Sunday, 25 September 2016

All three mobile network operators turn
their backs on 4G licenses

TL;DR

What We’re Tracking Today

Setting things right with Mother Russia: A delegation from the ministries of agriculture and trade is arriving in Moscow today to discuss lifting Russia’s ban on imports of Egyptian fruits, vegetables and other plant products, one day ahead of schedule, Al Mal reports. The ban was imposed after Egypt rejected a cargo of Russian wheat, saying it was contaminated with ergot. The Ismail government has since scrapped the ergot ban — this time for good, it says.

Cheese maker Obour Land should file with the EGX today for a listing in advance of an IPO. Sources tell Al Borsa, that the company is expecting to list in October, with the planned offering of 25% of its shares expected to take place in January 2017 at the latest. Proceeds for the funds to include the launch of frozen meats and ice cream product lines and the expansion of its juice and dairy production lines, the newspaper says. The company is hoping to raise EGP 100 mn from the IPO. CI Capital is advising.

What We’re Tracking This Week

The Finance Ministry will hold a meeting on Tuesday with advisors BNP Paribas, JPMorgan, Citi and Natixis to finalize strategy for its USD 3 bn eurobond issuance, government sources tell Al Borsa. Finance Minister Amr El Garhy had previously told the newspaper that they had not yet settled on date for the sale, but that it should take place in October.

The first debate of the US presidential election is on Monday. NBC News’ Lester Holt will moderate the first of three debates, which is set to run for about an hour and a half starting at 8pm Eastern (2am CLT on Tuesday). Politico, the Wall Street Journal, Facebook, Twitter and Youtube are all due to livestream the debate. We’ll poke into this a bit more and see if we can’t find links for you by tomorrow morning’s edition. Oh, and don’t sweat it if The Donald wins: Egyptian MPs apparently think he’s a great guy.

Citi’s two-day Frontier Markets Symposium will take place in London starting Tuesday.

Cairo Angels is hosting an introduction to angel investing in Egypt on Tuesday, 27 September from 6:30-9pm at the Nile Kempinski Hotel. Among the presenters:” guru Con O’Donnell, Endeavor Egypt’s Mohamed Rahmy, Flat6Labs’ Dina El Shenoufy, Cairo Angels founder Hossam Allam, Delta Shield Chair Neveen El Tahri and KI Angels founder Khaled Ismail.

The Narrative PR Summitwill take place on Wednesday, 28 September at the Four Seasons Nile Plaza, Cairo.

On The Horizon

House back in session next week: President Abdel Fattah El Sisi issued a decree recalling the House of Representatives into session on Tuesday, 4 October at noon.

The annual meetings of the IMF and World Bank Group will be held 7-9 October.

Speed Round

Speed Round is presented in association with

ALL THREE MOBILE OPERATORS shun 4G licences: Vodafone Egypt, Orange Egypt, and Etisalat Misr have all refused to buy 4G licences, Reuters reported. The deadline for submitted bids for the licences was last Thursday and none of the companies submitted an offer. Orange Egypt sent a bourse statement saying it refused to bid for the licence under the current circumstances and regulations, but would consider revisiting its decision if the situation should change. Vodafone Egypt considered bidding, but reached the conclusion that the spectrum on offer neither allows for operating 4G services effectively nor for faster internet speeds. It will also revisit its stance if the situation changes, Al Masry Al Youm reported. The National Telecommunications Regulatory Authority (NTRA)’s president Moustafa Abdul Wahed rejected the companies’ claims about insufficient spectrum being made available, saying “of course it will not be enough for the 90 [mn] users, but it’s sufficient” as a starting point, according to Bloomberg. The MNOs had petitioned to the Prime Minister’s office last week to amend the terms of the issuance, which they said favour Telecom Egypt (TE), to no avail.

NTRA had said it would offer the licence to international operators if the three existing MNOs did not bid and Kuwaiti mobile operator Zain, China Telecom, Saudi Telecom and Lebara KSA have all expressed an interest. A senior NTRA official tells Al Borsa that TE has the right to buy further 4G frequencies before a fifth telecom operator is brought to the market, a move meant to ensure TE’s viability before allowing a new competitor into the game. Nonetheless, TE is in a precarious situation, as the state-owned operator was given a two-month deadline to reach an agreement with an MNO to use its 2G and 3G network infrastructure until it completes its own 4G network. NTRA said it will decide on a course of action after a board meeting in October.

CBE LEAVES RATES ON HOLD: The Central Bank of Egypt’s Monetary Policy Committee “unexpectedly” left its overnight lending and deposits rates unchanged. “The current level of inflation and future upside risks are largely explained by transitory cost-push factors, while demand-side factors continue to pose downside risks to the inflation outlook. Given the balance of risks, the MPC judges that the key CBE rates are currently appropriate,” the Central Bank said in a statement (pdf). The overnight deposit stands at 11.75% against a Bloomberg survey expectation of 12.25%. All 12 economists surveyed by Reuters expected a rate hike, putting it in the range of 50-200 basis points. The move comes despite headline inflation rising to 15.47% year-on-year in August, from 14% in July, while core inflation rose to 13.25% last month against 12.31% in July.

Float by the end of the year? Reuters’ Asma Alsharif reminds us that Central Bank of Egypt Governor Tarek Amer had said Egypt will consider floating the EGP if the central bank’s reserves reach a level of around USD 25 bn. Alsharif says the CBE could hit that level by the end of the year with the arrival of funding from the IMF, bilateral financing from China and the GCC, and the planned eurobond issuance. One banker says, "the central bank cannot float the [EGP] before devaluing and hiking interest rates first to avoid a run on the banks in the absence of inflow of [USD]."

EGYPT’S ERGOT FLIP-FLOPPING has hurt market confidence, Bloomberg reports. “Confidence has been badly hurt … Traders might be in a kind of ‘you go first’ mood,” Vincent Jeannin, a trader at Al Ghurair Resources, said in a comment that was also carried by The Financial Times (paywall). GASC’s tenders might not garner as many offers as before, the director of Solaris Commodities says, “as some will remain skeptical that this is a permanent change.” Still, GASC’s return to the market is set to be welcomed, a ship broker told Bloomberg, "GASC needs wheat to get in, as I understood their stock is getting fairly low … Russians also need to get stock out from their ports. The wheat market needs GASC to get back into the game.” Reuters confirm on Thursday that GASC has amended its tender booklet to reflect its change on ergot tolerance to a level of 0.05%.

GASC signed contracts to buy a total of 240k tonnes of Russian wheat on Thursday, following the cancellation of the ergot ban, said Mohamed El Shahat, media adviser at the Supply Ministry, Al Mal reported. GASC had reportedly received four offers from Louis Dreyfus, Olam, Union and Aston selling the Russian wheat, with shipments set to arrive on 31 October. Ahram Online provides more details on purchase prices. Russian Trade Minister Denis Manturov had also confirmed that Russia will resume shipping wheat to Egypt, after Egypt rejected a 60k tonne cargo of Russian wheat two weeks ago. El Shahat added that Egypt had previously signed contracts to import 540k tonnes of Russian wheat set to arrive this week.

RUSSIA IS DRIVING HARD BARGAIN on plant export ban. We can buy all the Russian wheat we want, but that doesn’t seem to impress Russia’s food safety watchdog Rosselkhoznadzor, which has reportedly said it could substitute imports from Morocco, Syria and Iran for Egyptian plant products in a sign that it is continuing to play hardball Al Borsa reports. This comes despite Trade Minister Tarek Kabil holding extensive talks with his Russian counterpart on Friday, promising to ensure that Egypt’s exports meet with international standards, according to the newspaper. A delegation of Egyptian officials is also sitting down with Russian officials today — a day earlier than initially planned — to push for lifting the ban, Al Mal reports.

Kuwait is getting in on the act, having imposed a requirement that imports of Egyptian strawberries be accompanied by a certificate certifying they’ve been tested and are fit for human consumption. Ahram Gate also says samples of Egyptian products currently in Kuwaiti markets will be tested. Egypt’s exports to Kuwait are estimated to be around USD 450 mn annually, almost half of which are agricultural products. Kuwait now joins Russia, Sudan, the US, the UAE, Jordan and previously Saudi Arabia in investigating, restricting or outright banning imports of Egyptian agriculture products.

Thank God for China: It’s not all bad news, as Egypt will begin exporting grapes to China next month provided an export agreement is “soon” signed as expected, the Agricultural Export Council’s Moustafa El Naggary told Al Mal. New Zealand and Australia are also expected to sign-up for Egyptian grape exports by year’s end, he added.

CHINA FORTUNE LAND DEVELOPMENT COMPANY (CFLD) plans to invest USD 20 bn in Egypt over the next ten years, a company delegation promised President Abdel Fattah El Sisi at a meeting on Saturday. These investments will be primarily geared to developing phase 2 of the new administrative capital, said Ittihadiya spokesperson Alaa Youssef, according to Al Mal. CFLD aims to set up a smart village, an industrial zone in addition to residential districts in the new capital.

ALEX PORT PIVOT? The Alexandria Port Authority has decided to scrap plans to build a USD 750 mn multiplatform facility in the port and will instead build another container terminal, a senior port executive tells Al Borsa. China Harbour, which signed an agreement to build the multipurpose platform at the EEDC in March 2015, will remain as the new project’s developer. Funding for the new USD 800 mn container terminal will come from a facility from the Export-Import Bank of China, the official added. The Transport Ministry had scrapped the MoU for the multipurpose facility back in March after failing to reach an agreement over financing the project with China Harbour, only to resurrect it again in May. Last we heard, the Chinese government was to finance the original project. Al Borsa speculates that the port might have pulled a bait and switch. It has been looking to build a new container terminal, but could not issue a tender for fear being taken to arbitration by the Alexandria Container and Cargo Handling Company as its contract with Alex Port gives it rights of first refusal on all container terminal expansions at the port.

ENI UPGRADED the field potential of Baltim South West to 1 tcf of gas following the results of the appraisal well Baltim South West 2X. “The Baltim South West field is located in the conventional waters of the Nile Delta, in 25 meters of water depth, 12 Km from the coastline and just 10 Km from the Nooros field, discovered in July 2015 and is already in production… With this new well, the gas potential of the so-called “Great Nooros Area” reaches 3 tcf of gas in place, of which about 2 tcf are in the Nooros field, while the remaining are in the new independent discovery of Baltim South West.” Eni holds a 50% stake in the field through its subsidiary IEOC, while BP controls the remaining 50%.

EL SISI PROMISES INVESTMENT LAW AMENDS in meeting with investors in New York. President Abdel Fattah El Sisi said at a meeting organized by the nonpartisan Business Council for International Understanding in New York that his administration will amend the Investment Act in line with investor feedback, Al Mal reported. Remember GAFI’s poll on whether Egypt needs a new investment law, or just amendments to the existing act? It has been extended to 1 October from the original deadline of 12 September, the newspaper reports. Our gut tells us the amendments will center on the return of investment incentives, including tax breaks and free zones. Meanwhile, a US business delegation will visit Egypt in October to explore investment opportunities, Al Mal says, citing remarks it attributes to David Thorne, senior adviser to US Secretary of State John Kerry.

EBRD TO FUND QNB Alahli, local Dreyfus subsidiary: The European Bank for Reconstruction and Development (EBRD) may provide a USD 100 mn, three-year revolving to Louis Dreyfus Company Group’s subsidiaries in several countries, including Egypt, according to a statement by the development bank. The tranche allocated to the Egyptian subsidiary aims ”to improve global food security by enhancing trade linkages and efficiency between Egypt, the world’s largest grain importer, and some of its major suppliers.” The financing agreement also aims to provide stable working capital financing to the company’s activities in “countries where liquidity can be a constraint.”

EBRD is also considering providing a loan of up to USD 40 mn to QNB Alahli, with the European Investment Bank (EIB) expected to provide USD 20 mn of the loan, the EBRD said in a statement. The move comes as part of the “Egypt Sustainable Energy Financing Facility Framework,” which is a EUR 140 mn financing programme in support of sustainable energy projects. “The agreement with Egypt will provide funds to participating financial institutions for on-lending to eligible private sector sub-borrowers for sustainable energy investments,” the bank said. The agreement will also provide technical assistance and employee training to QNB Alahli.

CAIRO AIRPORT TERMINAL 2 will start trial operations on Wednesday, re-opening after structural upgrades and the introduction of entertainment and retail outlets at the facility, Al Mal reported. The terminal’s capacity of 7 mn travelers annually brings total capacity at Cairo International Airport to 30 mn pax per year, said Civil Aviation Minister Sherif Fathi. Up to 15 airlines operating from Terminal 1 will begin migrating to Terminal 2 as of 28 September, said Fathi, starting with Jazeera Airways and Kuwait Airways.

DEATH TOLL RISES in migrant ship disaster: The death toll from the fishing boat carrying 450 migrants that capsized off the coast of Egypt on Wednesday has risen to 165 according to official estimates, Ahram Online reported on Saturday. Reuters, however, is putting the number of those onboard at 600. The fishing boat had been headed to Italy carrying migrants of different nationalities, and was carrying over 300 people beyond the boat’s maximum capacity of 150 passengers. Authorities have ordered the arrest of the boat’s four crew members on charges including human trafficking and wrongful death. The death toll could still rise as searchers comb the water for bodies. Egyptian rescue workers and fishermen saved 169 people. President Abdel Fattah El Sisi has vowed to punish those responsible for the incident.

The Ismail government held crisis meetings on Saturday to develop a comprehensive strategy to clampdown on migrant smuggling in Egypt.El Sisi ordered a tightening of security on land and sea to combat human trafficking and migrant smuggling. The president also ordered the government to coordinate further with the House of Representatives to pass the Anti-Illegal Immigration Act and the launch of an awareness campaign to educate the public on the dangers of illegal immigration.

As predictably as ever, MPs of the House have used this tragedy as an opportunity for some grandstanding, with some calling for the resignation of the Interior Minister, holding him responsible for the incident, AMAY reports.

The total number of migrants reaching Europe via the Mediterranean Sea was a staggering 300k arrivals for 2016 alone; some 3,501 have died at sea in their attempt, according to a statement issued by the International Organization for Migration on Friday. The number of migrant arrivals, however, has dropped by nearly 50% from 2015’s 518k arrivals.

INTERNATIONAL NEWS WATCH- Among the international stories you may want to check this morning:

  • Saudi Arabia has offered to cap oil production if Iran does the same this year, four sources tell Reuters, reviving talk of a production cut to prop-up prices ahead of an informal meeting of OPEC in Algiers on the sidelines of a conference taking place 26-28 September. OPEC’s next regularly scheduled meeting is on 30 November. Don’t hold your breath.
  • Twitter may be up for sale, with Google and Salesforce said to be among the bidders, CNBC reported this weekend.
  • Yahoo may have fallen victim to the world’s biggest hack— and embattled CEO Marissa Mayer has known about it since July, the FT reports.
  • Snapchat (the company) has renamed itself just “Snap” and is launching video-sharing sunglasses it’s calling Spectacles. They’re ugly. The kid who owns Snapchat is clearly too young to have experienced glassholes (watch, run time: 1:46).
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Egypt in the News

CNN and the Washington Post published over the weekend separate interviews with President Abdel Fattah El Sisi conducted during his trip to New York last week. CNN posted El Sisi’s interview with Erin Burnett in two parts; the first features his comments on meeting with US presidential candidates Hillary Clinton and Donald Trump, which CNN already provided a preview of last week and which we noted in Thursday’s issue. It also includes El Sisi’s diplomatic response as to whether the US is providing enough aid to fight Daesh, as well as Egypt’s progress on economic reforms.

In part two, Burnett asks El Sisi if Egypt is safe enough for tourists to visit, to which he replied in the affirmative and invited all interested state parties to send security delegations to inspect Egypt’s airports. El Sisi also called on social media websites to step up their efforts in helping combat terror recruitment online. In response to Burnett’s question on the debate in the United States on the use of the phrase “radical Islamic terrorism,” which US President Barack Obama and others have said are unhelpful terms to use in framing the fight against terror, while Republicans including Donald Trump have insisted on its use as being an important first step in diagnosing the problem. El Sisi affirmed it is fair to use to use such labels, and while this may seem to be a break from previously outlined style guide issued by the Ministry of Foreign Affairs in 2015 advising against the use of such terminology, El Sisi framed the issue in the context of reforming religious discourse, a point which he has spoken on a number of times over the past few years.

The Washington Post’s foreign affairs opinion columnist David Ignatius sat down for separate interviews with El Sisi and Iranian President Hassan Rouhani which Ignatius has rolled into one piece titled, oddly enough, ‘Egypt and Iran have the same problem — and the same answer.’ That problem, as Ignatius sees it, is domestic security, as defined by domestic stability with an eye on the economic demands of each respective country’s peoples as well as the threat from terrorism. The solution, as Ignatius sees it, is that “neither country will grow and prosper without more freedom to empower its citizens.”

Michelle Dunne talks to a handful of urban planners and architects on their view of Egypt’s new administrative capital, whose views may best be summarized by David Sims’ response: “Egypt needs a new capital like a hole in the head.”

The Ismail government’s decision to turn outsource management of the Giza Pyramids to the private sector “will not only achieve material gains, but will also help save Egypt’s tourism reputation by marketing abroad and providing better service for tourists,” former undersecretary of the Tourism Ministry Magdy Selim told Al-Monitor.

A visit to Alexandria by Israeli Ambassador David Govrin is getting plenty of attention in the Israeli press. Apparently, Alex’s Jewish community is larger than Cairo’s.

On Deadline

The Al Masry Al Youm columnist writing under the pseudonym Newton asks why the prime minister hasn’t taken action to clearly define the jurisdictions of each ministry and authority. Bureaucracy in Egypt stems from conflicting and overlapping jurisdictions between ministries, authorities and public institutions, and the reason behind the failure to address the Metrojet crisis, the Giulio Regeni case, and the ergot flap, he says.

Worth Reading

US biotech firm using genetic tagging to detect fake Egyptian cotton: Bloomberg Businessweek’s Shannon Pettypiece details the work of US-based biotech firm Applied DNA Sciences, upon which a group of retailers and manufacturers are relying on “to avoid the fate of Target, which recalled 750k fake Egyptian cotton sheets and pillowcases after discovering they contained a less expensive form of cotton… the technology, developed by Applied DNA Sciences, uses tiny genetic markers that are sprayed on the cotton at the gin just before being packaged and sent to be turned into yarn.” (Read DNA testing could put an end to fake Egyptian cotton)

Image of the Day

Dunkin Donuts Egypt decided to post this racist ad on their Instagram account over the weekend before promptly deleting the image after realizing their bigoted humor wasn’t going over very well. The caption in the ad reads from right to left: “Dark: Half beauty,” above an image of a chocolate glazed doughnut, (a play on an old Egyptian proverb) next to a sugar-frosted doughnut whose caption reads: “White: Complete beauty.” The accompanying text posted with the image read: “Because we are against racism, we’ll eat both. Which one of them will you choose?” We have a long rant on the insidiousness of the racism portrayed in the ad this morning on our blog: The racism in the Dunkin Donuts Egypt ad is the rule, not the exception.

Worth Watching

Hillary Clinton Between Two Ferns: We at Enterprise are a bit late in posting this, as it appeared online two days ago, which in internet years is eons. We had intended to include the video in our Weekend Edition, but the person responsible may or may not have passed out on Thursday night watching 1951’s The Thing From Another World. We grade the performance of former US Secretary of State and presidential hopeful’s appearance on the satirical talk show hosted by comic actor Zach Galifianakis as “Good,” though long overdue. It is precisely this kind of pandering — yes pandering, it was funny, but let’s call it what it is — to Generation X, Z and the Millennials that Secretary Clinton should have been doing from day one. Disregard the TrumpTroll invasion of the comments section by individuals who seem to struggle to understand the format of Galifianakis’ show. (Watch Hillary Clinton Between Two Ferns, running time: 5:47)

Diplomacy + Foreign Trade

Full text of El Sisi UNSC speech released: President Abdel Fattah El Sisi addressed the United Nations Security Council last Wednesday during its Summit on Syria, as we previously noted, The full text of his speech was made available on Saturday from Ittihadiya. In what appears to be a veiled reference to the apparently cosmetic rebranding of Al Qaeda affiliate Jabhat al Nusra, El Sisi says, “Yes, there should be no place for terrorism in Syria, and no room for attempts to re-brand the terrorist organizations.” El Sisi went on to further say “So, let me be absolutely honest with you. Lost is any bet on a military resolution to the Syrian crisis.” Read the full transcript of El Sisi’s address here, (pdf).

Shoukry, Zarif meeting: Foreign Minister Sameh Shoukry met his Iranian counterpart Mohammad Javad Zarif on the sidelines of the 71st meeting of the UN General Assembly, Al Borsa reported. Syria topped the agenda.

World Bank could fund part of 1.5 mn feddan project: International Cooperation Minister Sahar Nasr held meetings with the World Bank to discuss USD 500 mn in funding allocated for the 1.5 mn feddan project and the USD 500 mn for the Upper Egypt development projects, according to a ministry statement. A World Bank delegation will meet with Nasr on 9-13 October to discuss the second tranche of Egypt’s three-year, USD 3 bn funding agreement with the WB.

Energy

EGPC signs three agreements with BP, IEOC

EGPC has signed three E&P agreements with the Eni JV the International Egyptian Oil Company and British Petroleum to drill in the Nile Delta, Temsah, and Ras El Bar concessions, Amwal Al Ghad reported. The agreements, worth around USD 595 mn, stipulates the drilling of 12 wells to produce over 1 bcf/d of natural gas.

Glencore, Trafigura and B.B. Energy to supply this year’s remaining LNG shipments

Glencore, Trafigura and B.B. Energy are set to supply three LNG shipments to Egypt this year, after EGAS issued a tender two weeks ago to secure shipments for the rest of the year, sources told Reuters. Glencore is set to deliver its cargo in October, while Trafigura and B.B. Energy are set to deliver in November and December, respectively.

Manufacturing

Alexandria Mineral Oils Company studies USD 800 mn expansions

Heavy oils and asphalt manufacturer the Alexandria Mineral Oils Company is studying expansion projects worth an investment value of USD 800 mn, company chairman Amr Mostafa told Al Masry Al Youm. The expansions would include the company’s gasoil maximization complex and lubricant oil and wax complex.

Ethydco takes USD 75 mn AfDB loan

The Egyptian Ethylene and Derivatives Co (Ethydco) taken a USD 75 mn loan from the African Development Bank (AfDB), Al Ahram reports.

Real Estate + Housing

Second phase of landmine-clearing project in the works

The second phase of the landmine-clearing project and development of the North-Western Coast is underway, as international cooperation minister Sahar Nasr met with the project’s board to discuss it, Al Mal reported. It is not entirely clear when the project will be completed, but given that Nasr signed a protocol with the housing ministry for the removal of landmines from 36k feddans in El Alamein last April, operations are expected to be completed in ten months’ time.

Automotive + Transportation

Operations to construct Zamalek metro station to begin in two weeks

Drilling will begin in Zamalek in two weeks for a planned metro station, Transportation Minister Galal El Saeed told Al Shorouk. He says the cost of the third metro line is estimated to reach EGP 20 bn. The neighbourhood’s residents had complained that the proposed station would impact the structural soundness of old buildings on the island and change the “nature of the district” and had filed a lawsuit at the Administrative Court that is scheduled to be heard on 18 October.

East Delta in talks with five Emirati companies

East Delta Travel Company is in talks with five Emirati companies that are bidding to run buses on its routes, a company source told Al Borsa. The selected company will operate a fleet of 150 new buses, with East Delta receiving 30-35% of consequent revenues.

Sports

All Egyptian finals at Al Ahram Squash Open

An all-Egyptian Al Ahram Squash Open took place on Friday, with Raneem El Welily and Karim Abdel Gawad taking first place in the women’s and men’s divisions, Ahram Online reported. El Welily defeated world number one Nour El Sherbini, while Abdel Gawad claimed a 3-0 victory against Ali Farag. Current world number one Mohamed El Shorbagy was eliminated in the semi-finals by Farag. The Professional Squash Association had announced the return of Al Ahram Squash Open back in July, after a 10-year absence.

On Your Way Out

QUANTITATIVE TIGHTENING: Firefighters contained a fire that erupted inside the Central Bank of Egypt’s banknote printing press in Giza, Al Masry Al Youm reported. There were no casualties, but the extent of the damage was not reported.

EGYPTIAN WOMEN’S RIGHTS activist Mozn Hassan and the Nazra for Feminist Studies are amongst the four winners of this year’s Right Livelihood Award, sometimes known as the “Alternative Nobel.” Hassan and Nazra share the prize of USD 350k with Syria’s White Helmets (Syria Civil Defense group), Russian activist Svetlana Gannushkina, and Turkish independent newspaper Cumhuriyet, Bloomberg report. “Hassan and her feminist organization were honored ‘for asserting the equality and rights of women in circumstances where they are subject to ongoing violence, abuse and discrimination.’ The citation said the group has documented human rights violations and coordinated the response to [redacted] assaults on women participating in public protests during and after the uprising of 2011.”

The markets yesterday

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USD CBE auction (Tuesday, 20 Sep): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Saturday, 24 Sep): 12.80-12.82 (from 12.75-12.90 on Wednesday, 21 Sep, Al Mal)

EGX30 (Thursday): 7,913.9 (-0.3 %)
Turnover: EGP 408.2 mn (6% below the 90-day average)
EGX 30 year-to-date: +13.0%

THE MARKET ON THURSDAY: The benchmark EGX30 ended the week in the red, losing 0.3% by the end of the session. Among the day’s worst performers were Qalaa Holdings and Egyptian Resorts, with only a few of the EGX30 constituents ending the day in the green. Telecom Egypt led the best performing stocks of the day on the back of Thursday’s announcement that all three mobile phone operators declined the 4G license terms, which ETEL had acquired earlier this month. Cairo Oils and Soap and Arab Cotton Ginning were also among the day’s top performers. Market turnover was EGP 408.2 mn with foreign investors the sole net sellers of the day.

Foreigners: Net Short | EGP -32.3 mn
Regional: Net Long | EGP +29.6 mn
Domestic: Net Long | EGP +2.7 mn

Retail: 41.0 % of total trades | 38.6 % of buyers | 43.4 % of sellers
Institutions: 59.0 % of total trades | 61.4 % of buyers | 56.6 % of sellers

Foreign: 33.9 % of total | 29.9 % of buyers | 37.9 % of sellers
Regional: 19.4 % of total | 23.1 % of buyers | 15.8 % of sellers
Domestic: 46.7 % of total | 47.0 % of buyers | 46.3 % of sellers


***
PHAROS VIEW

MPC maintains rates against expectations citing “transitory” inflation factors

The Central Bank of Egypt’s Monetary Policy Committee elected to keep rates unchanged at its meeting on Thursday, going against the expectations of both consensus and Pharos, with the reason given being the spike in inflation witnessed in August, caused by “transitory cost-push factors,” including higher electricity bills and increased demand on food from Eid El Adha. However, Pharos has continuously noted that raising the interest rate has not been the most effective tool to control inflation, as only 10% of the country is banked and inflation continues to be largely driven by the exchange rate due to the high import bill. Pharos Head of Research Radwa El Swaify examines the MPC’s decision in a research note (downloadable in full here, pdf) released this morning, the highlights of which include:

  • We believe that growth and budget deficit concerns have come in play
  • As the Fed maintained rates, there was less pressure to raise rates on EGP at this point in time
  • Devaluation will still happen; FX availability and magnitude of devaluation are key
  • Foreign inflows require confidence in the system and one exchange rate rather than high interest rates
  • EGX would probably witness a cautious rebound over held rates and in anticipation of a potential currency movement on Tuesday’s FX auction

***


WTI: USD 44.48 (-3.97%)
Brent: USD 45.89 (-3.69%)
Natural Gas (Nymex, futures prices) USD 2.98 MMBtu, (-0.71%, Oct 2016 contract)
Gold: USD 1,341.5 / troy ounce (-0.01%)<br
TASI: Market closed.
ADX: 4,5151.2 (+1.0%) (YTD: +4.8%)
DFM: 3,513.6 (+2.0%) (YTD: +11.5%)
KSE Weighted Index: 351.0 (+0.2%) (YTD: -8.0%)
QE: 10,412.5 (+1.6%) (YTD: -0.2%)
MSM: 5,766.1 (+0.3%) (YTD: +6.7%)
BB: 1,134.5 (flat) (YTD: -6.7%)

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Calendar

26 September (Monday): Technical delegation from the ministries of agriculture and trade to visit Moscow to discuss lifting the ban on imports of Egyptian plant products. 27-29 September (Tuesday-Thursday): Citi’s Frontier Markets Symposium – London 2016, UK. 28 September (Wednesday): Narrative PR Summit organised by CC Plus in partnership with the American University in Cairo, Four Seasons Nile Plaza, Cairo. 02 October (Sunday): Islamic New Year (national holiday, tentative date). 06 October (Thursday): Armed Forces Day (national holiday). 07 October (Friday): Deadline for phase one feed-in tariff investors to decide whether to remain under phase one conditions or move to phase two terms. 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. 10-13 December (Saturday-Tuesday): Projex Africa and MS Marmomacc + Samoter Africa, 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. 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. 14-16 February 2017 (Tuesday-Thursday): Egyptian Petroleum Show, Cairo International Convention and Exhibition Centre.

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