Thursday, 3 December 2015
Amer promises an exceptional auction “in the near future” during meeting with El Sisi (Speed Round)
Is the natural gas crunch officially over? (Speed Round)
Spotlight on the escalating feud between Russia and Turkey: Russia alleges Erdogan benefiting from illegal Daesh oil trade (Spotlight)
M&A watch: Middle East Glass denies it’s back in talks on Qalaa’s Misr Glass; Austria’s Alpla Group acquires Egyptian plastics plant (Spotlight)
EFG Hermes, CI Capital top brokerage league table for November (Speed Round)
Six investment themes Goldman Sachs think will define the future (On Your Way Out)
WHAT WE’RE TRACKING TODAY
The week’s third Central Bank of Egypt FX auction begins at 11am. After clearing a foreign investor backlog of nearly USD 550 mn on Tuesday, the CBE said it had changed the manner in which it allocates FX at auction, but stopped short of giving specifics.
We will have a new House of Representatives: Final results for the second and final round of parliamentary elections should be announced by the High Elections Committee today.
ON THE HORIZON
LAST NIGHT’S TALK SHOWS
It was a quiet night for Egypt’s political talk shows, as is the usual on Wednesday nights.
Ibrahim Eissa opened his program on Al Kahera Wal Nas by saying that despite reports of bribery and other complaints, the conclusion of parliamentary elections was overall positive for Egypt in terms of completing its political roadmap. But he urged that this should be viewed as a first step, rather as a stopping point. The nation needs to build on this to avoid simply becoming a “decorative” democracy, as Eissa put it.
After reiterating his view that single-party states such as those that have failed in the region are inherently unstable — their tunnel-vision leaves them less aware and adaptable to problems — he went on to say a starting point for defending Egypt’s democracy is by defending the constitution and dismissing calls for its amendment.
Eissa also spent a good portion of his program highlighting the plight of the Egyptian film industry, which is suffering under the weight of falling revenues in part due to regional satellite television channels that broadcast movies without paying for the rights. The issue has been ongoing for several years, and Eissa framed it by saying that Egyptian cinema was one of the country’s traditional industries and exports.
Eissa claimed that 77 such channels illegally broadcast Egyptian films, saying in some cases that this happened while the films in question were still playing in theaters. Eissa called on the government to take on a more active role in enforcing intellectual property rights, and asked what the Ministry of Culture’s role is in defending artists’ copyright.
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Central Bank of Egypt Governor Tarek Amer promised another exceptional auction “in the near future” during meeting with President Abdel Fattah El Sisi yesterday, according to a readout from Ittihadiya. The statement from the presidency is short — and suggests Amer has found a source of FX outside of reserves — so we’re running it verbatim. As usual, the bold is ours:
“Mr. Amer outlined his plan to be put into action upon officially assuming his post. The plan includes offering a new exceptional auction in the near future to meet import demands as well as enhancing oversight of the local markets. Mr. Amer affirmed that the CBE has paid arrears to foreign investors in the stock market, noting that this decision will have a positive impact on Egyptian, Arab and foreign investors, as it will raise confidence in the Egyptian economy and secure liquidity in the market in coming period. Mr. Amer added that he is keen on securing the necessary funding to support vital sectors, noting that the bank injected USD 1 bn into the market to meet importer demands last month, and that it intends to inject even more USD liquidity into the market next month.
“Mr. Amer affirmed that FX reserves are stable and that the monetary situation will be further improved. He added that he looked forward to working with the new members of the coordinating council, citing its important role in designing monetary policies.
“President El Sisi stressed the importance of adopting an approach that encourages investment and development, strengthens confidence in the Egyptian economy and realizes stability in prices and the banking system. President El Sisi and Mr. Amer discussed the need to reach out to investors in various economic sectors to identify and overcome the obstacles that they face. This is in addition to crystallizing suggestions aimed at increasing growth rates in all sectors, which will contribute to Egypt’s overall development.”
Execs from six industrial consumers say the natural gas crunch has come to an end, Al Mal reports. Mohamed El Sewedy, head of the Federation of Egyptian Industries announced that the end of November marked the end of the gas crisis, with industrial consumers receiving their full contracted allocations. Representatives from six companies in energy-intensive industries, including Lecico, Ezz Steel, Alexandria Portland Cement, KIMA, Abu Qir Fertilizers, and Ferchem Misr, confirmed this in talks with Al Mal. The sole complainer in the piece was Farouk Moustafa, CEO at Misr Beni Suef Cement, who said his plant is operating only one of two lines due to an energy shortage. “We contacted EGAS about the shortage to see if they could allocate more natural gas or mazut,” said Moustafa, “but we were surprised by EGAS’ response saying they couldn’t provide more energy.”
The EGX may be the world’s worst-performing stock exchange year-to-date, but it was number one yesterday, Bloomberg reports, as investors cheered the Central Bank of Egypt’s clearance of a foreign investor backlog of nearly USD 550 mn. The financial information service’s Ahmed Namatalla quotes an ebullient Arqaam Securities chief Radi Elhelw as speculating that “We absolutely think foreigners will put their money back in this market. If the foreign exchange situation is fixed, with a devaluation or otherwise, they’re going to come back in like a herd.” Market turnover yesterday was the highest since early July; foreign investors were net sellers.
We can dream, right? Egyptian Stock Exchange chief Mohamed Omran refused to speculate yesterday on what the nation’s IPO pipeline might look like for next year, but Reuters has crunched the numbers and found that as many as 15 companies that filed to go public in 2014 or 2015 have so far failed to list. Omran declined to comment other than to say that he expects to see a “large number” of companies in the pipeline, Reuters‘ Ehab Farouk reports in a piece for the newswire’s Arabic service. The story is getting wide pickup in the domestic and regional press.
In a brief statement to the EGX that gave no further details, Middle East Glass Manufacturing denied Al-Borsa’s report yesterday that it had resumed talks to acquire Qalaa Holdings’ Misr Glass Manufacturing. Al Borsa had reported that MEG upped its offer to EGP 800 mn for 90% of MGM, saying Arab African International Bank was providing acquisition finance.
In other M&A news, Alpla Group has acquired Greek outfit Argo’s Egyptian plant, the Austrian plastic packaging giant said in a recent statement. “The acquisition of this branch is a second important step to further expand our presence in Africa,” Alpla CEO Günther Lehner said, referring to a previous acquisition in South Africa. The 50-person Argo plant, located in El Obour city, will pass to Alpla at the end of this month. The value of the acquisition was not disclosed.
Market heavyweights EFG Hermes, CI Capital maintained their position atop the brokerage league table for November: EFG Hermes, which executes on the Egyptian market through two separate brokerage licenses, retained its title as the nation’s largest brokerage house with a 22.9% market share, followed closely by CI Capital with a 19.9% share. Beltone Financial, since acquired by OTMT, advanced nine spots to third place with a 5.7% share, bolstered by its execution of the OTMT transaction. Pharos Holding (2.7%) and Sigma Capital (2.4%) rounded out the top five. For the blow-by-blow on the monthly competition, Al-Mal‘s epically long one-paragraph story is your go-to. (One quick note: EFG Hermes executes through Financial Brokerage Group and Hermes, two separate subsidiaries. For ranking purposes, we sum the two figures.)
The International Finance Corporation has inked an agreement with Al Baraka Egypt to expand trade financing for Egyptian importers, the institution said in a statement. Al Baraka becomes the third Egyptian bank, and first Islamic bank to join the IFC’s Global Trade Program, reports Al Borsa. The IFC guarantees help Al Baraka bank clients to import essential commodities and raw materials, said Al Baraka CEO Ashraf El Ghamrawy. The IFC has pumped over USD 1 bn into the MENA region in FY 2015.
Ahmed Nazif’s conviction on corruption charges overturned: Former Prime Minister Ahmed Nazif will be back in the defendant’s box to face corruption charges on 3 February 2016 after the Court of Cassation overturned yesterday a five-year sentence on a trial that started in 2012, Middle East News Agency reports. The nation’s highest appeals court did not hand down the reasoning behind its decision. Nazif earlier this year won his appeal of a three-year sentence in the same case in which he had originally been found guilty of squandering public funds. Arrested immediately after the 25 January 2011 revolution, Nazif was released in June 2013 after spending the maximum possible time in pre-trial detention. Nazif was prime minister from 2004 until 2011.
MOVES- Mohamed El Tawab was appointed chairman of the Holding Company for Land Reclamation, reports Al Borsa. El Tawab retains his position as head of the General Authority for Land Improvement Projects as part of a Ministry of Agriculture restructuring plan to “unify efforts in the 1.5 mn feddan project.”
Arabtec wants a pledge from the Ismail administration that it will be able to repatriate future profits from the first phase of the mn homes project before it can begin work on the project, according to government sources speaking to Al Borsa. The move comes as Arabtec seeks USD 200 mn in financing from UAE-based banks to fund the long-delayed project, which has been on hold for a year now as the government and the UAE-based developer have been at an impasse on terms and conditions. Arabtec has also undergone significant management and shareholder shakeups, but keeps insisting it has not yet pulled out of the project.
Zamalek getting a Metro station whether the neighborhood’s residents want it or not: The Transportation Ministry will continue to move forward with building the Zamalek Metro station despite opposition by the neighborhood’s residents, Al Borsa reports. A government source speaking to Al Borsa described protests by the neighborhood’s mostly affluent residents as “classist,” as the project aims to facilitate transportation for underprivileged workers and students, in addition to easing congestion and traffic. He added that the construction of the station — part of the third phase of Metro Line 3 — would not affect the integrity of Zamalek’s buildings, a major concerns of residents. Dwellers of Zamalek have gone so far as to have written to the European Investment Bank asking that it halt its funding for the 17.5 km third phase, the paper reports. (Read in Arabic)
Prime Minister Sherif Ismail was in Saudi Arabia for the first meeting of the Saudi-Egyptian Coordination Council yesterday, Al Ahram reports. Mohammed bin Salman bin Abdulaziz, the Kingdom’s deputy crown prince and minister of defense, met Ismail. The two agreed to form working groups to putting into action the various bits and pieces of the Cairo Declaration signed by President Abdel Fattah El Sisi and King Salman bin Abdulaziz on 11 November 2015. Planks include the establishment of a Joint Arab Force, cooperation in strategic fields, and economic integration. Defense Minister Sedky Sobhy also met with bin Salman yesterday; details of their talks have not been released. The statement from the Saudi Press Agency on the meeting was likewise sparse on details.
Speaking of KSA: “German spy agency warns of Saudi shift to ‘impulsive’ policies,” Reuters reports after obtaining what it calls “an unusual public statement” issued by Germany’s foreign intelligence agency to German media on Wednesday. “The thus far cautious diplomatic stance of the elder leaders in the royal family is being replaced by an impulsive interventionist policy,” the BND wrote, saying that Saudi was taking “more risks in its regional competition with Iran.” Reuters said the intelligence report “pointed to risks stemming from the concentration of power in Prince Mohammad [bin Salman], who it said could get carried away with efforts to secure the royal family succession in his favour. The BND said there was a risk he would irritate other royal family members and the Saudi people with reforms, while undermining relations with friendly, allied states in the region.”
The Ismail cabinet held its weekly meeting on yesterday ahead of the prime minister’s visit to Saudi Arabia. Key decisions included:
If your company is looking to integrate coal in your energy mix as a hedge against the return of Egypt’s energy crisis, take note: More than 500 Institutional investors with assets north of USD 3.4 tn have “pledged to avoid or cut holdings in fossil fuels” including coal, gas and oil, reports the Financial Times (paywall), citing statistics from two leading advocacy groups. The campaign has already seen major investors including Norway’s sovereign wealth fund and German insurer Allianz pledge “to decrease investments in financial assets owned by fossil fuel companies,” the paper says. A year ago, the same figure stood at 181 institutions with AUM of USD 50 bn. The story quotes the leader of a coal industry association as noting that while some were divesting, “there are plenty of others that are remaining invested,” particularly in emerging markets looking to use coal to generate electricity. Bloomberg calls the development “a sign of the growing political stigma associated with coal, oil and natural-gas producers.” Additional coverage of the issue is available in Fast FT and from Reuters, which quotes the two advocacy groups as noting that “investors are reading the writing on the wall and dramatically shifting capital away from fossil fuels and towards clean, renewable energy.”
Other international headlines this morning that either carry implications for Egypt or that are simply worth noting in brief:
EGYPT IN THE NEWS
The sad state of the domestic tourism industry, the prospect of a new “golden age of archaeology” and the latest detention of a journalist dominate the international media’s coverage of Egypt this morning.
Prospects of a hidden chamber in King Tut’s tomb and “thermal anomalies” that suggest there could be secret chambers in the Pyramids of Giza leave the Guardian wondering “What treasures could lurk inside Egypt’s lost chambers?” The paper notes that “Egyptology is entering another golden age, with dazzling new discoveries of hidden chambers under the Pyramids and in Tutankhamun’s tomb. A cynic could almost say it’s hype for the desperate tourist industry.”
ICYMI- Foregoing the editorial board’s fortnightly condemnation of “Egypt’s latest outrage,” the New York Times cast its spotlight earlier this week on the search for what many now believe could be Nefertiti’s tomb. In a piece that deftly mixes the thrill of archaeology with commentary on the state of the beleaguered tourism industry, Karim Fahim notes, “The prospect of such a discovery is beyond tantalizing, and would be as momentous a find as any here for almost a century, antiquities officials say. It would also come at a time when Egypt’s tourism industry, frozen by years of political unrest and fears of militant attacks, is in urgent need of good news. (The Grey Lady ran its piece on Monday; we missed it. H/t Mohamed A.)
FT to Egyptian tourism industry: Abandon all hope. Writing for the FT’s management section, veteran writer Michael Skapinker states the obvious as he notes that “Terror attacks on tourism hit poor countries the hardest,” noting that “richer nations recover faster from terrorism while countries such as Egypt suffer long-term damage.” And it doesn’t get much better from there: “What can poorer countries do to mitigate the damage to their tourist industries after a terrorist attack? They can increase security and hope nothing similar happens for a long time.”
Following up on the crash of Metrojet 9268, the Wall Street Journal reports that “U.K. officials believe [the] Russian jetliner bomb [was] triggered by simple timer device,” saying that, “The device used appears to be the kind of basic design authorities have been aware of for years, including since the 1988 bombing of PanAm Flight 103 over Lockerbie, Scotland, that killed 270 people.” The newspaper quotes a U.K. security official as saying the attack “puts the spotlight back on basic security.”
Meanwhile, the Associated Press is reporting on the detention of journalist and researcher Ismail Alexandrani, who has since been remanded to custody for 15 days by the State Security Prosecution Service. Alexandrani is a frequent writer and commentator on terrorism in Sinai; the AP story is getting wide pickup internationally. Mada Masr notes that Turkey-based Alexandrani has been openly critical of the Sisi administration. Human Rights Watch‘s statement on the case, which it calls an “unlawful arrest,” is also getting wide attention.
SPOTLIGHT escalating feud between Russia and Turkey
Turkey is readying to cut its LNG imports from Russia by 25% in retaliation for Russian sanctions imposed on Turkey after the latter downed a Russian fighter jet, according to exporters speaking to Reuters Arabic. Turkish companies appear to be unfazed by the move, despite potentially costing more to source from elsewhere. However, it was noted the government is already lining up substitutes from Algeria and the US. While on Erdogan’s state visit to Qatar on Wednesday, Turkey’s Petroleum Pipeline Corporation (BOTAS) signed an MOU with Qatar’s national oil company for long-term LNG trade, Anadolu Agency reported. No details of the MOU’s terms were disclosed.
The move to cut LNG imports from Russia also preempts a possible Russian freeze on the Turkey Stream gas pipeline, Reuters reports. No formal decisions have yet been made on the project or on a nuclear power station that Russia is building in Turkey, Russian Economy Minister Alexei Ulyukayev said on Tuesday. The pipeline was intended to pump Russian gas to Europe through Turkey, in an effort to bypass Ukraine. Freezing the project would be a symbolic move, as it has been beset by delays and doubts, according to Reuters.
Russia’s defense ministry accused Erdogan and his family of personally profiting from oil trade with Daesh: Russian defense officials held a press conference on Wednesday at which they showed satellite images of tanker trucks filling up with oil from fields controlled by Daesh in Syria and Iraq before returning to Turkey. “Turkey is the main consumer of the oil stolen from its rightful owners, Syria and Iraq. According to information we’ve received, the senior political leadership of the country — President Erdogan and his family — are involved in this criminal business,” Reuters quoted Deputy Defence Minister Anatoly Antonov as saying. Officials did not provide evidence to back link their claims to the personal involvement of Erdogan and his family. Also on Wednesday, Russia sent back 160 tons of Turkish goods now that sanctions are in place, Turkish daily newspaper Sabah reported.
Erdogan struck back against the claims from the podium at Qatar University on Wednesday, where he denied all charges against him and said he would resign if they could be proven, and if not, the accuser should step down, Sabah reported.
The Terror Superhighway: Turkey and Qatar also agreed to visa-free travel during Erdogan’s visit.
IMAGE OF THE DAY
FP7/CAI ad agency’s billboard ad for UN Women’s campaign against domestic violence. The billboard lights up at night to reveal bruises on a young married woman’s face. (View image)
DIPLOMACY + FOREIGN TRADE
Hollande to visit Egypt in April: French President François Hollande will visit Egypt in April, Trade and Industry Minister Tarek Kabil said yesterday while in Paris for high-level talks. Kabil met with French Economy Minister Emmanuel Macron and Minister of State for Foreign Trade Matthias Fekl, Ahram Online reported.
Egypt expected to announce FLNG tender in the coming months, says Hoegh CEO
The governments of Egypt and Pakistan are expected to issue tenders to purchase Floating LNG (FLNG) platforms to help bring in natural gas, said Hoegh LNG CEO Sveinung Stoehle, Reuters Arabic reports. Speaking at the CWC World LNG Summit, Stoehle added that the tenders are expected to be announced in the coming few months, with his company participating. Hoegh is already a key player in Egypt’s LNG sector, having provided the FSRU Gallant, which is docked in Ain Sokhna and was key in the resolution of the nation’s chronic gas shortages earlier this year. (Read in Arabic)
EGAS studies increasing gas price to fertilizer companies, imposing a single market price for the industry
EGAS is studying hiking and unifying the price of natural gas that paid by fertilizer factories, Saad Abu El Ma’aty, Chairman of Abu Qir Fertilizers, told Al Mal. The new suggested pricing policy would eliminate the price formula system put in place by former Prime Minister Ibrahim Mahlab last year. The current system prices 1 mn BTU at USD 4.5, or as per the price formula in the agreement, which involves shifting the price of the gas depending depending on the price of the output. El Ma’aty warned against increasing gas prices to government fertilizer factories, noting that they feed directly into the Principal Bank for Development and Agricultural Credit, and supply prices are controlled by the Ministry of Agriculture. (Read in Arabic)
Extending infrastructure to 8k feddans in 6 October to establish new industrial zone, says IDA
Infrastructure is being extended into 8k feddans in 6 October to establish a new industrial zone, said Ismail Gaber, head of the Industrial Development Authority (IDA), in a meeting with the 6 October Investors Association. The New Urban Communities Authority (NUCA) had sent a letter detailing that licensing for factories will be granted for a period of five years, to which the Investor Association has asked to apply law number 453 of year 1954 to grant life-time licenses to industrial, commercial, and administrative establishments when prerequisites are met. The IDA is currently forming a committee that will include representatives from the city’s infrastructure authorities, as well as representatives from the investor associations, that will meet weekly to resolve licensing and permit issues. (Read in Arabic)
BASIC MATERIALS + COMMODITIES
New gold mining tenders to be issued by January; Mahlab condemns wildcat gold exploration
Eight gold mining tenders in the Eastern Desert will be issued by January, Omar Taema, head of the Egyptian Mineral Resources Authority (EMRA) told Al Borsa. Security clearances will be completed by the end of this month, while the administrative process to issue the tenders to international companies will be done by January 2016. The announcement came during a visit to the Fawakheer gold mine, 90 km off Al Qusair, with Ibrahim Mahlab, the President’s Advisor on National Projects. The news came as presidential advisor for national projects Ibrahim Mahlab condemned wildcat exploration for gold in the Eastern Desert and southern Egypt, according to a statement carried by the State Information Service.
REAL ESTATE + HOUSING
Secon begins executing three projects in 2016 at an investment value of EGP 3 bn
The Saudi Egyptian Construction Company (Secon) will commence three new projects in 2016, with a total investment value of EGP 3 bn, originally scheduled for this year, says CEO Darwish Hassanein. An additional EGP 1 bn will be injected to complete the projects simultaneously. The three projects include a hotel in New Damietta, a medium level housing project in New Assiut, and an above-medium level housing project in New Cairo. 30% of the energy required for these projects will be provided through solar power, added Hassanein. (Read in Arabic)
Palm Hills Development unveils the Capital Gardens Development
Palm Hills Developments (PHD) unveiled its upcoming 103 feddan Capital Gardens development, the joint venture with Madinet Nasr for Housing and Development (MNHD) it announced earlier this year. The project is located in New Cairo proximal to the proposed site of the New Administrative Capital. The project will be carried in four phases, with the first to break ground this month, said PHD CEO Tarek Abdel Rahman. The project is part of PHD’s strategy of growing through the development of projects in strategic locations in partnership with leading private- and public-sector developers, he added. (Read in Arabic)
TELECOMS + ICT
UAE’s Atlas Telecom plans to boost its investments in Egypt to EGP 2 bn by end-2017.
The company has entered into talks with numerous government bodies over a series of ICT projects, namely, security and CCTV capabilities and highly specialized communications technologies, said the company’s head Rashed El Muttawa’ in an interview with Al Borsa. He added that the company is seeking to grow its activities in Egypt by offering a variety of IT solutions to vital government priorities, including crisis management, security, satellite and GPS tracking and nuclear facility management systems. The company’s investments in Egypt totaled EGP 600 mn in 2014, the year it entered the Egyptian market.
AUTOMOTIVE + TRANSPORTATION
General Motor renews ExxonMobil agreement
General Motors Egypt has renewed its supply agreement with ExxonMobil Egypt for a five-year term, meaning the oil company will be the exclusive provider of lubricants and other petroleum products to GM’s assembly and after-sales service operations. (Read in Arabic)
Ports & Drydocks weighing seven offers for the 10 Ramadan drydock project
The General Authority for Ports and Drydocks (GAPD) received seven offers for a tender to develop the USD 80 mn 10 Ramadan drydock. The authority is looking to hold a limited auction between the seven companies for the project over the coming period, said the GAPD head Gamal Hegazi. He added that the authority is discussing financing mechanisms for the project with the New Urban Communities Authority (NUCA). (Read in Arabic)
Car prices continue to rise
The prices of some 60 car models continued has continued to rise, Al Borsa reports. Mercedes cars saw the highest increase, with some brands reaching as high as EGP 95K. This comes on the back of an intense debate over auto prices inflation over the past few weeks, with the Consumer Protection Agency holding a sit-down with auto distributors to discuss the issue. Some blame distributors for taking advantage of the FX crisis to engage in price gouging, while these distributors maintain that weak FX reserves are to blame for the issue. (Read in Arabic)
Details on UK’s security investigation into Sharm El Sheikh airport emerge
A UK security delegation investigating security protocols at Sharm El Sheikh airport recommended that UK-based airlines move their activities to terminal one from terminal two, according to government sources speaking to Al Borsa. Terminal two lacked essential luggage screening equipment which was available in terminal one, the source added. He, however, stated “that no other critical issues were spotted by the delegation”. The delegation’s visit comes as part of a series investigations conducted by foreign delegations into security protocols in key tourist airports in the aftermath of the Metrojet crash. Further delegations are expected to arrive to determine whether these airports are safe for their citizens to arrive. (Read in Arabic)
England pull out of Cairo squash event due to security fears: England has joined the ranks of teams who have decided to pull out of the World Men’s Squash Team Championship, scheduled to begin on 12 December, citing security concerns, reports Reuters. The other countries that have withdrawn from the event are France, Germany, the United States, Canada, Germany and Finland. “Following the release of security plans for the event and subsequently a comprehensive report from independent security advisers…there is an inherent risk that has not been mitigated to an acceptable level,” Keir Worth, CEO of England Squash said. Meanwhile, Andrew Shelley, CEO of World Squash said, “This is both disappointing and a little difficult to understand as there has been no security threat there… Cairo is a city where it is ‘business as usual’.”
Meanwhile, four-time squash world champion Amr Shabana cannot contain himself as he tweets: “And yet again half of the best 20 squash players on the Planet Earth are Egyptian” with an accompanying infographic.
ON YOUR WAY OUT
El Sewedy Electric’s bottom line nearly tripled to EGP 298.95 mn in 3Q2015 compared with the same period last year despite nearly-flat revenues, per a brief news flash on EGX screens yesterday.
The EGX has signed on to the United Nations’ Climate Resilience Initiative, to “prove its commitment towards promoting methods of reducing carbon emissions, as well as highlighting the importance of setting social and environmental standards in the decisions of large companies,” reports Al Borsa.
And last, but not least, CNBC teases what it says Goldman Sachs believes are seven future investment themes worth getting into right now, including:
QUICK FACT: If we completely ignore the cash flow generated by the firm’s developed projects, the current market cap of Madinet Nasr Housing values the firm’s undeveloped land at less than EGP 800/sqm, which is less than half of price fetched at recent auctions.
USD CBE auction (Tuesday, 01 December): 7.7301 (unchanged since Wednesday, 11 November)
USD parallel market (Monday, 30 November): 8.60 (+0.10 from Thursday, 26 November, Reuters)
EGX30 (Wednesday): 6649.72 (3.5%)
Turnover: EGP 843.7 mn (94% above the 90-day average)
EGX 30 year-to-date: -25.5%
THE MARKET ON WEDNESDAY: The CBE’s move to clear out a backlog for foreign investors looking to repatriate capital cheered the market yesterday, sending the EGX30 up 3.5% on its highest turnover since July. Across the market, 140 shares ended the day in the green, nine declined and 17 were unchanged. Outperformers included CIB, Global Telecom, Pioneers Holding, and Qalaa Holdings; real estate shares also soared, particularly Talaat Moustafa, Heliopolis Housing, and SODIC. Regionally, Saudi Tadawul inched 0.5% up in Wednesday’s session. European shares were mixed: the FTSE100 advanced, while Germany’s DAX and France’s CAC40 both closed down slightly.
Foreigners: Net Short | EGP -137.9 mn
Regional: Net Long | EGP +29.0 mn
Local: Net Long | EGP +108.9 mn
Retail: 58.1% of total trades | 59.7% of buyers | 56.4% of sellers
Institutions: 41.9% of total trades | 40.3% of buyers | 43.6% of sellers
Foreign: 28.6% of total | 20.4% of buyers | 36.8% of sellers
Regional: 5.8% of total | 7.5% of buyers | 4.0% of sellers
Domestic: 65.6% of total | 72.1% of buyers | 59.2% of sellers
Reiterating Shift to Neutral Stance
On 30 November 2015, we changed our views on Egyptian equities from “bearish” to “neutral”, following the appointment of a solid management team at the CBE and highly experienced figures in the Coordination Council. On 01 December, the CBE cleared around USD 0.5 bn of backlog owed to foreign investors. These funds were invested in Egyptian equities before 2013, the date at which the CBE re-activated an alternative repatriation mechanism for fund flows beyond that date. The move comes at a time when the plunge in crude oil prices could support the divergence of funds towards Egypt.
What we know for sure is that Egypt is funding a sizable reconstruction program via equally sizable project finance transactions. This is strictly positive and supportive of medium-term growth prospects. However, this fact does not negate the presence of material short-term pressures on reserves and the EGP, which could be only alleviated via a program-based debt agreement or else a noticeable slowdown in private sector activity. So, we will remain neutral until the CBE and the government provide clarity on the plan to fund the FC gap in 2016 and 2017, at least. Tap here for the full story.
WTI: USD 40.22 (+0.70%)
Brent: USD 42.49 (-4.39%)
Gold: USD 1,049.90 / troy ounce (-0.37%)
TASI: 7,347.4 (+0.7%)
ADX: Market closed.
DFM: Market closed.
KSE Weighted Index: 391.7 (-0.1%)
QE: 10,554.6 (+0.2%)
MSM: Market closed.
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