Sunday, 27 March 2016
Expect government program to be submitted to parliament today. (What We’re Tracking)
CBE sets nine-year term limit for bank CEOs, causes uproar. (Speed Round)
Amer to El Hadidy: CBE has absolute authority, devaluation brings in USD 500 mn, Belady certificates not doing so hot, calls into question Sawiris CI Capital buy. (Speed Round)
EFG Hermes to acquire 51% of Pakistan’s Invest and Finance Securities Limited. (Speed Round)
BP is committed to developing the North Alexandria concession. (Speed Round)
EGAS’s tender for LNG in April not meeting good appetite. (Speed Round)
Cabinet targets 5.2% GDP growth rate for FY2016-17. (Speed Round)
Egypt occupancy rates down + Russian flights could be resumed by summer. (Tourism)
EGX could allow investors to obtain GDR proceeds in USD. (Banking + Finance)
WHAT WE’RE TRACKING TODAY
It’s going to be an interesting day, folks: Tarek Amer has imposed a decree that (if it survives expected legal challenges) could see a quarter of the banking sector’s senior management turfed from office. And that was just a warm-up to his appearance on talk shows over the weekend, defending his decision and saying he has absolute power to remove from office not just bank MDs, but whole boards; promising that devaluation is really working; and not so subtly putting Naguib Sawiris in his cross-hairs. Naguib, of course, took it in stride and said nothing. Or rather… (More on all of this in Speed Round.)
Meanwhile: Prime Minister Sherif Ismail’s cabinet is presenting its program to the House of representatives today at 11 am CLT, according to Al Shorouk. The economy is expected to be the star of the show, according to DNE, citing remarks by members of of the House of Representatives. As we have noted over the past few weeks, the prime minister has held as many as 27 meetings with members of parliament, giving them a sneak preview of the program and lobbying for their support. Ismail has said his cabinet’s agenda is based on six pillars: (1) preserving national security; (2) strengthening democracy; (3) implementing growth-oriented economic policies; (4) social justice through the improvement of services such as health and education; (5) administrative reform; and (6) restoring Egypt’s leading position in regional affairs. Deputy Speaker of the House Suleiman Wahdan said this weekend that the House will have no more than 12 sessions to deliberate on the program and will compile its report on the agenda in a maximum of 30 days.
And what better way to “strengthen our democracy” (see point #2, above) than by having the people’s elected representatives decide to not broadcast Ismail’s speech live. House Speaker Ali Abdel Al said that only the House can decide whether Ismail’s speech is aired at all, let alone live, Al Masry Al Youm reports. A recording of the speech will be played on Sawt El Saab radio channel, Al Mal reports. The silver lining (if you can call it that) was that the decision was contested: MPs including Ibtisam Abu Hamed insisted that it was the right of the people to hear Ismail present his agenda live.
Egypt and China are set to sign five education cooperation agreements today as part of China’s Vice Premier Liu Yangdong’s visit to Cairo, which began yesterday. The agreements providing scholarships for Egyptian university students in China, training academics and professors, and joint research projects, Higher Education Minister Ashraf El Sheehy tells Al Ahram.
WHAT WE’RE TRACKING THIS WEEK
Future Rail and Metro Egypt is taking place from Tuesday 29 March to Thursday 31 March.
ON THE HORIZON
Saudi Arabia’s King Salman is visiting Cairo on 4 April for talks with senior Egyptian officials including President Abdel Fattah El Sisi, according to a statement from the Saudi Embassy in Cairo.
The four day Cityscape Egypt Conference kicks off on 7 April at the Cairo International Convention Centre.
A CONTRARIAN VIEW
CBE’s About Face: Invading the Private Sector
It was not long ago that the Central Bank of Egypt (CBE) was recognized for leading the banking sector’s ability to withstand the crippling repercussions from essentially two revolutions, four leaders and three constitutions in three years, not to mention the global financial crisis of 2008. In short, the banking sector helped save Egypt from collapse because of the CBE’s foresight over 10 years ago, when it led the privatization, consolidation and recapitalization of the sector at the same time as it encouraged foreign investment in it. In parallel, it implemented a series of regulations including conservative liquidity requirements, deposit reserves and capital adequacy requirements that strengthened the sector.
These moves produced banks that were perhaps the strongest, most efficient and most liquid among emerging markets. And so, when the upheaval erupted in 2011, the banking sector stood on solid ground and kept the economy afloat.
Thursday’s unexpected move by the CBE not only defies the principle of the private sector, but is a startling reversal of the government’s posture. The action leaves me quite puzzled, not to mention troubled. The CBE said it wants to help modernize the banking sector. It wants to inject “fresh blood” into banks by setting a time limit on the tenures of the CEOs. Is it not the shareholders of a company, through the board of directors they elect, who make such decisions? Before addressing the basic legality of this decision and the government’s interference with shareholder rights, or the repercussions of a move that smacks of nationalization and the inevitable, consequential drop in foreign investment, I question the motive.
The heads of some of the affected banks are the very ones who were called in to solve the foreign exchange crisis in 2003-2004, which, by the way, they did. The banking sector remains the strongest in the Egyptian economy. Capitalization levels are not only adequate, but exceed Basel III requirements. Tier I capital is 12%, versus a threshold of 6%. Common equity stands close to 12%, versus the 4.5% requirement. Confidence in the sector is best reflected in deposits, which have grown to EGP 1.5 bn today from EGP 973 mn in 2011. Local foreign currency deposits have grown commensurately with a rise to EGP 607 bn from EGP 465 bn over the same period. Financial inclusion for Egyptians is the only hope for the economy, and the banking sector appears to be making it possible.
I can only conclude that the CBE is not acting in the nation’s best interest, but rather is targeting those institutions that are doing everything in their power to prevent the collapse of an economy on the rocks. If Egypt’s stability and the welfare of its people were the priority, why would the government strip the private sector of its autonomy? After all, the private sector has made the greatest contributions to Egypt’s economic recovery since the revolution. The CBE’s recent action threatens the values for which the current government has said it stands and gives the rest of the world yet another reason to view Egypt through a negative lens.
The author is a New York-based consultant who has previously served as managing director at top global investment banks.
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Central Bank of Egypt directive on term limits for bank MDs turfs about 1/4 of the banking system’s CEOs: CBE Governor Tarek Amer issued a decree (original here in Arabic on the CBE’s website), dated 23 March, setting a nine-year term limit for any bank’s managing director in what he said was an effort to “inject new blood” into the sector. The limit applies to both Egyptian banks and foreign bank subsidiaries operating in the domestic market. If by 31 December 2015 any bank’s managing director has been at the helm for nine years or longer, the bank will have to obtain CBE approval to allow its managing director to remain in position until the date of the AGM, at which the bank’s results for 2016 will be approved, or until the results are approved by the bank’s auditors, in the case of foreign subsidiaries. The restriction applies retroactively and to anyone who served as the bank’s top executive for nine years or longer, regardless of whether or not the term was served uninterrupted.
…Who does this affect? Most obviously CIB, whose top management’s fate is entirely within the CBE’s hands now. Hisham Ezz Al Arab has been CIB’s chairman and managing director since 2002, so his tenure as the bank’s most senior executive is effectively over. CIB had announced in February that former CBE Governor Hisham Ramez was rejoining the bank and was appointed vice chairman and managing director, but his appointment is still pending CBE approval. Ezz Al Arab had already taken steps when Ramez was first appointed in 2011 to separate the chairmanship (which would focus on strategy and regulatory issues) from the day-to-day running of the bank, naming Ramez as MD. It’s a point the bank reiterated in announcing Ramez was returning to CIB back in February.
Also facing the exit doors: Hatem Sadek, Bank Audi’s chairman and managing director, who has held the position since 2006, is now effectively holding it until a replacement is appointed. Similarly, Hassan Abdalla, vice chairman and managing director of Arab African International Bank, will not be allowed to continue holding on to his executive position past the end of the current fiscal year. Also on the list are the heads of:
How’s the business community reacting? Not well, as you might expect. Egyptian Private Equity Association chief Hany Tawfik told Reuters that, “This is interference in an essential right of the general assembly to appoint someone that is best suited for them. It’s my right as a shareholder to choose the head of the bank.” Former Bank of Alexandria Chairman Mahmoud Abdellatif, well-respected in the banking community for the manner in which he led Bank of Alex’s sale to Intesa San Paolo, is quoted by Al Borsa as saying the decision sends exactly the wrong message to foreign investors. “If I were a foreign investor, I would think 100 times before investing in Egypt in the absence of guarantees that decisions will not change suddenly, with zero notice,” the newspaper quotes Abdellatif as having said on Al Qahera Wal Nas’ Cairo 360. (Al Borsa’s summary of the interview is worth reading in full.) Former EGX head Atef El Sherif has also come out swinging against the directive.
Lawyers are scratching their heads over the legitimacy of the decision, which some view as a violation of the Companies Law 91 of the year 1981, the CBE’s own executive regulations, and Article 43 of the Banking Law, which protects the sanctity of the bank’s general assembly. Article 43, however, does state that the CBE governor should be consulted when appointing heads and board members, Al Mal reports. But insiders tell us the CBE essentially has only two grounds on which to block an appointment: evidence of malfeasance or lack of technical qualifications.
Rallying behind Ezz Al Arab: CIB employees have launched a social media campaign expressing solidarity with bank’s chairman Hisham Ezz Al Arab. A Facebook page called CIBians Trust Hisham El Arab launched on Saturday and has already garnered over 1,600 likes. Al Mal is reporting that a number of economists active on social media have reportedly changed their profile pictures to that of Ezz Al Arab. CIB staffers and other banking sector employees have also called for a silent demonstration of the CBE’s decision, according to Al Mal.
** AMER STRIKES BACK: The CBE not only has the right to limit the terms of bank directors, it has to right to turf out entire boards, CBE Governor Tarek Amer told Lamees El Hadidy in an interview that aired on Saturday (watch, run time 1:55:49). The central bank has absolute authority because it oversees the system, he said. He explained that shareholder capital accounts for around 5% of a bank’s assets, while the remaining 95% consists of deposits, which is where the CBE’s overriding authority comes in.
He defiantly added that he was not afraid of the backlash and that the CBE will not back down from the decision, which he says is not the least bit personal, contrary to sentiment within the banking industry.
In a bid to explain the need for “new blood”, Tarek Amer heavily criticized conventional wisdom in the banking sector, attacking what he said was banks’ reluctance to loan out to average citizens. “Banks have been too lazy to loan to citizens because of increased issuance of government paper. Loans to depositors in Europe amount to around 100%, while in Egypt these are as low as 45% with some banks only lending out 15% to depositors,” he stated.
Amer also defended his decision to devalue the EGP, saying doing so had attracted foreign investment in treasury bills worth USD 500 mn, adding that he had pumped USD 22 bn into the banking system to clear goods languishing at ports, Reuters writes. “There is no currency crisis, there is merely a crisis in managing the foreign exchange market, and we will roll out an alternative plan for managing the market in the next three months.” Amer added that since the devaluation, foreign currency deposits skyrocketed 2130% “compared to the previous period” but “the decision wasn’t a devaluation, it was correcting the situation and we had planned for it in advance. Its advantages will outweigh its disadvantages.”
However, there’s been low appetite for USD-denominated Belady certificates, said Amer, attracting only USD 150 mn. Egypt will also pay back arrears worth USD 1 bn owed to Qatar in July and USD 800 mn to Paris Club countries, he told El Hadidy.
The CBE is considering a program that will guarantee the repatriation of funds for new investments and companies entering Egypt, said Amer. This system will be similar to the parallel mechanism in place for the stock market, he said, adding that he allowed the repatriation of USD 540 mn despite not being obliged to do so.
Banque du Caire will IPO 20% of its shares before the end of 2016, promised Amer. He added that 40% of the Arab African International Bank will be put up for IPO, with with half of the stake coming from the CBE and half from “other investors.” (Ownership of the bank is equally split between the CBE and the Kuwait Investment Authority at 49.37% each. The bank is particularly opaque about who holds the balance.) The United Bank of Egypt will be entirely privatized before the year is out, he added.
Oh, and don’t worry, we’ll rebuild reserves from with Chinese money: Amer said Egypt should expect to attract USD 30 bn from oil, gas, and spinning and weaving projects that will be presented to Chinese investors during an upcoming mission. Over the next three months, we should expect foreign inflows of about USD 5 bn.
Not enough for you? Amer also made it clear he really doesn’t want Naguib Sawiris to acquire CI Capital. “If I had the power to authorize NBE’s acquisition of CI Capital without waiting for the due diligence process, I would have,” said Amer, speaking on NBE’s aborted bid to compete with Beltone on the acquisition. The move was meant to prevent CI Capital from being “taken out of the banking sector,” Amer explained. Amer then made an oblique attack on Naguib Sawiris, questioning his experience and track record in the industry, and saying that there is more to acquiring an investment bank than profit alone.
Al Borsa has a pretty solid wrap-up of the interview in Arabic here.
Naguib Sawiris is furious: “Investors coming to Egypt, beware, the government will compete with you for public funds,” was the message underpinning Naguib Sawiris’ op-ed attacking CBE Governor Tarek Amer. He accused Amer of masterminding a plot to block OTMT’s acquisition of CI Capital and punish all involved. This plot started with state-owned NBE’s bid to compete for the acquisition. When that failed to block it, another unnamed state-owned bank backed out of financing the transaction on orders from the CBE. Private banks that stepped in were given similar orders, Sawiris added. He states that the decision impose a nine-year limit on bank MDs was specifically designed to punish managing directors who would not play ball, particularly Hisham Ezz Al Arab, who went ahead with the CI Capital sale. He points to the delay in the CBE’s sign-off on the appointment of former CBE Governor Hisham Ramez as managing director of CIB as further evidence of this plot. Sawiris then drops a bomb, saying that national security officials instructed the Capital Markets Authority to block approvals of the acquisition on the grounds of national security, just when he applied for authorization despite announcing the acquisition months in advance. He acknowledged that Amer’s wrath was not personally motivated, but political, due to Sawiris’ attacks against the delayed devaluation. He asks how can one stop a CBE governor who abuses his power and concludes by stating that these policies go against the principles of free markets and capitalism, questioning alleged pretenses by the government aimed at attracting foreign investments.
Responses to the op-ed came quickly. Sherif Samy, head of the Financial Supervisory Authority (EFSA), says EFSA abides by its own procedures for independently approving on transactions such as the OTMT-CI Capital lashup, Al Borsa reports. Cairo Capital Securities’ Adham Gamal El Din predicts OTMT and CIB shares will fall today, with wider consequences for the market as a result of Sawiris’ revelations and a possible breakdown of the OTMT-CI Capital pact.
Meanwhile, the EGP rallied against the USD in the parallel market on Saturday, hitting EGP 9.70 to USD 1, Al Mal reports. Al Masry Al Youm is reporting an exchange rate of EGP 9.85-9.88 and is attributing the rally to the CBE shutting down and revoking the licenses of two FX exchange bureaus on Thursday after the parallel market rate closed in on EGP 9.95 on Thursday. CBE sources speaking to Reuters’ Arabic service confirmed the closure of the bureaus.
EFG Hermes’s first expansion into frontier markets looks set to be Pakistan with the USD 3.3 mm acquisition of 51% of Invest and Finance Securities Limited (IFS), according to reports in the Pakistani press. The news follows a regulatory filing with the Pakistan Stock Exchange made by Bank Alfalah, reportedly EFG’s advisor on the transaction. Although he noted that EFG is yet to conduct due diligence, IFSL Chairman and CEO Muzammil Aslam told the Pakistani press that, “Global investment banks have done business in Pakistan’s equity market, but EFG will be the first one to actually have its own skin in the game as a majority shareholder of a local brokerage house.” Aslam, described as a “veteran stock market analyst,” led a “group of six acquirers” in buying 78% of IFS in November 2015. Aslam holds 18% of the company and shares management control with 7% shareholder and chief operating officer Asim Ali. Some 22% of the company’s shares constitute a free float on the PSX. IFS’s website says the firm offers “financial brokerage, corporate finance and financial research” and has offices in Karachi and Lahore.
BP is committed to developing the North Alexandria concession without any stoppages, Al Mal reported. The company added that it expects production from the project in early 2018. BP also denied any involvement in the dispute BG Group is having with the Egyptian government currently, saying that its role is only confined to facilitating production through the tie-in agreement it signed with BG in March 2015. BP completed the acquisition of 22.75% of the North Alexandria concession from DEA in December.
EGAS has not yet filled a tender to buy two LNG shipments due in April, trade sources tell Reuters. “EGAS launched a tender last week, open only to some of its existing suppliers, for the delivery of one cargo in April 1-7, and another in April 27-28.” The first delivery window was difficult to arrange given the short notice period, traders said. EGAS had lined up commodity trader Trafigura as the supplier for the late-April cargo but the deal went sour after EGAS tried to bring forward delivery to the middle of April, traders said. EGAS is understood to be still in talks with potential suppliers, the traders said.
New cabinet getting good reviews in US business press. The appointment of veteran investment professional Amr El Garhy is getting largely good reviews in the international business press, typified by Bloomberg’s “Egypt names former investment banker as finance minister,” which also takes note of OCI NV’s Dalia Khorshid being named investment minister, Ahmed Rashed’s being tapped to run tourism, and the elevation of World Bank economist Ahmed Kouchouk to deputy minister under El Garhy. The news service writes that “The appointment of El-Garhy, who also served as the head of the state-owned National Investment Bank, is a ‘good choice because he combines private sector experience with experience in public finance and government,’ said Reham ElDesoki, senior economist at regional Dubai-based investment bank Arqaam Capital.”
Future import restrictions on the horizon? The government is running potential future import restriction policies past the World Trade Organization, Industry and Trade Ministry sources tell Al Borsa. While the sources did not specify what these upcoming policies are, consultations with the WTO over possible violations of trade agreements would imply they are imminent. The sources added that last week’s move to clear imports following protests by importers does not mean the government is backtracking on the restriction policies such as the importers registry.
Enough wheat to last until the end of Ramadan — barely. That’s the takeaway from a brief Reuters piece on Supply and Domestic Trade Minister Khaled Hanafi’s statement, issued on Friday after a 60k ton wheat buy, that Egypt has enough of the strategic commodity to last “until the first week of July.”
Eight commodities will be traded initially when the Egyptian global commodities exchange is launched this year, with initial investments of EGP 300 mn, said Supply Minister Khaled Hanafi. Some 2 mn futures contracts are expected to be traded in the exchange’s first year, a number expected to grow to 9.5 mn in five years. 130 brokerages will be established in that year to manage over 65k traders, Al Masry Al Youm reports. Hanafi’s statements come following a meeting with the head of the Egyptian Financial Supervisory Authority Sherif Samy to lay down the legislative and administrative framework governing the exchange.
MOVES- Nokia and Motorola veteran Sherif Barakat has been appointed country vice president for Egypt at Samsung. The AUC-trained engineer studied business in Helsinki and at Harvard.
Sherif Ismail’s new cabinet met on Thursday, where discussions focused on the government’s economic and social development plan for FY2016-17, which is targeting a 5.2% GDP growth rate for the year, up from 4.6% this year, according to an emailed statement from the cabinet. The cabinet is planning to meet constitutional mandates on spending on health and education next fiscal year, press forth with local development projects and ensure a relative equitable distribution of investment projects across governorates. Below are the most important decisions taken:
THE MACRO PICTURE
“There is some confidence that global growth is not going into a black hole”: The Financial Times (paywall) writes that “The recent rally in emerging markets represents a sharp turnaround from the first month of the year, when China’s economic slowdown, falling oil prices and a rise in US interest rates in December drove investors to remove money from emerging markets at record pace.” Elsewhere, the paper writes that EM funds “are showing signs of a turnround, ranking among the best performing products for the year-to-date and attracting inflows.” Separate data suggests that eight months of net outflows from emerging markets may be coming to an end, with EM bond and equity funds attracting a net USD 1 mn per week in the first half of March.
For the first time, more investment went into renewables in 2015 than into fossil fuels, with the majority going to emerging markets, according to a report out Thursday from the United Nations Environment Program using BNEF data. Despite oil prices reaching historic lows, clean energy projects are getting more financial backing, with the industry shifting from “a plaything of rich industrial nations into a growing power source for emerging economies,” Bloomberg writes.
And while we’re on energy, slow global growth coupled with low and negative interest rates have undermined what ought to have been a boost from lower oil prices, according to an IMF blog post published on Thursday. “We argue that, paradoxically, global benefits from low prices will likely appear only after prices have recovered somewhat, and advanced economies have made more progress surmounting the current low interest rate environment,” writes Maurice Obstfeld, the fund’s chief economist, and coauthors.
EGYPT IN THE NEWS
The NYT’s editorial board is still unhappy with us. Surprised? It having been at least a couple of months since their last condemnation of Egypt, the New York Times’ editorial board must have felt something amiss. They set out to rectify their omission with this weekend’s “Time to Rethink U.S. Relationship with Egypt,” which plays off last week’s letter to U.S. President Barack Obama by the Project on Middle East Democracy’s Working Group on Egypt. (Signatories include the usual suspects: Michele Dunne (who was denied an entry visa last year), Tamara Wittes, and Robert Kagan, among others.) Saying “Egypt’s crackdown on peaceful Islamists, independent journalists and human rights activists has intensified,” the NYT suggests that “Egypt’s scorched-earth approach to fighting militants in the Sinai and its stifling repression may be creating more radicals than the government is neutralizing.” If Obama was recently willing to chastise the Saudis, the editorial board says, “Mr. Obama should personally express to Mr. Sisi his concern about Egypt’s abuses and the country’s counterproductive approach to counterterrorism.”
The activist press in the US is using Egypt’s employment of Glover Park Group to attack Hillary Clinton, writing that “Clinton’s ties to a lobbying firm working for the government of Egypt, a country with an abusive human rights record, casts doubt” on her claims that she would, as president, “continue her long-standing emphasis” on human rights. Egypt has paid more than USD 5 mn to Glover Park, according to Alternet.
The piece on GPG is just the latest in a string of pieces savaging Egypt‘s human rights record and the apparent re-opening of the “foreign funding for NGOs case,” and the Foreign Affairs Ministry has had enough, striking back in a statement posted to its Facebook page. Saying, “It is odd for such comments to come from foreign officials, using distorted generalizations to accuse the Egyptian government of stifling the freedom of civil society organizations in Egypt in their work, without providing any tangible evidence to support these claims.” The ministry claims Egypt has rejected just 7% of the foreign funding earmarked to support local NGOs in 2015. “Other organizations received an estimated 100 mm USD through legal channels” that year, “in light of which it becomes impossible to claim that there is a stifling of the work of civil society organizations in Egypt.”
Regeni case showing no signs of wrapping soon: Reports Mada Masr: “Italian investigators examining the murder and torture of Italian student Giulio Regeni said the ‘case is not at all closed’ on Friday, following a statement by Egypt’s Interior Ministry that they found Regeni’s identification documents in an apartment in Cairo, which domestic media, led by a report from Al Tahrir, took to mean as evidence the gang was responsible for Regeni’s death. However, the prosecution on Friday denied that their discovery of Regeni’s identity papers in the apartment meant the gang was responsible for his death. The Associated Press reports that current and former Italian officials are deeply skeptical of the notion that Regeni was the victim of a criminal gang, with the report coming after prosecutors ordered the detention of four relatives the head of a criminal gang that allegedly “specialized in impersonating police and kidnapping foreigners,” Reuters says. All four members of the gang were killed in a police shootout. Al Ahram is running with the story on its front page, including the police photo of Regeni’s ID.
Why Belgium? “Why has Belgium become such a focus of European jihad? And why has it been so difficult for Belgian authorities to contain the problem? Joost Hiltermann spoke to Didier Leroy, a leading terrorism researcher at the Royal Military Academy of Belgium and an adjunct at the Free University of Brussels.” Leroy: ”I think that money from Gulf countries has done a lot of damage in Moroccan mosques in Belgium on that level. Some mosques have been more and more under the sway of Saudi imams or Moroccan-Belgian citizens who have been trained in and funded by Saudi Arabia and who are spreading Wahhabi doctrine.” (Read Why Belgium? in the New York Review of Books)
IMAGE OF THE DAY
T-shirt boy released after two years in detention with no formal charges: Mahmoud Mohammed Ahmed smiles upon release from a police station in Cairo on Thursday, after being detained for two years in prison without ever being formally charged. Ahmed was arrested at age 18 while coming home from a rally commemorating 25 January, wearing a T-shirt that read “A nation without torture.” The prosecutor’s appeal against his release was also rejected on Thursday. (View image via the AP, photo credit: Mohamed el Raai)
DIPLOMACY + FOREIGN TRADE
Egypt has expressed its concern over the EU-Turkey agreement regarding refugee and immigration policy, the Foreign Affairs Ministry said. The ministry’s spokesperson is dismayed that the refugees’ “suffering” is being used for “political gain” without concern for international accords. He insists that Egypt continues to adopt an “open-door policy” for Syrian refugees.
An International Fund for Agricultural Development delegation was in Egypt on Wednesday to discuss with International Cooperation Minister Sahar Nasr providing USD 70 mn for an agricultural development project, Amwal Al Ghad reports. Meanwhile, Nasr signed two agreements with the German government for EUR 35 mn in aid financing for education. These include the EUR 25 mn technical cooperation agreement from 2012, and the EUR 10 mn second phase of the quality of education support agreement, Al Mal reports.
Axens contracted for design and engineering works on USD 1.3 bn mazut hydrocracking project
French refining services company Axens was contracted to provide process licensing, engineering, and design work on hydrocracking and middle distillates units, worth USD 1.3 bn of the USD 1.6 bn mazut hydrocracking project by the Assiut Oil Refining Company (ASORC), said ASORC’s CEO Nagy Abdel Ghaffar. Primary financing for the project came from the Italian Export Credit Agency, with ASORC looking to form an investment company to finance the rest of the project, Abdel Ghaffar added. Technip has been contracted to manage phase one of the project, which hopes to produce 1.4 mn tons of diesel, 389k tons of naphtha, and 105l tons of butane from refined mazut per year. (Read in Arabic)
Siemens begins constructing EUR 100 mn turbine blades factory
Siemens has begun constructing its EUR 100 mn wind turbines blade factory , said the head of the New and Renewable Energy Authority Mohamed El Sebky. Siemens will be building 12 wind farms in he Gulf of Suez and West Nile areas, requiring around 600 turbines producing 2 GW of power, El Sebky added. (Read in Arabic)
Tiba Manzalawi Group looking to build USD 80 mn solar power plant
The Tiba Manzalawi Group is looking to build a 50 MW solar power plant at a total cost of USD 80 mn by June, company Chairman Maged El Manzalawi told Al Borsa. The project duration is 12 months and involves a consortium of six companies including Tiba, he adds. (Read in Arabic)
BASIC MATERIALS + COMMODITIES
Food Holding Company to remain under Supply Ministry
The Food Industries Holding company will remain under the control of the Supply Ministry, Supply Minister Khaled Hanafi tells Al Borsa. His comments come in response to questions about the creation of the new Ministry of Public Enterprise. (Read in Arabic)
Engineering Authority anticipates delays in Furniture City project
The Engineering Authority of the Armed Forces was charged with managing the Furniture City project in Damietta and reading the project for tenders for factories in the project by May, in accordance with the president’s directives. The deadline might be placed in jeopardy after the Armed Forces found the soil on the land for the project to be unsuitable, which may necessitate a change in location. Timely completion will also depend on how fast a EGP 7 bn company, which will be partly owned by Damietta factory owners, can be formed to manage the project. (Read in Arabic)
REAL ESTATE + HOUSING
Saudi’s Teishan looks to invest in Egypt’s real estate market
Saudi-based Saleh Saeed Teishan Limited Company for Trading and Contracting is looking to injecting initial investments estimated at EGP 20 mn in 2016 in the Egyptian market. The company is interested in real estate development projects in the Suez Canal zone, General Manager Abdullah Saleh Teishan tells Amwal Al Ghad on Thursday. The company is looking to enter the market over three phases and is negotiating with a number of Egyptian firms to enter into strategic partnerships. (Read)
El Sisi says tourism will return to Sharm
“Sharm El Sheikh is safe and tourism is coming back,” said President Abdel Fattah El Sisi over the weekend while in Sharm El Sheikh for a conference on terrorism. The president reassured crowds who spoke to him following Friday prayers that the tourism sector will pick up after reaching agreements with foreign allies on the state of Egypt’s security. He urged the people to continue working to aid the industry, Al Ahram reports.
Middle East occupancy rates down, Egypt no exception
Occupancy rates in the Middle East dropped 5.3% y-o-y in February to 70.2%, according to an STR Global report released on Thursday. This coupled with a 10.5% fall in the average daily rate (ADR) to USD182.45 drove revenue per available room (RevPAR) to plummet 15.2% to USD 128.12. In light of the Metrojet crash, “Egypt reported decreases in occupancy (-8.6% to 43.1%) and RevPAR (-3.2% to EGP 263.16) but a rise in ADR (+5.9% to EGP 610.85). With the country’s occupancy falling as a result of political and economic unrest, hoteliers have raised rates to maximize RevPAR. Egypt saw RevPAR grow 23.5% in 2015, creating a high base for comparison.” (Read)
Russian flights to Egypt resume by summer, Russian foreign minister
Russian deputy foreign minister Mikhail Bogdanov hopes flights to Egypt will be restored by the beginning of summer, according to state news agency TASS. “Security specialists are cooperating closely. Now we have reached the final stage of the talks.” Egyptian Foreign Minister Sameh Shoukry and his Russian counterpart Sergey Lavrov had met earlier this month to discuss flight resumption, according to DNE. “We touched upon the question of resuming direct flights between our countries in order to help bolster tourism, which has declined for obvious reasons,” said Lavrov.
TELECOMS + ICT
Vodafone Group CEO discusses investment plans and growth margins at AmCham
Vodafone’s Egypt investment plan, dubbed DEGYPT, will be centered around investments in infrastructure, including fiber optic cables, said Vodafone Group CEO Vittorio Colao. Speaking at an American Chamber of Commerce talk on the role of ICT in economic growth, Colao spoke glowingly of Egypt’s ICT growth margins, in light of its “young” and “growing” population, which is developing a keen interest in information technology. Growth in data usage coupled with advances in electronic banking, he said, were signs of the expanding role of ICT in the country. (Read in Arabic)
AUTOMOTIVE + TRANSPORTATION
Transport Minister sets target of EGP 1 bn in revenues for Egyptian Railway Company
Revenues of the Egyptian Railway Projects & Transport Company (ERJET) must not fall below EGP 1 bn this year to cover the costs of government upgrade, said the recently appointed Transport Minister Galal Saeed. At a meeting with ERJET’s executive management, Moustafa expressed disappointment at the returns of the company considering its significant assets. (Read in Arabic)
Volvo sales down 25% in 1Q16 due to CBE restrictions
Sales of Volvo cars in Egypt dropped 25% year on year during 1Q16, said Ahmed El Sheehy, head of Volvo sales for the Ezz El Arab Automotive Group, Volvo’s official distributor in Egypt. He attributes this to the CBE’s regulations, adding that the company has only has 580 cars in stock. (Read in Arabic)
BANKING + FINANCE
EGX could allow investors to obtain GDR proceeds in USD
The EGX is looking into allowing Egyptian investors to obtain sale proceeds of global depositary receipts (GDR) in USD as well as the double-entry stocks registered in foreign markets, according to EGX Chairman Mohamed Omran, DNE reports. The Egyptian Financial Supervisory Authority has prevented GDR holders from receiving international transfers in USD, obliging them to exchange the amount to EGP since March 2015. (Read)
Sigma Capital in talks to run Chinese bank’s financial portfolio
Egyptian financial services firm Sigma Capital is in advanced talks to run a USD 30 mn portfolio from a prominent China-based bank, the Egyptian firm’s managing director announced Wednesday, according to Amwal Al Ghad. He made no mention of which Chinese bank was the target. (Read)
Al Ahly Bank of Kuwait to increase Piraeus Egypt’s capital in 2016
Al Ahly Bank of Kuwait (ABK) plans to increase Piraeus Egypt’s capital before the year is out as part of the latter’s restructuring since its acquisition by ABK, said ABK CEO Michelle Akkad. The restructuring and capital increase will be used for future expansions, he added. (Read in Arabic)
Arab Contractors, Orascom Construction seek EGP 3-5 bn loan from NBE, Banque Misr
Arab Contractors and Orascom Constructions have jointly begun negotiations with NBE and Banque Misr for a EGP 3-5 bn loan to cover the cost of drilling the three tunnels under the Suez Canal — a EGP 16 bn project. Talks over the loan, which may come in the form of a credit line or letters of credit, are expected to conclude. (Read in Arabic)
EFSA planning to issue new SME financing guidelines to protect clients by June
EFSA is planning to issue a decision setting measures to protect clients of SME financiers and microlenders by June at the latest, said Gamal Khalifa, chairman of the EFSA SME Unit’s board of trustees. These measures will set mandatory guidelines for the industry which include enforcing full disclosure and informing the client on their rights and terms and conditions and payment methods of the loans, and outlines channels for complaints recourse for the client. (Read in Arabic)
Union National launches remittances campaign
Union National Bank launched campaign in the UAE to encourage and increase Egyptian remittances from the UAE by eliminating fees on transferring money back home, Al Mal reports. (Read in Arabic)
Arab, African defence ministers meet in Sharm El Sheikh to discuss terrorism
Defence ministers and officials from 27 Arab and African countries held a two-day meeting in Sharm El Sheikh to discuss military and counterterrorism cooperation. “Terrorism and extremism presents a strong threat that has spread across all continents,” Egyptian Defence Minister Sedki Sobhi said in a speech. The Community of Sahel-Saharan States is concerned about the situation in the Sahel-Saharan states and wants to discuss draft agreements on military cooperation and conflict resolution, and drug and arms trafficking. (Read)
Egypt scores late equalizer to draw with Nigeria in AFN qualifiers
AS Roma striker Mohammed Salah snatched a late equalizer in a 1-1 draw against Nigeria on Friday in the African Cup of Nations (ACN) qualifiers, King Fut reports. Egypt now sits atop Group G with seven points, while Nigeria holds second place with five points. Egypt is set to play Nigeria next Tuesday in Alexandria to decide the ACN qualifier out of the group stage.
ON YOUR WAY OUT
The Israeli embassy in Cairo has created a webpage in Arabic. You can have a look at it here.
USD CBE auction (Saturday, 26 March): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Saturday, 26 March): 9.70 (compared to 9.85 / 9.90 since Wednesday, 24 March, Al Mal)
EGX30 (Thursday): 7,548 (+0.7%)
Turnover: EGP1.0 bn (137% above the 90-day average)
EGX 30 year-to-date: +7.7%
THE MARKET ON THURSDAY: Egypt’s benchmark index inched up 0.7% on the day. The EGX30’s largest constituent, CIB, capped the index gains and was the second-worst performer after the CBE set a nine-year term limit for CEOs. Top gainers were Pioneers Holding, Ezz Steel, and Global Telecom while the worst performers were Edita, El Sewedy Electric, and SODIC. At a market turnover of EGP 1,033.9 mn, local investors were the sole net sellers. Regionally, Saudi’s TASI was down 1.7%, Abu Dhabi’s General Index 1.4%, and Dubai’s General Index 1.0%.
Foreigners: Net long | EGP +6.8 mn
Regional: Net long | EGP +15.4 mn
Domestic: Net short | EGP -22.2 mn
Retail: 77.3% of total trades | 74.3% of buyers | 80.4% of sellers
Institutions: 22.7% of total trades | 25.7% of buyers | 19.6% of sellers
Foreign: 6.6% of total | 7.0% of buyers | 6.3% of sellers
Regional: 10.5% of total | 11.2% of buyers | 9.7% of sellers
Domestic: 82.9% of total | 81.8% of buyers | 84.0% of sellers
WTI: USD 39.46 (-0.20%)
Brent: USD 40.44 (-0.07%)
Gold: USD 1,223.50 / troy ounce (+0.02%)
TASI: 6,350.9 (-1.7%)
ADX: 4,331.9 (-1.4%)
DFM: 3,318.7 (-1.0%)
KSE Weighted Index: 359.0 (+0.1%)
QE: 10,285.5 (-1.6%)
MSM: 5,533.6 (+0.8%)
29-31 March 2016 (Tuesday-Thursday): Future Rail and Metro Egypt, Cairo.
04 April 2016: Saudi Arabia’s King Salman visits Cairo.
07-10 April 2016 (Thursday-Sunday): Cityscape Egypt Conference, Cairo International Convention Centre, Cairo
13-16 April 2016 (Wednesday-Saturday): Cafex, Cairo.
17 April 2016: German economic delegation visits Cairo.
25 April 2016 (Monday): Sinai Liberation Day (national holiday)
26-28 April (Tuesday-Thursday): Arabian Hotel Investment Conference, The Madinat Jumeirah, Dubai.
01 May (Sunday): Easter Holiday / Labour Day (national holiday)
02 May (Monday): Sham El Nessim (national holiday)
02-03 May (Monday-Tuesday): The Middle East Investment Summit 2016, Ritz-Carlton DIFC, Dubai.
25-26 May (Wednesday-Thursday): The Middle East and North Africa Solar Conference and Expo MENASOL 2016, Hyatt Regency, Dubai.
06 October (Thursday): Armed Forces Day (national holiday)
27 November 2016 (Sunday): 2016 Cairo ICT Conference Group
04-06 December 2016 (Sunday-Tuesday): Solar-Tec Conference, Cairo International Convention Centre, Cairo
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