Sunday, 21 February 2016

Is Barclays Bank getting ready to sell its Egyptian unit?

TL;DR

Barclays Bank is considering selling its Egyptian unit. (Speed Round)

Egypt finally buys wheat — 30k tons from U.S., 240k tons combined from France and Russia — but at a premium. (Speed Round)

CBE crackdown sends chill through parallel market for FX. (Speed Round)

Gov’t moving on VAT, amended Civil Service Bill. (Speed Round)

President orders new legislation on police abuses after driver shot dead. (Speed Round)

Afreximbank to provide Egypt with USD 500 mn, CBE “approves USD 9 bn in upcoming investments” from KSA. (Speed Round)

Highlights of the “Business for Africa” summit in Sharm El Sheikh include an AfDB to pledge of USD 1.5 bn for Egypt. (Spotlight)

By the Numbers

WHAT WE’RE TRACKING TODAY

Central Bank of Egypt Governor Tarek Amer will sit down for an exclusive interview with Ibrahim Eissa on Al Kahera Wel Nas at 10:00 pm CLT tonight. Eissa will ask the CBE Governor about his view on the economy, rumors of an impending devaluation, the new wave of “privatization,” import restrictions, and concerns over the central bank’s independence. We’ll have full coverage tomorrow.

A host of developments have already come out of the “Africa 2016: Business for Africa, Egypt and the World” (more in Speed Round below), which kicked off on Saturday and concludes today. We’ll be looking out for more material updates throughout the day.

Greek Tourism Minister Olga Kefalogianni is set to hold a press conference with her Egyptian counterpart today to sign an MOU for cooperation between the two countries, Al Masry Al Youm reports.

Donald Trump won the Republican primary in South Carolina by a margin that the New York Times said “solidifies his lead” of the GOP field, prompting Jeb Bush to “suspend” his campaign. Hillary Clinton eased past Bernie Sanders in the Nevada caucus, propelled by a coalition of African Americans and casino workers, the Times suggested, that should prove to an “anxious Democratic Party that she can assemble a broad coalition of voters who could carry her to the general election.”

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WHAT WE’RE TRACKING THIS WEEK

It’s shaping up to be a busy one this week.

On Monday, the Suez Canal Global Conference gets underway at the JW Marriott Hotel, wrapping on Wednesday.

On Tuesday and Wednesday, the fifth Euromoney GCC Financial Forum takes place at the Four Seasons Manama in Bahrain (press release here, conference website here).

The official opening of the Port Said side channel takes place on Wednesday and will be attended by Prime Minister Sherif Ismail. A number of projects in the Suez Canal Development Axis are being prepared to showcase during French President Francois Hollande’s visit in April, Al Masry Al Youm reports.

On Saturday, doctors are threatening a partial strike at hospitals nationwide if there is no response to the small protest held yesterday, which saw only about 10-15 doctors protest for about 20 minutes at a few hospitals, DNE reports.

ON THE HORIZON

President Abdel Fattah El Sisi kicks off his Asia tour on Sunday, 28 February. He’ll visit Japan through Wednesday, 2 March, according to Al Mal, then make his way to South Korea, visiting from 2-4 March, according to AMAY. In preparation for the visit, Industry Minister Tarek Kabil appointed GB Auto Chairman Raouf Ghabbour head of the Egyptian arm of the Egyptian-Korean Business Council.

Also on Thursday of next week, the PMIs for Egypt, the UAE, and Saudi Arabia are set to come out. The releases should be available here when they are.

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LAST NIGHT’S TALK SHOWS

Lamis El Hadidy: The absence of justice. Lamis El Hadidy on CBC Egypt spoke with clarity and frankness about the state of relations between the public and the Interior Ministry. El Hadidy opened her show by commenting on recent protests in the Cairo neighborhood Darb El Ahmar over the alleged murder of a driver by a police officer who has since been detained for four days pending investigation. Immediately following the shooting, enraged citizens who had gathered beat a man accompanying the police officer, who was subsequently hospitalized. The Interior Ministry initially said the police officer’s gun had gone off by accident, which was flatly refuted by a number eyewitness testimony. We have more coverage in Speed Round below.

El Hadidy referenced ‘other recent incidents,’ saying those who refuse to see the big picture and how these different incidents form a pattern are sticking their heads in the sand. El Hadidy was highly critical of the apparent low priority a number of these incidents receive until the president personally intervenes.

“The arrests of youth, cases against intellectuals, the closing of the Nadeem Center [for rehabilitation of victims of violence], road closures and demonstrations by drivers of Cairo’s taxis against Uber [and Careem] — all these ongoing problems are left unchecked. Are there those trying to take advantage of our mistakes? Of course. But what are we doing about it? We have reached a point where justice is absent. [The protesters in Darb El Ahmar] reached the point where they felt the only way justice would be served would be by taking matters into their own hands.”

She warned more may see this as the only way, and that this path will take us to the point of chaos. El Hadidy brought up the case of Shaimaa El Sabbagh, who was killed by a police officer’s bullet while she laid a wreath on a sidewalk during a peaceful march in January 2015. The officer’s conviction was recently overturned and a retrial ordered. El Hadidy said people are aware of this perceived lack of justice.

El Hadidy further hammered the point home by pointing out the efficiency and swiftness of justice when it came to cases regarding expressing unpopular and or inflammatory opinions. “Islam El Beheiry, arrested and sentenced quickly, Taymoor El Sobky, arrested and sentenced quickly — and we can’t even discuss the rulings lest we be accused of insulting the judiciary. I myself don’t even know how to permissibly discuss judicial rulings.” With regard to yesterday’s sentencing of author Ahmed Naji (more in Egypt in the News) to two years on morality charges following the publication of one his book’s chapters in a newspaper, El Hadidy said “We have a new media law sitting in a desk drawer for the past six or seven months. The entire world is laughing at us for jailing journalists and thinkers.”

El Hadidy later had on the line Suzan Fayad, director for the Nadeem Centre for the Rehabilitation of Victims of Violence, which also specializes in violence against women and which has recently been threatened with closure over licensing issues due to an alleged directive coming directly from the minister of health himself, according to Fayad. After hearing from both the ministry’s representative and the doctor, El Hadidy plainly stated, “The law is applied when we feel like it and disappears when we don’t.”

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SPEED ROUND

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Barclays Bank for sale? Barclays is considering selling its Egyptian unit, sources told Bloomberg. As we’ve previously noted, Barclays abandoned a plan to fold its Egyptian unit into its Africa business, Barclays Africa Group, after negotiations between group and the African subsidiary failed to reach an agreement on a price. One source estimates that the Egyptian unit, which has been active in Egypt since 1864, could be valued at USD 500 mn. “Barclays may decide to sell part of Barclays Bank Egypt S.A.E. including the real estate business, according to one person. The unit, which employs 1,500 people, has 56 branches in cities including Cairo, Giza and Alexandria with a focus on retail banking,” Bloomberg writes. If the sale goes forward, look for a regional player to make the buy: Domestic banks are unlikely to be able to marshal the USD required for the acquisition.

Egypt bought 30,000 tons of U.S. hard red spring wheat last week, the first purchase of the variety since 2010, according to data from the U.S. Department of Agriculture, Reuters reports. At midday on Friday, GASC announced it purchased 240k tons of wheat from France and Russia, with Supply Minister Khaled Hanafi saying “Egypt’s strategic wheat reserves are enough to last until the start of June,” after the statement, Reuters reports. As the bidding unfolded, Enterprise’s favourite commodities guy was suggesting Egypt had lined up to pay a premium of about USD 8 per ton. The wheat buy on Friday came after GASC released an open letter to the industry to try to calm a flap that saw traders refuse to participate in GASC tenders.

Clearly, Egypt is finding out that it can’t “buck the market,” according to Bloomberg; Jordan already knows this, and its own experience suggests things “may get worse.” Egypt’s state wheat buyer GASC is still struggling to secure participants for its tenders, with CEO of Dubai-based trader Hakan Agro saying, “We have seen Jordan face the same problems, with almost no participants in its tenders for a long time … Every restriction you impose on sellers will have a price.” Egypt, like Jordan, faced higher prices in its most recent tenders, according to Bloomberg. The president of Alexandria-based Medstar for Trading explained that, with the current trading strategy, “GASC will get less offers and much higher prices … Traders will charge a hefty premium because of the high risk dealing with Egypt now involves.”

Central bank clampdown on exchange companies spooks market: A clampdown last week that saw the closure of four exchange bureaux with a combined 27 offices nationwide had sent a chill through the parallel market by Thursday, Reuters reports, noting that it had spoken to “more than five black market traders all of whom quoted the official rate but largely had no USD to sell. Some said they would sell to longstanding special customers at rates varying between 9.10 and 9.25 [per USD], weaker than a rate of 9.05 quoted on Tuesday.” The CBE sold USD 38.8 mn in FX at Thursday’s auction at EGP 7.7301, unchanged since Wednesday, 11 November 2015. Meanwhile, Al-Masry Al-Youm claims bankers tell it the CBE may ease its crackdown, saying the move has failed to bring down the USD rate in the parallel market.

The Central Bank has approved USD 9 bn in upcoming Saudi investments, which will reach Egypt “shortly,” said CBE governor Tarek Amer, who did not provide details. Striking a reassuring tone at the Africa 2016 summit when discussing Egypt’s economy, he reiterated the success of the CBE in funneling FX from the parallel market, the rate of which he assured would drop. He stated that Egypt’s foreign debt saw a year-to-date reduction of 4% to USD 46 bn in 1Q 2015-16, Al Mal reports.

The African Export-Import Bank (Afreximbank) has agreed to provide Egypt with a USD 500 mn facility to help Egyptian importers through a foreign currency crisis, Reuters reports. The agreement was signed on Friday with the CBE and will “provide a trade liquidity facility to Egyptian importers, focusing on imports considered strategic to the Egyptian economy.” The facility from Afreximbank is part of a program approved in December worth over USD 3.5 bn to help member countries “adjust to a collapse in commodities prices and the impact of political violence.”

The value-added tax (VAT) will be in the 10-20% range and could include a 3-8.5% additional tax depending on the volume of goods, says Customs Authority head Magdy Abdel Aziz. Abdel Aziz states that the legislation will be presented to the House of the Representatives soon, despite statements by Legal Affairs Minister Magdy El Aggaty last week that confirmed parliament had received the bill. For his part, head of the Egyptian Automobile Manufacturers Association Hussein Moustafa criticized the lateness with which the VAT is being formulated because it will be a crucial component of the domestic automotive manufacturing strategy the industry is expecting the House to pass. Moustafa predicts that tariffs on imported cars will be reduced upon the passing of the VAT, Al Mal reports.

The government also sent the amended draft of the Civil Service Bill to the House, said Planning Minister Ashraf Al Araby at the Business for Africa Summit. “The law is in parliament’s hands now, and I hope they make the right decision,” said Al Araby, Al Borsa reports.

President Abdel Fattah El Sisi instructed Interior Minister Gen. Magdy Abdel Ghaffar to put an end to abuses by the police force and penalize perpetrators. The president ordered legislative amendments or new laws be drafted to hold security personnel who violate citizens’ rights accountable and be presented to the House of Representatives within 15 days, according to a statement from Ittihadiya following a meeting between the president and Abdel Ghaffar. The meeting came after protests outside the Cairo Security Directorate following an incident in which a member of the police force killed a driver in a dispute over a fare in El Darb El Ahmar neighborhood. The policeman was forced to flee a mob of local people who attempted to lynch him, said a statement from the directorate, Reuters reports. A Cairo prosecutor ordered the police officer detained for four days pending investigation. The officer confessed to having killed the driver by “accident,” AMAY reports. Al Mal reports that Prime Minister Sherif Ismail will hold a meeting with Abdel Ghaffar to discuss developments in the case.

MOVES- Thomas Zorn has been appointed CEO and president of Mercedes-Benz Egypt S.A.E.

Morocco has decided not to host the 27th Arab League summit, saying, “Amid the lack of important decisions and concrete initiatives to submit to the heads of states, this summit will be just another occasion to approve ordinary resolutions and to pronounce speeches that give a false impression of unity,” according to a statement from the Moroccan foreign ministry carried by Reuters.

Lagarde re-elected: The IMF’s board re-elected Managing Director Christine Lagarde to a second five-year term, starting on 5 July, which is just less than two weeks after Britain is set to vote on a historic referendum on whether or not it should leave the EU in 23 June.

SPOTLIGHT ON day one of the “Business for Africa” summit

Key government statements

President Abdel Fattah El Sisi’s opening speech said Egypt is looking to double bilateral trade with the continent from today’s USD 5 bn and increase Egyptian investments in Africa, which he put at c. USD 8 bn today. Speaking to over 1,200 businessmen and numerous heads of state and government officials, his speech focused on developing logistics and transportation routes “from Cairo to Cape Town” as a crucial means to strengthening trade. The president also stressed the importance of the Suez Canal Development as a key node in this trade network, Al Borsa reports. His speech also called for private sector involvement in development projects.

Industry and Trade Minister Tarek Kabil talked about opening direct shipping routes linking Egyptian ports with others on the continent — and opening 12 Egyptian logistics zones across Africa in partnership with the private sector. Egypt also plans on sending trade delegations to boost exports, including one to Cote D’Ivoire in March, is studying establishing a permanent exhibit in Angola for Egyptian goods, and plans to establish a 5 km2 industrial zone in the DRC, he added.

The ministry will also tape the Export Subsidy Fund to subsidize 50% of the cost of shipping Egyptian exports to the continent, Al Borsa reports.

Health Minister Ahmed Emad El Din Rady will hold talks today on opening two medical plants, one each in Ethiopia and Gabon, with the representatives from both countries. Funding for the project will come from the private sector, he tells Al Borsa.

MoUs and agreements

Qalaa Holdings’ Egyptian Company for Solid Waste Recycling (ECARU) signed a five-year renewable contract with Ethiopia’s Messebo Cement to supply it with biomass, according to a statement. ECARU will be responsible for collecting, transporting, and processing local biomass to be used as fuel. Qalaa Holdings’ Rift Valley Railways signed an MoU with the Egyptian Export Council for Chemicals and Fertilizers and another with Expo One to promote the use of RVR’s transportation and logistics services for their exports to Kenya and Uganda, according to an emailed statement.

Private sector views and announcements

Qalaa Holdings Chairman Ahmed Heikal opened the second session of the conference with a keynote presentation about why African governments should encourage the private sector to invest in infrastructure. Government borrowing capacity is tapped out, and private capital knows how to marshal a “triple combo” of development finance institutions, export credit agencies and sovereign wealth funds with appetite for African infrastructure opportunities.

EFG Hermes CEO Karim Awad’s talk focused on reducing red tape and how bureaucracy has been hindering investments in infrastructure. He encouraged taking a long-term view on investments in the continent, AMAY reports.

Samih Sawiris announced that Orascom Housing Communities (OHC) plans to launch a USD 300 mn development in Senegal to build low-income housing. He adds that the Senegalese government readied 3 mn sqm for the project and will soon sign contracts and set a timeline for the project. He also discussed OHC’s stalled USD 300 mn project in Ethiopia, which he blamed on complications arising from talks between Egypt, Ethiopia and Sudan on the Grand Ethiopian Renaissance Dam.

Development aid and loans

The African Development Bank (AfDB) will provide USD 1.5 bn to help fund the USD 44 bn new administrative capital in Cairo, said AfDB President Akinwumi Adesina. This new loan will raise the bank’s financing in Egypt to USD 2 bn this year, Adesina added. Speaking on the AfDB’s aid to Africa, Adesina stated that there were USD 9 bn in new development loans for the continent, although he did not set a timeframe. He added that USD 2 bn of these loans will go to the private sector. Adesina also announced that Egypt will contribute USD 100 mn for the bank’s private sector loans initiative. In an effort to help bolster the continent’s energy infrastructure, the AfDB plans to provide USD 12 bn in loans to the power sector in Africa as part of a nine-year development initiative, Al Mal reports. The AfDB has also earmarked USD 5 bn in loans to help grow the continent’s agriculture to counter the effects of desertification.

President Abdel Fattah El Sisi met with head of the Agha Khan Foundation, Prince Shah Karim Al Hussaini Aga Khan to discuss projects that the institution can fund, AMAY reports.

THE MACRO PICTURE

Do our eyes deceive us? The S&P posted its best week so far in 2016, Bloomberg reports. Losses on Thursday and Friday failed curb a rally led banks, oil companies and other industries not doing quite so well this year. “It suddenly looks like people are starting to dig around for babies thrown out with the bath water,” said John Stoltzfus, the New York-based chief market strategist at Oppenheimer & Co

Oil shares didn’t do quite so well, though, with U.S. crude stockpiles rising to their highest in almost eight decades, Bloomberg reports. The slump preceded news that consultations on the preliminary deal to freeze oil output should be end by March 1, Reuters quotes Russia’s energy minister said.

And while the gold rally slows, iron ore is making a quiet comeback, both Bloomberg and the FT (paywall) report. “The market has become more optimistic about iron-ore and steel demand in the coming weeks as manufacturing activity generally improves after the winter,” Bloomberg quotes, Zhao Chaoyue, an analyst at China Merchants Futures Co. as saying.

China was making all sorts of headlines this week. While its Finance Ministry said it would cut taxes on home transactions to support the property market, the central bank said it would increase reserve ratios for some banks who don’t meet the criteria for preferential reserve requirement ratios. The central bank also redacted the closely watched  “Position for forex purchase” category that tracked foreign exchange purchases “in a move likely to provoke suspicion that the government is attempting to conceal the extent of capital outflow,” according to the FT. Meanwhile, China’s top securities regulator is stepping down, CNBC reports, appointing an top state bank exec in his place.

EGYPT IN THE NEWS

It’s not business dominating coverage of Egypt in the international financial press at the moment. In the Financial Times’ opinion pages, author Wendell Steavenson wrote on Thursday that “By cracking down, Sisi risks a new uprising in Egypt” (paywall). Across the pond, the Wall Street Journal (paywall) took note the same day of the shutdown of the Nadeem Center for the Rehabilitation of Victims of Violence. Both stories mix in the murder of 28-year-old Italian grad student Giulio Regeni.

The leading story on Egypt in the mainstream foreign press this morning is the handing down of a two-year prison sentence for author Ahmed Naji due to the explicit content of a book he published, the Guardian reports. Naji is charged with “violating public modesty.” The ruling was overturned in January but the prosecution appealed the ruling. A citizen brought charges against the author after he claimed reading an except from his novel The Guide for Using Life “caused him to become ill after his blood pressure dropped and his heartbeat fluctuated.” The AP also picked up the story. We can only assume the sudden drop in blood pressure caused this citizen to forget that he could, at any time, just not read the book. Unfortunately, we can’t link to the coverage here because words used in the URLs will trip the algorithms that govern our daily deliverability to your inboxes.

In an alternate universe, a four-year-old boy has been sentenced to life in prison on charges of murder, Masr Al Arabia reported on Wednesday. The story gained traction in the foreign press, with both the Jerusalem Post and the Independent giving their takes. Ahmed Mansour Karni was convicted in absentia for “four counts of murder, eight of attempted murder, one vandalisation of property and another count of threatening soldiers and police officers — all before his second birthday,” the Independent writes. Karni was one of 115 handed life sentences at the same time for crimes allegedly committed in Fayoum in early 2014. A defence lawyers reportedly submitted Karni’s birth certificate to the court, adding that the judge likely did not read the case file.

And in another dimension still: Reuters profiles an 62 year-old Egyptian-American Muslim who loves Donald Trump. “I’m a Muslim and I love you,” Elhamy Ibrahim apparently fanboy-screamed at Trump during a rally. Clearly he hadn’t heard that Trump is now advocating that Muslims be shot in bullets dipped in pig blood.

WORTH READING

In more sensible coverage on Egypt, Reuters penned a lengthy feature about the shortage of government-subsidized food supplies under the smart-card system due to, you guessed it, the FX shortage. “Worst affected by the shortages has been cooking oil, with payment problems putting suppliers off bidding in state tenders,” the wire service writes. And with three oil tenders cancelled in the last three months alone, traders say they now have to factor in the cost of expected delays. “You are talking mns of USD here … They make you feel like a beggar when you chase your money, not answering calls, not responding,” says one trader.

DIPLOMACY + FOREIGN TRADE

President Abdel Fattah El Sisi capitalized on the Business for Africa Summit to hold one-on-one meetings with other leaders. El Sisi and Gabonese President Ali Bongo Ondimba signed five MoUs. The president also met with Equatorial Guinea’s Teodoro Obiang Nguema and held talks with Nigerian President Muhammadu Buhari. El Sisi and Buhari talked about strengthening economic ties and the upcoming March meeting of defense ministers of the Community of Sahel-Saharan States, which Egypt will host.

ENERGY

Petroceltic completes sale of Egyptian assets
Irish oil and gas producer Petroceltic has completed the sale of its Egyptian exploration licences to its joint venture partner Edison International for USD 9.5 mn in cash, after a working capital adjustment of USD 5.8 mn. “This sale continues our strategic initiative, announced in early 2015, to focus the company on the Ain Tsila development in Algeria, ” Petroceltic chief executive Brian O’Cathain said. “Petroceltic effectively put itself up for sale in December after a breach of banking covenants on its debts of USD 217.8 mn,” the Irish Times wrote. (Read)

European Investment Bank considers funding five Scatec Solar plants
The European Investment Bank could fund global giant Scatec’s five solar power plants in Benban and Al Zafaran worth a cumulative USD 600 mn and is reviewing financial and technical studies on the project. The Norwegian company is also in talks with the European Bank for Reconstruction and Development and the International Finance Corporation for the projects, Al Borsa reports.

Schneider, Samsung present offers for solar power plant in Marsa Alam
The Marsa Alam Investors Association is studying rival offers from Scheider Electric and Samsung to build a solar power plant in the city, according to association head Adel Rady. The agreements make use of storage technology during hours when there’s insufficient sun for generation, making them more economical than previous offers presented to the association. (Read in Arabic)

PM proposes that Schneider Electric invest in new capital, Suez Canal
Prime Minister Sherif Ismail offered Schneider Electric the opportunity to invest in the new administrative capital and the Suez Canal Development Zone at a meeting with the head of Schneider Electric Egypt and North East Africa Albert Fuchet during the Business for Africa Summit. A company official stated that Schneider is in talks with the Electricity Ministry and the governor of South Sinai to discuss obtaining land for a EUR 50 mn solar power plant in Sharm El Sheikh. (Read in Arabic)

Electricity Ministry looking to dismantle, renovate 100 transformers
The Electricity Ministry is looking to dismantle and renovate 100 transformers across the country as part of the ministry’s plan to increase the national grid’s efficiency and capacity, said Electricity Minister Mohamed Shaker. The estimated cost of the project is around EGP 400 mn, he added, noting that the project will be executed by a domestic company in cooperation with EETC. The companies potentially include EGEMAC, Eleject, and Kahromecha. (Read in Arabic)

BASIC MATERIALS + COMMODITIES

Veterinary Authority halts shipments of cattle from Sudan
The General Authority for Veterinary Services has imposed a moratorium on cattle imports from Sudan to Suez after Egypt imported 2,400 heads of cattle out of an agreed upon 7,500, Al Mal reports. The move was likely taken as a preventative measure due to the reported outbreak of foot-and-mouth disease among Egypt’s livestock. (Read in Arabic)

MANUFACTURING

Western Desert Gas Complex capacity increase to cost USD 600 mn
Petroleum Minister Tarek El Molla inked a cooperation protocol with Tecnicas Reunidas to provide technical and financial feasibility studies on a project to increase ethane extraction capacity at GASCO’s Western Desert Gas Complex by 30%. The preliminary investment value of the project is USD 600 mn, he added. (Read in Arabic)

HEALTH + EDUCATION

Additional Anti-RH injections delivered, says Health Ministry
Companies importing Anti-RH injections have delivered additional supplies at the request of the Health Ministry and were instructed to prioritize their supply, Health Ministry spokesperson Khaled Megahed told Al Shorouk. Anti-RH is considered a strategic reserve by the EDA and is regularly monitored to ensure its consistent supply, he added. Meanwhile, an industry association is saying that there’s a severe shortage in Anti-RH injections, and has been for a while, association head Adel Abdel Maksoud told Al Mal. The chamber has requested additional stock multiple times, he added, noting that the screening process for new shipments can take months at a time.

Health Ministry will begin distributing Qurevo today
The Health Ministry is expected to begin distributing the Qurevo hepatitis C treatment today to around 30,000 people for free in eight hospitals around the country, Al Mal reports. (Read in Arabic)

REAL ESTATE + HOUSING

Four banks donate EGP 40 mn to upgrade informal housing in central Cairo
CIB, NBE, Banque Misr and Banque du Caire contributed EGP 10 mn each in cooperation with the Cairo governorate and the Federation of Egyptian Banks. (Read in Arabic)

TOURISM

Four Seasons Sharm studies complete, inauguration in 2019, says TMG
Talaat Mostafa Group has completed the studies and designs for the Four Seasons Sharm El Sheikh expansions several years ago. A total of USD 1.38 bn has been spent as of 31 December 2015 and the expansion is expected to go into operation in 2019, the company said in a bourse statement. The expansion involves 99 new rooms and suites as well as restaurants, meeting halls, pools, and other services. (Read in Arabic)

AUTOMOTIVE + TRANSPORTATION

Transport Ministry to tender 40 projects to regional, international investors
The Transport Ministry plans to tender 40 projects to regional and international investors, says ministry spokesperson Ahmed Ibrahim. Ibrahim added that the state does not have sufficient funds to develop the sector and will need more private capital to realize projects, including the high speed railway line. He stated that the ministry is entertaining an offer from a Spanish company to develop the line. (Read in Arabic)

LEGISLATION + POLICY

New Egyptian Accounting Standards in line with international measures, EY says
The new amendments to the Egyptian Accounting Standards bring it in line with international accounting standards, a partner at Ernst & Young Egypt said. The business community had a number of questions over the years regarding the changes to the tax system, he explained. He expects this upcoming period to witness a large number of mergers and acquisitions across the market until foreign currency concern are resolved. (Read in Arabic)

LAW

Foreign investor concerns center around FX -Baker & McKenzie Egypt
Foreign investors have withheld plans to inject money in Egypt over foreign currency concerns, said Mohamed Talaat, co-managing partner at Baker & McKenzie Egypt. Talaat told Al Borsa he expects retail businesses to be hit the hardest due to the currency shortage and that the solution would be an EGP devaluation to “bring it close to its true value.” He added that the fastest way to secure foreign currency would be to resort to borrowing from international institutions including the IMF and World Bank. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Gov’t lowers growth outlook to 4.5% from 5.5%
The Planning Ministry said the government lowered its GDP growth target to 4.5% from an original 5.5%, Al Mal reports. The ministry forecasts a 5% growth rate in the next fiscal year. (Read in Arabic)

Importers Division, EBA propose alternative monetary policy, import restrictions
The Importers Division of the Chambers of Commerce issued a 14-point memo addressed to the central bank in which they proposed an alternative policy to curb FX outflows. The proposal called for the elimination of a cap on USD deposits; scrapping regulations requiring a 100% cash cover for LC; authorizing foreign branches of Egyptian banks to launch initiatives to draw savings by expatriate Egyptians to Egypt; reducing interest rates on USD deposits; allowing foreign transfers in USD; and allowing banks to manage FX bureaus. Concurrently, the Egyptian Businessmen’s Association sent the Trade and Industry Ministry its critique on import regulations, which included attacking clauses granting the trade minister discretionary powers over blacklisting foreign exporters, proposed reducing procedures to register exporters in the new registry, and outlined a different punitive system for violators of regulations, Al Ahram reports.

Regulators to crack down hoarders
Regulators including the Consumer Protection Authority, the General Organization for Export and Import Control, and the National Telecommunications Regulatory Authority are going after retailers who hoard supplies in bids to constrict supply and raise prices. (Read in Arabic)

Gov’t to partner with Saudi Fund for Development on projects in Egypt
The government will channel the USD 2 bn in aid funding pledged by the Saudi Fund for Development during the EEDC primarily into real estate and tourism projects, a government source tells Al Mal. The government will partner with the SFD in investing in these projects. (Read in Arabic)

ON YOUR WAY OUT

Nine Egyptian startups have qualified for the semifinals for Round 2 of the MIT Enterprise Forum Arab Startup Competition 2015-2016. Four more are on the “ideas track” and another six projects are on the “social entrepreneurship track.”

UNICEF, the WHO, and the Health Ministry are beginning the annual polio vaccination drive this week, Al Mal reported. Egypt has been polio-free for 10 years now, even though the disease is traced back to ancient Egypt.

The Egyptian Atomic Energy Authority is stipulating that EGP 60 mn should be allocated to insure every nuclear power plant that plans to operate, Al Borsa reported.

BY THE NUMBERS
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USD CBE auction (Thursday, 18 February): 7.7301 (unchanged since Wednesday, 11 November)
USD parallel market (Wednesday, 17 February): 9.10-9.25 (10pt weaker than Tuesday, 15 February)

EGX30 (Thursday): 5,944.47 (-0.05%)
Turnover: EGP 277.6 mn (36% below the 90-day average)
EGX 30 year-to-date: -15.15%

THE MARKET ON THURSDAY: The EGX 30 inched down 0.05% on Thursday with shares worth EGP 277.6 mn changing hands and regional investors being the only net buyers. The index’s top performers were Global Telecom, TMG, and El Sewedy Electric while Credit Agricole, Juhayna, and Madinet Nasr Housing were the worst performers. On the regional front, the Saudi Tadawul index ended the day up 1.4% and Du­bai’s DFM 1.2% on hopes that a global agreement would be struck to lift up oil prices.

Foreigners: Net short | EGP -15.0 mn
Regional: Net long | EGP +24.1 mn
Domestic: Net short| EGP -9.1 mn

Retail: 73.0% of total trades | 70.6% of buyers | 75.4% of sellers
Institutions: 27.0% of total trades | 29.4% of buyers | 24.6% of sellers

Foreign: 10.9% of total | 8.2% of buyers | 13.6% of sellers
Regional: 7.8% of total | 12.2% of buyers | 3.5% of sellers
Domestic: 81.3% of total | 79.6% of buyers | 82.9% of sellers


WTI: USD 29.64 (-4.73%)
Brent: USD 33.01 (-5.14%)
Gold: USD 1,230.80 / troy ounce (+1.76%)

TASI: 5,884.2 (+1.4%)
ADX: 4,212.9 (+1.5%)
DFM: 3,092.9 (+1.2%)
KSE Weighted Index: 349.8 (-0.6%)
QE: 9,967.3 (+1.6%)
MSM: 5,419.3 (+1.1%)

 

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