Sunday, 7 August 2016

Consumer confidence is up, but don’t buy cargo shorts if you know what’s good for you

TL;DR

What We’re Tracking Today

So, where were we? Happy Sunday morning, folks. The International Monetary Fund is still in town for talks on a USD 12 bn, three-year bailout package. Finance Minister Amr El Garhy says there is no pact with the IMF on a three-stage devaluation. House hearings on the value-added tax are ongoing. The president defended his economic policies in a speech yesterday, two days after the Economist savaged Egypt in a string of stories. It’s still earnings season. And if you’re a Cairo American College parent, it’s the last full week of summer vacation.

What We’re Tracking This Week

** Part three of our series “Saving Cairo from Itself” by the folks at SODIC ran on Thursday. The series has been the number-one or number-two most-clicked link in Enterprise in each of the past three weeks. If you missed an installment, catch up below:

This week’s installment will be out on Thursday and looks at the real reasons mortgage finance hasn’t caught-on in Egypt.

On The Horizon

The Rio Olympic Games are ongoing for the next three weeks, wrapping up on 21 August. 21-year old Farida Osman, one of Egypt’s best-ever swimmers and the first Egyptian to qualify at the World Aquatics Championship in 2013 (5:15), advanced to the semi-finals in the women’s 100m butterfly, butcame in 5th in her heat and 12th in the final rankings. It’s not over for Osman: Her main event is the 50m freestyle, taking place this Friday.

And how was the first day? “The Rio Olympic Games got off to a shambolic and nervous start on Saturday, with organizers apologizing to angry fans kept waiting for hours at security checkpoints to enter venues while, outside, shootings and bomb scares kept visitors on edge. Athletes competed in front of empty stands early on the first day,” Reuters reports in a scathing review of the games’ opening.

Speed Round

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Some good news for a change: Consumer confidence in Egypt grew by three points q-o-q to a reading of 81 on Nielsen’s Consumer Confidence Index for 2Q2016, below the Middle East / Africa average of 89. Egypt is ranked above only South Africa in a regional list topped by the UAE and Saudi Arabia. Job prospect sentiment improved by two points to 31% and personal finance sentiment was flat at 49%. In the latest sign that Egyptian consumers are feeling the pinch of inflation, the report shows that “Immediate-spending intentions were generally stable in each market. In the region, one in four respondents said they had no spare cash after paying basic living expenses, with levels in Egypt (31%) and Morocco (29%) above the average.” The landing page of the report is here and you can download it in full using the link on the right hand side, but will have to register.

We are borrowing USD 3-5 bn through a eurobond issue: Cabinet has approved plans for an international bond issuance of between USD 3-5 bn, Reuters reported on Thursday. A Finance Ministry official said Egypt would target USD 3 bn initially but could increase the borrowing to USD 5 bn if “it found there was investor appetite.” A day earlier, Egypt’s government published an advertisement in the FT seeking lead managers for the issue. Deputy Finance Minister Ahmed Kouchouk said the government will begin accepting bids to manage the issuance starting from this week, Al Masry Al Youm reported.

Clauses relating to the state budget are now on the agenda in talks with the International Monetary Fund, Finance Minister Amr El Garhy told Reuters, and the government is making “good” progress in the negotiations. “We want to achieve the figures we set for the budget… This is what we are discussing with the IMF,” El Garhy said.

El Garhy denied on Thursday the IMF has asked for a three-step plan to float the EGP, according to Al Masry Al Youm. On Wednesday Al-Shorouk had reported the IMF was pushing for a three-stage float. Al Borsa also has news of the denial.

VAT by September: The minister expects the House of Representatives to pass the value-added tax by the end of August or early September, but said he cannot disclose the details of ongoing discussions between the government and parliament. A member of parliament told Al Borsa the IMF delegation is expected to meet up with political parties represented in the House of Representatives this week to discuss the loan.

The government is looking to generate EGP 6-8 bn annually from the planned IPOs of state-owned companies. El Garhy said the state will list only 20-30% stakes in the companies it is looking to float. He did not give specify timelines for the listings.

Additional caps on purchases and cash withdrawals: AAIB, SAIB, QNB, Audi and Barclays imposed further caps on monthly cash withdrawal and purchases abroad both for credit and debit cards:

  • AAIB: Monthly withdrawal limit for debit cards at USD 250, down from a previous USD 750, Al Borsa reports. No change USD 2,000 cap for cash withdrawals on credit cards.
  • SAIB: Cut the limit for credit cards to USD 500 for cash withdrawals and USD 2,500 for purchases on all cards. No cash withdrawals allowed.
  • Bank Audi: Cut limits for purchases on Titanium Credit Cards by 50% to USD 2,000, while cash withdrawals remains capped at USD 400.
  • Barclays: Platinum card holders have had withdrawals capped at USD 280 and purchases capped at USD 3,370.
  • QNB capped purchases using Debit Classic at USD 1,520 and USD 200 for cash withdrawals. Holders of its Classic credit cards face caps of USD 3,000 for purchases and USD 500 for cash withdrawals.

The division of the Federation of Egyptian Chambers of Commerce representing FX bureaux is considering a motion to shut down exchanges for a three-month period in what it said was a bid to “calm” the parallel market and to ostensibly demonstrate to the CBE and that the they do not hold complete control of the parallel market, sources tell AMAY. Nearly two-dozen offices have seen their licenses pulled and 14 others have had theirs suspended for a year under recent crackdowns.

Meanwhile the parallel market apparently fluctuated between EGP 12.40 and EGP 12.50 to the USD 1 on Saturday.

Eni chief Descalzi has high hopes for Egypt: Paul Barrett interviewed Eni’s CEO Claudio Descalzi for Bloomberg: Descalzi, one of Egypt’s BFFs, as we called him in our 2015 year-in-review, believes he can unite the interests of Egypt and Israel. Descalzi has high hopes for Egypt, which he says “will be completely self-sufficient. At the end, they’ll also export energy. It will create stability in Egypt. They can create cash flow selling gas and promote their own development. Then they can aggregate. They can create a hub with Israel, with Cyprus, in the future with Libya. They can be one of the solutions for European energy security.” He also believes that Egypt can work with Israel well because they “need each other” and “can share facilities.” Globally, Descalzi attributes Eni’s success to keeping costs down saying their breakeven price is now at USD 27 per bbl.

FEI exporters object to rebate for exporters who source inputs locally: The value-added tax (VAT) legislation apparently grants tax rebates for exporters who source production inputs domestically — provided they deposit all their export revenues in banks, Al Masry Al Youm reports. Exporters who are part of the Federation of Egyptian Industries (FEI) have balked at the incentive, which they feel will simply drive exporters to rely heavily on drawbacks from their exports to supplement their need for imports, said Mohamed El Bahay, head of the FEI’s taxation committee, adding that importers warned that this would drive-up prices in feeder industries significantly. On a related note, Bahay stated that the FEI dropped its objection to the EGP 500K mandatory minimum income to register for the VAT after receiving assurances from the Finance Ministry that it will set a separate law to include SMEs as part of the VAT system.

President Abdel Fattah El Sisi criticized detractors of Egypt’s economic policies, saying the economic benefits of the New Suez Canal and other national projects is unquestionable. In a speech yesterday marking the one-year anniversary of the opening of the New Suez Canal, the president said critics either don’t know the truth or are deliberately attempting to “sap the will of the Egyptian people.” El Sisi also called out critics of the government’s social housing and defense spending priorities. The Associated Press’ Hamza Hendawi has a wrap-up on the speech that’s been widely picked up, helping set the tone on coverage of Egypt this morning. You can watch the president’s speech in Arabic here (runtime: 27:31).

USD-denominated revenues from the Suez Canal grew 4% in the period from January to July to USD 3.2 bn, up from USD 3.1 bn during the same period last year, said Suez Canal Authority Chairman Mohab Mamish at the anniversary celebrations. This comes despite a 14% decrease in global trade during 2015, said Mamish. He attributes the dichotomy to the Suez Canal Authority’s “new marketing strategy,” which helped attract shipping, referring to the four discounts instituted by the authority in 2016 on transit fees for routes from the Americas to Asia and South East Asia. In EGP terms, revenues, grew 13.5% during the period to EGP 26.6 bn, Mamish said.

Mamish noted that his data was verified by the CBE and displayed certification for the FX revenue figures signed by CBE governor Tarek Amer. The Suez Canal Authority had not presented its monthly accounts on Suez Canal revenues since March and had refrained from providing USD-denominated revenues from February onwards. Mamish expects total revenues to grow in conjunction with an expected 2.8% and a 3.6% increase in global trade in 2016 and 2017. You can Watch Mamish’s speech in Arabic here (runtime: 35:57).

No more than 12 companies qualified under the feed-in tariff program for renewable energy are likely to participate in phase one, Reuters suggests, noting that while some players may exit the market, “others, along with international lenders, are now looking to phase two.” The newswire’s Lin Noueihed hits the nail on the head when she notes that “…the government was dragging out the process because it now judged the FiT as too high and was hoping to offer lower rates in round two. The cost of solar components has plummeted since Egypt set its current tariff, which applies only if companies close a deal by Oct. 28,” adding, “Since announcing its renewable plans, Egypt has also commissioned megaprojects from firms like Siemens, which dwarf FiT schemes and, analysts say, have sapped the urgency to push through.”

The Reuters article, the first significant international coverage of the collapse of phase one, also provides the first statement we have heard from Enel Green, one of the international companies exiting the project. "Continuous uncertainty from the local authority in managing the process as well as delays in assigning contracts, have lead EGP to freeze its business development operations in the country," said a company spokesperson.

EFSA wants to regulate the health insurance industry: The Egyptian Financial Supervisory Authority (EFSA) is drafting proposed amendments to the Insurance Supervision Act that would give it new power to regulate the health insurance industry, Al Borsa quotes EFSA boss Sherif Samy as saying. Meanwhile, EFSA has apparently decided that it will combine legislation on leasing and factoring activities, both of which are currently being drafted, into one act, Al Shorouk reports. The regulator appears to have pushed back the deadline on its completion, as it plans to put it up for discussion by September and to have it introduced in the House by October, after earlier announcing a date of mid-July. Samy also claims a number of government bodies are considering issuing bonds secured by revenues from specific government or municipal projects. EFSA had introduced measures regulating the bonds over two years ago, but they have not been utilized, Al Mal reports.

Draft bill on water conservation reportedly in the works, possibly ahead of expected impact of GERD: The Ministry of Water Resources and Irrigation is reportedly preparing a bill to submit to the House of Representatives that would seek to replace the Nile’s supply of water to all of Egypt’s coastal cities with desalinated water, in addition to a number of other water-saving measures, according to an unnamed source at the ministry speaking to Al Monitor. The bill would reportedly double penalties on the “unlicensed cultivation of water-intensive crops” as well as aquaculture supplied by Nile water. The report also suggests that the water ministry is purposely keeping the public in the dark about this year’s flood levels to help its nascent water conservation and public education campaign succeed. “The Egyptian government should be honest with people regarding the embarrassing water situation in Egypt,” said Mubarak-era water minister Mohamed Nasr Eldin Allam. The ministry’s alleged political approach may also be to “prepare the public for a serious wave of water shortages when the Renaissance Dam starts to operate and be filled,” Al Monitor paraphrases Alexandria University’s chair of its irrigation and hydraulics department Haitham Awad as saying.

Is Russia’s Melinvest making a move on Egypt? Russian grain storage and handling facilities manufacturer Melinvest is considering investing in Egypt, the company’s rep in Egypt Magdy Shahata tells Al Borsa. The company would open line of credit worth hundreds of mns of USD with Russian lenders to develop silos in Egypt, said Shahata, who added that the company had participated in the development of a 3 mn tonnes-capacity grain logistical center. The announcement comes as Blumberg Grain has apparently been told the state won’t be working with it for part 2 of the “shounas program.” Phase one saw Blumberg build 105 shounas for the government in time for harvest collection season, with an eye to developing 300 more as part of phase two. After its shounas were not utilized during the collection season by the Supply Ministry, which has been embroiled in the wheat corruption scandal, the ministry refused to sign for phase two, potentially severing a long term relationship Blumberg Grain. That’s prompted reports, which we noted last month, that Blumberg may favour growing in Algeria, where we had previously noted it was finalizing a contract.

Meanwhile, the Supply Ministry is catching more heat for relying on privately operated silos, when there were plenty more government-run silos available, a source from the House of Representatives’ committee investigating wheat fraud tells Al Borsa. Of the 517 silos available, only 135 are private sector-run, said the source. The committee is expected to submit its report on the scandal this week.

Former Grand Mufti Ali Gomaa survived an assassination attempt by two masked gunmen while on his way to a Friday sermon in Sixth of October City, AP reported. Gomaa was unharmed, but one of his bodyguards was injured. A group called Hasm, reportedly an acronym for Haraket Sawid Misr, claimed responsibility for the attack in a statement on Friday, saying they aborted the plan because of “the presence of civilians near Gomaa.” The same group claimed an attack on a Fayoum police chief last month. Gomaa is “known for his controversial Islamic edicts,” Ahram Online notes, including declaring that obeying President Abdel Fattah El Sisi “is part of obedience to the Prophet Muhammad,” as well as suggesting that the Muslim Brotherhood are non-Muslims.

A combined air and ground operation killed the head of Daesh in Sinai Province Abu Duaa Al Ansari along with at least 45 other jihadists in a “preemptive strike” on Daesh ammunition depots in Sinai, according to an announcement by Armed Forces spokesperson Brig. Gen. Mohammed Abdul Aziz Ghonim on his official Facebook page on Thursday evening. The statement said dozens of other sites were “targeted with precise hits” in the operation against the group’s strongholds in the south and south-west of the Sinai city of El Arish. The group has previously claimed responsibility for the downing of the Metrojet airliner last fall and the assassination of Prosecutor General Hisham Barakat. It is the first time Egypt’s security forces have named the head of Daesh in Sinai, The Guardian reports. The announcement was followed by an explosion in Al Arish on Friday which killed four civilians and injured eight.

MOVES- Prime Minister Sherif Ismail appointed Finance Minister Amr El Garhy as Egypt’s governor on the board of the Asian Infrastructure Investment Bank, Al Mal reported. International Cooperation Minister Sahar Nasr was appointed deputy governor.

Civil war is brewing in America — and threatens at least one Enterprise editor’s household in Egypt. One of the most-shared stories in Wall Street Journal’s history, Nicole Hong’s pithy “Nice Cargo Shorts! You’re Sleeping on the Sofa” has been debated and discussed by high-profile U.S. CEOs, actors, directors — even top government officials. Hong, who usually writes about legal issues for the Journal, was back yesterday with “What Happened After I Wrote That Cargo Shorts Story,” chronicling the fallout. GQ notes that “The Men of The Wall Street Journal Stand Up for Cargo Shorts, Look Terrible.” And a prof at the Fletcher School writes a defense of cargo shorts in the Washington Post headlined, “A Very Important Post about … cargo shorts.”

CORRECTION- On Thursday, we outlined the new EGX regulations adding more restrictions on the shares that could be traded as GDRs and noted incorrectly that the decision changed the limit. The cap that a maximum of a third of company shares can be traded as GDRs remains and the EGX added to it that the percentage of shares traded as GDRs cannot exceed the proportion of shares in free float. Under the new rules, if the percentage of GDRs exceeds a company’s free-float, no new GDRs can be issued until the percentage returns to the level set by the new rule. Given the list of GDRs provided by the EGX, CIB’s shares will not be affected, unlike we mentioned in Thursday’s issue. We apologise for the error.

… EGX Chairman Mohamed Omran told Reuters “the goal [behind the new limits] is to encourage companies to increase their free-floating shares on the bourse." The newswire adds that the change will impact Edita, which has GDRs representing 24.9% of its shares compared to just 14.12% free floating.

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The Macro Picture

Low growth explains Donald Trump, Brexit and the rise of nationalists in Europe, the New York Times’ The Upshot blog wrote yesterday, noting that, “Economic growth in advanced nations has been weaker for longer than it has been in the lifetime of most people on earth. … It increasingly looks as if something fundamental is broken in the global growth machine — and that the usual menu of policies, like interest rate cuts and modest fiscal stimulus, aren’t up to the task of fixing it.” The piece takes a meandering route to get there, but winds up suggesting that the way forward “is that the government sharply expand investment in infrastructure, which might provide a jolt of higher demand, which in turn could help the picture on supply. … if something doesn’t change from the recent trend, the 21st century will be a gloomy one.”

Strong US jobs report suggests possibility of rate hike this year: Payrolls in the United States rose by 255k jobs in July, according to the US Bureau of Labor Statistics on Friday, beating expectations by economists polled by Reuters by 75k jobs. The unemployment rate remain unchanged at 4.9%. “The July jobs report was everything you could have asked for and more. Provided the strength in jobs is confirmed with other economic data, the Fed will have sufficient reason to hike (rates) this year,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York speaking to Reuters.

Egypt in the News

Driving the conversation about Egypt in the international press this morning are three pieces in The Economist, two of which savage Egypt, while the third takes a swipe at the wider Arab world. The first in the series is positively radioactive, headlined “The Ruining o Egypt” and focusing on President Abdel Fattah El Sisi’s management of the country in general and of the economy in specific. Meanwhile, Hamza Hendawi’s piece for the Associated Press on the president’s weekend speech on economic issues (tied to the first anniversary of the New Suez Canal) is also helping set the tone heading into this new work week, as we noted earlier.

The Economist had a field day bashing Egypt on Thursday, starting off by taking a big swipe at the country, again: Repression and official incompetence are stoking the “next uprising” in Egypt. The piece blames this on President Abdel Fattah El Sisi personally. “The regime is bust, sustained only by generous injections of cash from Gulf states (and, to a lesser degree, by military aid from America),” the magazine proclaims and adds that El Sisi has now “gone beret in hand to the IMF” for a bailout. The Economist concedes that Egypt’s economic woes stem partly from external factors including the drop in remittances with lower oil prices and tourists avoiding the Middle East altogether as well as legacy socialist policies, but stresses that policy decisions are “making things worse.” It specifically blames the president for “trying to control the cost of food” by defending the EGP, not slashing red tape, and overspending on “grandiose” projects. The Economist says the West needs to stop selling Egypt weapons it cannot afford and doesn’t need and should attach strict conditionality to any economic aid.

A bit less emotive was a second piece asking if Egypt is “at last ready to reform.” The newspaper is not optimistic; “Egypt’s government inspires little confidence. The new IMF package would be contingent on reforms that politicians have talked about for years, but failed to implement.” The piece makes a poignant reminder that the government is already shooting itself in the foot by having increased the tax rate on special economic zones to 22.5%, and compares that to Dubai’s Jebel Ali port, where companies will pay no tax at all for 50 years. The Economist gives a faint glimmer of hope that an economic collapse is not nigh, saying Egypt “has a history of muddling through.”

Two of the most noteworthy claims of both pieces is that Gulf aid has been slow to arrive due to the administration’s policies and that the UAE has pulled its advisors out of the country in frustration with the leadership.

Rounding out the trilogy: A parting gift from an Economist correspondent now based in Asia rounds-out the magazine’s coverage of the region. (Yes, you’re a magazine, not a newspaper, however much you protest.) Headlined “Arab Youth: Looking forward in Anger,” the piece is simply frustrating. It recycles stale tropes (“All too often taxi drivers reveal that they possess engineering degrees; sometimes driving is a second job taken to make ends meet after a day at work elsewhere”) and fails to mine the new (Beirut Madinati, which won 40% of the local vote in May’s elections, gets a sentence only.) Still, its warning chilling: “By treating the young as a threat, Arab rulers are stoking the next revolt.”

The UK’s Times (paywall) reported on Saturday that Egypt’s authorities have announced the formation of a new religious school “whose graduates will in future be the only clerics allowed to preach.” According to the report, the new institution was announced following Wednesday’s meeting with Azhar Grand Imam Ahmed al Tayeb and Religious Endowments Minister Mokhtar Gomaa, though the emailed statement on Wednesday made no mention of such an academy.

Other stories in the international press worth noting this morning:

  • The New York Times’ obituary of Ahmed Zewail is finally out.
  • Siemens CEO Joe Kaeser, a frequent visitor to Egypt, gets some love from the Wall Street Journal after the company raised guidance, in part based on the company’s growing energy operations, which includes a EUR 8 bn power generation contract in Egypt. The FT’s influential Lex column also shows Kaeser some love.
  • The Journal is the latest media outfit to review Uri Bar-Joseph’s book on the late Ashraf Marwan
  • A contributor to The Hill would like you to know that “The Israel-Egypt partnership deepens
  • “On Literature and Philosophy: The Non-Fiction Writing of Naguib Mahfouz, Volume I” gets a review in the Financial Times (paywall)

Worth Reading

Doping and the Olympics: In light of the recent retroactive awarding of two Egyptian athletes with Olympic medals for their performance in 2012 following the disqualification of their Russian rivals for doping, along with a number of athletes around the world who were belatedly recognized for their achievements, several writers have attempted to examine just what exactly is wrong with international sports and anti-doping efforts.

Marina Hyde writes for the Guardian: “As that verdict [by the World Anti-Doping Agency] makes clear, this catastrophic moment in the pursuit of sporting integrity must not be conveniently confined to Russia. It is much bigger than Russia, though it must be said Russia is, at least to my knowledge, the only country where the sudden death of the first head of its anti-doping unit was followed two weeks later by that of his successor.”

A number of comments, however, criticize Hyde for failing to mention, as one user put it, “As a sideline, while smugly condemning Russia et al for their corruption and [illicit substance] scandals, strange how a British sportswoman [cycling champion Lizzie Armitstead] has just been found guilty of missing 3 tests and the UK media immediately trip over each other trying to think up new excuses to show how and why she’s of course entirely innocent… and she’s allowed to go to Rio without any questions.” (Read Fifa is awful, but the Olympics takes the gold medal for sleaze)

Diplomacy + Foreign Trade

UK outlines guidance for conditions under which Ikhwan bosses can be granted asylum: In guidance (pdf) published last week by the UK Home Office, the conditions for the granting of political asylum for leaders of the Egyptian Muslim Brotherhood as well as their high-profile supporters were laid out, along with rationale for exclusions. “Those with a high profile in the MB [Muslim Brotherhood] or who have been politically active… may be able to show that they are at risk of persecution… Additionally, high profile supporters or those perceived to support the MB, such as journalists, may also be similarly at risk of persecution. In such cases, a grant of asylum will be appropriate.” However, the guidance argues that asylum cases for members of the Brotherhood’s rank and file are not being targeted by the Egyptian state and “it is unlikely that they will be able to demonstrate a real risk of persecution. Each case will need to be considered on its facts.”

The Egyptian European Council will host a delegation of Italian politicians and businessmen headed by Lucio Barani, leader of the Liberal Popular Alliance bloc, to discuss the outlook on Egyptian-Italian relations. The House of Representatives recently formed a committee to serve as a fact-finding group for Giulio Regeni’s murder and assess whether Italy intends to follow through with its decision not to Egypt with spare F-16 parts. The EEC’s Mohamed Abou El Enein called the murder “an act of terrorism” on a television show in April.

The delegation arrives just after the publication of a piece that claims “Two factors put the student [Giulio Regeni] at risk: His passionate interest in political and economic issues and his belief that Egypt needed change.” Reuters’ Michael Georgy files a special report on Regeni that suggests an informer was likely responsible for his detention and subsequent death.

Energy

EGAS issues tender for eight LNG shipments

EGAS issued an international tender for eight instead of the expected 16 LNG shipments for delivery between September and December, Reuters reported. Market players said they expected EGAS to resort to bilateral agreements with Russia, France, and China, and not international tenders, Al Borsa reported.

Idku and Damietta liquefaction plants to operate at full capacity by 2020-21 -El Molla

The natural gas liquefaction plants in Idku and Damietta will be operating at full capacity by 2020-21, Oil Minister Tarek El Molla told Al Borsa. One of the ways the government is looking to expedite operations at the terminals with Shell and Union Fenosa Gas is to import gas from Cyprus. Separately, El Molla said the Ministry has put together a plan to reschedule payments owed to Shell to be put together as part of a bigger plan that also includes repricing gas from the company’s Phase 9B project, which would require parliamentary approval.

Electricity Ministry completes 70% of Emirati-funded project

The Electricity Ministry has completed 70% of the renewable energy projects under an EGP 1.2 bn UAE grant to extend solar power projects to underdeveloped locations, sources told Al Mal. The Ministry has spent EGP 780 mn so far, and has almost completed two of the three phases that include eight governorates, the source added. The projects are being built by UAE contractors, who are reluctant to operate in South Sinai for security reasons.

Banking consortium to fund EGP c 15 bn, 6,000 MW coal power plant in Matrouh

An unnamed EGP 15 bn, 6 GW coal-fired power plant in Matrouh is lining up a facility from Al-Ahly Bank, Banque Misr, CIB, National Bank of Egypt, and QNB, The lenders are reportedly lining up to provide the LCY financing component for the plant, for which Japan’s Mitsubishi Heavy Industries is providing equipment. The loan could reportedly increase to EGP 17 bn, and up to an additional 10 banks may join the syndicate, according to an unnamed source. Preliminary agreements should be finalized within the next two weeks, the source added.

JICA developing EGP 1.2 bn power connection management system in Damietta

The Japanese International Cooperation Agency (JICA) is developing an automated system for connecting and disconnecting power that can dramatically reduce downtime at the North Delta Electricity Distribution Company, Damietta Governor Ismail Abdelhamid Taha told Amwal Al Ghad. The project is funded by an EGP 1.2 bn JICA grant, and will commence in September, he added.

Oriental Petrochemicals Company mulls construction of polypropylene factory in Tanzania

Oriental Petrochemicals Company (OPC) is reportedly building a USD 50 mn polypropylene plant in Tanzania to increase drive sales in East Africa and SADC countries.

Ministry of Environment tenders 50 feddans for waste-to-energy products to supply cement and steel factories

The Ministry of Environment will tender c. 50 feddans at Bilbeis to investors next month for waste-to-energy facilities that would supply cement and steel factories, Al Borsa reports, quoting a government official who added Minister of Environment Khaled Fahmy is working on locating a number of additional districts potentially suitable for the production of alternative fuels.

Infrastructure

China’s CFLD could invest USD 20 bn in Egypt over 10 years

China’s industrial city operator China Fortune Land Development (CFLD) could invest up to USD 20 bn in Egypt over the next 10 years, the company’s representative told Al Masry Al Youm. The representative met with Investment Minister Dalia Khorshid and told her CFLD is looking to turn Egypt into its regional hub and participate in the new administrative capital project. Al Shorouk says the company is preparing to organise a conference in China to promote investment in Egypt.

SCZone completes 16 mn sqm in East Port Said by end of 2017

The General Authority for the Suez Canal Economic Zone will complete the development of 16 mn sqm of land at the East Port Said Industrial Zone by the end of 2017, Prime Minister Sherif Ismail told Al Borsa. The East Port Said Development Company has begun developing 4 square kilometres at the Industrial Zone, which will be allocated for companies in the automotive, engineering, home appliance, and packaging industries.

Tourism

Lufthansa in talks to increase flights to Egypt from 2018

Lufthansa is in talks with German authorities to increase flights to Egypt starting from 2018, Lufthansa Egypt’s general manager told Al Borsa. The airline will add four flights to Hurghada and Marsa Alam in the winter season of 2017. Through Swiss and Austrian affiliates, Lufthansa says it operates 29 weekly flights to Egypt. The airline says it understands Egypt’s foreign currency problems and is working with Egyptian authorities to find solutions for the currency challenges.

Kuwaiti firm to develop tourist project in Sharm for USD 39.5 mn

Kuwait Projects Management (KPM) says it will develop a tourism and residential project in Sharm El Sheikh by an unspecified date at a total investment cost of USD 39.5 mn, ME Construction News reported citing Amwal Al Ghad. The project is set to include 12 buildings of unspecified dimensions and room number as well as 28 villas. There were no further details.

Cairo, Dubai expected to attract number of Saudi tourists who go to Turkey -Saudi investor

Cairo and Dubai are expected to attract the majority of the Saudi tourists who are shying away from Turkey over security concerns, according to Saudi tourism investor Khaled Al Aboud. Visits to Turkey by Saudis are reportedly down by 40% this summer, Al Aboud said according to Al Shorouk.

Banking + Finance

Beltone Financial advising Ousta, to set capital increase amount

Beltone Financial is acting as car-hailing app Ousta’s financial advisor and will set the amount of capital increase, and sources for it, within a week, Al Mal reported. Ousta is looking to raise capital through selling a minority stake of its shares to support its expansion plans. Chairman and co-founder Nader El Batrawy says Ousta aims to attract EGP 50 mn in funding before the end of the year.

Other Business News of Note

MBC Masr leads Ramadan viewership

MBC Masr led TV viewership during Ramadan with a 20.55% share, according to statistics from Ipsos, as per Al Mal. MBC’s reported dominance continued as MBC Masr 2 was in third place with 7.55% right behind second-placed Al Hayat, which captured 8.71%. Much to our dismay, Ramez Galal’s horrid prank show was the most watched show in Egypt during Ramadan.

Federation of Egyptian Industries to hold elections for its 2016-19 board

The FEI is holding elections during 8-21 August for a number of its committees and board. The elections for two of the FEI’s committees, the chamber of real estate development and the handicrafts committee, are taking place today and tomorrow.

National Security

Egypt receives new Russian warship

Egypt’s military received a new, advanced warship from Russia, Ahram Online reported. The Molniya RKA 32, which the army says is among the most advanced vessels in the Russian navy. Ahram Online quotes a military statement saying: “the vessel is equipped with multiple armament systems including surface-to-surface missiles, artillery as well as alarm and electronic warfare systems.”

On Your Way Out

Egyptian athlete waves Saudi flag in Rio

Social media pounced on Egyptian shooting athlete Hamda Talaat for waving the Saudi flag at the Rio Olympics opening ceremony, Ahram Online reported. the Egyptian Olympic Committee will investigate the incident and question Talaat.

Low-income housing loan from World Bank?

Low-income housing loan from the World Bank? Egypt is reportedly signing a social housing loan with World Bank, according to Al Masry Al Youm, which gives no details on the facility’s size.

Is it really 4G deadline day?

Today is supposed to be the deadline for mobile network operators to submit their applications for 4G licenses. So far, only Telecom Egypt has confirmed it will file paperwork, Al Borsa says. The NTRA had apparently concluded some horse trading over some of the conditions of the licence last week, said the source, and plans to set the final guidelines this week. This would imply that the deadline could be moved, despite previous statements by officials that this would never happen. The NTRA had finished drafting the terms and conditions an international tender, in the event a local MNO backs out.

The markets yesterday

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USD CBE auction (Tuesday, 2 Aug): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Saturday, 6 Aug): 12.40-12.50 (against 12.50 on Wednesday, 3 Aug)

EGX30 (Thursday): 8,255.4 (+1.9%)
Turnover: EGP 935.9 mn (in addition to special transactions worth EGP 938.0 mn)
EGX 30 year-to-date: +17.8%

Foreigners: Net Long | EGP + 1.5 mn
Regional: Net Long | EGP + 21.5 mn
Domestic: Net Short | EGP -23.0 mn

Retail: 56.5% of total trades | 50.4% of buyers | 62.5% of sellers
Institutions: 43.5% of total trades | 49.6% of buyers | 37.5% of sellers

Foreign: 12.3% of total | 12.4% of buyers | 12.2% of sellers
Regional: 13.4% of total | 14.5% of buyers | 12.3% of sellers
Domestic: 74.3% of total | 73.1% of buyers | 75.5% of sellers

WTI: USD 41.80 (-0.31%)
Brent: USD 44.27 (-0.05%)
Natural Gas (Nymex, futures prices) USD 2.77 MMBtu, (-2.19%, Sep 2016 contract)
Gold: USD 1,341.40 / troy ounce (-0.22%)

TASI: 6,246.5 (+0.1%) (YTD: -9.6%)
ADX: 4,526.6 (+0.4) (YTD: +5.0%)
DFM: 3,472.4 (+1.2%) (YTD: +10.2%)
KSE Weighted Index: 349.9 (-0.7%) (YTD: -7.9%)
QE: 10,681.1 (+1.3%) (YTD: +2.4%)
MSM: 5,869.8 (+0.4%) (YTD: +8.6%)
BB: 1,156.5 (+0.1%) (YTD: -4.9%)

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Calendar

05-21 August (Friday-Sunday): Rio Olympics.

07 August (Sunday): Deadline for mobile operators to submit applications for 4G licences

29-30 August (Monday-Tuesday): Wastewater Egypt conference.

04 September (Sunday): Arab Trade & Supply Chain Finance Conference.

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).

11 October (Tuesday): 2nd Annual Leasing Conference entitled “New insights to stimulate financing instruments”, Four Seasons Nile Plaza Hotel, Plaza Ballroom, Cairo.

11-12 October (Tuesday-Wednesday): Global Islamic Economy Summit, Madinat Jumeirah, Dubai.

November (TBD): Delegation of German companies in the renewable energy sector due to visit to discuss investment opportunities.

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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