Thursday, 1 September 2016

TE inks 4G license + Egypt’s regional gas hub ambitions just got a boost.

TL;DR

What We’re Tracking Today

It’s September, ladies and gentlemen. Most international schools are back in session on Sunday. The week after next is the Eid holiday (and, as usual, we have no clue when the holiday begins, let alone how many days the state plans to declare a national holiday). It’s investor conference season, industry conference season and, of course, the season for both new iPhones and budget planning for next year. Enjoy the sprint to year’s end.

Investor relations officers, take note: If you’re more than 45 days late releasing your quarterly earnings, your shares will be suspended from trading until you make things right, EGX boss Mohamed Omran said yesterday. A circular from the bourse yesterday said that companies that miss their filing deadline by more than 45 days will face suspension, a penalty previously handed out only after a company missed a 15-day warning issued after failing to issue in two consecutive quarters.

Random, anecdotal observations this morning: It’s become rather difficult to book flights out of Egypt these days, with limited route selection and low availability of seats. We’re basing this on a completely unscientific study of four different people / groups trying to book tickets to Berlin, Barcelona, Paris and Athens departing anywhere between this morning and early in Eid week. Is IATA really playing hardball on remittance of funds for international airlines? Or is it the combination of back-to-school travel and Eid vacation plans? Also: Enterprise’s parent company bought a very expensive graphics workstation yesterday — and was charged VAT as a “precautionary” measure, the vendor said. Forget that the vendor couldn’t offer a VAT registration certificate (or provide a VAT-compliant receipt). And set aside that we had to pay because we needed the gear, full-stop. If you’ve ever wondered why inflation spirals on rumor in Egypt, start with this.

El Sisi to arrive in India en route to China: President Abdel Fattah El Sisi is scheduled to land in India today for a three-day visit en route to the G20 summit in China, which will take place next week. El Sisi is set to meet with Indian Prime Minister Narendra Modi, with several projects proposed by India on the agenda, including a hospital “three times the size of Kasr El Eini” in the Administrative Capital.

On The Horizon

President Abdel Fattah El Sisi is expected to arrive in Hangzhou, China to attend the G20 summit, set to run from Sunday-Monday (4-5 September). This will be the first time Egypt will participate in the G20, as noted in Chinese state news agency Xinhua’s interview with El Sisi published on Wednesday. “Egypt supports the Chinese president’s initiative to revive the Silk Road… bearing in mind that Egypt can be a main focal point for the implementation of this initiative through the Suez Canal projects,” El Sisi said. China has spent months preparing for the event by “planting trees, shuttering factories and building new motorways and homes to ensure visitors go home with a good impression,” the Guardian reports.

Egypt, Ethiopia and Sudan’s water ministers are set to meet in Khartoum from Monday-Tuesday (5-6 September) to sign contracts with French consultancy firms Artelia and BRL for impact studies on the Grand Ethiopian Renaissance Dam, according to sources speaking to Al Ahram.

Markit Emirates NBD PMIs are due on Monday, 5 September for Egypt, Saudi Arabia, UAE at 6:15am CLT.

The EFG Hermes London MENA and Frontier Conference will run next Monday-Thursday (5-8 September) in London at Emirates Arsenal Stadium.

250K feddan of the 1.5 mn feddan project will be tendered to the private sector sometime next week as part of the first phase of the project, Planning Minister Ashraf El Arabi told Al Masry Al Youm.

Speed Round

Speed Round is presented in association with

Telecom Egypt (TE) is Egypt’s first 4G operator: State-run fixed-line monopoly Telecom Egypt is now in the mobile network operator business. TE inked an agreement yesterday with the National Telecommunications Regulatory Authority (NTRA) allowing it to provide 4G mobile network services, according to a company statement (Al Borsa has photos from the signing ceremony). The licence cost to TE stands at EGP 7.08 bn, of which EGP 5.2 bn is paid in advance, with the balance due in equal installments over the next four years. Half of the total license cost will be paid in USD. The license is for 15 years, renewable for five more at a cost of EGP 2 bn. TE is due to begin providing mobile services within six months.

CEO Tamer Gadalla said TE is also set to sign agreements with local MNOs to use their existing 2G and 3G network infrastructure until it completes its own 4G network, according to Al Mal. Acting NTRA executive director Moustafa Abdel Wahed told Al Mal TE has two months to reach an agreement with the MNOs, without mentioning the potential repercussions would be for the MNOs or Vodafone if no agreement is reached.

Does TE get to keep its 45% stake in Vodafone Egypt? So far, yes. Both Abdel Wahed and Gadalla have said that TE will not be required to dump the stake, though speculation in the press is that threatening to require a full or partial exit could be enough to force TE to come to terms with its rivals on infrastructure sharing. Other operators have for some time demanded that TE divest its stake in VFE.

Where the money is coming from? TE is financing its agreement with NTRA through an EGP 5 bn facility extended by a syndicate led by National Bank of Egypt and QNB Al Ahli, Gadalla told Al Mal.

Egypt’s ambitions as a regional gas hub just got a major boost: We have a preliminary natural gas agreement with Cyprus. Cyprus signed an agreement for the transfer of natural gas to Egypt via pipeline once extraction begins off the Cypriot coast, Reuters reported. 700 mcf/d of gas are expected to be imported to Egypt from the Aphrodite field, Al Borsa reports. The agreement allows for “a direct subsea pipeline from Cyprus’s exclusive economic zone (EEZ) to either Egypt’s EEZ or onshore Egypt, for domestic consumption or re-export.” Government sources tell the Egyptian daily that Egypt will expect to see the gas by the 2019-20 fiscal year. Oil Minister Tarek El Molla tempered expectations by saying the agreement is just a “preliminary” one, according to Al Ahram. He added that this will allow Cyprus to use Egypt’s natural gas infrastructure while also helping satiate Egypt’s gas demands. One issue that could impede any agreement is the opposition from Northern Cyprus, which already voiced an opposition to the agreement with Egypt and said it could stifle Cypriot reunification efforts, Christopher Coats explains in Forbes.

Shell announced a discovery at the West Alam El Shawish concession in the Western Desert that could produce around 500 bcf in natural gas reserves, Amwal Al Ghad reported. Aidan Murphy, chairman and CEO of Shell Egypt, says the discovery involved drilling one of the deepest wells in Egypt and could be one of the biggest in the Western Desert. Once on-stream, production from the West Alam El Shawish could account for 10-15% of JV Bapetco’s output in Egypt, Murphy added.

We’re going to beat the drum here and say, “You need to be worried about wheat imports, no matter what industry you’re in.” GASC, the state’s grain buyer and the world’s single largest purchaser of wheat, was forced yesterday to cancel its latest wheat tender after receiving only one offer, Reuters and Bloomberg report. The development came after Egypt officially instated its zero tolerance policy on ergot fungus in imported wheat. The sole offer trading house Venus for 55k tonnes of Ukrainian wheat, while Reuters noted that “other sellers boycotted the tender as they oppose Egypt’s policy.” Bloomberg said, “Tunisia, which buys seven times less wheat than Egypt, managed to attract offers from 13 firms in a separate tender Wednesday before buying 50,000 metric ton.”

Said a senior director at Société Générale in New York, according to Bloomberg: "Egypt has already lived through the riots that occurred when wheat prices went up, it took down Mubarak then. What will they do when they have no wheat? No one wants to play their games, and sooner or later, they have to bend a bit.” The business information service also nails it on the head when it notes that the whole wheat import flap smells very much of a turf war between the ministries and agriculture and supply.

MOPCO to IPO after Eid? The partial float of 4.5% of the Misr Fertilizer Production Company (MOPCO) is likely to take place in two weeks following the Eid break and could happen earlier, said EGX head Mohamed Omran, according to Al Borsa. The government had set a target date of December and January to begin floating shares in state-owned businesses in the banking and energy sectors, with MOPCO and Banque du Caire being the first to go. The Egyptian Financial Supervisory Authority had approved in July the FV report of MOPCO’s shares which puts the fair value of the share at EGP 52.18. There is no word on who will be advising on the IPO, but EFG Hermes was considered the likely candidate, as we noted last month. The news came as MOPCO reported yesterday a consolidated net profit of EGP 404.18 mn in 1H2016, a more than 3x rise from EGP 128.07 mn in the same period of last year.

Meanwhile, the state will retain a minimum of 51% of Banque du Caire’s shares after the bank is listed on the EGX, sources told Al Mal. The original plan was to list just 20% of the bank’s shares, but sources close to the bank said the state is willing to list a larger stake as long as the state retains managerial control. Investment Minister Dalia Khorshid said the first wave of listing public sector companies on the EGX will include petroleum sector companies and banks.

Everyone in the world with an investment banking license wants to advise on the Banque du Caire transaction: EFG Hermes and CI Capital have reportedly already submitted bids, while Pharos Holding, Beltone Financial, HC, and Pioneers are still preparing to throw their hats in the ring. International players said to be interested include HSBC, Morgan Stanley, and Deutsche Bank.

The European Bank for Reconstruction and Development (EBRD) is considering funding two banks in Egypt, according to statements issued by the Bank yesterday. The EBRD is considering a financing package of up to USD 100 mn to QNB Al Ahli comprising a senior loan for on-lending to private SMEs. It hopes the “loan will increase the availability of finance to private SMEs allowing greater access to finance for this largely underserved segment” and will accompany the funding with technical assistance to enhance QNB Al Ahli’s capacity and SME-lending know how.

The EBRD is also considering a senior unsecured loan of up to USD 40 mn to National Bank of Kuwait-Egypt (NBK-Egypt), of which USD 20 mn is expected to be co-financed by Agence Francaise de Developpement (AFD). The loan agreement, which is still pending concept review, will be under Egypt Sustainable Energy Financing Facility Framework (EgyptSEFF). The funding, the EBRD says, “will enable NBKE to support on-lending to private sub-borrowers for [energy efficient] and [renewable energy] projects, which are of particular relevance in the context of high energy intensity of the Egyptian economy. It is expected to be the first project under EgyptSEFF and follows a pilot project with National Bank of Egypt.”

Just because certain goods are exempt from the value-added tax (VAT) does not mean that their prices won’t increase, according to a number of commentators speaking to the local press. Magdy Morshid, chair of the House of Representatives’ Health Committee, takes this view on meds. While both imported and domestically manufactured products and their active ingredients are exempt, other non-active ingredients and production inputs are not, Morshid tells Parlmany. In fact, the issue never even came up with the Finance Ministry during VAT talks, he says. Osama Rostom, head of the pharma division of the Federation of Egyptian Chambers of Commerce, agrees that the industry’s products will rise in price as a result of the VAT.

The issue extends outside the pharma industry, with Abdel Rasool Abdel Al Hady, board member at the Egyptian Taxation Society stating that since the value chain of exempt goods are being taxed, then inevitably the prices of these goods and services will increase, something the government had stated would not happen in the run up to the VAT vote in the House, Al Mal.

And if you a smoker, you can expect prices to go up by EGP 1-5 per pack depending on the brand as soon as the VAT takes effect in October, said Ibrahim Imbaby, head of the tobacco division of the Federation of Egyptian Industries.

Oh, and we missed this the first time around, but: Mobile phone services and ethanolic beverages will be more expensive under the VAT. Taxes on beer and wine are up 50%, while that on mobile services are up 8%.

Automotive sales dropped 25.4% year-on-year in the seven months through July 2016, with 120K vehicles selling, down from 160K in the same period last year, Al Borsa reports, citing data from industry group AMIC. Passenger car sales dropped 25% for the period to around 84,400 cars, with sales of imported car sales down 32.5% and locally assembled vehicle sales easing 17.2%. Passenger car sales were down 22% year-on-year in July, with GB Auto holding a market share in the 40% range for the month.

Al Wehda Industrial Development has submitted a mandatory tender offer to acquire 100% of Misr National Steel (Ataqa), according to a filing with the EGX. The EFSA is studying the proposal, the statement added. The news saw Misr National Steel shares jump 9.9% on the EGX, Al Mal reported. We had reported earlier that Solb Misr was in talks to sell its majority stake in Misr National Steel.

EFG Hermes, CI Capital remain atop brokerage league tables for August: EFG Hermes closed the month with a 23.7% overall market share of transactions on the Egyptian Exchange, followed by CI Capital at 8.1%. Pioneers (4.7%), Sigma (4.3%) and Beltone (3.7%) round-out the top five. For the first eight months of this year, EFG Hermes holds an 18.9% share and CI Capital has 9.6%, followed by Pioneers (5.2%), Sigma (4.2%) and Pharos (4.1%). Want to drill deeper into the rankings or to look at other tables? The monthly rankings file is here and the YTD here, both in pdf.

**Earnings Watch: Maridive & Oil Services reported 1H2016 net income of USD 9.02 mn, up from USD 5.32 mn in 1H2015, according to an EGX statement.

MOVES- Prime Minister Sherif Ismail approved the appointment of Khaled Nassef Selim as an assistant to Finance Minister Amr El-Garhy for information technology. Selim will oversee the ministry’s migration from a paper-based system to digitisation, among other tasks. Selim is a business development consultant with experience at Hewlett Packard and Fujitsu.

MOVES James Moran, who has been the head of European Union Delegation to Egypt since 2012, will be leaving his post, Al Mal reports. “Egypt has had to deal with some tough times during my tenure, but I am hopeful for its future,” said Moran during his farewell banquet. Moran had been the lead negotiator for the EU on a number of issues with Egypt., including trade relations and the disbursement of EU funding and aid. Of late, Moran had been highly critical of the government’s import restrictions, which he called “damaging”.

The House of Representatives approved a new mechanism designed to “ease the process of settling tax disputes,” according to Reuters. “The law looks to accelerate what is now an often lengthy tax dispute process, removing cases from court and allowing them to be settled by committees headed by experts who do not work for the tax authority. The settlement process would start as soon as an investor submits a request to the tax authority, at which point court proceedings would be suspended for three months or longer if needed. The tax resolution law will expire after one year, a copy of the legislation stated.” The newswire adds that there are more than 6,000 tax dispute cases worth around EGP 47 bn in the court system currently, in addition to 150 civil disputes.

Gov’t looks to raise prices for processing official documents after power, metro price hikes: The government is looking to earn EGP 2 bn per annum from the repricing fees on its services, Al Borsa reports. The increases, which will come from fees on processing official government documents, must be approved by the House of Representatives, according to government sources, and will be introduced for discussion after the House’s upcoming recess. These fees usually net the government EGP 6-7 bn per year. The move follows decisions to raise prices on electricity and metro tickets. Oh, and as for when the House will recess and for how long? Nobody is exactly certain.

KSA sees heavy appetite for first int’l bond, but domestic banks are struggling: “Saudi Arabia’s first international debt sale has generated so much interest from Asian investors that the kingdom is weighing a full pipeline of bonds to follow a $15bn initial auction as early as October,” writes the Financial Times, noting that Asian investors looking to lock in returns amid negative rates in Japan have heavy appetite. But don’t be lulled into thinking all is well in the Kingdom, Bloomberg warns: “Easier lending rules and direct cash injections are doing little to alleviate a cash shortage at Saudi Arabian banks, now at its worst since the financial crisis.”

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Egypt in the News

Driving the conversation this morning: Foreign press coverage on Egypt this morning is focused on the presentation of the new Israeli ambassador’s credentials to President Abdel Fattah El Sisi. Also: The story on the growing number of cases of hepatitis A in the United States linked to strawberries exported from Egypt isn’t going away anytime soon, as new cases are being reported.

Ambassador Govrin presents his credentials to El Sisi: The Jerusalem Post covered the ceremonial presentation of credentials of Israeli Ambassador David Govrin, along with seven other ambassadors on Wednesday, in detail, noting that Israeli Ambassador David “Govrin said he spoke briefly, in Arabic, with Sisi, who asked about his background and stressed the importance he places on the relationship with Israel.” The Times of Israel gives some background on Govrin, noting he most recently held the post of director of Jordan and North Africa Department in the Israeli Foreign Ministry, and that his first foreign posting was in Cairo, serving as first secretary in the Israeli embassy from 1994 to 1997.

The outbreak of hepatitis A in the US linked to Egyptian strawberries is widening: While the AP was reporting on Wednesday morning that the outbreak has grown to 50 cases across four states in the US, by Wednesday evening CNN had said that number had grown to 55 cases across six states: Virginia, where the outbreak originated, West Virginia, Maryland, North Carolina, Oregon and Wisconsin. Almost all those infected had purchased smoothies from a chain of cafes in Virginia. As of Wednesday evening, the Virginia Department of Health said the investigation was ongoing. The aforementioned CNN piece notes: “The European Center for Disease Prevention and Control (pdf) reported 15 confirmed cases of hepatitis A infections and 89 probable cases in 14 countries” from 2012-2013, and that “All 104 of these cases were linked to travel to Egypt.”

Egypt is ramping up its efforts to enhance relationships with Nile Basin countries, Al Monitor reports. A parliamentary committee has summoned seven ministries to the House of Representatives to discuss “reconnect[ing]” Egypt with Africa and expanding the presence of its civilian and military services. Such efforts include sending medical envoys to a number of African countries, including Ethiopia, potentially setting up an African Affairs Ministry, and becoming a member country of the African Radio Stations Union. Egypt signed an MoU with the Japan External Trade Organization in Kenya earlier this week following the TICAD summit on 27 August, where the Egyptian delegation also signed deals with other African nations with the aim of promoting African development.

Egypt blames the EU-Turkey agreement for a recent spike in refugees and migrants in the country, requesting more help from the EU, EUobserver reported. Egypt hosts around 5 mn refugees, said Deputy Foreign Minister Hisham Badr. “The closing of the Balkan route and the [agreement] in north Africa, the pressure has increased on Egypt," he told MEPs in the European parliament’s foreign affairs committee.

The fight against [redacted] harassment in Egypt is bearing fruit, AFP reports. The piece looks back on the case of Noha Elostaz, the hero who broke social taboos by disclosing details of an assault as she pushed for and managed to get her harasser convicted in 2008. The piece tracks the progress that has taken place domestically since then.

Oh, and BuzzFeed is having fun trying to figure out who Moustafa El-Gindy, Breitbart’s Egyptian landlord, really us.

On Deadline

The business columnist writing under the pseudonym Newton penned an ode to capitalists in Al Masry Al Youm. Nasserist policies have just pitted one faction of society against the other, leaving both (the rich and the poor) worse off. “We’ve committed atrocities under the name of ‘social justice’,” he says.

Leftist Al Shorouk columnist Abdullah El Senawy says Egyptian media has managed to extinguish itself. The idea that Egyptian media is “dominant” is long over, he says, with more international news organizations setting up Arabic-speaking offices. Between a severe lack of professionalism and a scramble to the bottom to offer boasting cheap entertainment, Egyptian media can’t earn the respect of its people, yet alone influence them or call for their unity in tough times.

In a surprisingly poignant critique of the Construction of Churches Act, El Watan’s Emad El Din Adib argues that the key tenet of the law that passed on Tuesday were the very same ones to which the Coptic and Evangelical churches had objected. These include granting governors the final say on licensing churches and making the size of Christian houses of worship proportionate to the size of a district’s Christian population. He notes that the law continues to anger Coptic Christians both within the House and outside Egypt.

Worth Reading

Read about the 1973 war between Egypt and Israel through recently declassified CIA briefings for the US President: Last Wednesday, the CIA declassified c.2.5k daily presidential briefs (think: “Enterprise for the American president”) covering 1969-1977. While some sections within the briefings remain redacted, they provide a fascinating glimpse as to what American intelligence assessed as events transpired. Of likely particular interest to our readers is how the 1973 war between Egypt and Israel unfolded across the desk of US President Richard Nixon.

The briefings show that while at first neither the Americans nor the Israelis were concerned about a potential Egyptian attack, on 6 October the Israelis believed an attack was imminent — and the Americans discounted the concerns. But the most remarkable admission must be the brief saying the Americans believed the Soviets had sent nuclear missiles to Egypt. On the night of 24-25 October, the US raised its alert to DefCon III, its highest level of alert since the 1962 Cuban missile crisis. All links below are pdfs:

5 October 1973: “Military exercises now going on in Egypt are larger and more realistic than previous ones, but the Israelis are not nervous.”

6 October 1973: “A military initiative at this time would make little sense for either Cairo or Damascus. Another round of hostilities would destroy Sadat’s painstaking efforts to invigorate Egypt’s economy and run counter to his attempts to bring the less militant, oil-rich states into a united Arab front.”

26 October 1973: “The Middle East cease-fire is largely being observed… A Soviet ship, probably carrying nuclear weapons, arrived at its destination–most likely Alexandria–on October 24.” The non-redacted portions of the batch of declassified documents never reveals the fate of the ship.

(Read through the relevant pages of the declassified documents, detailing the war from 6-25 October 1973, here: Page 1, Page 2)

(Now, if only the good people at FRUS would get things moving and start publishing the Reagan years, we could have a field day. Thank you, AMJ, for the introduction — it’s the gift that keeps on giving.)

Image of the Day

Watch a seasoned tourist fall in love with Egypt when you zip back 57 weeks on her Instagram timeline. “If you’re wondering if Egypt is safe, it is. If you’re wondering if the people are warm and friendly, they are. … what I was struck by was 1) how safe I felt in doing the tour and, 2) how similar the daily life we witnessed, was to my own daily life back home. Too often I think we get caught up in how different we are from one another, and we let those differences become easy fuel for negativity and hate.” Alternatively: Scroll through the same user (Kirsten Alana)’s timeline and marvel equally at the choice of destinations and the quality of her mobile phone photography. You’re going to need an iPhone lens from these people if you going to want to compete in the photography department.

Diplomacy + Foreign Trade

Eight new ambassadors to Egypt have presented their credentials to President Abdel Fattah El Sisi, Ittihadiya said in a statement. They include:

  • Sibille de Cartier d’Yves (Belgium)
  • Michel-Christos Diamessis (Greece)
  • David Govrin (Israel)
  • Jose Octavio Tripp Villanueva (Mexico)
  • Myint Lwin (Myanmar)
  • Johannes Laurentius Westhoff (Netherlands)
  • Abdul-Ghani Mohamed Elmy (Somalia)
  • Juma Mubarak Juma Al Junaibi (UAE)

Saudi Arabia has picked Egypt as a guest of honour at its annual Al Janadriyah festival for next year, according to a statement sent out by the Saudi Embassy in Cairo. Janadriyah is a two-week culture and heritage festival held near Riyadh.

Egypt and Jordan signed 14 cooperation agreements in mining and geology, labor mobility, power, vocational training, and tourism on Wednesday at the 26th Egyptian-Jordanian High Committee meeting, Al Borsa reported. Al Ahram puts the number of agreements signed at 20.

Energy

House approves a number of loan agreements to fund energy projects

The House of Representatives voted to approve a number of loan agreements to build or upgrade power plants, Amwal Al Ghad reports. These include a USD 100 mn loan from the Saudi Development Fund to finance the expansion of the West Cairo power plant; a USD 108 mn loan with preferential terms from the Kuwait Fund for Arab and Economic Development to help finance the South Helwan power plant; and a EUR 50 mn credit facility to build a power transmission control center in the Delta signed with the French Development Agency.

Basic Materials + Commodities

Agriculture Ministry to provide cotton farmers with subsidy top-up of EGP 100 per feddan

Agriculture Minister Essam Fayed has issued a decision to provide cotton farmers with EGP 100 subsidy top-up per feddan, Al Shorouk reported on Wednesday. In May, the cabinet had approved paying farmers EGP 1,250 per qintar (160 kg) for long-staple cotton and EGP 1,100 per qintar for short staple cotton.

Real Estate + Housing

Holding Company for Tourism taps Arab Contractors for Continental Hotel, issuing 11k feddans in September

The Holding Company for Tourism is tasking the Arab Contractors with a project to demolish and rebuild the Continental Hotel in Downtown, holding company Chairman Mervat Hataba told Amwal Al Ghad. The EGP 950 mn project is expected to be completed within three years of demolition, she added. The hotel is owned by the Egyptian General Company for Tourism & Hotels. The Holding Company is also issuing 11k feddans in Six October to investors by September, Hataba told Amwal Al Ghad.. The company has completed design work and is expecting an investment cost of no less than EGP 400 mn, she added.

Tourism

UK-based Egypt-specialist tour operator sold in an MBO

The management team of Discover Egypt, a UK-based specialist tour operator to Egypt, has completed a management buyout from parent All Leisure Group, according to Travel Weekly. All Leisure said Discover Egypt will become part of Platinum Holidays Ltd from 31 August. Platinum Holidays director Philip Breckner told TTG “business for the company, which operates tours in classical Egypt, had remained ‘steady’ despite the UK ban on UK flights to Sharm el Sheikh which he admitted had created ‘misperceptions about the country’ … ‘Our cruise programme always has a break over the summer months, but on September 5 our first winter cruise will start and we’ve got groups booked every week.’”

Amer Group signs management contract with AccorHotels for Porto Al Sokhna

Amer Group has signed a management contract with AccorHotels for the company’s hotels in Porto Al Sokhna, Amer Group Managing Director Omar Amer told Amwal Al Ghad. Amer Group are planning additional investments for the project, he added.

Civil Aviation Ministry to shut down hot air balloon services for three days due to bad weather

Civil Aviation Minister Sherif Fathy ordered the shutdown of hot air balloon services in Luxor for three days due to bad weather conditions, Al Mal reported on Wednesday. The move comes a day after 22 Chinese tourists were reportedly injured on Tuesday after a hot air balloon made an emergency landing in Luxor.

Automotive + Transportation

House launches fact finding committee on the state of Egypt’s transportation system

Fresh off its victory in the wheat corruption scandal which toppled former Supply Minister Khaled Hanafy, the House of Representatives is forming a fact-finding committee to investigate losses of EGP 43 bn incurred by Egypt’s railways authority and the “continued state of disrepair of Egypt’s roads and bridges,” said MP Mohamed Dassouky, member of the House Transportation Committee.

Banking + Finance

Leasing contracts up 14% y-o-y during first seven months this year

Leasing contracts in Egypt increased by 14% y-o-y to EGP 12.9 bn during the first seven months of 2016, up from EGP 11.3 bn in the comparable period last year, EFSA head Sherif Samy told Al Borsa. The real estate sector made the largest contribution with EGP 9.3 bn (72%) in contracts, followed by machinery and equipment with EGP 1.2 bn (9%). Factoring contracts stood at EGP 2.7 bn during the same period, marking a 14% y-o-y increase from EGP 2.4 bn reported a year earlier, Al Borsa reported.

Other Business News of Note

CBC-Al Nahar launch Khaleeji channel early-2017

The CBC-Al Nahar television networks are launching a channel targeting GCC at the beginning of 2017, Al Nahar network CEO Alaa Kahky told Al Mal. The move comes as part of the expansion strategy of the recently formed holding company that combines both networks we had reported on in May. The holding company will control five companies in total — the television networks and their respective advertising arms.

Legislation + Policy

Civil Service Act annual raise will be applied retroactively, final vote postponed

Watering down the Civil Service Act was not enough, now the 7% annual raises will be applied retroactively starting from last July once the act becomes law, according to statements attributed to Planning Minister Ashraf Al Araby, Youm7 reports. Civil servants who have already received their annual raises this fiscal year can rejoice that their pay is getting significantly larger at the expense of the state budget. Oh, and speaking of the act: The final vote originally due to have taken place on Tuesday may be postponed to Sunday as a quorum was not reached, Al Mal reports. Procedurally, the act must be reviewed by the Egyptian Council of State (Maglis El Dowla) if the House makes any amendments to the law prior to the vote. The bill then gets sent back to the House for a final vote.

El Sisi orders all government bodies to cooperate with committee to reclaim land

President Abdel Fattah El Sisi issued an executive order that forces government bodies to comply with recommendations of the committee to reclaim illegally occupied land headed by former prime minister Ibrahim Mahlab, Al Mal reports. The committee has been “repossessing” illegally -occupied land and selling them in auctions. The committee had held its first auction last month, selling 900 feddans for EGP 164 mn.

Egypt Politics + Economics

Egypt poverty rate hits 27.8% -Planning Minister

Egypt’s poverty rate has increased to 27.8% from 26%, Planning Minister Ashraf El Araby told Al Masry Al Youm. Without recent economic reform plans, the poverty rate would have been 33%, he says. Inflation, which El Araby blames implicitly for the increase in poverty rates, is driven by the government’s inability to monitor markets.

Immigration Ministry considers exempting cars of Egyptian expats from customs

Immigration Minister Nabila Makram is considering exempting cars owned by Egyptians living abroad from customs if they transfer their remittances through domestic banks, Al Mal reported on Wednesday. Makram met with the representatives from the Central Bank, Customs Authority and the finance and interior ministries to try to find mechanisms to implement the strategy.

On Your Way Out

Parliament approved a decree imposing terms as long as life in prison for FGM, Al Shorouk reports. Earlier this week, cabinet approved a draft bill designating FGM a felony and raising the penalty to up to 15 years if the practice leads to death or “permanent deformity.” An assessment by researcher Amel Fahmy suggests that the problem runs deeper in Egypt, and harsher prison sentences are unlikely to reduce instances of the practice. Representatives from the Salafist Nour Party objected to the law, claiming that “Type 1 FGM” (defined by the World Health Organization as the full or partial removal of the [redacted]) is not harmful and should not be outlawed, Parlmany reported.

The markets yesterday

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USD CBE auction (Tuesday, 30 Aug): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Wednesday, 01 Sep): 12.77 sell, 12.57 buy (compared to 12.60-12.75 on Tuesday, 30 Aug, Al Mal)

EGX30 (Wednesday): 8,158.0 (+1.0%)
Turnover: EGP 508.8 mn (19% above the 90-day average)
EGX 30 year-to-date: +16.4%

THE MARKET ON WEDNESDAY: EGX30 posted 1.0% gain by the ring of the closing bell. Other EGX indices closed marginally in the green territory. Today’s top gainers were Elsewedy Electric, Amer Group, and Telecom Egypt. The latter’s gain were driven by the announcement of becoming the first 4G mobiles service operator in Egypt. On the flip side, Arabian Cement, Egyptian Resorts, and TMG Holding were today’s worst performers. At a market turnover of EGP 508.8 mn, foreign investors were the sole net sellers during the day.

Foreigners: Net short | EGP – 11.3 mn
Regional: Net long | EGP + 11.3 mn
Domestic: Net long | EGP + 0.0 mn

Retail: 58.3% of total trades | 60.0% of buyers | 56.6% of sellers
Institutions: 41.7% of total trades | 40.0% of buyers | 43.4% of sellers

Foreign: 25.6% of total | 24.5% of buyers | 26.7% of sellers
Regional: 6.4% of total | 7.5% of buyers | 5.3% of sellers
Domestic: 68.0% of total | 68.0% of buyers | 68.0% of sellers

WTI: USD 44.83 (+0.29%)
Brent: USD 47.00 (+0.23%)
Natural Gas (Nymex, futures prices) USD 2.87 MMBtu, (-0.62%, Oct 2016 contract)
Gold: USD 1,312.50 / troy ounce (+0.08%)

TASI: 6,079.5 (-0.8%) (YTD: -12.0%)
ADX: 4,471.0 (-0.5%) (YTD: +3.8%)
DFM: 3,504.4 (-0.3%) (YTD: +11.2%)
KSE Weighted Index: 347.3 (-0.1%) (YTD: -9.0%)
QE: 10,989.8 (-2.9%) (YTD: +5.4%)
MSM: 5,735.0 (-0.6%) (YTD: +6.1%)
BB: 1,142.2 (+0.3%) (YTD: -6.1%)

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Calendar

01 September (Thursday): President Abdel Fattah El Sisi is expected to be in India on a state visit en route to the G20 summit in China.

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

04-05 September (Sunday-Monday): President Abdel Fattah El Sisi is expected to be in China for a state visit coinciding with the G20 summit.

05-08 September (Monday-Thursday): The 6th EFG Hermes London MENA and Frontier Conference, Emirates Arsenal Stadium, London, UK.

05 September (Monday): Markit Emirates NBD PMIs are out for Egypt, Saudi Arabia, UAE at 6:15am CLT.

06-08 September (Tuesday-Thursday): Citi’s 2016 Global Technologies Conference, New York.

08-09 September (Thursday-Friday): Regeni case prosecutors from Egypt and Italy set to meet in Rome.

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

14-16 September (Wednesday-Friday): Bank of America Merrill Lynch Global Healthcare Conference 2016, London, UK.

19-20 September (Monday-Tuesday): Euromoney Egypt conference, venue TBD.

19-20 September (Monday-Tuesday): Arqaam Capital MENA Investors Conference 2016, Park Hyatt Dubai, UAE.

19-21 September (Monday-Wednesday): Bank of America Merrill Lynch Global Consumer and Retail Conference 2016, London, UK.

22 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates.

22 September (Thursday): Deadline for mobile network operators to accept the final terms for 4G mobile broadband network licenses.

27-29 September (Tuesday-Thursday): Citi’s Frontier Markets Symposium – London 2016, UK.

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.

26-27 October (Wednesday-Thursday): The Marketing Kingdom Cairo 2 event, Cairo.

31 October (Monday): Deadline for Telecom Egypt to reach an agreement with MNOs over using their 2G and 3G network infrastructure

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

14-16 November (Monday-Wednesday): Bank of America Merrill Lynch MENA 2016 Conference, The Ritz Carlton, Dubai International Financial Centre, 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.

29-30 November (Tuesday-Wednesday): Citi’s Global Consumer Conference, London, UK.

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

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

07-08 December: Citi’s 2016 Global Healthcare Conference, London, UK.

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.

13 December (Tuesday): Amwal Al Ghad’s top 50 most influential women in Egypt women forum, Four Seasons Nile Plaza Hotel, Cairo.

29 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates.

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

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.