Sunday, 30 October 2016

EGP 17 to the USD is nonsense + IMF says we’ve agreed to “gradual” devaluation


What We’re Tracking Today

** Winners of our mug draw: We have 22 sets of Enterprise mugs left over from back when we thought we were launching a print magazine about entrepreneurs called … Enterprise. (How pre-2011 is that?) So that’s exactly how many names we’ve drawn, giving us a good excuse to order up another batch for the next time we do this. The winners (in alphabetical order by first name) are below. We’ll be contacting each of them later this morning asking them to pass on their physical address and their telephone numbers so we can make deliveries.

  • Ahmed El Sewedy (El Sewedy Industries)
  • Angus Downie (African Development Bank)
  • Anna Chrisp (Australian Embassy)
  • Benjamin Pierce (US embassy)
  • Bill Stewart (Blumberg Grain)
  • Bruce Ludwig (Ludwig Capital)
  • Christine Kalindjian (Arqaam Capital)
  • Engy Khaled (AUC)
  • Frances Ames (Ajeej)
  • Hossam Abou Moussa (Actis)
  • Ibrahim Ouf (Harvard University)
  • Maha Hussein (World Bank)
  • Marc Koolen (GSK)
  • Mennatullah Sultan (Sharkawy & Sarhan)
  • Mohamed Ebeid (EFG Hermes)
  • Mohamed Hafez (Citibank Egypt)
  • Nader Ghabbour (GB Auto)
  • Osama Ezzeldin (CIB)
  • Patrick Oszczeda (Thales)
  • Sallie Pisch (Scoop Empire)
  • Samir Nabil (Decathlon)
  • Tarek El Kady (JLL)

BONUS: We know we have the best readers on the planet — you prove it daily with your emails full of ideas, thoughtful criticism and (often) a desire to help out members of the community. A case in point: A gentleman who asked only to be identified as an “avid Enterprise reader working at the Mantrac-Unatrac Group” crunched our daily FX data to create an XLSX illustrating the weekly spread in 2016 between the official and parallel market USD EGP rates in both percentage and absolute terms. His only motivation? “In an attempt to be a Samaritan I want to share the attached spreadsheet to support all the readers of Enterprise in justifying their YTD FX losses along their various lines of business.” Download the reader’s XLSX here.

‘Tis the night before Halloween and, still recovering from our resident nine-year-old’s weekend social schedule, these are the things we’re tracking this week:

The EGP is allegedly at 17 to the greenback on the parallel market. We say “allegedly” because you can’t buy at that price. Our take: The FX dealers continue to ratchet-up pressure on the government to include them at the table — or at least leave them market share. We have more on that in Speed Round, below.

Also in Speed Round: The IMF let slip last Thursday that it will probably be a stepwise devaluation, and Christine Lagarde expects executive board approval in the “next few weeks.” The IMF executive board is expected to meet in November to review Egypt’s request for a USD 12 bn extended fund facility. The IMF’s website lists meetings only seven days in advance. The next gatherings are slated for: 31 October (to talk about Brazil), 4 November (Bulgaria), and 7 November (Moldova, Sweden). We’re keeping our eye on this page.

The Emirates NBD / Markit PMI is out this Thursday. Don’t expect it to break the yearlong trend.

The new MacBooks Pro have been unveiled, and we iSheep are bleating this morning over the dent they’ll make in our pocket book. By the time they arrive in Egypt, we’ll be looking at USD 1 = EGP 35k. They’re thinner, faster, have longer-lasting batteries, a MacBook-like keyboard and come with a Touch Bar as well as TouchID. Apple’s propaganda page is here. H/t José Maria.

The US presidential election is a week from Tuesday, and Donald Trump was again narrowing Hillary Clinton’s lead in a national poll to 2 points — before the FBI’s announcement that it was re-opening its investigation into Clinton’s emails. The Clinton campaign is going to the mattresses on this, and Politico offers sane looks at whether the review will dent Clinton’s poll numbers. Either way, the consensus is that she can “no longer coast to the win.”

What We’re Tracking This Week

Singaporean President Tony Tan is expected in Egypt between 31 October and 02 November joined by three ministers including the minister of state at the Trade and Industry Ministry Koh Poh Koon, Al Mal reports. Nine MoUs are expected to be signed in the fields of civil aviation, water resources, education, electronic governance, and SMEs.

On The Horizon

The Central Bank of Egypt’s Monetary Policy Committee will meet on Thursday, 17 November to review rates. Widespread expectation is for a substantial bump ahead of devaluation.

Speed Round

Speed Round is presented in association with

The EGP broke the EGP 17.00 ceiling on Thursday: Like villains from the silent movie era, FX traders have strapped the EGP on the tracks in front of a speeding train, with Al Borsa reporting greenbacks changing hands at EGP 17.50 per USD 1. Al Mal reported a slightly lower rate of EGP 17-17.10 to the USD, while traders speaking to Reuters on Thursday put the rate at 16.80-17.10. That an inconceivable EGP 1 drop from Wednesday’s price. Demand for a speedy devaluation is growing: Samih Sawiris, chairman and CEO of Orascom Development Holdings, told Al Shorouk that investments have ceased as a result of the two rates.

A number of mid-sized companies are reporting that they have shut down production at their factories because FX losses now dwarf the un-recovered overheads they’ll incur by having staff down tools, Al Borsa reports. These include Gazan Metals and fridge manufacturer Al Ashary, both of whom are finding sourcing FX through the parallel market untenable. Prices are also increasingly inelastic, says the head of El Marakby Steel.

Chamber calls for two-week ban on parallel market: The situation has driven the Federation of Egyptian Chambers of Commerce to call for a two-week moratorium on buying FX from the parallel market. The federation has also called on importers of non-essential goods to stop or delay imports for three months. (The federation was unable to mobilize support for an earlier initiative to stop sourcing FX from the parallel market for 21 days.)

Container companies, including DP World, appear to appreciate the situation and have decided to charge customers in EGP at the official CBE rate for cargo shipped to Egypt, Al Mal reports. Outbound cargo will be paid for in USD at the port of destination. Shipping fees are expected to double as a result of the rate, especially as major shipping lines have been charging in USD since July.

The FX crunch has FMCG players studying price increases, with Al Mal zeroing in on Edita, the nation’s largest maker of packaged snack foods. (Separately, Edita’s Beni Suef factory re-opened as expected on Thursday, the company said in an EGX statement (pdf), after a brief closure due to the Supply Ministry seizing of 2k tonnes of sugar. These sugar raids, called “necessary” by Prime Minister Sherif Ismail last week, continue with the Supply Ministry recently boasting that it confiscated 400 tonnes of sugar and rice from alleged hoarders. The ministry is “ready to supply any needed amount of sugar to retailers as needed through [the state’s] Food Industries Holding Company,” according to a statement on Friday evening picked up by Al Shorouk.)

Lagarde says she’s hopeful IMF board will approve USD 12 bn extended fund facility “in the next few weeks.” Bloomberg’s Yousef Gamal El-Din scored a sit-down with International Monetary Fund chief Christine Lagarde in Riyadh. She made it clear that approval “within a few weeks” is possible, while her spokesman gave away hours later that we can expect a stepwise devaluation and not a full float. Given the widespread feeling in Cairo last week that there’s been a sudden loss of momentum on this front, we thought it worthwhile transcribing Lagarde’s remarks in full so folks could judge for themselves. Alternatively: watch, run time: 2:30.

Gamal El-Din: You’ve said that Egypt needs to move on certain policy options. Doesn’t Egypt need to have enough foreign reserves to meet the expected demand from a devaluation?

Lagarde: Well, first of all, we really strongly welcome the fact that the Egyptian authorities are deciding to address those issues. And it’s the Egyptian authorities, for the Egyptian people, for the Egyptian economy. We welcome that, and if they decide to move forward, we will certainly support that move. We will accompany it, we will put money on the table to help them along the way. But it is their call and it is their decision.

In terms of the exchange rate, there is currently a crisis, because if you look at the official price, if you look at the grey market price, there is a 100% difference. So that needs to be addressed, and we believe the authorities are right to prepare for that.

Gamal El-Din: How do policymakers address this most effectively? Do you believe in shock therapy in the way of a free float, or would it be a devaluation?

Lagarde: The right methodology and the right speed and the right timetable is going to be dictated entirely by the circumstances. When you have very low reserves, when the difference between the official and unofficial rate is very wide, historically, we have seen rapid transitions being most efficient. But it is really a matter of circumstances. In other cases, it has been gradual. It’s really going to be dictated by the local circumstances.

Gamal El-Din: [inaudible] so how to address disparity between the spot [inaudible]

Lagarde: If it had, nobody would be talking about it. Those decisions are made rapidly. And one of the issues is to keep confidentiality and then to move on.

Gamal El-Din: The other part of the puzzle has been the USD 5-6 bn in bilateral financing Egypt needs to secure. How much progress have they made and is Egypt close to wrapping that up?

Lagarde: I think they’re very close, and clearly the financing is one of the aspects that they need to lock in and to align. I think they’re very close to that and hopefully we’ll be able to secure the IMF board approval in the next few weeks.

Two related notes: First, the IMF clearly thinks we’re going to have a stepwise devaluation, not a free float. IMF Communications Director Gerry Rice, speaking at a press conference shortly after Lagarde’s interview: “On the reforms and what needs to be done before the program comes to the Board is really a question of just continuing with what has been agreed and the government’s reform plan. So as I mentioned, the parliament has already passed the budget; they recently approved the VAT; the government has a plan on energy subsidies; the central bank is committed to move gradually to a more flexible exchange rate. … And as I mentioned, we expect the Board to discuss this in the next few weeks.”

Second, who wants to volunteer to tell the Washington press corps that there haven’t been demonstrations against the IMF bailout package (yet)? From the same press conference, at which a journalist asks Rice: “There’s been a lot of protest against some of the measures that were advocated for by the IMF. So I was wondering, are you worried about those demonstrations, and do you think it jeopardizes the upcoming Loan Agreement that you expect to finalize with Egypt?” Read the full transcript here. (The bit on Egypt starts about a quarter or a third of the way down. Easiest way to find it: Ctrl / Command-F and type in “Egypt” on your laptop, or hit the “share” icon in your mobile browser and look for “Find on Page,” then search for Egypt.)

EFG Hermes and HSBC will lead Banque du Caire’s IPO, said Deputy Finance Minister Ahmed Kouchouk. EFG Hermes edged out CI Capital, Morgan Stanley, and a partnership between Pharos and Deutsche Bank. Kouchouk confirmed the transaction could begin unfolding as early as 1Q17. Talks are ongoing about how much of the bank will be on offer, Al Borsa reports.

Meanwhile, speaking on the USD 3 bn Eurobond issuance, Kouchouk stated that the government is gauging investor interest while working on timing and how much liquidity is available, Al Mal reports. Saudi Arabia’s recent bond issue raised USD 17.5 bn in its issue this month, and received orders for USD 67 bn. The Saudi issue had been stated as a reason behind the delay in Egypt’s bond.

Phase two of feed-in tariff (FiT) program launched on Friday for a period two years. That comes just one day after Thursday’s deadline for signing power purchase agreements (PPA) for renewable energy firms under the terms of phase one, Al Mal reported. Phase two looks to close agreements for as much as 4 GW of total capacity, with the deadline for financial close on solar projects set for 12 months from now, subject to an interim checkpoint in about six months’ tie. Wind energy producers will have 18 months to reach financial close. Appeals of local arbitration rulings will be conducted abroad in phase two, as we previously reported. Here is a round-up of phase two terms to refresh your memory.

Official list of 10 FiT phase one companies: The list of companies that signed PPA under the terms of FiT phase one for projects in Benban, Zaafarana and West of the Nile with investments of USD 615 mn were announced by Egyptian Electricity Transmission Company chairman Gamal Abdel-Rehim. The companies include:

  • Arinna
  • CTIP Oil & Gas
  • Desert Technology
  • Elf Energy
  • FAS Energy
  • Infinity Solar
  • MAG
  • Scatec Solar
  • Wadi Degla
  • Winergy-Schneider

Jordan’s Hikma will open within two months an EGP 500 mn plant to manufacture oncological compounds in Badr City, chief executive of MENA and emerging markets Mazen Darwazah said. The company is the sole producer of oncologicals in the Egyptian market, with 18 products now and a goal of having 50 in its product portfolio in the next two years. The company is targeting a 30% market share in the category.

Al-Ahram Beverages faces probe on “anti-military” ad: The Consumer Protection Agency has asked the Prosecutor General’s Office to investigate its claim that Al-Ahram Beverages Company ran an advertisement the agency says “directly insults a state institution in a manner that is out of line with Egyptian morals and traditions,” Al Mal reported. The advertisement in question was for its non-alcoholic beer Birell that depicted a man holding a military exemption certificate and superimposed text reading “the dream.” ABC pulled the ad and issued an immediate apology as soon as the controversy broke.

The auto industry has agreed to raise domestic content in locally manufactured vehicles to 60% over the next eight years in the executive regulations of the automotive directive, Al Mal reports. The decision came at a meeting with the Industrial Development Authority (IDA) last week to discuss proposals for the regs. The Trade and Industry Ministry will the set quotas for domestic components for each year. It not clear if the Egyptian Automobile Manufacturers Association reached an agreement with the IDA on whether imported parts that contain some local content will be classified as a locally sourced goods, a sticking point for the association. The executive regulations are expected to be drafted by the end of November.

Meanwhile, the slump in the auto market continues with auto sales declining 25.8% year-on-year during 9M16, according to a report by industry group AMIC picked up by Al Borsa. Passenger car sales are down 25% y-o-y with 110k vehicles sold, while bus sales dropped 31% to y-o-y to around 17,300. Truck sales by 27% y-o-y to 27.6k units sold. (We understand that the situation isn’t quite that dire: Renault and BMW are reportedly not filing data to AMIC, and there continue to be reports of at least one group choosing to under-report sales.)

Cairo Angels invests in Hire Hunt. Not sure how we missed this at the time, but Cairo Angels reportedly closed in September an investment in recruitment platform Hire Hunt. The size of the transaction was not disclosed. Wamda has more.

The Tax Authority is setting up a rebate system for tourists who have purchased goods under the value-added tax (VAT), Al Borsa reports. Tourists can be eligible for a rebate if they hold a receipt for an item they purchased no longer than three months prior to requesting the rebate. How much tourists can expect to get back will be determined in the VAT’s executive regulations. Speaking of which, ministry sources stating that the plan is being worked on seems to conflict with statements by Deputy Finance Minister Amr El Monayer and more recently those by Tax Authority chief Abdel Moneim Mattar that these were drafted and will be issued by Finance Minister Amr El Garhy in early November.

Did the Ismail government really try to sneak in provisions on caps in the new Investment Law? The Egyptian Businessmen’s Association (EBA) is raising a stink about a number of the law’s features including provisions which appear to give the government leeway to enforce price caps when necessary, Al Borsa reports. According to EBA head Ali Eissa, an article of the law guarantees the freedom of companies to set prices with the exception of goods that are deemed critical to national security. The EBA is requesting that the Investment Ministry clarify this point. Other features that the EBA is objecting include restrictions on foreign labor unless absolutely necessary. Eissa goes on to state that the law doesn’t go far enough and must include an overhaul of existing legislation that hinders the investment climate.

Price caps have the backing of the Egyptian Union of Investors Associations (EUIA), which is channeling the ghost of Abdel Nasser this morning. Free markets do not mean the government shouldn’t step in to regulate if it helps the consumer, the EUIA reportedly said in a report on the matter, according to Al Mal. Wait, huh? Sadly, we were unable to reach the EUIA to explain this oxymoron for us. The Federation of Egyptian Industries (FEI) and the Federation of Egyptian Chambers of Commerce have both condemned any move by the government to set caps on profit margins.

Heavy rains across the Red Sea governorate, Sinai, and Upper Egypt have killed 26 and left over 72 injured, Ahram Online reports. President Abdel Fattah El Sisi has since allocated EGP 50 mn as compensation to victims, and another EGP 50 mn towards repairing infrastructure damaged by the rain. Prime Minister Sherif Ismail went on a tour of Ras Gharib, one of the hardest-hit cities, where he persisted in a walking tour despite having to face the anger of local residents.

A joke by the Secretary General of the Organisation of Islamic Cooperation Iyad bin Amin Madani at President Abdel Fattah El Sisi’s expense has once again fueled speculation regarding the Saudi-Egyptian rift. Speaking at the first ISESCO Conference of Education Ministers in Tunisia, the former Saudi cabinet minister poked fun (runtime: 0:32) at President El Sisi’s statement at the multi-party youth conference in Sharm El Sheikh last week in which he said that his fridge held nothing but water for ten years. Madani’s statement was condemned by Foreign Minister Sameh Shoukry. Diplomatic sources tell Youm7 that a number of Arab countries have called for his removal as a result. Egyptian MPs have also voiced harsh condemnations of Madani, who has since apologized for the joke and expressed his utmost respect for the president.

Keep an eye on Tel Aviv: Backers of Egypt’s future as a regional natural gas hub need to keep an eye on Israel, where there continues to be rumblings about two pipelines for Israeli gas that sidestep Egypt. Last week’s meeting of officials from Italy, Greece and Cyprus are backing that route, while Tel Aviv and Ankara’s recent rapprochement has left Turkey still in the running.

CORRECTION- ARENA has not participated in the feed-in tariff program for renewable energy. A story in our Thursday edition should have referred to Arinna Solar Power, an investment of Iraq’s Al Bilal Group. We regret the error. H/t Donia El-M.

CLARIFICATION- In our October 25 interview headlined "Want to understand how the US business community sees Egypt? Speak with these two gentlemen," Greg Lebedev was speaking on behalf of the US Chamber of Commerce, not as a representative of the Center for International Private Enterprise.


Enterprise is available without charge — just visit our English or Arabic subscription page, depending on which edition you would like to receive. We give you just about everything you need to know about Egypt, in your inbox Sunday through Thursday before 7am CLT (8am for Arabic), and all we ask for is your name, email address and where you hang your hat during business hours.

The Macro Picture

Two quick hits and a complaint for you this morning.

EM equities outlook buoyed by stable USD, commodities prices: In an interview that otherwise focuses largely on Asia, Citibank’s Singapore chief nailed it when he notes that while EM are up 15% or so this year, “there’s further space to run” provided the USD doesn’t significantly increase in value and commodities prices continue to appreciate — or at least remain stable at today’s rates. (Watch, run time: 3:08)

We’re liking Capital Economics’ analysis of EM export data, which the Financial Times (paywall) notes suggests that in the past 24 months, the dip owes in very large part to declining commodity prices and not to decreased developed-market appetite for EM manufactured goods. EM exports are up 0.1% in USD terms in August, “the first such increase in two years … [and] a far cry from the year-on-year decline of 15.7% recorded in January.”

The complaint: There’s never going to be real PE interest in Africa until we can stop stalking about it in development terms. To take but one quote from “The missing middle in African private equity” in the FT’s Beyond Brics blog: “Given the dire need to create jobs for mns of young people and the positive outlook for small and medium size companies, the middle-market Africa PE space should be of greater focus for institutional investors and their gatekeepers.” Job creation is often a beautiful side-effect of private equity, but since when was it the mission of private capital?

Egypt in the News

Driving the conversation about Egypt this morning in the international press:Wire service reports on the economy, the flap at the OIC over a Saudi insult to Egypt as well as life sentences for Ikhwan members and the death of as many as 26 people in flash floods caused by heavy rains over the weekend.

Fallout from the seizure last week of sugar at Edita and PepsiCo continues, with everyone from the Associated Press to private intelligence outfit Stratfor noting the dent the actions made in business and investor confidence. The AP contrasts the scene “inside the glitzy Nile Ritz-Carlton hotel off Tahrir Square, [where] Cairo’s business elite were eager to put years of tumult and lost opportunities behind them” during the US Chamber’s business mission to Egypt, with the “shameful” seizure of sugar and “treating [business] like we’re smugglers.”

Private intelligence outfit Stratfor nails it, suggesting right off the bat that, “Economic reforms will stir up opposition across the socioeconomic spectrum, but it will not become a credible threat to the government.” Sadly, the firm has also picked up on the impact of the sugar seizures at PepsiCo and Edita: “Public unrest and resulting economic uncertainty are ironically the result of reform measures designed to help Egypt’s near-term economic stability. The result is an environment that is currently not conducive to investment. Cairo’s seizure of rice and sugar stores from private companies for the subsidized market, for example, does little for investor confidence. Furthermore, that the government is setting price caps on commodities and dictating private sector prices for products has ruffled feathers in recent weeks. Cairo insists the measures are temporary for Egypt’s extraordinary circumstances, but business owners are not convinced.” (Read)

WaPo runs letter on economy from Egypt’s ambassador to Washington: Amb. Yasser Reda writes in response to a front-page Washington Post piece by Sudarsan Raghavan and Heba Mahfouz headlined As Egypt’s economy struggles, calls for protests against Sissi grow louder, which we noted the Thursday before last. Key takeaway: “To spur growth, we are implementing market-driven reforms to energy subsidies and investment laws. We are modernizing the taxation system and legislation to fund health and education, increase the efficiency of social welfare programs and provide targeted cash subsidies to the most vulnerable segments of society. Ongoing infrastructure projects, such as the Suez Canal Economic Zone, will stimulate the economy, create jobs, and provide needed water and sanitation, roads and railways, hospitals and schools and thousands of housing units in the least developed urban areas.” (Read)

MoFA gets in on the act: Foreign Ministry Spokesman Ahmed Abu-Zeid is blogging about “Egypt’s necessary war on terrorism” in response to a piece in Foreign Affairs by Steven Cook headlined “Egypt’s Nightmare: Sis’s dangerous war on terror” in the journal’s November / December 2016 issue.

EFG Hermes’ Vortex infrastructure fund gets a brief shout-out in Reuters’ profile of Portuguese wind farm builder-operator EDP Renovaveis and chief executive Joao Manso Neto, with his “long, grey hair and gaunt features.” The EFG fund has twice acquired substantial non-majority stakes in EDPR assets.

Also making the rounds this morning on the interwebs:

On Deadline

Al Ahram columnist Farouk Goweda says Egypt’s ministers spend too much time on TV. The increased presence of Egypt’s Cabinet in TV interviews and talk shows have brought up several conflicting statements, he says, and worse, have caused market fluctuations and price gouging.

Another year, more casualties: El Watan’s Mahmoud Khalil questions the government’s commitment to investing in infrastructure. Prompted by deaths due to heavy rainfall this weekend, the columnist notes promises made after the Alexandria floods of late 2015 of EGP 1 bn in infrastructure investment have gone unfulfilled. Khalil suggests the authorities need to be more transparent to regain citizens’ trust.

Worth Reading

If you’re not an FT subscriber, subscribe today (or, for the ethically challenged, ask a friend to send you the text) and read “Clinton and Obama: An American rift over an Egyptian despot.” The piece by Geoff Dyer and Heba Saleh is the definitive account of US foreign policy toward Egypt during the events of 25 January and reveals a Hillary Clinton with whom the Egyptian business community would be much more comfortable than many would think. (Longtime readers will recall our assertion that Clinton is blamed locally for everything from pushing out Mubarak to cozying up to the Beardos when the Ikhwan seized power.

Image of the Day

Burullus wall art festival makes the AP: The Associated Press’ amazing Amr Nabil covers Burullus’ third annual wall art festival in this photo essay picked up by the Mail Online. The accompanying story quotes Egyptian, Macedonian and Portuguese artists participating.

Worth Watching

We hate to recommend two things behind paywalls in a single morning, but the FT’s new series on chief executives under pressure is worth recommending. How do leaders cope with intense stress? In M&A situations, in times of turmoil — and even when facing jail? FT management editor Andrew Hill has a series of interviews in the pipeline, starting with “Kozlowski: The CEO who went to jail” (run time: 14:08), which tells the story of the Tyco CEO Dennis Kozlowski, “one of the most deal-driven CEOs in America” who went to jail, some claim, for simply having been too-rich (and too public about it) after the Enron meltdown. The interview covers “the stress of running a large conglomerate, going to jail, and returning to life on the outside.”

Diplomacy + Foreign Trade

We love dates: The Trade and Industry Ministry is looking to boost non-oil exports to USD 30 bn by 2020, minister Tarek Kabil told Amwal Al Ghad on the sidelines of the second Egyptian dates festival. Egypt only exports 2.7% of its dates despite producing 18% of the global output, he added. The ministries of trade and agriculture signed an MoU with the UN’s Food and Agriculture Organization to strengthen the value chain of dates. The ministries signed a second MoU with the United Nations Industrial Development Organization to develop the dates industry, Al Masry Al Youm reported.

Egypt will host the China-Arab Cooperation Forum in 2018, deputy electricity minister Ossama Assran said, Al Masry Al Youm reported. This year’s Forum closed last week.


Infinity Solar building four power plants under FiT phase two

Infinity Solar are building four power plants under FiT phase two with a total capacity of 133 MW, Human Resources Director Hisham El Gamal told Al Borsa. Two wind farms with a combined capacity of 100 MW will be built in Gabal El Zeit, in addition to a 30 MW solar power plant in Zaafarana and another at 3 MW, he added. The company could only reach financial close on one 50 MW project in Benban under phase one, he added. The USD 100 mn plant will be financed by a German Bank and the Arab African International Bank, he told Al Mal.

Health + Education

Traders caught storing 220k types of meds amid widespread shortages

The Health Ministry has accused the former head of the Pharmacists Syndicate and Ibn Sina Pharma founder Mohamed Abdel Gawad with hoarding 220k meds held in storage at an Ibn Sina Pharma-owned warehouse in Qalubiya since 2015. The move follows a bust in coordination with the Supply Ministry of the warehouse which included critical meds that are currently in short supply, said Health Ministry spokesperson Khaled Megahid, according to Al Masry Al Youm. The meds include IV fluids, as well as some pharma used in ER, childbirth, and seizures. Abdel Gawad’s case has been brought to the Prosecutor General.


Russian flight ban may be lifted by the year’s end

A decision to lift the Russian flight ban on Egypt could come by the end of the year, according to Russian Transport Minister Maxim Sokolov, Sputnik notes. "If the Egyptian colleagues invite us with the commission by December, if the group works rapidly and prepares the corresponding report….[the resumption of flights] can be launched before winter holidays. But for now these are just assumptions," Sokolov said. He reiterated statements last week that Egyptian authorities have implemented almost every airport security measure demanded by Russia, with the remaining one due within upcoming weeks.

Tourism Ministry to launch promotional campaign in Rome next month

The Tourism Ministry will launch a promotional campaign for Egyptian tourism in Rome, according to Al Shorouk. Additional flights between Sharm El Sheikh and a number of Italian cities have also been scheduled during the coming three months. The report comes as Reuters quotes Italian Foreign Minister Paolo Gentiloni as saying that the unsolved murder of graduate student Giulio Regeni is an “open wound” and that it was “‘not by chance’ that Rome had recalled its ambassador from Cairo in April.

Banking + Finance

National Company for Sinai investments to offer stocks for Canal and Sinai governorates 6 November

The newly-established National Company for Sinai Investments, which will manage state projects in Sinai, will offering shares to Sinai residents as well as citizens resident in Suez and Ismailia for a one-month period beginning 6 November, company chairman Hassan Fahmy said, according to Al Shorouk. The company will hike its capital to EGP 2 bn by issuing 6 mn shares at EGP 100 each. The move is a bid to get Sinai tribes on board with the state- and Saudi-funded development program.

Other Business News of Note

Pepsico files suit to drop EGP 12 mn sales tax

Pepsico is reportedly embroiled in a tax dispute with the government and is filing suit to have the Tax Authority drop a claim for EGP 12 mn in unpaid taxes, Al Borsa reports. The company is claiming that the Tax Authority had refused to accept refrigeration costs as a deductible expense.

National Security

Military division commander killed in IED explosion in North Sinai

Lt.-Col. Ramy Hassanein, commander of a shock battalion in North Sinai, was killed along with the driver of his armored vehicle in an IED attack, Al Shorouk reported. Three conscripts were injured in the attack. Also this weekend: A civilian in Cairo was killed and another injured by an IED that went off near a police patrol in Heliopolis district, the Interior Ministry said.

On Your Way Out

Egyptian Sarah Sayed was awarded a silver medal at the 2016 Karate World Championships in Linz, Austria after losing the global crown to Kiyou Shimizu. "It is the first time in the history of Egyptian karate that a female has reached the kata final, so of course I am very happy," she said. Giana Farouk, winner of the women’s under 61kg crown, and Omar Abdel Rahman, who competed in the men’s under 75kg category, won gold and silver medals respectively yesterday, Ahram Online reports.

The markets yesterday

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USD CBE auction (Thursday, 27 Oct): 8.78 (unchanged since 16 March 2016)
USD parallel market (Saturday, 29 Oct): North of 17.00 (from 16.10 on Wednesday morning, 26 Oct, Al Borsa)

EGX30 (Thursday): 8,343.31 (+1.04%)
Turnover: EGP 610.58 mn (40% above the 90-day average)
EGX 30 year-to-date: +19.08%

THE MARKET ON THURSDAY: EGX30 rose 1.0% on the day. The top performing constituents were Domty, Edita Food Industries, and ACC. Eastern Company was the only constituent to close in the red. EGX30’s largest constituent, CIB, was up 1.0% on the day. At a market turnover of EGP 610.6 mn, regional investors were the sole net buyers.

Foreigners: Net short | EGP -7.1 mn
Regional: Net long | EGP +29.9 mn
Domestic: Net short | EGP -22.8 mn

Retail: 66.0% of total trades | 61.9% of buyers | 70.1% of sellers
Institutions: 34.0% of total trades | 38.1% of buyers | 20.9% of sellers

Foreign: 14.4% of total | 13.8% of buyers | 15.0% of sellers
Regional: 12.8% of total | 15.2% of buyers | 10.3% of sellers
Domestic: 72.8% of total | 71.0% of buyers | 74.7% of sellers

WTI: USD 48.70 (-2.05%)
Brent: USD 49.71 (-1.51%)
Natural Gas (Nymex, futures prices) USD 3.11 MMBtu, (+0.29%, December 2016 contract)
Gold: USD 1,276.80 / troy ounce (+0.58%)

TASI: 5,936.3 (+0.9%) (YTD: -14.1%)
ADX: 4,292.5 (+0.6%) (YTD: -0.3%)
DFM: 3,318.4 (+0.4%) (YTD: +5.3%)
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31 October (Monday): Deadline for Telecom Egypt to reach an agreement with MNOs over using their 2G and 3G network infrastructure

31 October – 2 November (Monday-Wednesday): Singaporean President visits Egypt.

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

2-6 November (Wednesday-Sunday): Petroleum Housing Conference, Petrosport Club, New Cairo, Cairo

3 November (Thursday): The Emirates NBD PMI for Egypt, Saudi Arabia and the UAE compiled by Markit comes out here.

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.

25-26 November (Friday-Saturday): 27th Energy Charter Conference, Tokyo, Japan.

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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