Sunday, 22 May 2016

Search for EgyptAir flight 804 black boxes continues as first wreckage recovered.


What We’re Tracking Today

Finance Minister Amr El Garhy and Planning Minister Ashraf Al Araby will give a detailed presentation on the government’s fiscal policy to the House of Representatives today, said House Planning and Budget Committee chair Hussein Eissa. The committee will then draw up a timetable for deliberation on the FY 2016-17 budget. Eissa tells Al Borsa that in the event parliament does not meet its deadline to approve the 2016-17 budget, cabinet will continue to operate under the current budget. The state’s current current fiscal year ends on 30 June 2016.

Abraaj’s Cleopatra Hospital Company has released its public subscription notice(pdf download) for domestic investors as part of its offering of 40 mn existing shares. Egypt’s second public offering of the year has been priced at EGP 8.75-11.88 per share, according to a price range announcement (pdf) released late last week, valuing the transaction at EGP 350-475 mn. The offering will “raise capital to support expansion and growth” and includes up to 34 mn shares for international investors and 6 mn in an Egyptian retail offer. Selling shareholders will re-inject the net proceeds of the transaction into Cleopatra to fuel growth. Sources tell Al Borsa that EFG Hermes, sole global coordinator and bookrunner for the offering, will end its marketing of the offering on Thursday. The company’s shares are likely to begin trading in the first week of June.

President Abdel Fattah El Sisi will inaugurate the c.USD 2 bn expansion to Misr Fertilizers Production Company (MOPCO)’s fertilizer plant in Damietta today, Al Borsa reports. The project, which has been over four years in the making, was financed by USD 1.1 bn in loans from 22 banks, government sources tell the newspaper. When the third production line becomes fully operational at the end of the week, MOPCO will be in line to produce 2 mn tonnes of urea per year, or 1% of global production, the source added. 60% of production will be exported on export contracts with over 20 countries. Based on the lowest price estimates for urea, MOPCO stands to generate USD 300 mn per annum in revenues. MOPCO has been receiving gas from the government at a price of USD 5 per mmbtu, said the source.

Al Mal GTM’s Portfolio Egypt Conference kicks off today at the The Marriott Hotel in Zamalek. Register here.

What We’re Tracking This Week

The House of Representatives will vote to approve a USD 243 mn loan from the Arab Monetary Fund on Tuesday 24 May, said House Economic Committee member Amr Al Gohry. The loan, which carries a 1.2% interest rate, will be used to shore up FX reserves. The committee will discuss the CBE report on Monday ahead of sending it to parliament for the vote. Al Gohry noted that the committee has requested further details on how the CBE plans to pay back the USD 1.6 bn it has loaned from the fund since its formation, with the CBE promising to respond today.

Sir Suma in town to ink EUR 320 mn in agreements: European Bank for Reconstruction and Development President Sir Suma Chakrabarti will arrive in Cairo on Wednesday, 25 May to sign EUR 320 mn in loan agreements with the government. The loans will help finance transportation, irrigation, and water infrastructure development projects, Al Borsa reports.

With just over two weeks to go before the Holy Month is due to begin (probably on 7 June), we’re looking at the usual pre-Ramadan crush of conferences this week and next:

  • On 25-26 May (Wednesday-Thursday) The Middle East and North Africa Solar Conference and Expo MENASOL 2016 kicks off at the Hyatt Regency in Dubai.
  • Also on Wednesday: The FAO and EBRD conference “Securing the future of Baladi bread: how Egyptian public-private partnerships can help deliver tomorrow’s food security,” Sofitel El Gezirah, Cairo. Register here.
  • The second Africa and Middle East conference on software engineering (AMECSE) is happening at Intercontinental Citystars in Cairo on 28-29 May.
  • The two-day Middle East Regional Forum Egypt kicks off on Monday 30 May at The Movenpick Hotel & Casino Cairo-Media City in Cairo.
  • N Gage’s Investment Regulation Forum in cooperation with Pepsico kicks-off on 29 May (Sunday) at the Four Seasons Nile Plaza, Cairo. Register here.
  • On 1-2 June (Wednesday and Thursday) the Cisco Connect Egypt 2016 is taking place at Cairo’s Royal Maxim Palace Kempinski. You can go ahead and tap here to register.
  • Right after, the first annual EBRD Research Symposium on the Economics of the Middle East and North Africa takes place on 2-3 June (Thursday-Friday) at the EBRD headquarters in London.
  • Oh, and OPEC meets on Thursday, 2 June. Don’t expect an agreement to reduce output.


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Speed Round

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EgyptAir flight MS804 sent a series of messages indicating that smoke had been detected on board before crashing into the Mediterranean on Thursday, France’s Bureau of Investigations and Analysis agency said on Saturday, according to Reuters. A spokesman from the bureau told AFP it was “far too soon to interpret and understand the cause of the accident,” but Bloomberg quotes president of the Washington-based consultancy Safety Operating Systems John Cox said the signals are “too long for an explosion and too short for a traditional fire … It says we have more questions than we have answers.”

While the Ismail government has said that it is more likely the jet was brought down by terror than by mechanical failure, no group has yet claimed responsibility for a terror attack, whereas Daesh promptly claimed responsibility for the downing of the Metrojet flight over Sinai last fall.

On Friday, the Egyptian Navy found human remains, luggage, aircraft seats and other parts of the wreckage, Reuters reported. The Armed Forces released photos of the debris on Saturday on their official Facebook page. Three French officials, three British investigators, and a technical expert from Airbus arrived in Cairo on Friday to aid in the Egypt-led investigation, airport officials told the Associated Press. French aviation investigators have begun to check and question all ground staff at the Charles-de-Gaulle airport, a French judicial official told AP on Friday. The wire also noted that the aircraft had travelled through Eritrea and Tunisia prior to the crash.

As searchers scramble to both find the rest of the wreckage and investigators look for the cause of the crash, EgyptAir’s vice president told CNN correspondent Christiane Amanpour that "the plane was ‘fine and healthy’ at take off.” French Foreign Minister Jean-Marc Ayrault said on Friday there was "absolutely no indication" of the cause despite Egypt’s Civil Aviation Minister Sherif Fathy saying during a press conference on Thursday that the “possibility of a terrorist act is higher than that of a technical error,” according to Ahram Online. Head of Russia’s FSB security service Alexander Bortnikov also said on Thursday terrorism was the more likely cause, according to Reuters, as did US presidential frontrunners Hillary Clinton and Donald Trump, wrote CNN.

Pundits don’t know what to think: Data broadcast suggesting fires on board in the minutes before the crash “seem at odds with the idea that the aircraft suffered the kind of sudden, catastrophic break-up normally associated with a bombing. However, it remains possible that they reflect a hostile act that started an onboard fire without immediately breaching the aircraft’s fuselage,” the Financial Times notes. While messages such as these “generally mean the start of a fire … everything else is pure conjecture,” the Associated Press notes.

The search for the flight data and cockpit voice recorders will be challenging, experts warn. The recorders, key to the reconstruction of the disaster, could be among “parts of the Airbus A320 have likely sunk to the seabed and could be hidden by ridges and underwater volcanoes as high as the Alps,” says one. The area in which the jetliner went down is marked by deep water, rough seas and a complex geography on the ocean floor.

Meanwhile, the tourism sector is holding its collective breath at the outcome of the investigation, with the Tourism Development Authority stating that it is too soon to gauge what effect this will have on the sector, according to its deputy head Ahmed Hamdy. Hamdy implied that the TDA’s promotional campaign in France and other European countries, which launched in February, will not be paused.

The mainstream business press is already noting the tragedy bodes ill for the tourism industry. The Financial Times (paywall) quotes travel expert Hany Madkour as saying, “There will be no impact because there is no tourism to start with.” The WSJ (paywall) is even more pessimistic, quoting Hany Farahat, a senior economist at CI Capital. as saying that for the economy, “four incidents in a row within several months is too much to swallow.” Farahat tells Bloomberg the crash could “affect unemployment, consumption and other sectors linked” to the tourism industry. Meanwhile, the Financial Times (paywall) is one of the few outlets not placing the onus squarely on Egypt, calling into question Europe’s airport security since the flight originated from France, where Charles de Gaulle airport has already had problems with radicalism. CNN, BBC, and the Telegraph ask if Egypt’s tourism will ever recover at this rate, while New York Time’s Declan Walsh wrote on Thursday that the crash “blindsided” a nation that thought it might be on the path to recovery. The EGX closed Thursday in the red on the news, and the USD gained 5 piasters against the EGP.

Ahram Online has profiles of a number of those of who lost their lives in the disaster.

Also worth a read this morning in the stream of stories on the incident: Kareem Fahim leads a three-person byline explaining what’s known so far about the data the flight broadcast prior to its crash. Tamer El-Ghobashy and Dahlia Kholaif note the tragedy has brought together a “deeply divided” nation, and Declan Walsh covers the 2013-era “CC” graffiti found on the doomed airliner at the time.

Egypt will accept a USD 25 bn loan from Russia to finance the construction and operation of the Daba’a nuclear power station, according to an agreement published in the Official Gazette and carried by Reuters. The loan carries a 3% interest rate with installments beginning from 15 October 2029. “The loan will be used by the Egyptian side for a period of 13 years between 2016-2028 … the Egyptian side will repay loan amounts used over 22 years in 43 instalments,” the gazette said. The agreement to build a nuclear power plant was signed with Russia on 19 November, but the terms of the agreement were unclear at the time.

Some 52 goods and services will be exempt from the final draft of the value-added tax (VAT) legislation, said Finance Minister Amr El Garhy. The 20 services exempted include health; education; media-related services such as film production, broadcasting, publishing and printing; and banking and all financial services under the supervision of the Egyptian Financial Supervisory Authority. Thirty-two goods will be exempt include the usual staples such: as infant formula, basic food commodities, and animal and agricultural products, Al Mal reports. Restaurants and food outlets will also be exempt, but the ministry will issue a further clarification on this point. Oil, butane gas, and other fuel sources were also included in the list. Books and newspapers will also be exempted. House Economics Committee member Ashraf Al Araby has interpreted the education exemption as encompassing international schools, despite statements last week by Deputy Finance Minister for tax policy Amr El Monayer that these schools will be subject to a 10% VAT, Al Mal reports.

The Electricity Ministry and NI Capital have agreed to form four new power companies next month that they plan to IPO, said the head of the Egyptian Electricity Holding Company (EEHC) Gaber El Desouky. Three of the companies will manage Siemens’ EUR 10 bn power plants in Borollos, Beni Suef, and the new capital (El Desouky puts the total cost of the plants at EUR 6 bn and EUR 4 bn to prepare the land), while the fourth will administer the power ministry’s USD 2.3 bn emergency plan to raise the national grid’s capacity, El Desouky added. The ministry and NI Capital, a subsidiary of the state-owned National Investment Bank, are determining the companies’ capital and evaluating their assets ahead of formation, with the EEHC holding a majority stake in all four companies, Al Borsa reports. As we noted earlier this month, NI Capital announced the plan at Business News Foundation’s Energy Conference, but at the time it was promoting one company to manage the three plants. Deputy Electricity Minister Sabah Mashaly had stated earlier that the move was among the ministry’s plan to allow citizens and the private sector to hold stakes in power projects. Although not stated by any officials, the IPO of these companies may be the first step in the ministry’s grander scheme to deregulate the power market.

Meanwhile, El Desouky promised no power cuts this summer, announcing that the ministry is in the final stages of completing the emergency plan to raise the national grid’s capacity by 3.6 GW. The ministry also completed its pre-summer maintenance work on the grid’s existing power plants producing 32 GW, said El Desouky. He predicted that peak demand for power this summer would reach 31.5 GW. Nonetheless, he called on citizens to reduce consumption, according to Al Mal.

New guidelines will encourage banks to lend to SMEs, said CIB chief Hisham Ezz Al Arab, wearing his hat as chairman of the Federation of Egyptian Banks (FEI). The new regulations will allow banks to provide loans to SMEs that lack complete financial documents, as most of them are part of the informal economy, said Ezz Al Arab at a FEI forum on transitioning into a non-cash economy on Thursday. The banks will rely on preliminary permits issued by the government to provide the loan, in addition to proof that the borrower is on the way to completing full licensing procedures, Al Mal reports.

The CBE confirmed it is monitoring banks to make sure they abide by its regulations on SME lending, Al Shorouk says. The CBE reportedly made the statement to deny rumours that funds for SMEs were being diverted to larger borrowers.

… In related news, there are a “host of problems” with the CBE’s plan to expand lending to SMEs, veteran finance writer Patrick Werr writes in The National. Why should banks that cater to corporate borrowers “be forced to add expensive infrastructure and apply models outside their expertise” to lend to SMEs, he asks. The required regulation adds a layer to obstacles to doing business. Another problem concerns protecting depositors’ assets, an issue that appears at odds with forcing banks to lend to borrowers that do not have complete financial data. More shrewdly, Werr asks what stops an SME from borrowing at the mandated 5% interest rate only to reinvest the funds in government treasuries that pay around 11%?

Pharos Holding is advising on six acquisitions worth a combined EGP 4 bn, Al Borsa reports. The transactions involve acquisitions by companies based in Europe, the US, GCC and South Africa of controlling interest in “well known” Egyptian companies operating in the food, retail, consumer and pharmaceuticals sectors, said Sherif Abdel Al, managing director and head of investment banking at Pharos. Pharos Holding was named the 2016 Mergermarket Middle East Consumer M&A Financial Adviser of the year last week for a number of high profile transactions including Mass Food Group’s acquisition by Kellogg Company, and Halayeb’s acquisition by Danone.

Orascom Development Holding (ODH) reported a net loss attributable to shareholders of CHF 26.4 mn in 1Q2016 compared to a net profit of CHF 3.4 mn a year earlier, the company announced. ODH says the loss is attributable to FX losses and a decision to reduce land sales.

The middle class in Egypt is small — and has gotten “substantially” smaller over the past decade, according to estimates by World Bank researchers Elena Ianchovichina and Hai-Anh H Dang. “In Egypt, the middle class was small and getting smaller as many people were getting poorer,” the researchers write. They estimate that no more than 10% of the population can be considered middle class today.


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The Macro Picture

Finance chiefs from the Group of Seven met on Thursday-Sunday in Japan for talks mostly centered on reaffirming a pledge not to deliberately weaken their currencies, Bloomberg reports. Washington issued a stern warning against Tokyo acting to weaken its currency (FT, paywall) during the meetings, according to the FT (paywall), but beyond currencies, the G-7 didn’t agree on how best to revive the world’s economy. They did manage to agree that if “U.K. voters decide in a June referendum to leave the European Union, it would be the wrong decision and hurt the country’s economic growth.”

However, something solid did come out of the talks, as the World Bank launched its first-ever insurance market to help protect the poorest countries from pandemics, according to a statement on Saturday. The new Pandemic Emergency Financing Facility (PEF) would see new diseases automatically trigger a USD 500 mn fund to fight back after the World Bank. G7 hosts pledged an initial USD 50 mn over three years to fund the system. The PEF is expected to be operational this year.

On the sidelines of the meetings, a rough compromise deal was sketched that would see Greece’s international creditors drastically scale back the IMF’s exposure to the country by means of an EU buyout of up to EUR 14bn in IMF bailout loans and “front-load some concessions to Athens before 2018 in an attempt to end a protracted IMF-Germany stand-off over the [EUR 86 bn] bailout,” according to the Financial Times (paywall).

Apparently the last time the Treasury term premium(extra compensation investors demand for long-term debt) was this low was when Bob Dylan released his first album. That is, 1962, which means it probably makes sense for the US to join the “ultra-long party” along with European bonds. Bloomberg View’s Barry Ritholtz makes the case for a US with a 30-year or even 50-year bond maturity, writing: “I have been trying to find sound arguments against refinancing U.S. debt with longer-dated securities. The only half-decent case that comes up is that maybe rates will go even lower than they are today.”

Egypt in the News

Egypt had walk-on roles to play in Libya stories coming out of the weekend. Eastern oil officials agreed to resume crude exports from the port of Hariga last week, but the deal would require UN-backed Prime Minister Fayez al Serraj to make peace with the east, Bloomberg writes. On Friday, General Khalifa Haftar, who heads up troops in the east, said it would be "unthinkable" for eastern Libyan forces to join a UN-backed unity government until militias aligned to it are disbanded. Militants and rebels view Haftar as an Egyptian-backed relic of the old guard with presidential ambitions. “If the international community supports us … by lifting the embargo on weapons, then we could eliminate Daesh in Libya,” he said. “The U.S., France, Italy and the U.K. are pressuring General Haftar and his main political backer, Aguila Saleh, to accept the unity government,” Riccardo Fabiani, senior North Africa analyst at Eurasia Group, said in a note quoted by Bloomberg. “Egypt, the U.A.E. and Russia would like the peace process to accommodate General Haftar and Aguila Saleh’s concerns.” Last week we reported that the US and all permanent members of the UN Security Council decided to begin arming the Libyan government.

Worth Reading

The age of oil rents is over, says head of Russia’s largest commercial bank: Petr Aven, Russian bn’aire, former foreign trade minister, and current president of Russia’s largest commercial lender Alfa Bank, along with co-authors Vladimir Nazarov and Samvel Lazaryan, have a number of dire warnings for petrostates such as Russia and the GCC, but which easily apply to rentier economies such as Egypt’s. In their diagnosis of the resource curse, the authors note: “The vast majority of oil-producing states have paid for their windfalls with the entrenchment of authoritarian or populist left-wing regimes, repression of civil society and infringement of women’s rights.” The result, the authors argue, could not have greater bearing on Egypt’s future, and coming from a Putin ally, should serve as a national wake-up call to Egyptians who seek to emulate Russia’s model of separating and prioritizing economic rights above civil and political rights. In a passage one wishes could be laser-engraved into our collective consciousness: “The full enjoyment of Western comforts and technologies will no longer be compatible with a negation of its values and institutes. Only those countries that embrace modernization and carry it further than they did in the previous oil downcycle can hope [to] not be relegated to a historical footnote.” (Read: Twilight of the Petrostate)

Diplomacy + Foreign Trade

Israel’s defence minister Moshe Yaalon quit on Friday, according to Reuters,saying the nation was being taken over by "extremist and dangerous elements" after Prime Minister Benjamin Netanyahu asked right wing ultranationalist politician Avigdor Lieberman to replace Yaalon in a “shock move.” Reuters describes Lieberman as a “settler in the occupied West Bank,” who “has stirred controversy by questioning Palestinian President Mahmoud Abbas’s commitment to peace and the loyalty of Israel’s Arab minority, while pushing for stronger military action against Gaza’s Hamas rulers.” The newswire quotes an anonymous Egyptian official as saying “we’re shocked, we’re really shocked” as he noted that “the Lieberman appointment came just a day after a speech by Egyptian President Abdel Fattah al-Sisi promised Cairo’s help to try to end the Israeli-Palestinian conflict.” Lieberman had previously proposed bombing Egypt’s Aswan Dam.

In related news, two sources within the Israeli political system tell Haaretz that it was former British Prime Minister Tony Blair who pushed and encouraged Egyptian President Abdel Fattah El-Sisi’s speech on Tuesday. Blair apparently was coordinating between Netanyahu and Zionist Union leader Isaac Herzog to help Herzog garner support inside the party for joining the government. But “talks between Netanyahu and Herzog started to fall apart and finally collapsed just after midnight” on Tuesday. “Neither Blair, Sissi nor Herzog could understand how Netanyahu wound up going with Lieberman,” said an unnamed political source. “Blair thought he could engineer the Netanyahu government and Herzog counted on the international embrace that Blair arranged for getting him into the government. It didn’t work.”

If it’s the twilight of a U.S. presidency, then it’s time for another push on Israeli-Palestinian peace: US Secretary of State John Kerry will be attending a conference in Paris on June 3 to discuss Israeli-Palestinian peace efforts, he said on Thursday, but added that it would be up to both sides to decide whether they were ready to negotiate, Reuters reports. “I will work with the French, I will work with the Egyptians, I will work with the Arab community in good faith in an effort to see if we can find a way to help the parties see their way to come back,” Kerry told a news conference during a meeting of NATO foreign ministers. Kerry was in Cairo last week to talk to President Abdel Fattah El Sisi about peace-keeping efforts after Egypt after El Sisi promised Israel warmer ties if it resumes peace talks with the Palestinians.

Polish companies will be granted investment incentives if they invest in a Polish zone in the Suez Canal area, said Sahar Ibrahim, head of EU Investor relations at GAFI, Al Ahram reports. Ibrahim who was in Warsaw as part of a doorknock mission, said a leading polish road infrastructure developer and a tram manufacturer have expressed interest in operating in a Polish special economic zone. Ibrahim reiterated previous ministry statements that the Investment Act 2.0 would restore the incentives given to investors in free zones (to which former Finance Minister Hany Dimian was ideologically opposed) and renew licences for free zone investors.


Occidental says it is unaware of takeover bid for Apache

Occidental Petroleum said it is unaware of any takeover bid for Apache, saying “it had no knowledge of any pending transaction, while Apache declined to comment on what it called rumors,” Reuters reported. The rumour possible started when “, a jobs site for the energy industry, posted a note on Wednesday about the purported acquisition, saying Apache would soon announced (sic) the deal to its employees.” Apache is one of the largest acreage holders in Egypt’s Western Desert and produces roughly 600k boe/d from its Egyptian operations. It produced 156k boe/d in 1Q2016.

Total Egypt to invest up to EGP 500 mn within three-to-five years

Total Egypt is targeting to invest up to EGP 500 mn within the next three-to-five years, Al Mal reported. The investment are expected to create over 2,500 new jobs, said Jérôme Déchamps, ‎Total Marketing & Services’ executive VP for North Africa and the Middle East. Déchamps added that Total has maintained its commitment to Egypt despite the political and economic disturbances.

Siemens plants: Beni Suef 37% complete; Borollos 28%, new capital 21%

Siemens’ Beni Suef power plant is 37% complete, its Borollos plant 28.3% complete, and the new capital plant 20.9% complete, an official at the Electricity and Renewable Energy Ministry official told Al Mal on Saturday. Egypt has received the first two of eight 400 MW turbines to be installed in Beni Suef, the ministry said on Thursday, according to Ahram Online. The project’s capacity is set to hit 4.4 GW in December 2016, 5.6 GW by May 2017, and 8.8 GW by December 2017 before reaching its nameplate capacity of 14.4 MW by May 2018.

Suez Canal Zone approves USD 1 bn in projects in Ain Sokhna port

The Suez Canal Zone Economic Authority will execute three projects worth USD 1 bn in Ain Sokhna port, Authority Vice President Abdel-Qader Darwish said, Al Borsa reported on Saturday. Darwish positioned the projects as part of a bid to raise total annual handling capacity to 20 mn containers from 4.5 mn today. In February, we had reported the oil ministry’s plans to turn Ain Sokhna port into an energy trading and exchange hub, according to Al Mal. Darwish also said on Thursday the Authority would discuss the project to redevelop West Port Said on Saturday, Al Borsa reported.

Emirates Egypt signs fuel supply deal with ExxonMobil

ExxonMobil has won a contract to supply Emirates with fuel for its aircraft at Cairo International Airport, Al Borsa reported on Saturday. The report cites Emirates’ Egypt general manager Mohamed Gomaa bin Sharaf as saying the company has an exclusive supply contract with Misr Petroleum for 12 regional airports.

IFC studies lending 12 solar companies USD 230 mn

The International Finance Corporation is studying lending 12 solar companies USD 230 mn, Al Borsa reported on Saturday. The figure represents about 17% of the total USD 1.35 bn in project costs associated with the 12 projects, the newspaper notes. News of the facilities is expected in June.

Basic Materials + Commodities

Turkey cancels anti-dumping duty on Egyptian biaxially oriented polypropylene

Turkey has cancelled the anti-dumping duties that were imposed on Egyptian exports of biaxially oriented polypropylene (BOPP), Al Masry Al Youm reported. The decision was reached after Turkish authorities concluded they provided no real harm to their domestic industry. The says this will allow for the export of USD 14 mn worth of BOPP annually.

Supply Ministry to import 80,000 tonnes of rice, pressures traders to reduce price to EGP 4.5 per kg

The Food Industries Holding Company has signed contracts for the import of 80,000 tonnes of Indian rice at a price of USD 350-355 per ton. The shipment will be delivered over two phases, the first before Ramadan and the second will arrive in the middle of the month, said the company’s CFO Abdul Aziz Abed. It is unclear whether this is related to the 60,000 tons of rice purchased last week. Abed added that the company was coordinating with the Federation of Egyptian Industries and government bodies to launch an initiative which would see local rice traders sell 50,000 tonnes of rice through the Supply Ministry cooperatives and outlets at a price of EGP 4,500 per ton (or EGP 4.5 per kg) before Ramadan. A rice trader speaking to Al Borsa attested that the ministry’s enforcement unit has been threatening traders with monopoly charges if they don’t comply. The ministry has begun pumping the market full of rice since Friday at EGP 4.5 per kg in effort to cut prices which have reached as high as EGP 10 per kg, said a statement by Supply Minister Khalid Hanafi. According to state-owned Al Ahram, this amounted to 40,000 tonnes as of Saturday evening.


Chinese manufacturer TCL to set up LCD TV factory in Egypt

Chinese LCD TV manufacturer TCL announced plans to set up a TV factory in Egypt in cooperation with Elaraby Group. “The joint factory will complete the first phase investment of [USD 2.4 mn] and go into operation in 2017, and the annual output will amount to [2 mn] sets over the coming five years,” TCL said. TCL will provide 30% of the investment and ELARABY provide the remainder. "The Egypt-based joint LCD TV factory will supply the African and Middle East markets and get stable orders for TCL with the help of Elaraby’s well-developed sales network," said Liang Tiemin, general manager of TCL’s strategic clients business center.

Food industry projects make up 34% of new industrial projects

Food manufacturers accounted for 34% of the 227 new industrial projects that were licensed in April, the head of the Industrial Development Authority said, according to a report in Al Mal on Friday. The 227 projects approved in April will result in EGP 1.9 bn in new investments and create as many as 5,000 jobs in eight industries.

Banking + Finance

CBE to amend, expand anti-money laundry regulations

The Central Bank of Egypt will amend its current anti-money laundry regulations, Al Masry Al Youm reported. The amendments will expand the current provisions to encompass individuals and SMEs, said Ahmed Faragallah, the CBE’s head of payment systems. Faragallah added that the central bank is looking into using mobile technologies to connect with small businesses and is working with banks to set risk assessments for different categories of borrowers.

NBE, Misr, Caire, HDB provide Housing Ministry with EGP 20 bn loan for mortgage fund

The National Bank of Egypt, Banque du Caire, Banque Misr, and the Housing and Development Bank will provide a EGP 20 bn syndicated loan to the Housing Ministry’s Mortgage Finance Fund. NBE, Misr, and Banque Du Caire will each provide EGP 6.3 bn, while HDB will contribute EGP 1.1 bn to the pot, according to NBE VP Yahya Abou Al Fotouh. Conditions for the loan, which has already been signed, will include full payment in five years, utilizing the full amount within a year from signing, and reporting to the banks on the status of the homes built with financing from the loan. The banks had managed to get liquidity for the loan by mortgaging their debt instruments with the CBE. Housing Minister Moustafa Madbouly had announced that the budget for subsidized housing will be increased to EGP 61 bn to fund the doubling of housing construction to 400k homes, Al Mal reports.

Egypt signs agreement with Islamic Development Bank for EGP 450 mn Islamic microfinance institution

International Cooperation Minister Sahar Nasr signed an agreement with the Islamic Development Bank (IDB) to set up an EGP 450 mn Islamic microfinance institution, with assets forecast to hit EGP 4 bn within five years, according to Al Mal and Mubasher. The new institution is expected to “stimulate social and economic development, to economically support youth and woman, and to finance vulnerable small enterprises,” said Nasr, who signed the agreement with IDB President Ahmad Mohamed Ali on the sidelines of the annual IDB Board of Governors meeting in Indonesia.

Legislation + Policy

House Manpower Committee to conclude deliberations on Civil Service Act this week

The House Manpower Committee is expected to complete its review and discussion of the Civil Service Act this week before sending the legislation to the full House for a vote, said the committee’s deputy chair Gamal Aqaby on Saturday. The committee, which has finished reviewing 50 of the 72 articles, will take into account numerous notes from other house committees on the bill’s most contentious articles when making its evaluation, Al Masry Al Youm reports.

National Security

Falcon Group to begin manufacturing security gates, metal and mine detectors

Falcon Group and an international partner are set to co-found the first Egyptian factory manufacturing security gates as well as landmine and metal detectors, Falcon Group’s Executive Director Sherif Khaled told Al Mal. The company will be announced within weeks, he said. Falcon Group will provide security for airports in Egypt through a JV with the state called Falcon National Company for Security, we reported last month.

On Your Way Out

High-profile minority rights researcher Mina Thabet was arrested on Thursday and remanded to custody for 15 days on Saturday pending an investigation of charges he “sought to overturn the regime and joined a terrorist group,” Ahram Online reports.

Desert racing is not just for men, proves Egypt’s first rally driver Yara Shalaby, who was profiled by Reuters. After coming in second place in her second race in 2013 and first in Egypt’s Pharaons International Cross Country Rally in 2014, Shalaby has now “set up the Middle East’s first women’s rally team, the Gazelle Rally, which has seven drivers and has secured sponsorship for 2016.”

American and Egyptian archaeologists discovered a rare nilometer among the ruins of the ancient city of Thmuis in Egypt’s Delta, National Geographic wrote on Wednesday. A nilometer was used for about a thousand years to measure the levels of the Nile water during its annual flooding and subsequently gauge harvest and thereby taxes. “If the water level indicated there would be a strong harvest, taxes would be higher,” according to Robert Littman, an archaeologist at the University of Hawaii. Less than two dozen nilometers are said to exist today.

Alexandria University nominated Supply and Domestic Trade Minister Khaled Hanafy for the World Food Prize, the ministry announced in a Friday statement published by state news agency MENA and picked up by Al Mal. Hanafy was nominated for his work on reforms for the bread subsidy and smart card programs, which were commended by the World Bank. The prize winner will be announced in October in the United States.

Koshary Abou Tarek will open three new branches in Saudi Arabia at an investment cost of SAR 2.4 mn, according to Al Borsa. The first is set to open up shop in Mecca during the last days of Ramadan, the food outlet’s manager Tarek Youssef said. This isn’t the first time the koshary shop has gone overseas, however. While we wish Abou Tarek all the best in KSA, their namesake product remains forever banned at Enterprise World Headquarters.

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USD CBE auction (Tuesday, 17 May): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Thursday, 19 May): 10.95 (compared with 10.90 on Wednesday, 18 May; corrected from the original version sent in email)

EGX30 (Thursday): 7,499.49 (-1.8%)
Turnover: EGP 545.9 mn (25% above the 90-day average)
EGX 30 year-to-date: +7.04%

THE MARKET ON THURSDAY: The EGX30 traded in the negative territory on Thursday erasing Wednesday’s gains and edging down 1.8% amid news of the disappearance of the EgyptAir flight. Global Telecom, Porto Group, and Juhayna were the benchmark in­dex’s top-performing stocks, while Elsewedy Electric, Egyptian Resorts, and Ezz Steel were the worst-performing constituents. At a market turnover of EGP 545.9 mn, foreign investors were the sole net sellers. Regional stocks were also in the red on Thursday, with Saudi Arabia’s TASI down 0.6%, Dubai’s DFM General Index 1.7%, and Abu Dhabi’s ADX 1.8%.

Foreigners:Net short | EGP – 35.3 mn
Regional:Net long | EGP + 5.5 mn
Domestic:Net long | EGP + 19.8 mn

Retail: 62.4% of total trades | 61.9% of buyers | 62.8% of sellers
Institutions: 37.6% of total trades | 38.1% of buyers | 37.2% of sellers
Foreign: 21.1% of total | 17.9% of buyers | 24.4% of sellers

Regional: 6.2% of total | 7.6% of buyers | 4.8% of sellers
Domestic: 72.7% of total | 74.5% of buyers | 70.8% of sellers

WTI: USD 48.41 (+0.98%)
Brent: USD 48.72 (+0.21%)
Gold: USD 1,252.90 / troy ounce (-0.63%)

TASI: 6,695.3 (-0.6%)
ADX: 4,235.4 (-1.8%)
DFM: 3,229.9 (-1.7%)
KSE Weighted Index: 356.7 (-1.4%)
QE: 9,814.0 (-2.0%)
MSM: 5,931.0 (-0.4%)

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22 May (Sunday): Al Mal GTM’s Portfolio Egypt Conference, The Marriott Hotel, Cairo. Register here.

25 May (Wednesday): The FAO’s and EBRD’s conference: Securing the future of Baladi bread: how Egyptian public-private partnerships can help deliver tomorrow’s food security, Sofitel El Gezirah, Cairo. Register here.

25-26 May (Wednesday-Thursday): The Middle East and North Africa Solar Conference and Expo MENASOL 2016, Hyatt Regency, Dubai.

28-29 May (Saturday-Sunday): The second Africa and Middle East conference on software engineering (AMECSE), Intercontinental Citystars, Cairo.

29 May (Sunday): N Gage’s Investment Regulation Forum in cooperation with Pepsico, Four Seasons Nile Plaza, Cairo. Register here.

30-31 May (Monday-Tuesday): The Middle East Regional Forum Egypt, Movenpick Hotel & Casino Cairo-Media City, Cairo.

01-02 June (Wednesday-Thursday): Cisco Connect Egypt 2016, Royal Maxim Palace Kempinski, Cairo. Register here.

02-03 June (Thursday-Friday): The first annual EBRD Research Symposium on The Economics of the Middle East and North Africa, EBRD headquarters, London, UK.

06 June (Monday): First day of Ramadan (tentative date)

06-08 July (Wednesday-Friday): Eid El Fitr (national holiday, tentative date)

06-09 August (Saturday-Tuesday): The International Conference on Chemical Sciences & Applications, Arab Academy for Science, Technology and Maritime Transports, Alexandria.

11-13 September (Sunday-Tuesday): Eid El Adha (national holiday, tentative date)

02 October (Sunday): Islamic New Year (national holiday, tentative date)

06 October (Thursday): Armed Forces Day (national holiday)

01 November (Tuesday): Prophet’s Birthday (national holiday, tentative date)

27 November (Sunday): 2016 Cairo ICT Conference Group

04-06 December (Sunday-Tuesday): Solar-Tec exhibition, Cairo International Convention Centre, Cairo

04-06 December (Sunday-Tuesday): Electricx exhibition, Cairo International Convention Centre, Cairo

11-13 December (Sunday-Tuesday): The Middle East Fire, Security & Safety Exhibition and Conference (MEFSEC), Cairo International Convention Centre, Cairo

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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