Tuesday, 27 September 2016

Ogromnoe spasibo, Comrade: Russia lifts agri ban, could decide flight ban today.

TL;DR

What We’re Tracking Today

Announcement on Russian flights today? Russian Transport Minister Maxim Sokolov and Civil Aviation Minister Sherif Fathy are expected to announce the progress on talks to restore direct flights from Russia at a joint press conference today at noon, Al Borsa reports. We have more in Speed Round.

The Finance Ministry will meet today with advisors on its USD 3 bn eurobond issuance, including BNP Paribas, JPMorgan, Citi and Natixis, government sources tell Al Borsa. Finance Minister Amr El Garhy had previously told the newspaper that while they had not yet settled on a date for the sale, it is likely to take place in October.

Tervetuloa: A delegation of 40 investors from Finland, led by Foreign Trade Minister Kai Mykkanen, arrives today for a meeting of the Egyptian-Finnish business forum, Al Mal reported. The forum will discuss relations targeting trade blocs in Africa and Arab countries, in addition to EU projects, infrastructure, management and administration, and the Suez Canal Axis, Al Masry Al Youm reported.

Tourism minister to talk with industry: Tourism Minister Yehia Rashed will headline an event on Egypt’s “tourism crisis” hosted by the Canada Egypt Business Council and the Egyptian Council for Sustainable Development today at the Four Seasons Nile Plaza Hotel at 5:00 pm.

Hillary Clinton and Donald Trump faced-off overnight. We have more in a Spotlight, after Speed Round, below.

What We’re Tracking This Week

Administrative Court to issue ruling on appeal of its decision to void Tiran and Sanafir agreement on Thursday: The country’s High Administrative Court will reportedly issue a ruling on the government’s appeal of the court’s initial decision in June that voided a border demarcation agreement with Saudi Arabia, Al Borsa reports.

We’re also looking at back-to-back long weekends ahead for Islamic New Year (either 2 or 3 October) and Armed Forces Day (6 October).

On The Horizon

Tsipras to visit Cairo, meet with El Sisi: A Greek delegation headed by Prime Minister Alexis Tsipras will visit in 9-12 October, and a sit-down with President Abdel Fattah El Sisi is on the agenda, Al Mal reports. The two sides will discuss the maritime border delineation between the two countries as well as Cyprus, which was a focus of El Sisi’s state visit to Greece last December. The visit will also look into potentially setting up a shipping route between the Alexandria and Suez ports with Athens’, said the head of the Egyptian-Greek Business Council Hani Berzi. Egypt and Greece have been cooperating on developing energy ties between Egypt and Cyprus.

Speed Round

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RUSSIA LIFTS BAN ON EGYPTIAN agriculture products: Russia’s agricultural safety watchdog Rosselkhoznadzor has lifted its ban on the import of Egyptian plant products, according to Sputnik. The measure was in place for less than a week. “The sides agreed to resume the deliveries of agricultural produce from Egypt to Russia, except potatoes, on condition that the Egyptian side will meet all Russian demands on sanitary safety of supplied produce," Rosselkhoznadzor spokeswoman Yulia Melano told reporters in Moscow. Al Mal quotes Trade and Industry Minister Tarek Kabil as suggesting the reversal came in no small measure thanks to joint work between the ministries of trade agriculture, which sent a joint delegation to Russia on Sunday to discuss the ban.

Officials from both the agriculture and trade ministries are claiming that the ban and its lifting are unrelated to ergot and are framing the whole issue as a quality control problem. Traders including Hesham El Naggar, vice chairman of commodities outfit Daltex, maintain it was always about ergot. As we’ve previously noted, import bans are standard Russian tactics in trade disputes, and this one was slapped on after Egypt rejected one or more cargoes of Russian wheat. A Russian delegation will arrive in Egypt next month to coordinate on procedures for restoring exports of plant products to Russia, said the head of the Agriculture Export Council Abdel Hamid El Demerdash, Youm7 reports.

Will Russia officially announce the resumption of flights today? Expectations are running high, with Russian Transport Minister Maxim Sokolov expected to detail the significant progress made in talks to restore flights from Russia in a joint press conference today with Civil Aviation Minister Sherif Fathy, Al Borsa reports. Fathy had announced that the two sides had reached an agreement to resume flights “gradually” starting from October. These will be primarily run through EgyptAir and Russia’s Aeroflot and would reportedly begin with a Moscow-Cairo route. Flights to Sharm El Sheikh and Hurghada would follow. Sokolov arrived in Cairo yesterday to finalize the agreement.

And not a moment too soon: Tourist arrivals to Egypt were down 51.2% year-on-year during 1H2016 to 2.3 mn, in part due to a 54.9% y-o-y fall in the number of Russian tourists, according to Al Shorouk, which cited a CAPMAS report. The paper also reports a 14.9% y-o-y decline in tourist arrivals from the UK, and a 6.9% y-o-y drop in German tourists.

THE EU NEEDS to “establish migrant [agreements] with Egypt and Tunisia” along the lines of the agreement it already has with Turkey, German Chancellor Angela Merkel said. According to Reuters, she added that “more must be spent on development aid to deal with the root causes of migration.” The EU’s agreement with Turkey stipulates that it stems the “flow of illegal migrants to Europe in exchange for financial aid and the promise of visa-free travel.” Austria’s Chancellor, Christian Kern, suggested a similar agreement last week whereby “the EU provides funds to Cairo to stem the flow of migrants northward.” Merkel’s statement comes after nearly 170 people lost their lives when a migrant ship originating from Egypt capsized last Wednesday.

ARE MPs GUNNING FOR OMRAN? The House of Representatives is working on a draft law that would tighten oversight of the head of the EGX through an authority which could remove him from his position, said MP Emad Mahrous. The bill has the support of 70 other MPs. Ali El Moselhy, the Nazif-era cabinet minister and former head of Egypt Post who now chairs the House Economics Committee, said that the EGX will be on the agenda when the House reconvenes from its recess next week, AMAY reports. As we noted back in July, moves to “reform” the EGX were prompted by 20 MPs who called for the formation of a committee to monitor “the poor management” of the bourse and “the constant losses [incurred by] minority shareholders.”

Mahrous hinted that a lobbying “campaign by shareholders” is (in part) driving the motion. This comes despite Cabinet considering amendments to the Capital Markets Law that strengthen minority shareholder rights. The House Economics Committee had also called for a probe into the GDR trade back in July.

Legal Affairs Minister Magdy El Agaty confirmed that the amendments to legislation governing the EGX are part of a wider legislative agenda on governance of capital markets and investment promotion that the House is due to discuss. These include a new incentives for investors, the formation of a higher council on investment, and amendments to the companies act, the minister said, stopping short of getting into details.

IS ENPPI AN IPO candidate? The Oil Ministry has called in officials from Enppi to discuss the company’s readiness for an IPO. The transaction could come during the second phase of a program that will see the Ismail government list public-sector companies, sources told Al Borsa, noting that Enppi’s listing could take place as early as 2017. State-owned energy companies set to be included in phase one of the IPO program include MIDOR and Ethydco; additional shares of Sidi Kerir Petrochemicals and the Alexandria Mineral Oils Company are also expected to be on offer. Enppi is a state-owned engineering, procurement and construction company specialising in the petroleum, petrochemical and energy sector.

LUFTHANSA LOOKING TO EXIT EGYPT? The German carrier is mulling whether to require that tickets it sells in Egypt be paid for in USD or by credit card — and is considering a moratorium on sales here entirely as a preliminary part of an exit strategy, Al Borsa quotes Country Sales Manager Zied Gueblaoui as saying. The company has had persistent problems repatriating cash and profits and expects to make a decision by November. In parallel, the company is working with global industry association IATA to pressure the Ismail government for a clear plan outlining how and when the funds will be repatriated. Lufthansa been unable to get as much as EUR 15 mn out of Egypt since January. The FX crisis has led a number of airlines to question their presence in the country, with the latest being KLM Royal Dutch Airlines, which announced earlier this month that it will indefinitely suspend flights to Cairo starting 8 January.

KUWAIT’S ZAIN is still interested in acquiring a 4G licence and is willing to pay for it in USD. The company reiterated its interest in a talk with CIT Minister Yasser El Kady on the sideline of a meeting of Arab telecom ministers in the UAE. The licences will be issued with new terms and payment conditions, according to Al Mal. If Zain enters the market, it would become the second 4G operator after Telecom Egypt. Vodafone Egypt, Orange Egypt, and Etisalat Misr would operate as mobile virtual network operators, the story says.

ANOTHER CONSORTIUM QUITS the feed-in tariff program? The Adenium-Triangle consortium is reportedly the latest to announce it is withdrawing from phase one of the feed-in tariff program, and it won’t sign-up for phase two, Al Mal claims to have been told by a source at Triangle. The consortium has failed to secure funding for its phase one project, blaming it on domestic arbitration clauses that resulted in many international funders opting out from the program. The firms reportedly held talks with EBRD, IFC, KfW Development Bank, UK Export Bank, as well as OPEC for the phase one funding. The consortium had announced last month that it looking to obtain financing from a UK bank for a USD 100 mn solar plant in Aswan under phase one.

EL SISI ECON SPEECH: President Abdel Fattah El Sisi briefed the nation on the state of the economy during the inauguration of the Bashayer El Kheir projects in the Gheit El Enab area of Alexandria. The project is being touted as the first time the government has worked with civil society on informal housing.

El Sisi hit illegal migration right out of the gate, calling on the Egyptian people to back his plan to clamp down on unregulated migration into and out of Egypt.

El Sisi blamed inflation in part on a rise in spending on public-sector wages. Increased purchasing power hasn’t been met with an equivalent rise in supply, he said, saying public-sector wages have gone up EGP 150 bn in the last five years, while pensions have risen EGP 53 bn and some 2.5 mn families are now benefiting from some form of social assistance.

More large-scale projects: The government has in the pipeline job-creating projects including two fish farms (in East Port Said and Kafr El Sheikh). It will offer by October the first 500k feddans of the 1.5 mn feddan land reclamation project and will build 100k greenhouses that will be 5-10x more productive per feddan than standard agriculture while eliminating wastage and spoilage, El Sisi said.

Don’t forget the little guy: El Sisi said that he had instructed Trade and Industry Minister Tarek Kabil to market industrial projects to smaller investors as complete packages that include land, corporate documentation and all necessary licenses.

Separately, El Sisi vowed to provide sewage systems to 50% of villages across the nation by 2018, as well as eliminate Hepatitis C in two years. The president also provided more details on the national social housing project, claiming that 600k housing units are set to be completed by next June, with the entire nationwide project, which will cover around 300 regions, set to be fully completed by June of 2018.

During his remarks on housing, El Sisi floated the idea that citizens should make financial contributions to help complete low-income housing, suggesting they could start with “50 piasters here and there.” Watch the full address (Arabic, 51:23) and or read the full transcript (in Arabic) at Ahram Gate.

**Earnings Watch: Al Ezz Dekheila Steel Company reported 1H2016 consolidated net losses worth EGP 555.7 mn, deteriorating from EGP 237.6 mn recorded in 1H2015, according to a bourse statement.

PARTNERS IN ISRAEL’S Leviathan field signed a USD 10 bn agreement to supply Jordan’s National Electric Power Company with a gross 1.6 tcf of gas. Leviathan’s operator, Noble Energy, said “subject to regulatory approvals from Israel and Jordan, sales …are anticipated to commence at field startup,” Reuters reports. The agreement is for 15 years and production is set to begin in 2019 or 2020. Yossi Abu, chief executive officer of Delek Drilling, Noble Energy’s partner in Leviathan, said “partners in the Leviathan project will continue to pursue long-term agreements with other customers in the eastern Mediterranean, including in Egypt, Turkey and the Palestinian Authority,” according to Bloomberg.

Disclaimer on our coverage of the US presidential debate: We are biased. We have always been biased. All media everywhere is biased, but we freely admit to it. What feels like a long time ago, we used to be very tough on Sec. Clinton especially with regard to the email scandal. But when a greater threat emerged to the very fabric of reality, we were forced to adjust our risk assessment.

Former US Secretary of State Hillary Clinton and an individual going by the alias “Donald Trump” went head to head Monday evening (early Tuesday morning our time) in the season’s first presidential debate to an expected viewership of 100 mn people in the United States alone. The debate was moderated by NBC Nightly News anchor Lester Holt, who appeared most of the time to simply be a bystander as Trump steamrolled over him, interrupted him and interrupted Sec. Clinton. Holt was also unable to keep the audience from continually hooting and hollering as if it were a crowd at a WWE match.

A close race in a post-factual age: To prepare, Clinton relied on longtime aide Philippe Reines as a stand-in for Trump in her mock debates to prepare. Trump, on the other hand, said that he simply watched old debates of Sec. Clinton going up against US President Barack Obama in 2008. Clinton was able to use the difference in preparation as an applause line to her favor when Trump had been bragging that he had “been all over the place,” in reference to his tireless campaigning around the United States. “You decided to stay home,” he said dismissively to Clinton. “And that’s ok.” Clinton was able to interrupt: “I think Donald just accused me of preparing for the debate. And that’s right. And I prepared to be president too, and that’s a good thing,” to which the audience erupted into applause.

Tap here to read more of our coverage of the debate. Or click here to watch the full debate for yourself (run time: 1 hour, 34 minutes). Also worth checking out: The New York Times’ recap of “what you missed” — a bulleted list of zingers from the night.

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The Macro Picture

DEUTSCHE BANK IS IN TROUBLE. If you’re wondering what all the noise is about, here’s the rundown: The bank’s shares are down more than 50% this year to their lowest levels in 20 years, and German Chancellor Angela Merkel has reportedly ruled out state assistance. She also rejected the notion that she would run interference with the US Justice Department’s investigation into a USD 14 bn dispute regarding the sale of mortgage products. For its part, the bank said “it had not expected Ms Merkel to intervene in the US case,” according to BBC. Deutsche “is determined to meet the challenges on its own" and has "no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning."

The International Monetary Fund has highlighted Deutsche as the world’s riskiest globally significant lender, according to The Financial Times (paywall) and investors including Marshall Wace, Highfields, Discovery, and Soros Fund Management have all established significant short positions on the bank.

Not everyone is worried, however. “Regardless of what Ms Merkel says, the view of the market is that the German government will stand firmly behind Deutsche Bank, for good nationalistic reasons and because if there was a serious problem for Deutsche Bank it would be a massive dislocation for the whole system,” Atlantic Equities analyst Chris Wheeler says. And it doesn’t look like Deutsche is about to pull a Lehman: Bloomberg Gadfly says while the threat of “a downward spiral involving credit downgrades isn’t here yet,” if Deutsche Bank “is backed into a corner and forced to pay a steeper-than-expected fine, the concern is that it will be forced to skip coupons on some debt instruments and take a bigger hit on already painful asset sales.”

Worth reading again from our weekend edition is The Economist’s presentation of Hyman Minsky’s work as part of its “six big economic ideas” series. PIMCO’s Paul McCulley coined the term “‘Minsky moment’ to describe a situation when debt levels reach breaking-point and asset prices across the board start plunging” and the newspaper cautioning that “the warnings of Minsky will fade away. The further we move on from the last crisis, the less we want to hear from those who see another one coming.”

Egypt in the News

A quiet morning for Egypt: With global media attention focused squarely on the first debate between Hillary Clinton and Donald Trump, it’s a blessedly quiet morning for Egypt in the international press. Stories making headlines include pickups of President Abdel Fattah El Sisi’s defense of the military’s involvement in the economy (made in a speech yesterday), German Chancellor Angela Merkel’s suggestion that Egypt needs a migrant deal with the European Union, and ongoing coverage of the death of nearly 170 people in last week’s migrant ship capsizing.

If it’s September, it’s time to recycle the Zabaleen story, part of the pre-2011 ‘holy trinity’ of stories about Egypt that were once dear to foreign correspondents, alongside FGM and the status of women. Copts in Egypt are “finding great success in the country’s recycling business” despite growing religious intolerance, the BBC reports about the predominantly Coptic, Garbage City in Cairo. “Garbage City may not be paved with gold, but it’s not without opportunity.”

Many Egyptian women are suffering from depression and other psychological disorders stemming from a desire to “shake off the weight of tradition and expectation from the families and society,” writes Sophie Anmuth in depth for Open Democracy. The roots of this dispossession are entrenched economic and political factors, but these social and familial dynamics have come to mirror Egypt’s “military regime” relying on relationships and power structures of force and obedience.

On Deadline

Migration is on the minds of Egyptian columnists in the wake of last week’s tragedy. Former MP and Al Masry Al Youm columnist Amr El Shobaky says Egyptian migrants the reasons have less reason to head to Europe than do people from Iraq, Syria, and Libya, where the prospect of death at sea is no more daunting than that of being killed at home in an attack by Daesh.

El Watan’s Ali El Selmy writes that legislation alone will not put an end to unregulated migration, saying job creation and social justice are long-term solutions. The tragedy is a warning sign of a looming crisis, he says. Meanwhile, the same newspaper’s Mahmoud Khalil complains that while pop culture and films in the ‘50s and ‘60s denounced the idea of leaving behind friends and family in search for other opportunities overseas, immigration is a primary ambition of the masses today.

Diplomacy + Foreign Trade

CBE Governor Tarek Amer travelled to Frankfurt, Germany yesterday to “strengthen monetary cooperation” between Egypt and Germany, Al Masry Al Youm reported. The paper did not provide specific details about the visit, but said Amer will meet with Bundesbank President Jens Weidmann along with other officials. Talk is already circulating in the domestic press that Amer is in Germany for “USD 10 bn pledged at the EEDC to build new power grid infrastructure with Siemens,” where he will reportedly negotiate for better terms. Siemens’ power plants in Beni Suef, Burullus and New Capital have already received USD 3.5 bn in funding from 17 banks arranged by Deutsche Bank, HSBC and KfW IPEX-Bank.

Foreign Minister Sameh Shoukry met with Ireland’s Foreign Affairs Minister Charles Flanagan on Saturday on the sidelines of the UN General Assembly in New York, according to a statement from the ministry.

A delegation of Egyptian business leaders will travel to India to attend a textiles exhibition this December, said Ali Shouky, the chamber’s vice chairman, Al Mal reported. The number of participating Egyptian companies has not been decided yet, as the chamber is still in the preparatory stage for the exhibition, he said.

The Federation of Egyptian Industries will meet with a Moroccan trade delegation today to discuss investment opportunities in Egypt, Youm7 reports. The delegation is scheduled to visit the SCZone, as well as a number of factories.

Energy

Egypt-focused SDX announced board reshuffle

Egypt-focused IOC SDX Energy has announced the appointment of CFO Mark Reid and non-executive director Michael Raynes to the board of directors. They replace Paul Moase and Barrie Wright, formerly non-executive directors, effective immediately. Chairman Michael Doyle said Reid and Raynes “ join the Board at an exciting stage in SDX’s corporate development as we carry out important work-streams across our portfolio of exploration, development and production assets in Egypt. I am confident that their expertise will prove extremely valuable as we look to further grow the business."

Basic Materials + Commodities

GASC to hire six companies to inspect wheat imports

The General Authority for Supply Commodities (GASC) will use six companies to inspect shipments of wheat importsunder the 0.05% ergot policy both at the point of origin and when the shipment arrives in Egypt. These include Inspectorate, Control Union, SGS, Cotenca Inspection and Comibassal. Importers speaking to Al Borsa have raised concerns about GASC’s policy of withholding payment to them before inspections of the shipments are completed, as the quantities of wheat it buys could necessitate multiple shipments.

Domty begins operations at Six October juice factory next week

Domty is set to begin production at its new Sixth of October juice factory next week, Deputy CEO Mohamed El Damaty told Al Borsa. The new factory will help Domty expand its production target to 36k tonnes annually, he added. Domty plan on adding a baked goods line with a capacity of 2 mn pieces every month, as well as a 3-4k tonne per month roumy cheese line by the beginning of next year, El Damaty said.

Food exports up 2% y-o-y during the first eight months of 2016

Food exports rose 2% y-o-y during the first eight months of 2016 to USD 2.2 bn, Chairman of Food Export Council (FEC) Hani Berzi said, according to Amwal Al Ghad. The council aims to increase this figure to 5% y-o-y by the year’s end despite the current challenges the food exports segment is facing.

Manufacturing

Medco Plast to build EGP 115 mn plastics factory in Six October

Medco Plast is planning to build a EGP 115 mn plastics manufacturing factory in Sixth of October, Managing Director Mohamed Samaha said, Al Mal reported. The factory has a targeted production capacity of 25k tons per year, with 50% of its capacity set to be exported to African countries. It is expected to begin operations in 2017. The firm also has plans to float some of its shares on the bourse in 1Q2018, Samaha added, providing no further details. Medco Plast is 40% owned by Al Samaha Company, while Middle East Glass and Gulf Capital both have a 30% share in the company.

Health + Education

The pharma industry bracing itself for the upcoming devaluation

The pharma division of the Federation of Egyptian Industries will lobby the government to allow further increases in the price of meds in light of the devaluation, which the industry cannot handle, said the division’s head Hisham Hagar. The industry’s revenues are expected to be negatively impacted in 4Q16 by the devaluation, Radwa El Swaify, head of research at Pharos Holding, tells Al Borsa — despite the industry being given priority by the CBE over FX. The industry’s profits grew 76% year-on-year in 1H16, buoyed by the government’s decision in May to raise the prices of meds sold for under EGP 30 by 20%, El Swaify says.

Saba appoints Tiba for Trading and Contracting to expand Kafr El Sheikh factory

Pharma manufacturer Saba has signed a EGP 22 mn agreement with Tiba for Trading and Contracting Company to implement expansion plans for Saba’s factory in Kafr El Sheikh, according to an EGX statement. The firm’s major shareholders will finance 25% of the project through a loan, with the remainder of the cost to be either financed through banks or a capital increase. The factory is set to be completed in 16 months.

52% of Egyptian citizens don’t devote enough time to personal health, says BUPA

52% of Egyptian citizens do not devote enough of their time to take care of their health, according to a study by health insurer BUPA, Al Borsa reported. The study, which was conducted on 1,000 citizens, also revealed that around 66% of citizens allocate 30 minutes or less per week on their personal health.

Pharma Syndicate to form company to import and distribute products

The board of the Pharmacists Syndicate approved yesterday forming a company to produce, import, export, and distribute meds, Al Mal reports. Shares in the new company will be exclusively offered to syndicate members.

Banking + Finance

Bank card usage by Egyptians abroad quadrupled, Deputy CBE Governor says

Egyptians’ usage of credit and debit cards abroad has quadrupled since last year, Deputy CBE Governor Mai Aboul Naga said, according to Al Mal. She said the CBE has not imposed binding restrictions on card transactions abroad, but noted that policies were left at banks’ discretion and according to their liquidity cover.

Banking sector loans to SMEs reach 7% target of EGP 200 bn initiative

The banking sector’s loans to SMEs has reached 7% of the four-year EGP 200 bn target set out by the CBE in its SME-financing initiative, CBE Assistant Sub Governor Mai Abulnaga at the SME Beyond Borders forum yesterday, Al Ahram reports. On a related note, the CBE has allegedly been snubbing the House of Representatives’ requests to provide it with detailed information on the status of the program, chair of the House SME Committee Hala Abou Saad told Al Borsa. Both sides appear to agree at least that the program lacks coordination, with Abulnaga calling for a coordination committee be formed, while the House is drafting a law whereby a single body will be responsible for governing the SME sector.

Egypt Politics + Economics

Finance Ministry approves EGP 250 mn in funding for export subsidies fund

Finance Minister Amr El Garhy has approved EGP 250 mn in emergency funding for the export subsidies fund to make good on overdue payments to exporters, Youm7 reports.

On Your Way Out

Wamda’s Radwa Rashad sheds light on Egyptian fintech startup Paymob, a Payment Service Provider that converts cash into electronic money. It operates as “one-stop-shop for payments acceptance,” in an effort to eliminate the operational hassle that vendors go through. While the founders claim that they face difficulty in having people trust a non “bank-like” institution with their money, they reckon that their recent appointment as a technology provider to AAIB has put them one step closer to their goal. Paymob, which signed an undisclosed funding agreement with A15 earlier this month, said its target clients are mainly the younger generation who are more accepting of this global trend.

The owner of the migrant boat that capsized last Wednesday was arrested in Damietta governorate yesterday, Al Shorouk reports. Seventy-five of the 169 dead have been identified, most of whom were young men in their teens and early twenties, with the youngest casualty aged two years old, according to Al Masry Al Youm.

The markets yesterday

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USD CBE auction (Tuesday, 20 Sep): 8.78 (unchanged since 16 March 2016)
USD parallel market (Monday, 26 Sep): 12.87 (from 12.85 on Sunday, 25 Sep, Al Mal)

EGX30 (Monday): 7,974.8 (+0.9%)
Turnover: EGP 542.7 mn (25% above the 90-day average)
EGX 30 year-to-date: +13.8%

Foreigners: Net Short | EGP -53.6 mn
Regional: Net Long | EGP +86.0 mn
Domestic: Net Short | EGP -32.4 mn

Retail: 46.9% of total trades | 45.5% of buyers | 48.2% of sellers
Institutions: 53.1% of total trades | 54.5% of buyers | 51.8% of sellers

Foreign: 33.3% of total | 28.4% of buyers | 38.2% of sellers
Regional: 15.7% of total | 23.6% of buyers | 7.8% of sellers
Domestic: 51.0% of total | 48.0% of buyers | 54.0% of sellers


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PHAROS VIEW

MPC Maintains Rates: Implications and What Next?

The MPC maintained rates last Thursday noting that the inflation spike witnessed in August was caused by “transitory cost-push factors” rather than demand factors, meaning raising rates would not control inflation. We have noted that interest rate has not been an effective tool to control inflation as it is driven largely by the exchange rate from the importation bill. Concerns over weakened real GDP growth impacted the decision, in light of the current weakness in investment expenditure. Additionally, raising interest rates would add to the debt service burden, which currently represents c. 30% of fiscal expenses. We had noted that the Industrial Production Index depicts weak growth figures over the last three quarters, due to the FX shortage overhang. Tap here to read the full note, in which Head of Research Radwa El Swaify notes that devaluation should still happen — the questions are FX availability and the magnitude of devaluation.

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WTI: USD 45.69 (-0.52%)
Brent: USD 47.35 (+3.18%)
Natural Gas (Nymex, futures prices) USD 3.02 MMBtu, (+0.63%, Oct 2016 contract)
Gold: USD 1,341.80 / troy ounce (-0.17%)<br
TASI: 5,956.6 (+0.7%) (YTD: -13.8%)
ADX: 4,492.2 (-0.1%) (YTD: +4.3%)
DFM: 3,493.0 (0.0%) (YTD: 10.9%)
KSE Weighted Index: 352.1 (-0.2%) (YTD: -7.8%)
QE: 10,509.8 (+0.7%) (YTD: +0.8%)
MSM: 5,767.4 (0.0%) (YTD:+6.7%)
BB: 1,139.6 (+0.2%) (YTD: -6.3%)

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Calendar

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.

19 October (Wednesday): Digital Media Forum Cairo, Four Seasons Nile Plaza Hotel, Cairo.

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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