Monday, 8 August 2016

Reserves plunge USD 2bn on debt service.

TL;DR

What We’re Tracking Today

For verily, we are in summer: The crush of news that has overwhelmed us since the IMF first confirmed it would be coming to town slowed to the barest trickle yesterday. Think of it as the last gasp of summer and of earnings season.

Not likely to go on summer vacation any time soon: Members of the House of Representatives, who voted yesterday to allow President Abdel Fattah El Sisi to decide when the House would recess for summer break, Al Shorouk reports.

The Egyptian team has a busy day at the Olympics today. Unless we’re mistaken, Egyptian Olympians today will shoot, box, fence, row, lift weights, sail and (among other things) throw other Olympians through the air in Rio today. Worth skimming: The Olympic website’s profile of swimmer Akram Ahmed, who has his sights set on a medal in the 1,500 m freestyle. Check out the national squad’s full calendar for today (tap or click on the “8”) and say a little prayer the kids do well.

And, of course, hijab has become a “thing” at the Olympics: Egyptian beach volleyball player Doaa Elghobashy gets some ink from the Associated Press after hitting the beach veiled and wearing long sleeves. She was allowed on the sand after uniform requirements were “relaxed so as not to exclude cultures that might be turned off by the standard bikinis and boardshorts.” Meanwhile, the Financial Times has jumped on the bandwagon and decided to profile Ibtihaj Muhammad, a US fencer who is making headlines for being the first veiled American to compete in an Olympics. We’re trying fantastically hard not to roll our eyes, but still: Good on her for taking on Mr. Trump.

We interrupt your morning read to bring you patently alarmist news from the far north that nevertheless has us a bit spooked this morning. The carcasses of deer infected with anthrax and frozen in permafrost since the Second World War are being exposed as temperatures rise thanks to global warming. Dozens of people have been exposed to the deadly disease (mortality rate: 20-80%, depending on the strain). There are eight confirmed cases so far and one death. If you have time for backstory, it begins with these Siberian Times stories (here and here) from a few days ago. If you want to get straight to the chase: Bloomberg over-promises a bit with the headline, but it’s bang on point: “Anthrax-Spewing Zombie Deer Are the Least of Your Warming Planet Worries.” The kicker: “Diseased carcasses dating to World War II aren’t the only surprises coming our way, courtesy of climate change.”

Oh, and for those of you of a certain (middle) age: Did this air on Egyptian TV when we were kids? We’re starting to think the Americans should resurrect comedic great Richard Pryor and have Brewster resume his electoral campaign, this time for the presidency. (Watch, run time 0:51).

** We have a new section this morning. We’ve added “On Deadline” to take a semi-regular look at what domestic columnists have to say. We’ll be focusing mostly on views on the economy (we’re not aware of anyone who would qualify as a “business” or “finance” columnist in Egypt), but we’ll throw in political opinion where it’s relevant. As always, let us know your thoughts.

Speed Round

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Net foreign reserves fell USD 2 bn to USD 15.5 bn in July, down from USD 17.6 the month before, according to a statement (pdf) from the Central Bank of Egypt on Sunday evening. As expected, drop came as Egypt repaid foreign debt and other obligations including USD 1 bn to Qatar and USD 720 mn to the Paris Club. The central bank also returned USD 250 mn to Libya, paid off USD 207 mn in arrears owed by the state oil regulator EGPC, and satisfied USD 55 mn in unspecified “short term obligations.”

The news came as the central bank continued its crackdown on exchange bureaux it says are guilty of “repeated violations,” shutting another office down yesterday, Al Masry Al Youm said. The bureau, Brent Exchange, had its licence revoked, bringing up the total number of shuttered FX offices to 24. The CBE also suspended four bureaux for a year and another two for six months. Yesterday, we noted that the Federation of Egyptian Chambers of Commerce representing FX bureaux is considering a motion to shut down exchanges for a three-month period to demonstrate that they do not hold complete control of the parallel market. Or to hold a gun to everyone’s head. Your call how you see their move.

The EGP weakened slightly to EGP 12.55 to the greenback on Sunday. Traders told Al Mal that the drop was largely attributed to rising demand following the recent crackdown on FX bureaux. Transactions are being made “very carefully,” with traders often only selling to “trusted” clients.

Prosecutor General issues first arrest warrants in the “wheat fraud” scandal: The Prosecutor General’s Office issued arrest warrants, travel bans, and an order to freeze the assets of an unspecified number of agriculture ministry officials and shouna owners and operators for their alleged involvement in the scandal surrounding this year’s wheat harvest. The prosecutor’s office alleges shouna owners defrauded and operators the government of EGP 533 mn by submitting forged receipts worth EGP 621 mn for 222K tonnes of wheat that were never collected, according to the statement from the Prosecutor General.

The Supply Ministry, which has its collective head on the chopping block in the case, was quick to issue a statement praising the prosecutor’s move. A Supply Ministry spokesperson made sure to note that it was the ministry that initially began investigating the fraud during harvest season. Continuing the PR offensive, the ministry apparently ran a report by CAPMAS defending its handling of the bread point system (the primary beneficiary of wheat grown in Egypt), stating that the system had increases access of rural families to subsidized bread, Al Borsa reports.

House committee welcomes the charges: The investigation was praised by MP Magdy Malak, head of the House committee investigating the wheat case, who made the talk show rounds on Sunday. Malak pointed that the prosecution’s investigation was separate from his own, which he says has so far tallied around EGP 500 mn in ‘missing’ wheat. He confirmed that the committee will complete its report this week, but shied from specifying a day, in a call-in to Al Sada Al Mohtaramon on OnTV (runtime: 8:59). He stated that Supply Minister Khaled Hanafy is ultimately responsible for the flap and alleged that some of Hanafy’s underlings were criminally culpable.

House to question cabinet figures over wheat fraud and ergot: Meanwhile, the House approved a motion that Minister of Supply Khaled Hanafy be questioned by the House amid allegations he “mismanaged” and “squandered” public funds in regard to both the wheat harvest and the bread subsidy system. Parliament also wants to question Prime Minister Sherif Ismail as well as the ministers of health and agriculture on why they moved to accept wheat shipments with up to 0.05% ergot contamination. MP Nadia Henry believes the move violates the law and “puts the health of Egyptians at risk” despite the limit falling within UN FAO norms.

And while we are on the House, the Planning and Budget Committee is expected to wrap up its report on the value-added tax (VAT) in a week’s time, said the committee’s chairman Hussein Eissa. The committee is now in closed-door deliberations to draft the report, Al Masry Al Youm reports.

It would appear export subsidies in the FY 2016-17 budget stand at EGP 4 bn, according to Deputy Finance Minister Ahmed Kouchouk, less than the EGP 6 bn promised by Industry and Trade Minister Tarek Kabil. Kouchouk tells Al Mal the subsidies will be conditional, implying that the number of exporters who benefit from the program needs to grow for the funds to be disbursed. The Finance Ministry has also increased its budget allocation for connecting utilities to industrial projects, earmarking EGP 1.5 bn in the new budget, more than 4x from last year’s EGP 400 mn.

Meanwhile, Kouchouk suggested the IMF delegation is now focusing on Egypt’s social safety net and the government’s provisions to shield low-income citizens from the effects of the reform agenda, according to comments Al Ahram attributed to the deputy minister. Kouchouk added that the talks with the IMF are progressing well.

Positioning the IPO program for domestic consumption: With plans afoot to sell stakes in nearly a half-dozen state-owned companies, the government is pre-selling the public on the notion of khawaget buying in via an international institutional offering. Government sources speaking with AMAYyesterday said the state expects to rake in USD 20-40 bn through the offerings. The story plays up the “IPO of state-owned companies = hard currency” angle rather heavily.

Oil Ministry moves to reassure Eni over Zohr: The Oil Ministry has agreed to add a requirement to its agreement with Eni over the Zohr field requiring the state to open a revolving letter of credit facility worth the equivalent of Eni’s stake in production, Al Borsa reported. The move, Oil Minister Tarek El Molla says, is meant to reassure Eni that the Egyptian government will meet its financial obligations and reduce risk. El Molla hopes this will help Eni expedite the field’s development.

FiT investors say they were not aware domestic arbitration was a hallmark of the FiT program: Investors in the Feed-in-Tariff program are reportedly “incensed” over comments by Electricity Minister Mohamed Shaker claiming that investors were aware that domestic arbitration clauses would be a feature of power purchase agreements [PPAs], as they had already signed off on such clauses when signing cost sharing agreements [CSAs], Daily News Egypt reported on Sunday. “A number of investors responded,” DNE’s Mohamed Farag writes, “saying that they had accepted local arbitration in the CSA as it is a 12-month agreement and includes the infrastructure cost at a maximum of EGP 30 mn. On the other hand, the PPA is a 25-year contract, and each project included would cost more than USD 100 mn.” Cairo Solar’s CEO Hisham Tawfik adds: “It [domestic arbitration] was not a point of contention, as it included contracting and infrastructure work.” However, due to the long-term nature of the power purchase agreements, such arbitration mechanisms would not be suitable. “Governments will change and new leaders will come. The rights of investors and financing banks must be considered and guaranteed.”

Tawfik confirmed that Shaker has set Thursday 11 August (that’s this Thursday) as the date of a much anticipated meeting between the FiT investors and the minister to discuss “the ministry’s vision” for the phase one and two of FiT projects. As we noted last month, the minister is unlikely to budge from his stance on domestic arbitration.

You’ve got 48 hours to sign the 4G agreement, the CIT Ministry told the mobile network operators, according to Al Shorouk. So far, none of the three mobile network have reached an agreement to acquire the 4G licence, even though the preset deadline for signing was yesterday. A source says the companies are still insisting that the ministry auctions off a wider spectrum, saying the current offering is inadequate. Disagreements with the ministry also involve the fees Telecom Egypt must pay the MNOs to piggyback off their networks, Al Borsa reports. The haggling even included the pricing of text messages on the 4G network. No word has filtered to the media on whether a resolution was reached over TE exiting its 45% stake in Vodafone Egypt, an issue over which existing MNOs are more than a little concerned.

TE’s board of directors officially approved applying for a 4G license yesterday, a company source tells Reuters, adding that the company would pay the full amount requested by the regulator.

…The government is encouraging businesses to break the law, Al Borsa says. By requiring domestic businesses to settle contracts in foreign currency, as the CIT Ministry is asking MNOs to do, it is in violation of legislation requiring all local contracts to be settled in EGP. A banking source tells the paper all domestic companies bidding for government contracts that require payment in foreign currency are having to resort to the parallel market, which adds to the pressure on the currency, driving up the parallel market rate.

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The Macro Picture

Hmmm… Maybe it’s not such a bad time to be on the road with a eurobond. There’s so much interest in emerging market paper that “10-year bonds from sovereigns across the emerging world — China, the Philippines, Chile, Peru, Poland, Hungary and others — now offer lower yields than the 2.9 per cent a year currently available on 10-year bonds from Portugal,” the Financial Times writes. The newspaper quotes one analyst as noting: “If you’re a pensions guy you have to do something. With German 10-years at zero, you need to change your mindset. Your whole view migrates into US high-yield and EMs.”

Hedgies are going “all-in on lower oil prices,” Bloomberg tells us this morning.

Egypt in the News

After a brutal weekend (thank you, Economist) it’s mercifully quiet for Omm El Donia on the international front this morning. The most widely picked-up piece is on the Egyptian beach volleyball team competing wearing long sleeves and (in the case of one player) hijab. Otherwise, we offer you this morning:

Reviving Egypt’s wine industry: Egyptian vineyards are trying to win over international wine connoisseurs, Tony Gamal-Gabriel writes for AFP. Jean-Baptiste Ancelot, founder of Wine Explorers, described some of Egypt’s new production as "not necessarily great wines, but wines of immediate pleasure … The whites are the most successful. You can find wines that are both fresh and very fruity — of the exotic fruit type: peach, pineapple, and a little passion fruit." Dutch Ambassador Gerard Steeghs is also quoted in the piece saying when he first arrived in Egypt, he was told: "There is the ‘headache wine’ and there is the wine that is ok. But there is no good wine … [today] they still have the ‘headache wine’, but you also have really good wine.”

The potential IMF loan to Egypt could itself pose a risk to the country, Andy Critchlow writes in a Reuters Breakingviews post. “After two previous attempts to agree a deal with the IMF were rejected over fears of a political backlash, Egypt may be running out of options. It may now have to take the cure on offer. But that carries a big risk. Cutbacks on government spending and subsidies are likely conditions of any deal with the fund… A rejection of austerity on the streets of Cairo would be a big problem for the Egyptian authorities. Critchlow says, the potential rejection could make the loan an “even bigger risk for the wider Middle East.” He does not explain how the risk extends to the wider Middle East, however.

A large number of international media outlets have picked up on Ahmed Zewail’s funeral with military honors including the Daily Mail, ABC News, Gulf News, Al Arabiya and Middle East Monitor. The official service was attended by President Abdel Fattah El Sisi.

On Deadline

Domestic columnists are offering boilerplate coverage of President Abdel Fattah El Sisi’s weekend speech on the economy alongside eulogies for Ahmed Zewail and the IMF loan. Oh, and surprising nobody: They don’t like the notion of “selling” citizenship to investors. Told you, folks. Beer. Snowmen. Salafis. Western Desert…

Ziad Bahaa El Din offers standard fare on the IMF loan in Al Shorouk, noting that while Egypt may have no choice but to seek the funding, it should consider four steps as part of its economic reform programme: Determining the state’s role in the national economy, reconsider taxation, reevaluate state spending priorities, and ensure there’s parliamentary oversight of international financial agreements.

The Al Masry Al Youm columnist who writes under the pseudonym Newton tackles The Economist’s recent savaging of Egypt. While he usually holds The Economist in high regard,he says the pieces ignore including political turmoil in Sinai, the nation’s resort to the IMF, and President Abdel Fattah El Sisi announcing difficult economic reforms. He says that, just as Europe did after the Second World War, Egypt can handle the tough times and muddle through.

Al Nour is still around, and it’s not down with the IMF: “If they lend us everything in the coffers of int’l organisations, it would be swallowed by corruption,” said Younes Makhioun, leader of the Al-Nour Party who posted his take concerning the IMF loan on his Facebook page. “A government that led us to this crisis and failed to manage the majority of [critical] files is not one that can effectively manage this loan,” and goes on to doubt that “[it would] benefit the average, struggling Egyptian.” Makhioun says taking on the loan contradicts the “correct” teachings of Islam, and is considered usury.

Amr El Shobaky’s says the recent talk of granting Egyptian citizenship in exchange for a “bank deposit” is deeply “insulting,” in Al Masry Al Youm. He says it disregards how the process is done anywhere else in the world. Clearly, Mr. El Shobaky’s isn’t an Enterprise reader, or he’d know better.

Meanwhile, Salah Montaser writes for Al Ahram that the recent attempt to assassinate former Grand Mufti Ali Gomaa’s life is backlash against a military operation that 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. Al Kahera Wel Nas’ and El Watan’s Osama Kamal criticized British Ambassador John Casson’s congratulating Gomaa for surviving the attack, contrasting them with the UK Home Office’s announcement of guidance for conditions under which Ikhwan leaders can be granted asylum, as we reported yesterday. Kamal stresses he doesn’t oppose the UK, but believes granting Ikhwan members asylum, despite the clear conditionality, is poor policy.

Worth Reading

International tourism is a huge market but Egypt continues to be a perennial underperformer. In a market representing USD 1.5 tn per year in revenues in 2015, Egypt’s share was under USD 6.1 bn, far from the top 10 list in terms of arrivals and receipts, according to the UNWTO’s Tourism Highlights 2016 report, (pdf) which uses a picture of the Karnak Temple in Luxor as its cover. The report focuses on the raw numbers, not insights and strategies, but shows the major trends in tourism across the world.

France leads the world in terms of tourist arrivals, having welcomed 84.5 mn tourists in 2015, followed by the United States, Spain, and China. The same four top the recipient list, but in a different order; the United States comes ahead having brought in USD 204.5 bn, followed by China, Spain, and France. The surprise entries on the lists are Russia on the arrivals side with 31.3 mn tourists and, more strikingly, China’s special administrative region of Macao on the receipts side with USD 31.3 bn — suggesting that gambling can do wonders for your tourism industry (that’s more than 5x Egypt’s tally, if you’re counting).

Compared to the Middle East, Egypt trails Saudi Arabia (buoyed by hajj and umrah tourists) and Morocco, respectively, in terms of arrivals. Although Egypt inches slightly above Morocco in terms of receipts, it falls behind Saudi Arabia, high-spender attractions in the UAE, and, surprisingly, Lebanon, which attracted USD 6.9 bn in receipts in 2015. The dynamic between the UAE and Lebanon specifically is particularly interesting, as Dubai overtook Beirut as the regional plastic surgery destination, according to a recent AMEinfo piece. A silver lining for the region as a whole: the UNWTO report expects the Middle East’s share of tourism arrivals globally to grow from 6.5% in 2010 to 8.2% in 2030.

Image of the Day

Stamping-out the parallel market for FX without a liquidity shield… (View image)

Worth Watching

Being John Malkovich | Sad man becomes John Malkovich. (Watch, running time: 2:11)

Diplomacy + Foreign Trade

Projects signed under the SAR 60 bn Saudi-Egyptian investment fund are reportedly stalling due to land not being allocated for them and bickering between government bodies vying for turf (no pun intended), Al Mal reports. Although four months have passed since the agreement was first signed between Investment Minister Dalia Khorshid and Deputy Crown Prince Mohammed Bin Salman, the majority of agreed projects have yet to be implemented. An anonymous source said that land being offered to the Saudis for several of these megaprojects are at exaggerated prices, including those allocated for building world-class resorts near Sharm El Sheikh as well as Ras El Hekma.

The International Cooperation Ministry and The Ministry of Housing signed a USD 2.5 mn low-income housing loan agreement with the World Bank, which International Cooperation Minister Sahar Nasr says could benefit up to 4 mn citizens, according to a ministry statement.

Italians interested in waste-to-energy opportunities: The Italian business delegation that arrived yesterday likes RDF as a category, but is worried about red tape, according to Egyptian European Council head Mohamed Abou El Enein. Other members of the delegation reportedly have an interest in healthcare.

Energy

What is happening with the new electricity prices?

The local press is running conflicting stories on when and by how much your electricity bill will go up. Al Borsa is claiming new prices will come into effect in September and that all seven consumption tiers will be hit. Electricity Minister Mohamed Shaker is expected to announce the new electricity prices in a press conference next week, following their approval from the Cabinet, which has apparently been behind the delay in its implementation, the newspaper says. On the flipside, Electricity Ministry sources tell Al Mal that new prices will come in August, with the ministry planning to exempt the lowest three consumption tiers. The two newspapers can’t even agree on when the announcement will come as Al Mal’s source says the announcement will come today and the delay was because President Abdel Fattah El Sisi had himself had interceded to set the exemptions. By law, the Ismail cabinet would have to set the prices; our money says the earliest date the hikes could be announced is Wednesday, after the cabinet meeting, unless the matter is reserved solely to the cabinet economic group.

Siemens power plants to begin producing electricity by December 2016

The power plants Siemens is contracted to construct will begin producing electricity by December 2016, Prime Minister Sherif Ismail said, according to Al Shorouk. The plants will generate 4.4 GW by December, reaching their full capacity of 14.4 GW by May 2018, he added. The electricity transmission network upgrades, including new transformer stations and over 1,600 kms in high-voltage cables are set to be complete by mid-2017, said Ismail.

Infrastructure

Cairo-Suez road works to be completed within three weeks

Cairo-Suez Desert Road upgrades and maintenance will be completed within three weeks at a total cost of over EGP 1 bn, head of the General Authority for Roads, Bridges & Land Transport Adel Tork told Amwal Al Ghad. The upgrades included a two-lane service road on either side, plus an additional lane on either side, as well as six bridges and a tunnel to eliminate intersections, he added. The project took 18 months and involved four different contractors, said Tork.

Manufacturing

Investors demanding natural gas prices be slashed for all industries, not just steel producers

State mouthpiece Al-Ahram is reporting that “investors” are demanding that all industries, not just steel producers, have the benefit of lower natural gas prices. Factories are shutting down due to increasing costs, according to Tenth of Ramadan Investors Association chief Sobhy Nasr, adding it would be better to keep footing the cost of subsidizing gas prices and grow the nation’s industrial base industries than it would be to increase prices and reduce factory output.

Real Estate + Housing

Deliveries of Dar Misr’s first phase to begin “soon,” construction of phase 2 due to begin

The Ministry of Housing is preparing the new timeline for deliveries of phase one of the Dar Misr middle-income housing project, which has previously been plagued by delays. Phase one’s 31,800 homes are almost complete, with deliveries expected to take place soon. Construction of phase two and three are also expected to begin in the “near future.” The ministry puts Dar Misr’s current costs at c EGP 70 bn given the total number of homes was increased to 250,000 from 150,000.

Tourism

Egypt re-launches tourism portal

The ministries of communication, tourism, and antiquities issued a joint statement (Arabic) on Sunday announcing the relaunch of the egypt.travel site at beta.egypt.travel, although the statement may have caused some confusion as it points to the old URL. The effort is part of a cooperation protocol between the ministries to improve quality of services offered to tourists, according to the CIT Ministry. The portal is available in 14 languages, and aims to improve Egypt’s image, Tourism Minister Yehia Rashed said, according to Al Shorouk.

Telecoms + ICT

Ismailia Technology Valley approves five projects with EGP 250 mn in investments

The Ismailia Technology Valley has approved five projects with a combined investment value of EGP 250 mn in the fields of electronics manufacturing and photovoltaic cells, Technology Valley general manager Naeema Moheb told Al Mal.

Automotive + Transportation

Gezhouba-led consortium submits USD 1.1 bn bid for monorail project

A consortium consisting of China Gezhouba Group, Petrojet, Concord Engineering, and CRRC Corporation submitted a USD 1.1 bn bid for the monorail project linking Six of October to Giza, Gezhouba Egypt representative Ezzeldin Gawary told Al Shorouk. The Cabinet had requested all participating companies to amend their prices for tickets based on the most recent EGP devaluation, he added. The Gezhouba financial proposal of USD 1.1 bn is USD 200 mn less than the competing bid, said Gawary. A consortium between Orascom Construction and Bombardier Inc is also bidding on the project.

Passenger Transport Authority contracts 50 buses from GB Auto

The Passenger Transport General Authority in Alexandria has signed an EGP 60 mn agreement with GB Auto to supply the city with 50 air conditioned buses within four months, Alexandria authority chief Khaled Elewa told Al Borsa.

Banking + Finance

Kuwait Finance House interested in acquiring CBE stake in United Bank of Egypt

Kuwait Finance House (KFH) is interested in acquiring the CBE’s 99.9% stake in the United Bank of Egypt, sources told Amwal Al Ghad. KFH will conduct due-diligence this month, if preliminary negotiations go through, the source added. Plans for the CBE to exit United Bank have varied between floating some of the bank’s stock announced by former bank Chairman Mohamed Ashmawy, and most recently, a complete sale to a strategic investor announced by the CBE.

Legislation + Policy

Industry Ministry completes drafting law granting IDA exclusivity in managing industry land

The Industry and Trade Ministry has completed drafting legislation which would task the Industrial Development Authority (IDA) with managing and tendering land allocated to industrial projects, Industry and Trade Minister Tarek Kabil told the House Economic Committee on Sunday. As we noted back in June, the Ismail cabinet had approved drafting the law. The legislation, along with others that grant the New Urban Communities Authority exclusivity to manage allocating land for housing, would erode the powers of the General Authority for Investment and Free zones to tender land under the Investment Law. Kabil urged the House to expedite the approval of the Industry Permits Act, which cuts red tape on obtaining industry permits and shortens the time to obtain them to 30 days by allowing the IDA to be the sole party to issue them as we noted back in April. According to Deputy Finance Minister Ahmed Kouchouk, the environmental and security codes will not be enforced for industrial permits.

Politics + Economics

Unions oppose VAT, Labour Unions bill, Civil Service Act

A number of trade and workers’ unions appear to be leading a concerted campaign to tank key government legislation including the Civil Service Act, the value-added tax (VAT), and the Labor Unions Act. That’s right: They haven’t given up on scrapping the Civil Service Act despite it having passed the House. The Tadamon Coalition of state employees are on a letter-writing campaign targeting the Council of State (Maglis El Dowla), which is reviewing the law, trying to get it reject it. The group feels the law is unconstitutional, saying it violates workers’ rights to form unions. They’re also arguing that it was previously rejected by the House (how that’s supposed to matter, we’re not entirely sure). As for the VAT, a number of unions issued a joint press statement saying the measure would “threaten stability,” widen the gap between rich and poor, and further derail investor sentiment if it passes in its current form. At a parliamentary hearing on the tax last week, union members also demanded expansion of the VAT exemption list. Meanwhile, leaders of independent trade unions are seething over a leaked copy of the draft Labor Unions bill, which they claim violates international labor laws and enforce new restrictions on the rights of workers to bargain collectively, Al Mal reports.

On Your Way Out

SCZone and Finance Ministers discussing a return of investment incentives: The General Authority For Suez Canal Economic Zone (SCZone) is in meetings with the Finance Ministry to bring back the tax incentives at special economic zones, Al Mal reported. The recent talks are part of a concerted campaign by SCZone chief Ahmed Darwish to restore the incentives, after taxes in the zones were raised by the Mahlab cabinet in 2015 to 22.5% from 10%. Last month, Darwish managed to get a tentative approval from President El Sisi to review taxes in these zones.

The markets yesterday

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USD CBE auction (Tuesday, 2 Aug): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Sunday, 7 Aug): 12.55 (from 12.40-12.50 on Saturday, 6 Aug, Al Mal)

EGX30 (Sunday): 8,223.5 (-0.4%)
Turnover: EGP 478.3 mn (38% below the 90-day average)
EGX 30 year-to-date: +17.4%

Foreigners: Net Short | EGP -23.7 mn
Regional: Net Long | EGP +20.3 mn
Domestic: Net Long | EGP +3.4 mn

Retail: 71.7% of total trades | 74.3% of buyers | 69.1% of sellers
Institutions: 28.3% of total trades | 25.7% of buyers | 30.9% of sellers

Foreign: 11.8% of total | 9.4% of buyers | 14.3% of sellers
Regional: 7.6% of total | 9.7% of buyers | 5.5% of sellers
Domestic: 80.6% of total | 80.9% of buyers | 80.2% of sellers

WTI: USD 41.91 (+0.26%)
Brent: USD 44.27 (+0.00%)
Natural Gas (Nymex, futures prices) USD 2.74 MMBtu, (-1.08%, Sep 2016 contract)
Gold: USD 1,344.40 / troy ounce (+0.00%)

TASI: 6,289.5 (+0.7%) (YTD: -9.0%)
ADX: 4,546.2 (+0.4%) (YTD: +5.5%)
DFM: 3,511.2 (+1.1%) (YTD: +11.4%)
KSE Weighted Index: 351.8 (+0.5%) (YTD: -7.8%)
QE: 10,789.4 (+1.0%) (YTD: +3.5%)
MSM: 5,874.5 (+0.1%) (YTD: +8.7%)
BB: 1,157.1 (0.0%) (YTD: -4.8%)

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Calendar

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

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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