Monday, 18 July 2016

VAT will apply to tuition, fuels, but the EGX can breathe a sigh of relief


What We’re Tracking Today

It’s going to be a busy day in the House of Representatives today, with hearings on the VAT and relations with Italy and voting set to resume on both the civil service and labour unions acts:

Garhy to brief House on VAT: Finance Minister Amr El Garhy is expected to appear today before the House Planning and Budget Committee to discuss the latest draft of the value-added tax legislation, which included changes to the exemptions list. (More on that in the Speed Round.)

House to probe relations with Italy: Senior government officials including representatives from the interior and foreign ministries, intelligence and the prosecutor’s office will appear before a House committee today to discuss relations with Italy and the investigation into the killing of Italian grad student Giulio Regeni.

The House of Representatives’ vote on the Civil Service Act will resume today after it passed 12 articles on Sunday, Al Masry Al Youm reports. Parliament has been discussing and voting on the watered-down draft that was amended by the House Manpower Committee, including the amendment setting annual raises at 7%, which was contested by the government, Al Ahram reports. Other amendments set out by the committee include provisions for the hiring of temporary workers, setting maternity and paternity leave, and ensuring no currently employed bureaucrat will be fired or see his income reduced, which could defeat the whole purpose of civil service reform. As is typical of the House, the vote was not completed as the House lost quorum. Voting will resume today.

Passage of the Labor Unions Act also lost momentum yesterday when the House lost quorum. The act sets new regulations for union elections that could affect unions such as the Press and Doctors’ syndicates. This is fourth time that Parliament failed to complete a vote on the law because of MPs being absent, Youm7 reports.

The House did manage, however, to vote in favor of permanently ending daylight savings, after its initial vote was approved by the Egyptian Council of State (Maglis El Dowla).

On the international scene: More than 90 of the largest companies in America could roil global markets this week as they report what is expected to be the fourth straight quarter of declining profits, the Wall Street Journal reports. The Financial Times, meanwhile, says it’s looking forward to results from Goldman Sachs and Morgan Stanley after their “first-quarter meltdown” and following strong results from JPMorgan Chase and Citigroup.

What We’re Tracking This Week

Foreign Minister Sameh Shoukry is due in Washington on Thursday for a ministerial meeting of the anti-Daesh coalition.

Saturday is a statutory holiday marking the 1952 Revolution. While we’re not aware of anything yet scheduled, we’ll be keeping an eye out for a policy speech of some form from President Abdel Fattah El Sisi in the second half of this week.

Speed Round

Speed Round is presented in association with

VAT will be lower for tuition, Garhy will introduce tax on fuels -Reports. It appears the value-added tax (VAT) bill which will be discussed by the House of Representatives with Finance Minister Amr El Garhy today will include a different set of exemptions than were previously reported. International schools and universities will be taxed at 5%, while professional services (including the services of legal counsel and accountants) will be taxed at 10%, Al Borsa reports. Contrary to previous reports, not all staples of food will be VAT-exempt: Vegetable and cooking oils and grease will be taxed at 1%, while confectionary goods and all flours apart from those used in bread will be taxed at 5%.

Another about face was on fuels, as diesel, petrol, and kerosene will be subject to a tax ranging from EGP 0.18-EGP 0.63 per liter depending on whether it is imported or not. Construction, imported production inputs for the pharm industry, fertilizers and all forms of air-conditioned transportation will be taxed at 5%. Worth noting: the general taxation rate for the VAT has not been set per the latest draft presented to the House.

Financial services will be VAT-exempt: Al Mal has published the list of the 32 goods and 20 services that are now set to be VAT-exempt.

What about cars? Al Borsa claims the VAT rate for automobiles will reach 14%. An additional 1% tax will be imposed on passenger cars with engines below 1,600 cc. Cars of up to 2,000 cc (including trucks and SUVs) will be taxed at 15% if they are made locally, while imported ones will be taxed at 30%. This will drive inflation of 2-3% for locally assembled passenger cars, trucks and SUVs, and a 4-5% increase in prices for imported vehicles, said Ra’fat Masrooga, the head of the Automotive Marketing Information Council (AMIC), an industry association. Dealers will bear 14% of the tax on imported vehicles which will then be passed on to the consumer. Masrooga urged the government to quicken the pace on releasing the executive regulations for the VAT legislation to not allow car dealers the opportunity to price-gouge.

Look for more details today if Finance Minister Amr El-Garhy appears before the House to brief MPs on the tax.

Finance Ministry in talks with international investment banks over eurobond issuance: The finance ministry is discussing with investment banks including HSBC, Citibank, and Standard Chartered issuing USD-denominated bonds in the international market, a source told Al Borsa. The ministry is set to appoint two banks to manage the issuance, but is for now looking to gauge the interest rate and the optimal timing for the issuance, which Finance Minister Amr El Garhy had hinted could be in September or October. The source added the government is looking to secure a financial guarantee from an Arab country, which would effectively lower the interest rate Egypt would have to pay for its borrowing and to also finalize an agreement with the IMF. The government is weighing issuing the bonds in Ireland or Luxembourg, he added.

Meanwhile, the Finance Ministry is expected to issue EGP 3 bn in treasury bonds today, Youm7 reports. EGP 2.5 bn-worth of five-year bonds will be issued along with EGP 500 mn ten-year bonds.

And while we’re on FX, the parallel market saw the EGP weaken to EGP 11.50 to the USD 1 on Sunday. FX traders told Al Mal that demand for greenbacks rose as a result of continued confusion over whether the CBE would take any action concerning the exchange rate. The next Central Bank of Egypt currency auction is tomorrow.

Arabian Cement has withdrawn its preliminary offer to acquire 99.9% of ASCOM subsidiary ASCOM Carbonate and Chemicals Manufacturing (ACCM), according to a bourse statement. Arabian Cement said its board of directors decided to withdraw the offer in the light of the negotiations that followed due diligence on the Qalaa Holdings-owned company. The company had submitted the preliminary offer in March and, at the time, noted it could submit a binding one “within three months.” ASCOM confirmed that no agreement was reached and said ACCM will continue operations normally.

Kuwait’s Zain has officially asked last week to bid for a 4G license under the government’s terms and conditions, a senior source from the CIT Ministry told Reuters’ Arabic service on Sunday. The ministry appears to also be in talks with China Telecom to explore the possibility of its entry, a ministry source tells Al Masry Al Youm. As we noted yesterday, the CIT Ministry had been actively courting foreign competitors, a move the existing operators tell AMAY is just a negotiating tactic to get them to accept the government’s terms on bidding for 4G. MCIT had said it would consider opening the field to foreign operators any one of the existing MNOs backed out of the 4G sale.

As for the talks themselves, telecom operators are complaining about six items in the 4G agreement terms, sources told Al Mal. In a meeting with the head of the National Telecommunications Regulatory Authority (NTRA), representatives from Vodafone Egypt, Orange Egypt, and Etisalat Misr objected to the limited spectrum on offer, saying it will affect the service quality. The MNOs say the cost of the licence is too high and that will be challenging to pay 50% of license fees in USD. Sources also said the August deadline does not give the companies enough time to reach a decision, overlapping as it does with annual leave season the seating of new board members. A government source told Al Borsa that it will not back down of the charging 50% of the licenses in USD and that the operators have until the end of the first week of August to accept.

State-owned Telecom Egypt plans to fully accept the terms (which MNOs say skew in its favor) and begin preparations to pay the license fee next week.

In other NTRA news, it emerged last night that the regulator is considering new restrictions on the sale of mobile phone lines, a source from the NTRA told Youm7. The source added that the NTRA will redouble its efforts to clamp down on sales of SIM cards outside of licensed vendors as part of know-your-customer rules, a key component of its security policy requiring authorized outlets fully document the personal information of new subscribers. The NTRA had imposed a model contract for new subscribers last November and had clamped down on both retailers and telecoms, enforcing fines on the latter, and conducting a sweeping crackdown on the former. The issue had seemed to have died down since January.

Meanwhile, the House Health Committee rejected a proposal to open up the development of 377 full-service hospitals for underserved areas to private sector participation, according to unnamed parliamentary sources, Al Borsa reported on Sunday. The proposal had been submitted by Health Minister Ahmed Emad El Din Rady. The total estimated cost to develop the hospitals is reportedly EGP 11.3 bn, according to the health minister’s proposal, or c.EGP 30 mn per hospital. Last month, Rady had said his ministry identified 75 out of 400 such hospitals which were suitable for privatization. Private-sector participation was one scenario of several presented by the minister. Others include joint development of hospitals with another ministry, possibly including the Defense Ministry. Also yesterday: The Doctor’s Syndicate released a statement explaining their opposition to the privatization of the hospitals in question.

Background: The “Takamol” hospitals were built in the 1990s to provide low-income families across Egypt with access to comprehensive, quality and low cost healthcare — and were promptly neglected by the state. Plans to refurbish them under a public-private partnership first arose during the 2005 campaign of Hosni Mubarak, but were abandoned, Youm7 reports.

Apparently, a number of multinational [healthcare compounds] manufacturers have warned they will curtail supplies in Egypt of products currently priced over EGP 30 if the government does not allow them to increase retail prices, insiders tell Al Borsa. The threat follows the Health Ministry’s rejection of a proposal to increase prices. The companies argue that the devaluation and FX shortage has made its untenable to sell under the current ministry-imposed price formula. They’re arguing that raising prices on medication over EGP 30 is no less important than the ministry’s decision to allow a 20% increase on compounds under EGP 30. Pharmacist Syndicate is siding completely with the ministry on this, with its head saying that manufacturers are raking in 600% profit margins and vowing to challenge the motion. The Syndicate’s support was crucial in getting the ministry to approve the 20% increase in May.

“No1 investor & hungry for more” –UK ambassador. U.K. ambassador John Casson was typically exuberant on Twitter as he noted the arrival in Egypt of the U.K.’s trade representative to Egypt and the chief of U.K. Export Finance, the United Kingdom’s export credit agency. The U.K. offered to “underwrite prospective UK-Egyptian trade deals with up to GBP 500 mn in financing or insurance,” according to a statement by the British Embassy in Cairo tweeted by Casson. The two officials are set to meet with the ministers of trade and investment to discuss key economic projects such as the Suez Canal Economic Zone and the Tahrir Petrochemicals project in Sokhna, among others. A statement from the Prime Minister’s office also claims the parties discussed potential investments in the renewable energy, education and transport sectors, particularly the upcoming monorail project.

The first phase of the Cairo Metro’s fourth line has gone USD 500 mn over budget to USD 3.5 bn, Al Mal reported. The cost increase is being blamed on the spiraling price of building materials. The Japan International Cooperation Agency (JICA) said it is willing to provide 50% of the total cost of the phase, if asked by the Egyptian government. The first phase of the fourth line is 19 km long and includes 17 stations.

New Israeli ambassador to Cairo David Govrin arrived in Egypt yesterday to assume his new role, Al Ahram reported. Govrin was formerly the Director of the Jordan and North Africa Department at the Ministry of Foreign Affairs in Israel.

MOVES- Nayera Amin has quit her post as executive vice chairperson of Al Ahli Bank of Kuwait-Egypt, Al Mal reported. Amin was CEO of Piraeus Bank Egypt before it was acquired by Al Ahli Bank of Kuwait.

MOVES- Yehia Sameh is the new CEO and Managing Director of Promomedia, Al Mal reported. Sameh was previously deputy General Manager at Optimum Media Direction.

MOVES- The New York TimesLiam Stack is in Egypt subbing for bureau chief Declan Walsh. The Irish national is now in the U.S. to help the Times with its coverage of the U.S. presidential election campaign, to which Walsh writes he’ll bring a foreign correspondent’s eye as he focuses on stories of interest to the paper’s international readers. The title of Walsh’s section / column: Abroad in America. Read his first installment here.

Turkey after its failed coup: The most recently updated death toll of Friday’s failed coup as of dispatch was 294 people. At least 104 conspirators were killed in the unrest, according to Turkish government officials. In what Turkish President Recep Tayyip Erdogan called on Friday “a gift from God,” he has taken the failed coup as an opportunity to arrest a further 182 military personnel, including “more than 50 senior army officers.” Among those arrested was Maj. Gen. Ozhan Ozbakir, commander of the Denizli garrison and the 11th Commando Brigade, according to unnamed sources speaking to state news agency Anadolu. Earlier in the day, Erdogan’s top military aide, Col. Ali Yazici, was also put under arrest. Maj. Gen. Mehmet Disli, brother of AKP deputy Chairman Saban Disli, has been charged with organizing the coup in Turkey, Hurriyet reported. It is unclear if Erdogan will continue to assign equal blame to the alleged coup plotter as is directed toward others. The state news outlet Anadolu has also taken to referring to the putschists in its articles as “FETO/PDY terrorists,” a reference to US-based cleric Fethullah Gulen and his followers, whom Turkey designated as a terrorist organization this past May. During rallies on Sunday, Erdogan responded to chants of “We want the death penalty,” by saying “you cannot push the wish of the people to one side.”

Erdogan appears to have a much firmer handle on the need to arrest enemies in such situations than those trying to overthrow him, as Harvard professor Dani Rodrik writes in ‘Turkey’s Baffling Coup’: “No less baffling was the almost amateurish behavior of the putschists, who managed to capture the chief of the general staff but apparently made no meaningful attempt to detain Erdogan or any senior politicians. Major television channels were allowed to continue to operate for hours, and when soldiers showed up in the studios, their incompetence was almost comical.” This is despite reports that two rebel F-16 pilots had harassed Erdogan’s plane while it was en route to Istanbul and had the plane in their sights, according to an unnamed former military officer speaking to Reuters. “Why they didn’t fire is a mystery,” he said.

Closed air base reopens, commander arrested: Turkey reopened use of its Incirlik air base for use by the United States to launch airstrikes against ISIS targets, US Defense Department officials said on Sunday. Base commander Gen. Bekir Ercan Van and 11 other personnel from the base were arrested (paywall). The general had reportedly approached the United States for asylum but was rejected, according to unnamed sources speaking to the New York Times. Turkey is pressuring Greece to hand over eight of its military personnel who fled by helicopter and who profess they were not part of the coup plot but fear retribution if they return. Greece has said it would return the helicopter immediately but would examine the requests for asylum.

Turkey responds to Egypt’s moves at the United Nations Security Council: “It is natural for those who have come to power through coup to refrain from taking a stance against the coup attempt aimed at our president and government, who came to office through democratic elections,” said Turkish foreign ministry spokesperson Tanju Bilgic said on Sunday, Anadolu reported.

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The Macro Picture

Isolationism and fear of immigration and free trade will not end globalization, Michael Schuman writes for Bloomberg Businessweek. “Rather than retrenching, globalization is deepening and expanding — whether angry Trump supporters or British Leave voters like it or not,” Schuman thinks. Trade relations are growing between countries, with more regions moving towards establishing free trade areas in Asia and Africa. And investments abroad by companies, including from the emerging countries, increased dramatically over the past 10-20 years. Trade between China and India grew from USD 1.7 bn in 1997 to USD 72 bn in 2014, one of several examples Schuman cites. Chinese companies alone invested USD 111 bn around the world, ten times bigger than in 2005. Schuman admits that Brexit could dampen growth in Europe and outside of it, yet insists globalization will not be stopped. “Instead of pandering to isolationist forces, politicians would do better to address their very real concerns directly,” writes Schuman.

Image of the Day

Turkey’s tourism sector: While some have expressed concerns that the failed coup will harm Turkey’s hopes to revive its tourism — foreign tourist arrivals are down by 340k visitors in 2015 from the previous year, and down by 300k visitors y-o-y in 1Q 2016 — one should still keep a long term perspective on the strength and resilience of the Turkish tourism sector, as shown in the following chart. (Turkey — Foreign tourist arrivals, 2001-2015, view image, source: TurkStat)

Diplomacy + Foreign Trade

Civil Aviation Minister Sherif Fathy is in Russia on a three-day visit to meet a number of Russian senior officials and discuss resuming direct flights, Sputnik reported. "We hope, we will make progress on this issue, especially after we have taken a significant number of measures to ensure airport security," Fathy is quoted as saying.

Trade ministry studying Brexit impact: The Trade and Industry Ministry is currently studying the impact of Great Britain leaving the EU on trade relations and contracts under the European-Egyptian partnership agreement, Trade and Industry Minister Tarek Kabil told Al Masry Youm. Both countries want to maintain trade relations, he added.

During closed door sessions at the African Union summit, President Abdel Fattah El Sisi and other heads of state discussed ways to conclude negotiations on forming an African trade area, Africa’s stance on Security Council reforms, as well as the upcoming AU Commission elections, Al-Ahram reported on Sunday. El Sisi also held talks with Malinese president Ibrahim Boubacar Keita, as well as Sudanese president Omar Bashir Al-Shorouk reported on Sunday.


EGAS to defer 45 LNG shipments to next fiscal year

EGAS plans to defer the deliveries of over 45 LNG shipments signed with companies and nations including Oman and Russia to the 2017-18 fiscal year. EGAS is targeting importing 110-120 shipments of LNG in the 2017-18 fiscal year and has begun drawing up a timetable for the shipments, according to an EGAS sources. The source does not provide an explanation as to why that is. A three-year supply agreement with Gaz de France (GDF) for 12 shipments of LNG will also be moved to next fiscal year, the source adds. Al Shorouk quotes former EGAS head Khaled Abdel Badei as saying that the Egypt’s bill for LNG shipments for the 2016-17 fiscal year will amount to USD 3 bn.

Petrobel adds 70 mcf/d to production in August

Eni and BP JV in Egypt, Petrobel, said it is adding 70 mcf/d to its production in August from the DEKA offshore field, sources at EGAS told Al Borsa. Petrobel is bringing one new well at DEKA onstream, which will make up for the natural production decline rate in Egypt, the source explained. The DEKA project is centred on the Denise and Karawan gas fields in Temsah Concession in the East Nile Delta, reached first gas in August 2014, and is intended to supply the domestic market.

Electricity ministry studies completing Damanhour power station through turnkey system

The electricity ministry is studying building the Damanhour power station through one EPC (engineering, procurement and construction) and finance contract instead of multiple tenders after classifying the project as part of its 2017-2022 plan, Al Borsa reported. The ministry had recently reached an agreement with the African Development Bank for a USD 80 mn loan to fund the project, but the bank is awaiting a decision on changing the tender system. The total cost of the project is estimated at around USD 1.3 bn.


Singapore port operator mulls backing out of container station management contract

Singapore port-operator PSA International is studying backing out of a container station management MoU signed for the port of East Port Said, sources tell Al Mal. Preliminary studies found the project was economically unfeasible due to a decline in trading to 1.9 mn tonnes last year despite the port having a capacity of 5.5 mn containers, the sources added. The MoU was signed in November 2015 before the formation of the General Authority for the Suez Canal Economic Zone. SCZone Spokesperson Nasser Fouad declined to comment.

Basic Materials + Commodities

12 firms offer to supply GASC with wheat, 300k tonnes bought

Twelve trading firms have submitted offers to supply GASC with wheat on Saturday for 21-30 August delivery, Reuters reported. GASC announced on Sunday it bought 300k tonnes of wheat split between 180k tonnes from Romania and 120k tonnes from Russia at an average price of USD 174.99 per tonne. GASC’s latest tender “was held just four days after the GASC purchased [180k] tonnes of Russian and Ukrainian wheat, a rapid return to the market that underscores recent questions over how much wheat is actually in the country’s domestic stocks.” Supplies Minister Khaled Hanafy noted that Egypt’s wheat stocks now last to the end of the year, according to Al Shorouk. Reuters also published an infographic detailing Egypt’s wheat suppliers in FY2014-15 and FY2015-16.


Reliance builds EGP 30 mn recycling factory in Port Said

Reliance Heavy Industries built an EGP 30 mn recycling factory in Port Said that will go into operation in August, CEO Karim El Sabe told Al Borsa. The factory includes two lines for manual sorting of waste, and one refuse-derived fuel production line, he added, noting that RDF will be sold to cement factories. The factory can generate 200 tonnes of alternate fuel from 550 tonnes of waste, said El Sabe.

Health + Education

Education Ministry to tender the development of 200 schools under PPP framework in August

The Education Ministry plans to launch a tender for the construction and management of 200 schools in August, said Education Minister El Helal El Sherbiny according to Al Borsa. These will be part of the first phase development of an estimated EGP 15 bn public-private partnership program announced back in December, which hopes to build schools targeting medium-income families with a combined capacity of up to 60K classrooms by 2018. Under the partnership, the ministry will provide land, while the private sector will build and operates the schools.

Real Estate + Housing

Maksab Project Management plans USD 100 mn investment in Egypt

Kuwait-based Maksab Project Management is planning a USD 100 mn investment into Egypt’s real estate market, CEO Abdullah Al Harran told Al Shorouk. The investment will include a shopping mall as well as housing projects that will be announced at the Elite Real Estate Exhibition, he added.

Nasr Company for Building and Construction to develop 22 feddan of Merryland

The Nasr Company for Building and Construction (EGYCO) has won the contract to develop 22 feddan of Merryland Park during the first phase of the project, which is worth EGP 30 mn, the Heliopolis Company for Housing & Development (HCHD) said, according to AMAY. The HCHD is set to proceed soon with the tendering process for the remaining 45 feddan of the project.


Currency devaluation might not boost tourism as security concerns remain

An EGP devaluation might not be sufficient on its own to stimulate tourism in Egypt, Sarah Diaa writes for Gulf News. “Without a marked improvement in the confidence of tourists and tour operators in terms of safety and security on the ground, devaluation is unlikely to attract more tourists. Safety will be more paramount to tourists than a reduction in travel costs,” said Rashid Aboobacker, associate director at TRI Consulting. International tourists are still shunning Egypt for destinations such as Spain and Portugal, an analyst at Euromonitor noted. Despite the setbacks, Aboobacker expects the industry to bounce back once the international community “perceives a marked reduction in terrorist threats in the country.”

EgyptAir cancels Jakarta route, Indonesian tour operators respond by cancelling Egypt trips

A number of tourism industry investors have voiced their concern over EgyptAir’s “surprise” decision to cancel direct flights between Cairo and Jakarta, Al Shorouk reported. Eight Indonesian tour operators have responded by cancelling trips to Cairo and St Catherine’s. A member of the South Sinai tourism investors association said EgyptAir should restore the Cairo-Jakarta route and can instead reduce the losses by linking the flights to different routes.

NUCA and Tourism Development Authority to form committee to finalize land tender bids on tourism projects

The New Urban Communities Authority (NUCA) and the Tourism Development Authority are set to form a committee this week to begin reviewing some 112 bids for land zoned for tourism use, Shorouk reported on Sunday.

Automotive + Transportation

Egyptian Holding Company for Airports investing EGP 800 mn into upgrading subsidiaries

The Egyptian Holding Company for Airports and Air Navigation (EHCAAN) is investing EGP 800 mn in FY2016/17 into upgrading four of its subsidiaries, EHCAAN Chairman Ismail Aboulezz told Al Shorouk. The company is waiting for Cabinet approval to task the Arab Contractors with the Sharm El Sheikh airport expansion project that will increase capacity from 2.5 mn passengers to 4.5 mn passengers at a total cost of EGP 300 mn that will be self-financed, he added.

Suez Canal Authority reduces total transit fees on US East Coast / South Asia / Southeast Asia route

The Suez Canal Authority approved a discount rate ranging from 45% to 65% on transit fees for the US East Coast / South Asia / Southeast Asia route, marking the third discount this year by the authority in an effort to attract shipping traffic, Al Borsa reported on Sunday. Earlier last month, the authority reduced transit fees by 65% on the same route, after having put in place a 30% reduction in March. The cuts are on total transit fees, which include both the actual transit fees as well as any additional fees.

Banking + Finance

NBE contracts NCR to install 1,000 ATMs by end of fiscal year

NBE has contracted consumer transaction service provider NCR to install 1,000 ATMs by the end of the current fiscal year, head of retail Alaa Farouk told Al Borsa. The contract will bolster the number of NBE-operated ATMs from 2,750 to 3,750, he added. The value of the transaction was not disclosed.

Singaporean company to borrow around EGP 1 bn to build desalination plants near Suez Canal

Singapore’s Hyflux is borrowing around EGP 1 bn from Bank of Alexandria, Banque Misr, and HSBC Egypt to build desalination and power plants at the Suez Canal economic zone, sources told Al Shorouk. The three banks are trying to attract more domestic lenders to finance the loan, the sources added. Hyflux had signed a letter of intent to build a desalination and power plant for an investment cost of USD 500 mn on an EPC+finance basis.

Other Business News of Note

GAFI, Japan External Trade Office study increase in Japanese investment in Egypt

General Authority for Investment and Free Zones (GAFI) head Mohamed Khodeir met with the head of the Japan External Trade Office (JETRO) Atsushi Ikeda to discuss Japanese investments in Egypt, particularly in the infrastructure, renewable energy, food, car assembly and home appliances industries, AMAY reported on Sunday.


Lawyers Syndicate renews confidence in syndicate head Ashour in vote

Lawyers Syndicate head Sameh Ashour was re-elected to his position following a vote of confidence on Sunday, Daily News Egypt reported. Ashour and the board received 9,974 votes, while 3,080 members voted to withdraw confidence. The vote was marred by physical fights between supporters and opponents of candidates, resulting in the assault of some journalists covering the elections and damage to their cameras and equipment.

National Security

US Navy commander arrives in Cairo

Commander of the US Naval Forces Central Command, Vice Admiral Kevin M. Donegan, arrived in Cairo yesterday to “meet with senior Egyptian officials and discuss shared security interests,” according to a statement from the US Embassy. Donegan plans to discuss US-Egypt “collaboration and the long-standing partnership between our two countries in fighting terrorism and promoting security and stability in the region.”

On Your Way Out

One winner from the EGP devaluation: Egypt Duty Free, whose (EGP-denominated) profits increased by 13.7% y-o-y in FY2015-16, according to Daily News Egypt. The EGP devaluation shielded the company “from the negative repercussions of the decline in tourism activity and fewer arrivals from abroad.” Egypt Duty Free recorded a net profit of EGP 61.24 mn in FY2015-16.

The markets yesterday

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USD CBE auction (Tuesday, 28 June): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Sunday, 17 July): 11.50 (against 11.30-11.40 on Wednesday, 13 July)

EGX30 (Sunday): 7,600 (+0.22%)
Turnover: EGP 439.9 mn (1% above the 90-day average)
EGX 30 year-to-date: +8.47%

THE MARKET ON SUNDAY: The benchmark EGX30 inched up 0.2% yesterday, with top gainers including Emaar Misr (+6.3%), Egyptian Resorts (+5.3%,) and Arab Cotton Ginning (+5.2%), while the index’s worst performers included Orascom Construction (-1.3%) and United Arab Stevedoring (-1.2%). Total market turnover stood at EGP 439.9 mn, with local investors the sole net buyers.

Foreigners: Net short | EGP -14.2 mn
Regional: Net short | EGP -15.9 mn
Domestic: Net long | EGP +30.1 mn

Retail: 68.9% of total trades | 71.6% of buyers | 66.1% of sellers
Institutions: 31.1% of total trades | 28.4% of buyers | 33.9% of sellers

Foreign: 4.7% of total | 3.1% of buyers | 6.4% of sellers
Regional: 7.9% of total | 6.1% of buyers | 9.7% of sellers
Domestic: 87.4% of total | 90.8% of buyers | 83.9% of sellers

WTI: USD 45.91 (-0.09%)
Brent: USD 47.69 (+0.17%)
Natural Gas (Nymex, futures prices) USD 2.78 MMBtu, (+0.98%, August 2016 contract)
Gold: USD 1,326.40 / troy ounce (-0.08%)

TASI: 6,680.8 (0.3%)
ADX: 4,597.5 (+0.5%)
DFM: 4,597.5 (+0.5%)
KSE Weighted Index: 349.0 (unchanged)
QE: 10,418.8 (-0.1%)
MSM: 5,871.8 (+0.2%)

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21 July (Thursday): Foreign Minister Sameh Shoukry is due in Washington for a ministerial meeting of the anti-Daesh coalition. 23 July (Saturday): Revolution Day, marking the 1952 Revolution. We’re expecting that Sunday will not be a national holiday despite the statutory day falling on the private-sector weekend. 25 July (Monday): The European Bank for Reconstruction and Development, European Investment Bank, and World Bank launch their joint report: What’s holding back the private sector in MENA? Conrad Hotel, Cairo. 28 July (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates. 28 July (Thursday): Ruling expected on charges of disseminating false news against former Central Auditing Organization head Hisham Genena. 07 August (Sunday): Deadline for mobile operators to submit applications for 4G licences 05-08 September (Monday-Thursday): The 6th EFG Hermes London MENA and Frontier Conference, Emirates Arsenal Stadium, London, UK. 11-13 September (Sunday-Tuesday): Eid El Adha (national holiday, tentative date). 19-20 September (Monday-Tuesday): Euromoney Egypt conference, venue TBD. 22 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates. 02 October (Sunday): Islamic New Year (national holiday, tentative date) . 06 October (Thursday): Armed Forces Day (national holiday). November (TBD): Delegation of German companies in the renewable energy sector due to visit to discuss investment opportunities. 11-12 October (Tuesday-Wednesday): Global Islamic Economy Summit, Madinat Jumeirah, Dubai. 17 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates. 27 November (Sunday): 2016 Cairo ICT, Cairo International Convention Centre. 04-06 December (Sunday-Tuesday): Solar-Tec exhibition, Cairo International Convention Centre. 04-06 December (Sunday-Tuesday): Electricx exhibition, Cairo International Convention Centre. 11 December (Sunday): Prophet Muhammad’s Birthday (national holiday; date to be confirmed). 11-13 December (Sunday-Tuesday): The Middle East Fire, Security & Safety Exhibition and Conference (MEFSEC), Cairo International Convention Centre, Cairo. 29 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates.

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