Sunday, 22 November 2015
DPRK to Naguib: “Thanks for the cell phones. We’ll take the company, too.” (Speed Round)
Global terror fears at new peak with Brussels on lockdown, weekend terror attacks in Africa; Anonymous warning of possible Daesh action against U.S., France, Italy, Lebanon, Indonesia (What We’re Tracking Today)
Egypt eyes USD 1 bn World Bank loan in December (Speed Round)
Second round of elections get underway today (Speed Round)
Brace yourselves for another year of lousy internet service: TE needs EGP 1 bn more and one extra year for fiber optic plan (Speed Round)
Tawfeer to invest EGP 500 mn in Kazyon expansion (Speed Round)
U.S., Canadian air cargo safety regulations taking toll on Egyptian operators (Speed Round)
Goldman Sachs on what should be informing your 2016 investment strategy (Speed Round)
By the Numbers + How much will the state make from new marriage and divorce fees?
WHAT WE’RE TRACKING TODAY
The second stage of the parliamentary elections begins today in 13 governorates including: Cairo, Qalyubiyah, Damietta, Menoufiya, North Sinai, South Sinai, Ismailia and Suez, reports Al Ahram. These 13 governorates hold 28,204,225 registered voters. Security measures have been stepped up at polling stations nationwide, said Interior Minister Gen. Magdy Abdel Ghaffar. There has been no word of special measures taken in North Sinai, which saw a Nour party candidate assassinated. Today will also see the end of the second round of elections for Egyptians abroad, who have been voting at 139 embassies, with the High Elections Committee reporting a turnout of 18,500 voters so far.
Syria will be at center stage in U.S. Secretary of State John Kerry’s three-day swing through Abu Dhabi, Tel Aviv, Jerusalem and Ramallah, which gets underway today, according to a State Department statement.
Daesh planning attacks on U.S., France, Italy, Lebanon and Indonesia today? The loose hacker collective Anonymous, which recently ‘declared war’ on Daesh, announced yesterday that it had “uncovered information about Islamic State group attacks in Paris as well as at locations in the U.S., Indonesia, Italy and Lebanon, all apparently set for Sunday. OpParisIntel, a group within Anonymous, released a statement saying it had collected information about imminent attacks by the militant group.” The International Business Times is the only semi-mainstream outlet to have taken note of the story.
The warning comes on the heels of an uptick of attacks and alerts around the world over the past weeks and days, including a suicide bombing in Nigeria claimed by Daesh affiliate Boko Haram that claimed at least 49 lives on Wednesday, followed by an attack by Qaeda-affiliate al-Murabitoun on the Radisson Blu hotel in Mali’s capital Bamako on Friday, killing at least 21, and three female suicide bombers in Cameroon on Saturday in an attack killing at least four in addition to four attackers that was also claimed by Boko Haram.
Belgium has also warned of an imminent attack, and has ordered all restaurants and cafes ordered shut, according to the Telegraph.
WHAT WE’RE TRACKING THIS WEEK
Tarek Amer takes over as governor of the Central Bank of Egypt on Friday, 27 November, while the new CBE board apparently steps into office the following Sunday.
ON THE HORIZON
PwC and N Gage Consulting are partnering to host an open discussion on the impact of possible changes in monetary policy. As the organizers put it: “The CBE’s decision to not let the Egyptian pound fall faster comes from a fear of fuelling inflation. Egypt imports plenty of staples, which would see a spike in prices if there was a sudden depreciation of the pound, therefore leading to social unrest. The country is seeking Foreign Direct Investments, but the capping of USD deposits hinders profit repatriation, hence discourages investors. The country is seeking economic production, yet the structure of the Egyptian market is not flexible and strong enough to benefit from a devalued currency.” Monetary Policy and Foreign Exchange Challenges Workshop will take place at the Four Seasons Nile Plaza, at 9:00 am CLT tomorrow. Register here.
LAST NIGHT’S TALK SHOWS
Lamees El Hadidy on CBC Egypt’s Hona Al Assema held an extensive interview with Foreign Minister Sameh Shoukry, focusing largely on regional issues with a direct bearing on Egypt, as well as Egypt’s relations with Russia, and current progress on the ongoing tripartite talks between Egypt, Sudan and Ethiopia.
Before the interview, El Hadidy commented on the recent spate of terror attacks and alerts throughout the world, pointing to the global scale of terror as evidence that terrorism is not caused by the political exclusion of Islamists in the region, which she said is a favored narrative in the West. El Hadidy also noted Orascom Telecom Media and Technology Holding’s denial that its North Korea operations had been nationalized (as detailed in the Speed Round, below). She noted that while OTMT Executive Chairman and CEO Naguib Sawiris was unavailable to speak over the phone due to travel commitments, she would seek his comment on Sunday night’s program. El Hadidy also went through a quick rundown on the details for the second round of parliamentary elections, with Egyptians abroad having gone to the polls on Saturday and voting in Cairo and 12 other governorates set to begin today.
El Hadidy and Foreign Minister Sameh Shoukry spoke on a wide range of issues, including the Grand Ethiopian Renaissance Dam, Syria, and the strength of ties between Egypt and Russia in light of Russia’s recent unilateral declaration that a bomb had downed Flight 9268.
Russia: FM Shoukry said relations between Egypt and Russia remain strong, evidenced by progress on other fronts, such as the signing of a nuclear power agreement on Thursday. However, he did reiterate that other countries including Russia have yet to share their intelligence and preliminary findings with regard to the investigation into the crash of Flight 9268.
Ethiopia, Sudan and the GERD: El Hadidy noted that time is not on Egypt’s side as it enters into the tenth tripartite round of talks on the dam. Shoukry agreed that time is of the essence but said talks going forward should be entered into in the spirit of trust, cooperation and transparency. Asked by El Hadidy about the recent reports in Sudanese and Egyptian media regarding the recent surge in institutionalized mistreatment of Sudanese nationals in Egypt, which has been thought to be related to Sudan’s position in the GERD talks, Shoukry reiterated the MFA’s denial of any such mistreatment, and said he spoke with his Sudanese counterpart asking him to convey this message to the people and parliament of Sudan.
On Syria: El Hadidy: “Our position on Syria is unclear. Is Egypt for or against Bashar Al Assad staying in power?” Shoukry: “This question is up to Syrians to decide. However, there is no solution except for a political resolution with a transitional government that includes members of the opposition.” El Hadidy repeated her question, saying Assad’s continued rule is a central concern to the people of Syria. Shoukry replied that Egypt is not attached to or invested in any particular individual, and then went on to ask whether Assad’s departure would resolve the problem of terrorism and militants in Syria. “Would it resolve the demands of the Syrian opposition? This is unrealistic,” Shoukry said.
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OTMT posts 9M2015 net loss of EGP 3 bn as North Korea unit goes south: Orascom Telecom Media and Technology Holding (OTMT) posted consolidated 9M2015 results on Thursday. Despite registering a profit after taxes from continuing operations of EGP 92.4 mn (against a net loss of EGP 363 mn for the same period last year), the company posted a 9M2015 net loss of EGP 3 bn, nearly entirely on the back of writing off the fair value OTMT estimated for its former subsidiary and now associate Koryolink. OTMT states, in the notes to their interim financial statements, that the “fair value of the investment has been determined based on [an] independent valuator report.” The auditor was “not able to verify the fair value that will be recovered at the balance sheet date,” as this is precisely at the heart of the one of many disputes between OTMT and the North Korean government.
…OTMT has had ongoing difficulty in repatriating funds from Koryolink, “partially because of international sanctions imposed on the country but mainly by the government’s refusal to let the money go,” writes Martyn Williams for IDG News. “The government hasn’t acted because it can’t afford to. The profits are held in North Korean won, but the currency isn’t traded internationally and the government’s official rate is set artificially high, at 100 won to the U.S. dollar. At that rate, Orascom’s holding at the end of last year was worth USD 585 mn. But at the black market exchange rate, which is effectively the real value of the currency in North Korea, the cash is worth only USD 7.2 mn. And therein lies the problem. The government can’t afford to pay the money at the official rate, and it can’t be seen to officially recognize the black market rate. So the two sides have spent months locked in talks about what to do.” Following last June’s revelation that North Korea planned to launch a rival national telecom to compete with Koryolink known as Byol, OTMT had entered talks into merging with the newly proposed carrier. However, the North Koreans then reportedly indicated they wished to be the majority partner in any future joint venture, according to Williams. The earnings release notes: “OTMT and the Korea Post and Telecommunications Corporation (“KPTC”) have been in discussions regarding the merger of Koryolink with the state-owned mobile operator, and while the negotiations are not terminated, it is clear to us from the current discussions that consolidating the asset will be difficult as per the IFRS and EAS regulations.” The financial statements read: “In the management view, the control over the subsidiary’s activities was lost, due to the increase of the severity of financial and operational obstacles and the futility of the negotiation conducted…”
“We are very proud of the success of our operation ‘Koryolink’,” Naguib Sawiris said in a statement. “We have around 3 mn people today carrying our phones in the DPRK. We are still hopeful that we will be able to resolve all pending issues to continue this successful journey.” The Washington Post, however, is not being too kind with its headline: ‘North Korea tells Egyptian company: Thanks for the cellphones. We’ll take the company, too.’ OTMT investor relations chief Marawan Hussein reiterated on Saturday that negotiations regarding a potential merger with the proposed Koryolink-competitor ‘Byol’ are still ongoing, Daily News Egypt reported. (Check out OTMT’s earnings release in English or the Arabic version. Its 9M2015 consolidated statements are here. All files in pdf)
Oh, and OTMT is kinda-sorta an investment bank-slash-company now: Almost as an afterthought to the Koryolink story, OTMT’s earnings notes that 97.4% of Beltone Financial shareholders have accepted OTMT’s tender offer, as we had noted on Tuesday. “This confirms OTMT’s new direction to diversify its portfolio from a solely Telecom and Technology based firm to an Investment Holding company with a special focus on the Financial Services sector, the Energy sector and the Transportation and Logistics sector.” The earnings promises news of additional investments “to be disclosed in due course.”
The World Bank expects to make a USD 1 bn “development policy loan” available to Egypt, Hafez Ghanem, the World Bank’s MENA VP, said. The loan could come through sometime in December, he added, noting that both the Egyptian government and the World Bank would still need to approve the final document for the loan. Reuters quotes Ghanem as saying the loan “could be the first of three as part of a three-year programme with Egypt.” Shares rallied on the EGX in trading Thursday largely on the back of the announcement, the newswire suggests.
Brace yourselves for another year of lousy internet service. That’s the fundamental takeaway from news this morning that Telecom Egypt will need another year and EGP 1 bn extra to finish upgrading its network from copper wire to fiber-optic cables, reports Al Borsa. The company had previously been expected to complete an EGP 2 bn network upgrade next month, but now says it will require an additional year and EGP 1 bn more as it looks to replace declining voice call revenues with new income from ADSL services. TE generates data revenues from both the direct provision of services through subsidiary TE Data and network infrastructure fees it charges other providers to use its lines.
Discount food retailer Tawfeer will invest c. EGP 500 mn to bring its national footprint to 1,000 Kazyon-branded stores by 2017, according to executive board member Mohamed Kharma in comments to Al Borsa. The company presently operates some 120 retail outlets in nine governorates.
GB Auto sees new motorcycle and tuk-tuk assembly operation up and running by 2017. Groundbreaking on the facilities should take place in 1Q2016, CEO Raouf Ghabbour told Reuters Arabic. GB Auto also aims to build a tire production factory, the story notes. Production capacity at the motorcycle and three-wheeler factory will run at 120k tuk-tuks and 120k motorcycles annually, Ghabbour added. “We were selling 12k motorcycles per year, but this year we have reached nearly 60k motorcycles—a five-fold increase,” Ghabbour said.
US and Canadian air cargo safety regulations will take a toll on domestic operators: Safety regulations imposed by US and Canadian authorities on air cargo originating from Egypt after the crash of Metrojet flight 9268 has adversely affected 30% of DHL’s business here, said the company’s Ahmed El Fangary told Al Mal. The US’s Transportation Security Administration (TSA) issued a decision requiring cargo being transported on airlines bound from Egypt to be held in quarantine for 48 hours before being admitted to the United States. EgyptAir, AirFrance, and KLM subsequently banned the transport of goods on their airlines heading to London and the US, a move that has adversely affected 146 shipping companies, according to Tarek Darwish, head of the transport and air freight chamber of commerce. (See coverage in English and in Arabic)
Nudged into transparency? Egypt to release preliminary report on its investigation into the crash of Flight 9268 in December -Interfax: The Russian Interstate Aviation Committee (IAC) says Egypt will release its own preliminary findings in a report next month, according to Russian news agency Interfax, Daily News Egypt reports. There has yet to be any word from Egyptian authorities confirming or denying a tentative release date of the investigative committee’s findings.
Britain will resume flights to Sharm El Sheikh “as soon as possible,” Reuters reported. “A delegation of British aviation and counter-terrorism experts has spent the past two days meeting Egyptian authorities in Cairo to work out how best to tighten security and allow flights to and from the Red Sea resort to resume,” the newswire said.
How tourism hotspots can bounce back after terrorist attacks: Tiffany Misrahi writes for the World Economic Forum notes “The hotel industry is becoming more resilient to shocks from terrorism. In effect, the time that it takes for destinations to recover from these shocks has significantly decreased over the past 15 years … it appears that there has been a shift in mentality among consumers and companies over the last 10 years, with the emergence of a ‘carry on as normal’ culture in response to terrorism.”
Another year added to the five-year timeline to reduce energy subsidies? The Oil Ministry’s program to cut energy subsidies will take five to six years to complete, said Oil Minister Tarek El Molla. With that statement, the ministry appears to have given itself a leeway of one more year to complete the program, after the minister hinted at a five year program in an interview with the FT (paywall), which we noted earlier this month. The program will include diversifying sources of energy in addition to de-regulating the natural gas sector — primarily through the approval of a natural gas law that forms a general authority governing the sector, according to Al Masry Al Youm.
President Abdel Fattah El Sisi enacted the Movable Assets Law on Tuesday, allowing for non-fixed assets to be used as collateral and facilitating the transfer of these assets to lenders. The law establishes an electronic movable assets registry designed to make it easier for SMEs to with limited fixed assets to borrow, said Investment Minister Ashraf Salman. A draft of the law had been in place since 2010, according to OECD’s SME Policy Index: MENA 2014.
MOVES- MasterCard appointed its Egypt country manager Magdy Hassan as the General Manager for Egypt and North Africa.
The season of prognostication has begun, with Goldman Sachs first out the gate: Business Insider has two takes on client notes issued on Thursday by Goldman Sachs, including the investment bank’s “six best ways to trade the world in 2016“ and “10 themes will dominate world markets in 2016“. For the latter, Goldman sees stable global growth, with developed economies leading the way on the back of consumer spending. Of concern locally: The investment bank also sees lower oil and commodities prices — and an emerging markets slowdown: “But in EMs like Russia and Mexico, where currency depreciation has helped absorb the terms-of-trade shock, the remaining adjustments to government and private-sector balances should be correspondingly less painful. … We are more concerned about places with pegged exchange rates (such as Nigeria and Saudi Arabia), where the burden of adjustment falls more squarely on government fiscal balances, domestic households and corporates (and in the limit, the exchange rate peg may itself be at risk).”
EGYPT IN THE NEWS
Top Egypt cleric urges disassociating Islam from attacks: The AFP runs comments from the Grand Imam of Al Azhar, Sheikh Ahmed al-Tayyeb, who made “an impassioned appeal Saturday to disassociate Islam from extremist attacks, saying Muslims themselves had suffered most from ‘the catastrophe of terrorism,’ saying ‘Those who have burned Korans or houses of God (mosques) in the West should know that these acts are also terrorism by any standard.’“ At time of dispatch, the article has received nearly 600 comments, the overwhelming majority of which are negative and skeptical, saying that judging by the actions and not the words of Muslim-majority countries shows evidence of inequality under the law for men and women and a number of other regressive policies. A number of readers also bring up the recent booing of the moment of silence in Turkey during a recent football match, which we had mentioned on Thursday, as evidence that the views of extremists are far more common and widely held than Sheikh Tayyeb admits. (Read)
David Enders writes for Vice News ‘No One Is Showing Up for Egypt’s Election, Including The Party That Won Last Time.’ Enders writes: “Also not showing up this time are the international monitoring groups, including the Carter Center, that certified the 2012 ballot as largely free and fair. The former American president’s nonprofit organization was not allowed back to monitor this year’s vote.” In October 2014, the Carter Center announced that it was closing its field office in Egypt and that it would not be monitoring the upcoming parliamentary elections. The reasoning given at the time was that “This decision reflects The Carter Center’s assessment that the political environment is deeply polarized and that political space has narrowed for Egyptian political parties, civil society, and the media. As a result, the upcoming elections are unlikely to advance a genuine democratic transition in Egypt.”
The method to Trump’s madness: The current xenophobic alarm sweeping the United States and some parts of Europe with regard to Syrian refugees is simply the next logical step in the ongoing culture wars between the right and left political establishments. In the United States, state senators, governors, congressmen, and presidential candidates appear locked in a struggle to one-up each other in their shock-value generalizations about entire ethnic and religious groups. Rather than be met with rejection, a good number of these politicians have thus far been able to prosper from such statements and use them to build their base of support. But is the groundswell against refugees, migrants and legal immigration fueled by such remarks, or are politicians simply tapping into a sentiment ignored and or suppressed by political elites? Neil Malhotra and Yotam Margalit argue in Stanford Business: “…immigration, like globalization in general, creates losers as well as winners. Those losses are cultural as well as economic… The media coverage of Trump’s campaign has largely been a source of entertainment. But this masks profound, underlying rifts. You may or may not think of Donald Trump as a serious candidate, but it would be a big mistake to belittle the seriousness of the concerns driving his support.” (Read The Serious Side of the Donald Trump Phenomenon)
“I will not give you the gift of hating you”: Antoine Leiris’ wife was killed in the terrorist attacks in the Bataclan theatre in Paris. He wrote her a tribute on Facebook that has been shared widely across the world. The BBC recorded Leiris reading out an English translation of his moving letter (running time 02:29).
DIPLOMACY + FOREIGN TRADE
El Sisi meets with US congressional delegation: President Abdel Fattah El Sisi met with a congressional delegation from the US House of Representatives on Saturday, led by the Chairman of the House Armed Services Committee’s Subcommittee on Readiness, Congressman Robert Joseph Wittman (R), according to a statement from Ittihadiya. They reportedly discussed military relations between the two countries, as well as the threats and responses to terrorism. El Sisi is quoted as emphasizing the importance of uniting and strengthening “the international community’s efforts to eradicate all forms of terrorism and cut off its sources of funding.” El Sisi also discussed Egypt’s efforts to “rectify the religious discourse, address extremist thought and correct the misconceptions that it propagates,” the statement reads.
Egypt-Sudan beef causes postponement of tenth GERD talks: The tenth round of talks over the Grand Ethiopian Renaissance Dam scheduled to take place in Khartoum on Saturday have been postponed. This was directly due to a deterioration of Sudanese-Egyptian relations stemming from accusations that Egypt’s security apparatus has been mistreating Sudanese citizens, which we noted last week, according to Sudanese sources speaking to AMAY. These sources state that the Sudanese Irrigation Minister’s decision to fly out to Brazil on the same day was a deliberate snub, as this trip is not as important to the government as the GERD talks. Talks are expected to resume at the end of November, according to spokesperson of the tripartite committee of the dam, Alaa Yas. Yas also urged that the committee be joined by the foreign ministers of all three countries, as the committee is solely concerned with the impact studies and not the diplomatic implications of the dam.
UN Security Council unanimously adopts resolution for eradicating Daesh safe havens in Syria and Iraq: The United Nations Security Council (UNSC) voted unanimously on Friday on a resolution calling for its members to eradicate Daesh in Syria and Iraq. The release from UN News Centre noted “the ‘horrifying terrorist attacks’ it perpetrated recently in Sousse (Tunisia), Ankara (Turkey), over Sinai (Egypt) with the downing of a Russian plane, and in Beirut and Paris.” The final resolution has yet to be uploaded, and as such it’s unclear if the wording of the resolution includes a reference Sharm and Flight 9268. The resolution also calls on member states to “intensify efforts to stem the flow of foreign terrorist fighters to Iraq and Syria and to prevent and suppress the financing of terrorism.”
Heads of Egypt, Cyprus and Greece are set to meet on 9 December in presidential summit in Athens: The meeting is was announced by Cyprus government spokesperson Nikos Christodoulides, Ahram Online reported. This will be the third meeting of the countries this past year, with the prior summits taking place in Egypt and Cyprus.
Gov’t plans to repay foreign E&P partners USD 500 mn by year’s end
The government will repay foreign E&P companies USD 500 mn by the end of the year from a combined USD 1.5 bn it expects to net rom World Bank and AfDB loans. The Oil Ministry is in talks with the International Cooperation Ministry about when to begin accessing these funds, said an Oil Ministry source to Al Borsa. Egypt owes foreign energy companies operating in the country USD 2.7 bn as of last October, after paying USD 200 mn in September, according to statements by Oil Minister Tarek El Molla. (Read in Arabic)
77k tons of coal arrive in Ain Sokhna Port to supply cement factories
Coming from South Africa, 77 ktons of coal arrived in the port of Ain Sokhna bound to supply cement factories, Al Ahram reports. (Read in Arabic)
National Organisation for Potable Water to tender for three desalination plants
The National Organization for Potable Water will issue tenders for three desalination plants on Marsa Matruh and South Sinai early 2016, sources told Al Borsa. The plants will reduce costs of installing infrastructure to transport water between governorates. The projects are part of a Ministry of Housing strategy to build desalination plants in coastal city that lack freshwater resources. (Read in Arabic)
BASIC MATERIALS + COMMODITIES
EMRA to tender eight sites for gold exploration and production
Egypt’s Mineral Resources Authority (EMRA) is tendering eight new sites for gold exploration in January, Al Borsa reported. Seven of the areas are in the Eastern Desert and one in South Sinai, with EMRA now finalising security clearances for the issuance. EMRA said it will form joint ventures with winners of the tender and hopes exploration activities begin as soon as possible. (Read in Arabic)
GAFI signs an agreement with Beheira Governorate for EU-funded dairy center
The General Authority for Investment and Free Zones (GAFI) signed an agreement with the Beheira Governorate on Saturday for the launch of a dairy processing center as part of the EU-funded Lactimed program. The center has already been constructed, according to a press release issued by GAFI. The Lactimed program is an initiative aimed at developing the dairy industry in Mediterranean countries. (Read in Arabic)
Flash floods cost Borg El Arab factories EGP 1.6 bn in losses
Borg El Arab factories lost EGP 1.6 bn as a result of the flash floods that hit Alexandria, Borg El Arab Investors’ Association said. Water damaged the stock of goods at some factories rendering them unusable. Investors there are still voicing their concerns and saying that the high salinity levels in the water supply is disrupting operations at factories. (Read in Arabic)
Trade Ministry in talks with World Bank for USD 500 loan for factory programs in Qena and Sohag.
The Trade & Industry Ministry is in talks with the World Bank for USD 500 mn to finance the development of industrial zones, focused on small-medium sized factories, said Trade and Industry Minister Tarek Kabil. The project comes as part of a ministry strategy to develop SME industries in rural areas, including the “Work by your home” initiative. Qalyubiyah governorate has allocated 10 plots of land for 10 such factories, which is hoped to provide 3,000 jobs in the area. (Read in Arabic)
Polvara Spinning and Weaving looking to sell EGP 150 mn land plot
The Arab Polvara Spinning and Weaving company is looking to divest a 10k square meter unused land plot in the coming period to finance a restructuring program. The land comes from a portfolio of unused assets estimated at EGP 1.5 bn, sources told Al Borsa. The company needs liquidity to buy raw materials, restructure non-performing production lines, and increase the efficiency of departments. (Read in Arabic)
Egypt’s Credence to invest USD 39 mn in Hurghada resorts
Egyptian tourism company Credence plans to invest USD 39 mn in expansions in Hurghada over the coming period, said its CEO Islam Mahdi at an IFC summit. The company’s expansion includes building 390 new hotel rooms at one of its Hurghada resorts. Credence is also looking to develop a new pricing scheme to attract Russian tourists. Mahdi added that the company has launched promotional offers targeting European and regional tourists. These do cut prices but offer additional nights at the resort. (Read in Arabic)
JWT to change target market for Egypt tourism campaign
JWT will change its target market for Egypt’s national tourism marketing campaign, said Ahmed Helal, project manager at the agency. He did not mention the focus of the new campaign, however. Helal said the marketing strategy remains unchanged, but the official launch of the campaign has been delayed in the wake of the Russian plane crash. JWT said it began marketing Egypt on digital media, but the full scale launching of the campaign awaits approvals from the Tourism Ministry. (Read in Arabic)
Egypt signs tourism MoU with Namibia
Mahmoud Fawzy Egypt’s ambassador to Namibia signed a MoU with Namibian Environment and Tourism Minister Pohamba Shifeta, which calls for cooperation between the two countries in encouraging tourism investments between both countries, knowledge sharing, and issuing legislation that incentivize tourism projects. (Read in Arabic)
AUTOMOTIVE + TRANSPORTATION
National Roads Projects put on hold amid funding delay?
The Planning Ministry refused to grant EGP 3.6 bn to the General Authority for Roads, Bridges and Land Transport (GARBLT) to complete the first phase of the National Roads Project, which includes the construction of 12 roads at a total of 1095 km, Al Borsa reports. An unnamed official at the Ministry of Transport said the GARBLT requested EGP 3 bn for the completion of the project’s first phase, and nearly EGP 600 mn to complete its own plans for the 2015 fiscal year. GARBLT President Adel Turk said that five roads will be implemented of the National Roads Project in December, namely: Wadi Al Natrun – Al Alamein road, Assuit-Sohag-Red Sea road, Qena-Safaga road, Al Shat – Ayoun Moussa road, and the Al Menya-Ras Gharib road. Turk indicated the implementation of the remaining projects will take effect by next June with an estimated EGP 17 bn in total investments.
Transport Ministry holds off on increasing port services fees
The Transportation Ministry is halting all initiatives to raise port services fees, said an official from the ministry to Al Borsa. Transportation Minister Saad El Geyoushi promised to reverse a decision by his predecessor to increase port services fees by up to 300%, at a meeting with the Egyptian Businessmen’s Association (EBA). The decision to reverse the hike was welcomed by the sector, which had been in an uproar since the hike was issued in September. (Read in Arabic)
BANKING + FINANCE
Bahrain’s Al Baraka to open 50 branches across Egypt, North Africa
Bahrain’s Al Baraka Banking Group plans to step up its expansion, opening 50 new branches in Egypt and the rest of North Africa in 2016, said its CEO Adnan Yousif. This follows a wave of expansions in 2015 that saw the bank open 54 new branches in the region. The bank currently operates in 12 countries with assets of around USD 24 bn. (Read in Arabic)
Global Lease signs EGP 200 mn agreement with Banque Misr to finance leasing activities
Global Lease signed a EGP 200 mn loan agreement with Banque Misr to finance leasing activities and grow its market share. The leasing market is expected to grow considerably in the coming period in light of an increased appetite for investments in commercial real estate and office building developments, said Global Lease’s managing director Hatem Samir. The company plans to increase its paid up capital to EGP 50 mn, up from its current 15 mn. (Read in Arabic)
OTHER BUSINESS NEWS OF NOTE
Egypt Kuwait Holding says it is conducting due diligence to acquire three companies in 2016
Egypt Kuwait Holding plans to acquire three companies operating in the petrochemical sector, Sahar Farahat, Deputy Executive Director, said in a statement, according to Al Borsa. Currently, Egypt Kuwait Holding is conducting due diligence on the three companies, with formal bids coming in at the beginning of 2016, Farahat added. Egypt Kuwait Holding has nearly 20 subsidiaries in the oil, gas, insurance, fertilizer, telecommunications, construction, financial investment sectors, among others. (Read in Arabic)
EGYPT POLITICS + ECONOMICS
El Sisi approves development plan for regions along western regions and Sinai
President Abdel Fattah El Sisi has ratified the development plans for governorates in Sinai and along Egypt’s western borders, according to “high-level government sources,” AMAY reports. The Sinai development plan includes: the Suez Canal Development Axis; completing the 240K agricultural project east of the Canal; rainwater collection projects; and eco-tourism projects along the peninsula. The western development plan includes: building an international port in Ras El Hikma; the Daba’a nuclear plant; nuclear-powered desalination plants; fisheries along the coast; and rainwater collection projects in Siwa; and other agricultural projects. (Read in Arabic)
Revenues from the Suez Canal eased 6.9% year-on-year to USD 449.2 mn in October 2015, the ninth consecutive month revenues have dipped on the back of cooling global trade. (Read)
Security raids journalist’s Sinai residence in his absence -Journalists syndicate: The Journalists’ Syndicate lodged a complaint on Tuesday with the general prosecution “demanding an investigation into a security raid on the house of one of its members in North Sinai. The syndicate said a security force raided the home of Abdel Qader Mubarak, a journalist with independent newspaper al-Osboa, in the city of Arish,” Egypt Independent reported. The journalist’s family, however, were apparently at home, and the search “spread panic among my household,” a complaint by Mubarak reportedly states.
ON YOUR WAY OUT
Tarek Amer becomes the CBE Governor at the end of this week. Veteran financial writer Patrick Werr says Amer faces “twin crises” coming into office. The Russian plane crash is expected to dry up foreign currency revenues from tourism and support from the GCC is expected to be tempered as the oil price stays low. Domestically, the arrest of businessman Salah Diab sent “a shiver through the business community and threatening to slow foreign investment, traditionally a pillar of Egypt’s foreign currency inflows.” Together, the crises are going to “almost certainly” lead to a devaluation, Werr notes. This could spur a wave of dollarization and lead to higher inflation rate, likely pushing the CBE to resort to the IMF and World Bank for funding.
Brand management: Terrorist attacks might have given the last nudge to drive pharmaco Isis to change its name. Originally named after the ancient Egyptian goddess associated with good health, Isis now wants the story be about the medicines they are creating and not their name.
QUICK FACT: A recent presidential decree imposed EGP 100 per marriage and divorce certificate. In Egypt, approximately 1 mn marriages take place every year, which implies that the government will raise extra revenues of around EGP 100 mn per annum. The amount collected is 50% or higher than the above figure if annual divorce cases are taken into account. This is almost 15% of the cost of fixing the drainage network in Alexandria.
USD CBE auction (Thursday, 19 November): 7.7301 (unchanged since Wednesday, 11 November)
USD parallel market (Wednesday, 18 November): 8.57 (+0.05 since Monday, 16 November, Reuters)
EGX30 (Thursday): 6568.97 (+2.42%)
Turnover: EGP 487.0 mn (12% above the 90-day average)
EGX 30 year-to-date: -26.41%
THE MARKET ON THURSDAY: The EGX closed a rough week on a calmer note Thursday. Investors had been dumping shares aggressively since Metrojet Flight 9268 fell in the Sinai, with the sell-off deepened by concerns over Egypt’s balance of payments as well as geopolitical concerns after terror attacks in Beirut and Paris. After sliding c. 15% since the Metrojet crash, the EGX30 climbed 2.4% on Thursday on news of a USD 1.0 bn loan. Index heavyweights CIB and EFG-Hermes were the day’s most heavily traded stocks. At a market turnover of EGP 483.5m, foreign investors were the sole net sellers of the day. Global equity markets, meanwhile, extended their rally as investors cheered increasing certainty that the U.S. Fed will hike rates in December.
Foreigners: Net Short | EGP -13.9 mn
Regional: Net Long | EGP +6.8 mn
Local: Net Long | EGP +6.9 mn
Retail: 54.1% of total trades | 52.1% of buyers | 56.1% of sellers
Institutions: 45.9% of total trades | 47.9% of buyers | 43.9% of sellers
Foreign: 26.2% of total | 24.8% of buyers | 27.7% of sellers
Regional: 14.4% of total | 15.1% of buyers | 13.7% of sellers
Domestic: 59.4% of total | 60.1% of buyers | 58.6% of sellers
WTI: USD 41.90 (+0.43%)
Brent: USD 44.66 (+1.09%)
Gold: USD 1,076.70 / troy ounce (+0.04%)
TASI: 7,034.1 (+1.2%)
ADX: 4,260.1 (+1.5%)
DFM: 3,273.3 (+ 2.9%)
KSE Weighted Index: 390.8 (+0.8%)
QE: 10,860.2 (+0.3%)
MSM: 5,795.8 (flat)
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