beans. Wheat reserves as of October 8 reached 3.4 ktons, enough to last for four months, according to AMAY.

The Egyptian Center for Economic Studies’ Business Barometer Report edition 38 (registration required) holds less optimistic prospects for the quarter. Based on a survey of 474 companies and the center’s review of the economy, the report concludes that domestic sales will witness a decline this quarter, along with production, while exports will grow only marginally. Prices of end-user goods will rise while wages will fall short of targets, Al Borsa reports. Investments will hold steady over the quarter. Tourism will be one of the lowest performing sectors, while construction and brokerage houses could see some growth.

Sheikh Mohamed takes El Sisi for a spin: On the first leg of a tour that will take him through the UAE. India and Bahrain, President Abdel Fattah El Sisi met yesterday in Dubai with UAE Vice-President and Prime Minister Sheikh Mohamed bin Rashid Al Maktoum. The post-meeting statement from Ittihadiya was light on policy specifics, but emphasized that the two had agreed there was room to grow bilateral cooperation on “economics, investment and development.” After the meeting, which saw Al Maktoum brief El Sisi on plans for Dubai’s continued growth, the Dubai ruler took El Sisi on a tour of the city, with the Egyptian president in the passenger’s seat and Al Maktoum at the wheel (photos here). El Sisi also met yesterday in Abu Dhabi with UAE Crown Prince Mohammed bin Zayed Al Nahyan. Al Nahyan emphasized the UAE’s interest in backing Egypt’s “security and stability and strengthen its economic and development plans.” The two also discussed regional security issues including Egypt’s ongoing military operations in Yemen as well as the war in Syria and conflict in Libya, Ittihadiya noted.

NUCA ratifies new real estate regulations: New real estate regulations announced last week by Housing Minister Mustafa Madbouly were ratified by NUCA on Tuesday. These new regulations — governing all dealings between NUCA and outside investors — set guidelines for bidding on tenders; establish a ranked database for developers; streamline bureaucratic procedures; and form new mechanisms for dealing with investors who do not meet terms and conditions. Madbouly announced that NUCA will also form a committee to expedite ongoing disputes with developers and investors.

The first contracts for investments in the East Port Said industrial zone will be signed next week in London, announced Suez Canal Authority head Mohab Mamish. He added that details on the agreements would be disclosed soon, suggesting they would be in a fairly wide range of industries, Al Mal reports.

Gilead will import its last contracted shipment of Sovaldi to Egypt in mid-November, which will consist of 30K units costing EGP 66 mn, according to company sources. Over the past 15 months the company had imported EGP 1.3 bn worth of the drug under a contract that saw 600l units of the drug sold at EGP 2,200 per unit. With 20k units of the drug yet to clear customs, sources predict that Gilead’s contracted importer, Ibis Pharma, will not be able to get this last shipment in on time, thanks to the FX crunch, Al Borsa reports.

Egypt is in the midst of a water shortfall of 15 mn cubic meters, according to the Water Resources Minister Hussam Al Moghazi. Speaking at a UN FAO workshop he stated that supply of water stands at 60 mn cubic meters, while demand is 75 mn cubic meters, a deficit which the government hopes to plug with recycling wastewater, Al Ahram reports.

Kuwaiti emir calls for spending cuts over low oil prices: Addressing parliament at the beginning of the new term, Sheikh Sabah Al Ahmad Al Jaber Al Sabah said state revenues were down 60% on the back of low global oil prices, which have dropped by more than 50% since June, The National reports. 90% of Kuwait’s state revenue comes from oil. Sheikh Sabah called for “urgent measures” with regard to fiscal reform and further called on “every citizen to realise the importance and usefulness of these reforms.” Kuwait’s move comes just two weeks after Saudi started mulling budget cutbacks, as we noted at the time.

Speaking of Saudi: The kingdom is considering cutting energy subsidies to manage budget deficit: Saudi oil minister Ali Al Naimi on Tuesday floated the possibility that Saudi Arabia could allow energy prices to rise. “The fact that this is being discussed in the open is quite new for Saudi Arabia. They may well be looking at some of the points raised by the IMF, who said that their fiscal plans just aren’t transparent enough. That is a positive step,” said William Jackson, a senior emerging markets economist at Capital Economics to the National.

Turkey confirms strikes against Kurdish militias in Syria: Turkey has struck Kurds in Syria allied with the United States in the fight against Daesh, according to Turkish prime minister Ahmet Davutoglu speaking on a Turkish news channel on Monday, the NYT reports. The Democratic Union Party, or P.Y.D, confirmed that Turkey had struck its positions once on Saturday and again on Sunday. The positions had been seized by the Kurds from Daesh.

Media silenced ahead of Turkish elections: Turkish police fired tear gas at protesters who attempted to enter the seized headquarters of exiled Erdogan rival Fethullah Gulen’s Koza-Ipek Group in Ankara on Tuesday, the AFP reports. The seizure of assets included the group’s media operations following a court order on Monday, just days before Turkey’s general election next Sunday. Gulen is accused of plotting to overthrow the government.

***
A MESSAGE FROM SODIC

Join SODIC and the Cairo Runners for a 6 kilometre breast cancer charity run

SODIC is proud to partner with Cairo Runners for a special 6 kilometre charity run this coming Friday, 30 October 2015. Runners of all ages are welcome. All funds raised will benefit Baheya Cancer Hospital, the first hospital in Egypt and the Middle East to specialise in the early detection and treatment of breast cancer. All services at the hospital are free and are extended to all women who enter the premises. The run gets underway at 8:00am — tap here for more details.
***

EGYPT IN THE NEWS

The Telegraph reviews the “ambitious” Faith after the Pharaohs exhibition at the British Museum. Starting with the death of the Ptolemaic queen Cleopatra in 30 BC to the fall of the Fatimid Caliphate in AD 1171, the “bloody jostling between opposing faiths” is the main focus of the display. The British Museum has a short promotional clip for the exhibition: (Watch, running time: 45 seconds).

Jonathan Jones of The Guardian also has an in-depth review of the exhibition: “Trying to understand North Africa or the Middle East without somehow going to the heart of faith is like trying to read a book in a language you don’t understand. This exhibition begins with books that are indeed written in languages I don’t understand: Hebrew, Greek and Arabic. They are some of the most precious religious manuscripts on Earth, laid side by side here, just as the communities they speak to have lived side by side in Egypt for millennia.”

55 Brotherhood members and leftists have signed an open letter calling on UK Prime Minister David Cameron to rescind his invitation to President Abdel Fattah El Sisi. The letter has been published by The Guardian. Elsewhere in that paper, Rowena Mason notes the “letter to the Guardian protesting against Sisi’s visit has been orchestrated by the Egyptian Revolutionary Council, a coalition formed in Istanbul last year, which is made up of political opponents of the Egyptian regime, including some linked to the Muslim Brotherhood.”

WORTH READING

Egypt was ranked 131 out of 189 in the World Bank Group’s Doing Business 2016 Report (pdf), dropping from 126 (this figure was adjusted from the 112 ranking when the 2015 report was published). The report shows that Egypt demonstrated a marked improvement in protecting minority interests (rising 11 spots in the rankings) and a marginal gain in power supply and construction bureaucracy, rising by one rank in both categories. Egypt’s biggest negatives were on the ability of businesses to access credit (dropping eight places) and paying taxes (dropping five places), followed by the “starting a business” and “registering property” categories. The two categories in which Egypt lags the furthest behind – enforcing contracts and paying taxes – saw no improvement from the previous year.

WORTH WATCHING

Domestic component of the Ministry of Tourism and JWT’s #ThisIsEgypt campaign? We’re not sure to be honest; the video does not appear on JWT’s YouTube channel, and was posted by the channel of French tourism magazine Le Quotidien du Tourisme. Still, this feels an awful lot like an ad spot designed to win domestic attention for the international campaign: (Watch in Arabic, running time: 58 seconds)

DIPLOMACY

President Abdel Fattah El Sisi’s Asia tour began on Tuesday with the UAE, as we noted above. His next stop is New Delhi for the third India Africa Forum Summit, his first trip to India. He will then meet with Bahrain’s ruler Sheikh Hamad Bin Isa Al Khalifa in Manama to discuss growing the USD 100 mn trade between the two countries and a host of regional security issues. (Read in Arabic)

Developing countries need to share burden of climate change -French ambassador: Developing countries must bear a role in curbing climate change, French ambassador to Egypt André Parant said in the run-up to the Paris 2015 United Nations Climate Change Conference (COP 21). Speaking at the Climate Finance Workshop hosted by the EU in Cairo on Tuesday, he said that developing countries must be able to establish mechanisms to implement any agreement to come out of the COP 21. Environment Minister Khaled Fahmy said that Egypt will go to the conference to ensure that global producers of greenhouse gasses, i.e. the developed nations, bear the cost of climate change whose victims will be the least polluting developing countries. (Read in Al Mal or the Cairo Post)

9th GERD tripartite meeting scheduled for 7-8 November: The 9th GERD tripartite meeting between Egypt, Sudan and Ethiopia has been scheduled for the second week of November, following consultations with the Ethiopian and Sudanese governments, said Water Resources Minister Dr. Hossam Moghazy. The meeting will discuss the contentious issues relating to the Renaissance Dam, as well as the impact of the dam on the flow of the Nile water. (Read in Arabic)

ENERGY

EGAS resumes pumping gas to fertilizer factories, three factories excluded
Six fertilizer factories are set to resume receiving natural gas, including Talkha, MOPCO, Abu Qir, EFC line 2, El Nasr and Helwan, following a three-month hiatus due to natural gas shortages. Three factories are still suffering from the shortage, but will be resupplied by the end of this month after the second FSRU is connected to the grid, and an additional 700 mcf are received daily, according to Khaled Abdel Badei, Chairman of EGAS. (Read in Arabic)

Sumed building fuel depot in Sokhna
Sumed is building a fuel depot for diesel and butane gas products in Sokhna, Oil Minister Tarek El Molla said. The depot, El Molla says, is part of a plan to turn Egypt into a logistics centre for energy products. The plan includes increased utilisation of domestic refineries, liquefaction plants, as well as building stations to handle fuel products along the Suez Canal axis. (Read in Arabic)

INFRASTRUCTURE

Accelerated National Roads Project to cost EGP 7.5 bn
Around EGP 7.5 bn is needed to complete the 10 roadways that are part of the National Roads Project, says Adel Tork, head of the General Authority for Roads, Bridges and Land Transport (GARBLT). Five of those roads will be completed by the end of December, including the EGP 1.156 bn Assiut-Suhag-Red Sea twin road and EGP 1.92 bn Wadi El Natron-Alamein highway. The authority needs EGP 6 bn for road maintenance, said Tork, noting that they are currently upgrading 2,400 km of road at a total cost of only EGP 900 mn due to available resources.
Additionally, major road projects totalling USD 8.8 bn in investments are set to take place between 2019-2030, including a 1100 km, USD 2.75 bn highway connecting Alexandria to Abu Simbel. Shorouk has the full plan for the accelerated National Roads Project in Arabic.

BASIC MATERIALS + COMMODITIES

Centamin ships 296 kg of gold to Canada
Centamin is shipping 296 kg of gold to Canada, Al Ahram reported. In a piece we reported on yesterday, The Globe and Mail said Centamin refines its product at the Johnson Matthey precious metals refinery near Toronto, Canada. The gold shipments, produced from the Sukari gold mine, are now awaiting the necessary clearances at the Cairo Airport. (Read in Arabic)

Egypt to sign four-way trade pact with Italy, Jordan, Lebanon
Egypt will sign a free-trade zone agreement for agricultural products with Jordan, Lebanon and Italy. The agreement is expected to reduce waiting time by three to four days by using electronic certification for shipped goods and increase Egypt’s exports to the countries signing the agreement, said Saad Moussa, Director of the Central Authority for Agricultural Quarantine. (Read in Arabic)

Domestic reaction to WHO’s meat report
A number of meat importers were quick to dissect (pun somewhat intended) the WHO’s meat report in the context of the Egyptian consumer, possibly out of fear from its implications on the market and reports that Egypt’s own Health Ministry is looking into processed meat as a carcinogen. The head of the Egyptian Meat Importers Association stated that the average annual meat consumption in Egypt ranges from 8-10 kg a year, or 30% of the average consumption rate in Europe, Brazil and the US. Nabil Labib head of the Al Eman for Import, Export denied that this report would have an adverse affect on the meat market. (Read in Arabic)

HEALTH + EDUCATION

Egypt and UK collaborate on higher education regulation
A new regulatory authority for higher education has been established with the support of UK experts, writes Chris Havergal for the Times Higher Education. “The Higher Education Regulatory Funding Authority will be tasked with designing new funding models and regulatory controls, and to create the conditions for an autonomous university sector in Egypt,” according to the report. Egypt and the UK are expected to sign an MOU next month with regard to further cooperation in higher education.

REAL ESTATE + HOUSING

OHC signs MoU for Indonesia’s “mn houses project”
The domestic press is picking up last week’s news that Samih Sawiris’ Orascom Housing Communities (OHC) was part of a consortium that signed an MoU for Indonesia’s affordable housing project. The MoU is worth USD 200-250 mn and seeks to develop an integrated, affordable community for Indonesia’s low-income group on a 200-hectare plot of land in West Java. OHC’s partners in the project are Indonesian private equity company Syailendra Group and the workers’ social security agency BPJS Ketenagakerjaan. “The project will involve the development of low-rise residential buildings which can house up to 30,000 families.” (Read)

NUCA announces tenders available for New Urban Communities
Tenders in IT, landscaping, infrastructure and construction have all been issued by NUCA for some of its new communities, according to officials at NUCA. These include installing 315 traffic light monitoring and control units. New Tiba will require further developments of new neighborhoods and roads, while landscaping across new communities are up for grabs. New Qena’s development authority will issue tenders for a public library for companies registered with the Egyptian Federation for Construction & Building Contractors (EFCBC). (Read in Arabic)

TOURISM

Poland scales back travel warning on Red Sea resorts
Poland has reduced its level of travel warning on the Red Sea resorts of Hurghada, Sharm al-Sheikh, Safaga, El Gouna and Marsa Alam, according to a statement from the Ministry, Cairo Post reported. The move came following a meeting between Tourism Minister Hisham Zaazou and the Polish ambassador in Cairo Michał Murkociński. The Polish ambassador called for a resumption of direct flights, according to Egypt Independent. The Polish Ministry of Foreign Affairs had in July raised its travel warning to Egypt’s Red Sea resorts to its third, “orange” level, advising against travel.

TELECOMS + ICT

Is Sharm El Sheikh really hosting the International Telecoms Regulatory Conference in May 2016?
Sharm El Sheikh will play host to the upcoming International Telecoms Regulators Conference, scheduled for May 2016, announced the NTRA. 700 individuals from around the globe, representing both the public and private sectors, will be in attendance, Al Masry Al Youm reports. The report matches a similar release issued by SIS in May. However, the International Telecommunications Union’s calendar of events makes no mention of a regulatory conference in Sharm in May 2016 or at any other date in between, but does make note of a two-day workshop in Cairo on Spectrum Engineering Techniques.

AUTOMOTIVE + TRANSPORTATION

GM to assemble Chevrolet-branded vehicle domestically -Source
A source at General Motors Egypt said the company is planning on assembling a certain model of Chevrolet vehicles domestically. The source says this will help attract a new segment of the market as it will enable GM to sell it at a cheaper price compared to imported models. The source declined to name the model that will be assembled in Egypt. (Read in Arabic)

Hani Azer to meet periodically with Ismail to assess developments in transportation projects
Prime Minister Sherif Ismail agreed to meet periodically with transportation advisor Hani Azer to assess developments in national transportation projects, the office of the Prime Minister said. Azer, the chief engineer of the Berlin Hauptbahnhof project, has also said that an agreement has been reached with Siemens to train 600 Egyptians in its plants in Germany. Azer also proposed maintenance routines for some projects in order to improve their operational efficiency. (Read in Arabic)

BANKING + FINANCE

A15 seeking USD 2 mn from STC Ventures for T-Pay
A15 (formerly OTVentures) said it is seeking USD 2 mn from STC Ventures to finance its subsidiary, T-Pay. Al Mal says A15 is looking to pump USD 15 mn in investments over the next two years, USD 3 mn of which will go towards new companies. A15 is also reportedly evaluating investing in one of four e-commerce companies. (Read in Arabic)

Barclays Egypt targets EGP 80 mn in profits from SME funding in FY15
Barclays Egypt is targeting FY15 profits from financing SMEs of EGP 80 mn, after realizing profits in EGP 60 mn from SMEs alone in 9M15. Barclays retail banking division’s loan portfolio grew EGP 200 mn in 9M15 to EGP 840 mn, with 60% of new loans coming from Packaging and Labelling, pharmaceuticals and agriculture enterprises, said division head Sherif El Beheiry. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Plan to facilitate environmental approvals for industry
The Environmental Affairs Ministry is adopting a new strategy to reduce the time it takes to assess the environmental impact of projects, says Environmental Affairs Authority head Ahmed Abou El Seoud. The Authority will allow the 17 branches of its Ministry, throughout the country, to issue the necessary approvals for projects in the vicinity of their governorates directly, without resort to Cairo. While the study time should not exceed 30 days, says El Seoud, the average waiting time extended for months due to the centralized role of the authority. (Read in Arabic)

NATIONAL SECURITY

Nour Party candidate hospitalised in Kafr El-Sheikh after attack by unknown assailants: Mahmoud Abdel-Hamid, Salafist Nour Party candidate running for an individual seat in Gharbiya governorate, was dragged out of his car and attacked by two unknown assailants on Tuesday, Ahram Online reported. He was taken to Kafr El-Sheikh hospital with head injuries, internal bleeding and a concussion.

Court lifts travel ban on preacher Mohamed Gebreel: The Administrative Court lifted a travel ban on preacher Mohamed Gebreel on Tuesday, three months after it was first imposed, Aswat Masriya reports. Gebreel was stopped from boarding a plane to London on 15 July. While leading a supplication during taraweeh prayers during Ramadan last July, Gebreel had said: [God] “protect us from corrupt media, the ignorance of rulers and preachers who lead us astray,” Ahram Online reports. The Ministry of Religious Endowments subsequently banned him from preaching in mosques.

SPORTS

FIFA presidential-hopefuls in Egypt for support
South African mining tycoon, and former Robben Island inmate, Tokyo Sexwale will be in Egypt today for a meeting with African football executives to gain their endorsement for his campaign for FIFA presidency, the AP reported. The South African is one of eight who have submit their paperwork for presidential elections on 26 February, following Sepp Blatter’s 90-day suspension in light of the ongoing Swiss criminal investigation against him. Sexwale reportedly received support from Issa Hayatou, the interim FIFA president, to present his campaign after a meeting in Zurich last week. “Sexwale’s starting point on his presidential campaign trail is now Cairo, where an official show of support would give the South African a significant boost,” the AP notes. Prince Ali Bin Al Hussein of Jordan met with CAF President Issa Hayatou in Egypt to win support for his bid, reports Ahram Online. Other candidates include UEFA chief Platini, Platini’s right-hand man Gianni Infantino, former FIFA official Jerome Champagne, Liberian football official Musa Bility and David Nakhid, a former player from Trinidad and Tobago.

Heads will roll: With regard to the ongoing internal investigation by the FIFA Ethics Committee into Sepp Blatter’s dealings, his advisor Klaus J. Stohlker said in a recent interview with German newspaper Der Tagesspiegel: “It’s reminiscent of France in 1789, when the Jacobins came into power,” ESPN FC reported.

Zamalek players dominate PFA awards: Zamalek SC’s players won the majority of the 2014-15 season’s PFA awards, reports King Fut. “Zamalek goalkeeper Ahmed El Shennawy was voted the Best Player of the Season, as well as the Best Goalkeeper. Zamalek midfielder Omar Gaber received the Fans’ Best Player award, while defender Mohamed Koffi received the Best Foreign Player in the League award.” Mohamed Salah was named the Best Egyptian Player playing abroad.

ON YOUR WAY OUT

How many times has this happened? We have a final date: The Nile Ritz Carlton will be inaugurated officially on 14 November, according to statement sent by the Misr Hotels Company to EGX yesterday.

Surrealist painter Salvador Dali collaborated with Alfred Hitchcock on the dream sequence for Hitchcock’s 1945 psychological thriller Spellbound. (Watch, running time: 2:40)

BY THE NUMBERS
Powered by

QUICK FACT: About 25% of all USD 100 bills are in circulation outside the United States. The bill may be the most-counterfeited in the world, but less than 1/100th of 1% of all U.S. currency in circulation is reported as counterfeit each year.

USD CBE auction (Tuesday, 27 October): 7.9301 (unchanged since Sunday, 18 October)
USD (CBE market rate): Buy: 8.0071 | Sell: 8.0301
USD parallel market (Tuesday, 27 October): 8.30 (+0.05 since Sunday, 25 October, Reuters)
EUR (CBE market rate): Buy: 8.8543 | Sell: 8.8821

EGX30 (Tuesday): 7,534.08 (-0.57%)
Turnover: EGP 493 mn (13% above the 90-day average)
EGX 30 year-to-date: -15.59%

Foreigners: Net Long | EGP +26.3 mn
Regional: Net Short | EGP -42.8 mn
Local: Net Long | EGP +16.5 mn

Retail: 68.9% of total trades | 72.1% of buyers | 65.8% of sellers
Institutions: 31.1% of total trades | 27.9% of buyers | 34.2% of sellers

***
PHAROS VIEW

Facing the Moment of Truth: Cost of a Rate Hike will be only Justified if Accompanied by an Outright Floatation

It is becoming increasingly difficult to project the next move of the MPC in the absence of information on 1) Egypt’s FX policy under the new governor, 2) timing / scope / magnitude of the next steps in fiscal consolidation and 3) the outlook for international commodity prices. Yet, it is becoming evident that the government and the CBE have been caught off guard by the recent plunge in FC reserves, which has likely worsened in October. Hence, draining the system from excess EGP liquidity to increase the allure of EGP denominated assets will likely be on the cards. The net benefit of a 50-100 bps rate hike, however, is unclear given that the CBE has already drained the market from sizable excess EGP balances.

Out bottom line is this: The 1) delay in funding the BoP gap, 2) October devaluation round, 3) the aforementioned widening in the official/parallel market gap and 4) absence of exceptional FX auctions (> USD 40m per auction) suggest that reserves are at a critical floor. This will be particularly the case if Egypt plans to repay the USD 1.0 bn owed to Qatar before end October. In the absence of reserve firepower, we believe a Big Bang approach to FX policy (floatation + removal of the FC daily / monthly cash deposit limit + temporary interest rate defense + social safety net) is an optimal mix. Yet, history suggests that the likelihood of executing this mix is at best 50.0%, given its potential socio-political ramifications. Tap here for more background, including where we see some industries setting the USD in the FY2016 budgets and how the gap between the official and parallel markets is already sending prices up.
***

WTI: USD 43.34 (+0.32%)
Brent: USD 46.81 (-1.54%)
Gold: USD 1,166.70 / troy ounce (+0.08%)

TASI: 7,097.6 (-3.0%)
ADX: 4,391.4 (-0.5%)
DFM: 3,518.2 (-1.0%)
KSE Weighted Index: 391.2 (-0.1%)
QE: 11,715.2 (-0.1%)
MSM: 5,937.9 (+0.1%)