Is it devaluation day in Egypt? We should know by 11:30am.

Is today ‘D Day’? There are unconfirmed reports that the Central Bank of Egypt will devalue the EGP at an extraordinary auction today, according to a tweet overnight by Carina Kamel, the generally very well-sourced senior correspondent at Al Arabiya. Kamel says the move follows news that the parallel market rate is closing in on EGP 16.00, the latest record low.

We have the USD 6 bn in third-party funding the IMF wants? Kamel’s suggestion came as a report last night by Bloomberg’s Ahmed Feteha cited an unnamed central bank official as saying Saudi Arabia has deposited USD 2 bn at the Central Bank of Egypt. That was immediately followed by news from a senior Finance Ministry official that we have closed the USD 6 bn in third-party funding the IMF requires to sign-off on a USD 12 bn extended fund facility.

CBE Board to meet today? Expectations were high that the Central Bank of Egypt would make the decision to devalue yesterday at the biweekly meeting of its board. The meeting was postponed to today as some members were unable to attend due to unspecified “scheduling conflicts,” sources tell Al Mal.

When should we know what’s going on? The CBE’s weekly currency auction typically takes place at 11am, as have many of its extraordinary auctions. If that pattern holds, we could know as early as 11:30am.

Two pieces of evidence to the contrary: We think it’s largely undeniable that tensions are brewing between Egypt and KSA, and the lack of information on when the KSA funds arrived leave in question the status of ties and endgame. Also: One of our favourite sources drew our attention to an anonymously sourced (and so far completely unconfirmed) piece in online tabloid Dotmisr suggesting that President Abdel Fattah El Sisi had nixed CBE Governor Tarek Amer’s suggestion of a devaluation to EGP 13.00 for fear of its impact on the poor and low-income earners. We think the evidence of USD 6 bn in funding in place (and the moving of the CBE board meeting today) outweigh these concerns, but still…

Wait — did you say EGP 16.00? It’s heading in that direction on the parallel market, yes. Importers gave Reuters a range of EGP 15.20-15.68 per USD 1.00 yesterday, with one commodities trader saying he was quoted levels as high as EGP 15.80. The last quoted price we heard was from a significant buyer who was quoted EGP 15.75. You need to take all parallel market pricing with a grain of salt: There are virtually no greenbacks changing hands at these prices. Reality check: The EGP has tumbled a bit more than 21% on the parallel market since the beginning of the month.Just a month and a half ago, the whispered plea / fear in our circle was: “Do you think it could really hit 15.00?” The community clearly expects the EGP to overshoot before hitting a market-clearing rate; the challenge is estimating what that rate is when so much liquidity is held by a vast swath of USD-holders clinging desperately to USD 10k or USD 50k, waiting to sell into a free-fall.

We have more on all of this in Speed Round, below.

Companies qualified to participate in phase two of the feed-in tariff program have until 21 October to decide whether they’re moving forward with the new terms; the original filing deadline was 7 October.

More 4G blowback in the pipeline? Telecom Egypt has until Monday 31 October to reach an agreement with MNOs over using their 2G and 3G network infrastructure. The MNOs have so far said they will not rent their existing network infrastructure to TE.

Egypt has the USD 6 bn in third-party funding it needs to unlock the USD 12 bn IMF extended fund facility, according to an official from the Ministry of Finance. The announcement came just hours after Bloomberg’s Ahmed Feteha reported that the Central Bank of Egypt had received a USD 2 bn deposit from Saudi Arabia, citing an unnamed source at the Central Bank of Egypt. Officials from the Saudi finance ministry and SAMA (its central bank) did not immediately respond to Bloomberg’s request for comment. Neither the CBE nor the IMF responded to Reuters’ request for comment on Feteha’s report, which did not specify when the deposit arrived.

Official confirmation: Deputy Finance Minister for International Affairs Ayman Al-Qaffas subsequently confirmed that we have the USD 6 bn we need to close the IMF facility. Al-Qaffas did not break-down the origin of the funding, saying only that it came from multiple countries. The IMF has been informed of the development, he said, according to Al Shorouk. A senior CBE official tells Al Borsa that part of the USD 6 bn came from Germany.

Reports of the Saudi deposit come despite signs that new tensions with Riyadh remain unresolved. Egyptian government officials were at pains yesterday to reassure the market that Saudi Arabia remains committed to its funding agreements with Egypt despite any perceived deterioration in ties over the past week as a result of Aramco delaying October’s petroleum products shipments to Egypt, Al Borsa suggests. November’s shipments will arrive on time, an official said, confirming Tuesday’s statements by Oil Ministry spokesperson Hamdy Abdel Aziz.

This comes as the Saudi Ambassador Ahmed Kattan left Cairo for Riyadh yesterday on a three-day visit. Al Masry Al Youm says Kattan is in Saudi Arabia to deliberate on “recent developments” in relations between Cairo and Riyadh and is scheduled to return on Saturday. The Saudi ambassador’s trip comes ahead of a rumored upcoming visit by a high-level Egyptian delegation to Riyadh, as we noted yesterday based on a report from Youm7 citing unnamed diplomatic sources. Saudi’s Al Arabiya expanded on the report, also citing the domestic press here, saying that Egyptian and Saudi officials will discuss a new draft UN resolution on Syria “to be presented to the Security Council within days.” Egypt’s vote on two conflicting UN resolutions on Syria last weekend had exacerbated the tensions between the two countries. Separately, a Saudi delegation is expected to arrive in Egypt to begin jointly reviewing bids on installing transformers for the Saudi-Egypt power grid link, Gamal Abdel Rahim, head of the Egyptian Electricity Transmission Company tells Al Borsa. Bidders include Siemens, ABB Group, and Alstom.

Is something playing out with KSA behind closed doors? Saudi aviation authorities are reportedly delaying approving private Egyptian airlines’ flight schedules to Saudi Arabia for the winter season, the head of Egypt’s air transport association told Al Mal. He says the season begins on 30 October and the airlines have been waiting for approval for over three months. The airlines have lodged a number of complaints over the delay as the season draws closer with the authorities having already approved Saudi airlines’ schedules. And promises by Aramco to restore petroleum shipments in November have not stopped Egypt from seeking backup plans, as the Kuwait National Petroleum Company has apparently reduced the price of oil shipments headed to the Sidi Kerir Port by USD 0.15 per bbl FOB, traders told Al Masry Al Youm. This comes as the government said it started receiving shipments from alternative sources this week, without stating their origin. Meanwhile, Saudi media continued to savage Egypt yesterday, as we note in “Egypt in the News,” below.

Additional Saudi funding could be in question: The deposit fulfills a crucial part of the financing promised to Egypt during King Salman’s visit in April. By Youm7’s count — based on a review of statements by International Cooperation Minister Sahar Nasr — as much as USD 19 bn in pledged Saudi funding could still be in the pipeline:

• USD 2.5 bn grant: The USD 500 mn first tranche of the grant was sent in May, with promises to send USD 2 bn by January 2017 at the latest;
• USD 1.5 bn in funding for Sinai development from the Saudi Development Fund: USD 500 mn was received.
• SAR 60 bn Saudi-Egyptian Investment Fund: No updates as of yet on this.

It’s a lack of USD liquidity and not the exchange rates quoted that are affecting output in Egypt, Mohamed Badran, CEO of dairy and juice manufacturer Beyti, told Al Mal. If companies find USD, even at a higher price, they would be able to reprice their output to readjust their profitability. The problem is that companies are unable to source sufficient quantities of USD, regardless of price. Beyti, a subsidiary of Saudi Arabia’s Almarai, aims to increase its exports to 20-30% of output within 18 months to increase its foreign currency revenue, Badran says.

Egypt is looking to import large quantities of rice this month “as farmers refuse to sell the government their crops despite a plentiful harvest and an extreme shortage of [USD] that should make buying from abroad a last resort,” Reuters’ Eric Knecht and Maha El Dahan write. Farmers are claiming that the EGP 2,400 per tonne the government is offering for their crop is too low. “Farmers don’t want to sell because in the previous years they saw that they sold cheaply and then prices increased and they didn’t profit,” said Mostafa al-Naggari, head of the rice committee of Egypt’s agricultural export council, adding that the free market price is around EGP 2,900 a tonne. A trader says farmers sold the crop cheaply last year and traders “made a lot of money,” so, keeping in mind what happened last year, they are willing to store it. The government, which issued a tender to import rice, might be moving tactically, traders say; “ a shot across the bow to farmers holding stocks in hopes that they will release them to the market.”

On a related note, GASC postponed a global tender yesterday to buy 100k tons of white rice on the grounds that suppliers needed more time to collect necessary documents for the tender, Al Masry Al Youm reported. The tender is now set to take place next Monday.

Is the NTRA going to reprice 4G spectra entirely in USD? The National Telecommunications Regulatory Authority (NTRA) is reportedly considering repricing 4G spectra entirely in USD, sources tell Al Mal. The move comes after Orange Egypt is said to have contacted the NTRA to re-open talks ahead of the regulator’s board meeting yesterday, which was to decide on the fate of 4G spectra. The source does not explain how that move would then push the NTRA to consider such a measure. The motion of pricing licenses in USD may be the NTRA’s opening gambit in renewed talks. It is also unclear whether Vodafone Egypt or Etisalat Misr are also interested in opening talks. The three MNOs have been holding a united front in both their rejection of 4G and in refusing to allow Telecom Egypt to use their 2G and 3G infrastructure. Under the old terms 50% of the price of the license would be paid in EGP, while the rest would be paid in USD. The regulator had been considering putting the spectra up for auction to international competitors in an auction to be settled entirely in USD.

Could Beltone finally get a reprieve from the EGX? Egyptian Financial Supervisory Authority chief Sherif Samy expects that EGX will finally stop cancelling trades on Beltone Financial’s shares after the regulator reviewed the fair value report the company submitted explaining why its stock had moved significantly against the market trend, Al Mal reports. The EGX had repeatedly cancelled Beltone’s shares over the course of the year on suspicions of stock market manipulation, prompting the company to file complaints with the regulator, which were rejected. EFSA announced new regulations back in August requiring listed companies to submit fair value reports if their stock price moves unusually in a short period of time “in a manner uncharacteristic of its performance, or the performance of the sector and market.” The EGX should stop cancelling once the results of the reports are announced on the trading floor, Samy added.

Samy also told the newspaper that EFSA will issue new regulations governing insurance for SMEs. These include allowing the Principal Bank for Development and Agricultural Credit and certain civil society groups to issue insurance policies for small businesses.

Surprise, surprise: the ministries of agriculture and supply are once fighting over how to manage the wheat harvest, a source from the agriculture ministry tells Al Borsa. The Agriculture Ministry wants (and has publicly promised) to raise prices for the wheat it buys from farmers to EGP 450 per ardib, something vehemently opposed by the Supply Ministry. The latter is trying to revive the wheat subsidy system proposed last year by former minister Khaled Hanafy, which would buy wheat from farmers at the international market price and pay them an additional EGP 1,300 per feddan of wheat farmed. The move was widely rejected by the House of Representatives, which forced the Ismail cabinet to backtrack on the policy. Hanafy had long maintained that failure to implement this system was one of the reasons why the harvest remains so problematic. MPs are pushing to Agriculture Ministry to be more generous: Yasser Omar, a member of the House committee that investigated fraud in this year’s harvest, tells the newspaper that he will push for farmers to be guaranteed EGP 550 per ardib.

Standard Chartered Bank denied it is in talks to acquire United Bank of Egypt (UBE) or any other institution here, the British lender told Al Mal via an e-mailed statement. “We are dedicated to the markets we serve in Asia, Africa and the Middle East, and greatly value our current presence in the Egyptian market,” the bank said. We had previously noted that sources told Al Borsa that Standard Chartered, as well as Kuwait Finance House, were reportedly in talks to acquire UBE.

A little protest and a lawsuit, and the taxman caves: The Tax Authority is in talks with the Lawyer’s Syndicate over how to tax its members under the value-added tax (VAT) system, said Tax Authority chief Abdel Moneim Mattar, who spoke at the Egyptian-Canadian Business Forum on Monday, AMAY reports. The Syndicate had filed a suit in the Administrative Court demanding the VAT legislation be struck down on the grounds that they their profession is classified as “Free” or “independent” under Article 198 of the constitution. That came despite the taxman having cut VAT on legal services to 10% from the standard baseline rate of 13% that the rest of us are forced to charge. Lawyers had also protested the law and refused to register for the VAT.

Egypt is the 2016 Outsourcing Destination of the Year: The Global Outsourcing Association (GSA) European Awards has named Egypt the 2016 outsourcing destination, beating competition from destinations including Belarus, Fiji, and Sri Lanka. The awards ceremony was held in Sofia, Bulgaria last week.

Cairo University’s president is one of our new favourite civil servants, up there with Egyptian Competition Authority chief Mona El Garf: Cairo University President Gaber Nassar has decided to remove the fields indicating religion from all certificates and documents the university issues to students, staff, and professors. “We noticed several complaints about the possibility of discrimination between students due to the mention of religion,” Nassar said, according to Ahram Online. The story is also front-page news in the digital edition of state-run daily Al-Ahram. National identification cards and all other government paperwork should similarly be stripped of the requirement to specify one’s religion.

**Earnings Watch: QNB Al Ahli reported 3Q2016 net profit worth EGP 1.12 bn, up year-on-year from EGP 898 mn recorded during 3Q2015, according to a bourse statement.

Also worth noting this morning, at home and abroad:

• The national gold market has come to a standstill as traders hold back stock amid rising prices, Al-Ahram reports.
• A Brilliance v5 — the BMW X3 copycat — is going to cost you more than EGP 215k after the latest price hike.
• “Saudi Arabia is exploring the possibility of granting more licenses to foreign banks and easing restrictions on their operations to boost growth in the private sector, people with knowledge of the matter said,” according to Bloomberg.
• Embattled Wells Fargo boss John Stumpf has stepped down amid allegations the bank’s staff fraudulently opened accounts for clients.

A lot can happen in just 24 hours in TrumpWorld: Despite their defection from their party’s nominee Donald Trump, four Republican members of Congress have come crawling back to Trump after all had criticized him and one openly disavowed him, following the release of a lewd recording of Trump from 2005, the New York Times reports. This comes after most national polls show former US Secretary of State Hillary Clinton in the lead, with Trump trailing behind by 8 points according to a post-debate Reuters / Ipsos poll. The embattled candidate has barely had time to recover from his latest scandal before two women came forward on Wednesday to accuse Trump of having made uninvited and unwanted physical advances toward them, according to the NYT and others. Trump’s lawyers are now reportedly preparing lawsuits against the Times and the Washington Post, according to unnamed sources at the Trump campaign speaking to CNN Money. A video from 1992 also emerged showing Trump speaking to a young girl, commenting as she walks away: “I’m going to be dating her in ten years. Can you believe it?” To top it all off, Trump is now tied in deeply Republican Utah with Sec. Clinton, a state which has not voted for a Democrat since Lyndon B. Johnson in 1964. Why? Because unlike evangelicals, Mormons have shown in this election to vote along their stated values, of which Donald Trump is the pure antithesis, as explained by Vox.

READER COMMENT- In regard to our pickup yesterday of data from the Financial Times suggesting Egypt had netted nearly USD 20.8 bn in greenfield FDI in 7M2016, reader Alex W writes: “If you look at the most recent CBE data, total FDI inflows were about USD 9.5 bn for the period from July 2015-March 2016, including USD 3.5 bn for the January-March 2016 period. It’s hard to see where the USD 21 bn (the FT figure for Jan-July 2016) can come from, especially given devaluation (and prospects of more devaluation later in the year, which typically means foreign investors will hold off). The only major change in FDI spending this year, as far as I can see, is Zohr — several bn USD has probably been spent on it so far in 2016. There’s a few other smaller gas projects, and you could possibly count all the spending on the Siemens plants, but theoretically that’s not FDI because the government is the one spending the money (even though it’s being borrowed from foreign lenders). I’m sure there’s bits of FDI scattered across other sectors (real estate, etc) but can’t see how it would make up the USD 21 bn figure.”

We welcome reader comment — and pitches for op-eds and analysis pieces — at editorial@enterprise.press.

Fed policymakers closer to rate hike, but inflation doubts remain -Fed meeting minutes: Minutes from the 20-21 September policy meeting of the US Federal Reserve indicate a split over the timing of any possible rate hike, Reuters reports. “In the minutes, both voting members and the wider group were divided on how much more they can allow the labor market to strengthen before raising rates,” the newswire notes, adding that analysts have all but ruled out the possibility of a November rate hike, with traders putting at 70% the probability of a hike in December.

The fallout between Egypt and Saudi with regard to Egypt’s recent controversial vote at the UNSC, as seen by Saudi columnists:

• Egypt should have at least remained neutral, Mohammed Al Osaimi writesin a piece for Okaz.Egypt could have abstained from voting for Russia’s program on Syria at the UN Security Council which Saudi opposed. Nobody can force Egypt to maintain its alliances with the GCC countries, he says, but similarly GCC countries cannot then be blamed for the alliances they are forced to make (with *cough* Turkey *cough*) to protect themselves from Iranian threats.
• Egypt does not know what it wants, Saud Al Rayes writes for Al Hayat, mocking Egypt’s UN Security Council vote. He calls on President Abdel Fattah El Sisi to move out of this grey area and take a clear stance on Syria, whether it be supporting the Syrian regime, the rebels or even calling for unity between warring factions. It is also time for Egypt to drop its “illusion” of itself being a “leader” of the Arab world, as it is neither equipped economically or politically to assume this role.

Here at home, columnists added their own two cents not only on the perceived spat between Cairo and Riyadh, but also on the structural weaknesses in their diplomatic relationship as well as Egypt’s changing role in the region:

The region cannot handle a rift between Saudi Arabia and Egypt, Al Masry Al Youm’s columnist with the pseudonym Newton says. Egypt’s stance on Syria is similar to its stance on Yemen in 1962, Newton tries to explain, in the sense that it is not an act of hostility towards Saudi.

Howeidy sees no sense in Egypt’s diplomatic stance: Al Shorouk columnist Fahmy Howeidy says the duality in Egypt voting for two rival resolutions is just a reflection of its inconsistency. Similar examples include the doubletalk of praising Egyptian-US relations internationally, while centering them in conspiracy theories domestically; claiming the Palestinian issue is central to Egyptian politics, but maintaining a blockade on Gaza; claiming the armed forces can spread through Egypt in six hours, but having not solved the insurgency in Sinai yet.

There was never really a proper strategic alliance between Egypt and Saudi Arabia, writes Al Shorouk columnist Abdallah El Sennawy. Differences were always palpable between the two nations, particularly on how to deal with the issues in Yemen and Syria. El Sennawy says a major turning point would be if Saudi Arabia decides to rescind all of the partnership agreements signed during King Salman’s visit to Egypt.

You think Youtube, Snapchat, Netflix and WhatsApp are rotting your kid’s brain. Your great grandparents thought the same thing about your grandparents and their love of radio. Via the inimitable @jason Calacanis, whose podcast This Week in Startups (particularly his media roundup) is more than worth a listen, whether via the site or on your podcatcher of choice.

Foreign Minister Sameh Shoukry is in Vienna to meet with Austrian Chancellor Christian Kern to discuss bilateral relations and regional issues, according to a ministry statement. Shoukry is also set to meet with the Austrian Foreign Minister, as well as the head of international relations at the Austrian Parliament.

El Sisi meets European Neighbourhood Policy chief: President Abdel Fattah El Sisi and Foreign Minister Sameh Shoukry met with the European Union’s Commissioner for European Neighbourhood Policy and Enlargement Negotiations Johannes Hahn to discuss bolstering cooperation in education, technical training, infrastructure, irrigation, and agriculture. Additionally, they discussed issues relating to illegal immigration and regional developments in Syria, Libya, Yemen, and Iraq, Ahram Gate reported.

UN Special Rapporteur calls for easing restrictions on NGOs: The UN Special Rapporteur on freedom of peaceful assembly and of association, Maina Kiai, has called on the Egyptian government to ensure that the NGO draft law complies with International law standards, the Office of the United Nations High Commissioner for Human Rights reported. Kiai claims that elements of the draft law, such as the high level of minimum capital required to start an NGO, would “aggravate already constraining legislative framework.” Kiai also called for a halt to the government’s crackdown on human rights activists, most recently exemplified by the recent freeze on the assets of five activists and three NGOs.

The Electricity Ministry is ready to sign power purchasing agreements with ten companies under the terms of phase one of the feed-in tariff (FiT) program, unnamed sources tell Al Mal. These include Scatec Solar, Wadi Degla, Infinity, and FAS Energy. Phase one of the FiT program enforces domestic arbitration, requires 85% of funding for the project to be sourced in FX and 15% in EGP, but has a FiT rate of USD 0.14 per kWh for solar projects as opposed to USD 0.084 in phase two. Companies which have not yet declared whether to move to phase two have until 21 October. The Electricity Ministry has started repaying companies exiting the FiT program, reimbursing Cairo Solar with EGP 19.5 mn it paid under the cost sharing agreement, CEO Hisham Tawfik told the newspaper.

Royal Dutch Shell has increased its investments in Egypt by 15% y-o-y to reach USD 450 mn, during FY 2015-2016, Oil Minister Tarek El Molla following a meeting with Andrew Brown, Shell’s global upstream director, Ahram Gate reported. Brown, who is visiting Egypt, added that the oil company sees promising investment opportunities in Egypt, particularly following the latest discoveries in the Western Desert and the Mediterranean. Shell is reportedly owed USD 1.3 bn in receivables from the Egyptian government.

Total Egypt is targeting investments worth USD 100 mn in Egypt during the next five years, the company’s Senior VP in Africa and the Middle East Stanislas Mittleman was quoted as saying according to Al Mal. He added that the company will open 10 new gas stations annually during the stated period.

The Giza governorate will tender trash collection contracts to private-sector companies, Al Borsa reports. A technical committee headed by the deputy governor and with the participation of several academics as well as the environment ministry has been formed to draft the terms and conditions for recycling projects, which will also be tendered this year.

Saudi’s Almarai has completed investing USD 55 mn into Beyti, increasing the company’s capital to EGP 1.6 bn, Beyti’s CEO Mohamed Badran told Al Borsa. The company is in negotiations to acquire a land plot for an experimental livestock farm to hold up to 5,000 heads of cattle, he added. Beyti’s is expecting to complete its new EGP 1 bn juice factory by the end of next year, as part of an EGP 4 bn strategy to increase production, said Badran.

Qatar Airways is set to launch daily flights to Luxor starting from 30 October, Travel Daily Media reported. The move marks an increase from the carrier’s current five-times a week service to Luxor. “The increase in services to a daily flight reflects the strong demand we’ve experienced on this route since our launch of flights to Luxor in June 2004,” said Ehad Amin, the firm’s vice president of Commercial Middle East, Africa, and Pakistan.

Egypt will be participating at the TTG Incontri international tourism fair in Rimini, Italy to promote its tourism industry, Italy’s Ansamed reported. Tourism Minister Mohamed Rashed and the director of Egypt’s tourism board in Italy Emad Abdalla will be at the trade fair on Thursday to relaunch the country’s main destinations.

Egypt receives 38% of Boeing’s MENA community development budget, Al Borsa reported. Boeing’s community development investments in Egypt are the largest in any single country, an unnamed company source said. The finances target business development programs through NGOs to tackle unemployment, the source added.

Russia’s aircraft carrier, the Admiral Kuznetsov, will be heading towards Egyptian waters after completing its mission in Syria, Russia Today reported. Moscow is reportedly in talks about having the aircraft carrier participate in joint exercises next spring along with Egypt’s two new mistral-class helicopter carriers. Russia’s defence ministry decided to send the Admiral Kuznetsov to join the operations in Syria last month. Russia and Egypt are set to begin joint military exercises at El Alamein between 15-26 October, according to a statement by the Egyptian Defence Ministry. The drills, named “Guardians of Friendship,” will include “elite units” as well as vehicles from both militaries.