Thursday, 8 December 2016

Inverted yield curve vindicates Egypt’s decision to float


What We’re Tracking Today

** We’re pleased to announce that we will unveil today our first Newsmaker of the Year. Look for a special email at 9am with a wide-ranging interview with the person in question.

The Health Ministry should be announcing the results of its week-long meetings with pharma companies at a press conference today. The Federation of Egyptian Industries’ pharma division held an emergency meeting yesterday to discuss a reported offer from the ministry to allow the prices of 10% of all medicines to increase by up to 50% every six months, which they had initially rejected due to its extended timespan, Al Mal reports. Minister Ahmed Rady denied earlier this week that the offer had been made.

Number of days by which the executive regulations for the value-added tax act are overdue: 62. That’s two months and one day.

New, revised deadline for the executive regulations for the value-added tax: Someday, insha’Allah.

Day on which (by our math) our parent company’s first remittance of VAT is due to the Tax Authority: Today.

What We’re Tracking This Week

The RiseUp Summit takes place Friday through Sunday at Ahmed El Alfi’s wonderful Greek Campus. Check out the entrepreneurism summit’s website, which features an updated agenda and a full list of very interesting speakers. If we had more than a 28-hour weekend, all of us would be there. As it is, at least one of us will be zipping into and out of sessions looking for stories.

REMINDER: Sunday, 11 December is officially a national holiday, with Prime Minister Sherif Ismail having signed the decree yesterday. Enterprise will be taking the day off. We’ll be back on Monday, 12 December.

On The Horizon

The African Development Bank will vote on issuing the USD 500 mn second tranche of USD 1.5 bn loan on 12 December, while the board of the World Bank Group will decide on the USD 1 bn second tranche of its USD 3 bn loan on 22 December. International Cooperation Minister Sahar Nasr confirmed to reporters that AfDB has already approved the tranche, Al Shorouk reported.

Conferences next week include:

  • The Projex Africa and MS Marmomacc + Samoter Africa takes place at the Cairo International Convention Centre on 10-13 December. (Yes, the name is meaningless to us, too. But apparently it’s a trio of high-profile conferences in the construction industry.)
  • The Middle East Fire, Security & Safety Exhibition and Conference (MEFSEC) also happens at the Cairo International Convention Centre, Cairo on 11-13 December.
  • The Amwal Al Ghad’s top 50 most influential women in Egypt women forum, Four Seasons Nile Plaza Hotel, Cairo on 13 December.

The Roadmap to Developing Globally Competitive Egyptian Export Champions takes place on 19 December at the Four Seasons Nile Place, 8:30am-12:30pm. It’s the first in a series on Egyptian exports and is hosted by Logic Management Consulting in association with the Federation of Egyptian Enterprises and the Ministry of Trade and Industry. Information here (including speakers list) or register here.

Enterprise+: Last Night’s Talk Shows

Yahduth fi Masr’s Sherif Amer covered the House of Representatives’ debate of the Media Act. The MBC host’s guest line-up was composed entirely of (by North Korean standards) press freedom advocates. These include political commentator Mostafa El Fekki (who we otherwise rather like), who wants to resurrect the Ministry of Information.
Talk of the Media Act also dominated Al Hayah Al Youm, where host Lobna Asal interviewed Press Syndicate Secretary General Gamal Abdel Rahim. He told Lobna that the House Media Committee snubbed the syndicate, opting not to invite them to discuss the law. So much for the notion of “national dialogue.” Abdel Rahim called the draft law “unconstitutional” (watch, runtime: 8:25).
“The government wants people to always blame “The Other” for its failures… it wants people to blame importers and traders for their decisions taken without consideration,” said Al Qahera Wel Nas’ Ibrahim Eissa in reference to the government’s flip-flop on poultry tariffs. The talk show host’s weekly Wednesday Debate questioned the economic soundness hiking tariffs on non-essential goods as move to control imports (watch, runtime: 2:30).

Eissa’s best rant this week was also last night: The government needs to stop perpetuating conspiracy theories that the whole world is out to get us (watch, runtime: 34:24).

Amr Adib and Lamees Al Hadidy were off last night.

Speed Round

Speed Round is presented in association with

Egypt’s inverted yield curve is a good sign: The inversion of the yield curve in Egypt’s bond market is “vindicating Egypt’s decision to undertake the world’s biggest currency devaluation in at least two years,” Bloomberg’s Ahmed Namatalla writes. “The yield on the government’s shortest-maturity treasury bills is higher than the rate on its longest debt for the first time since Bloomberg started tracking the market in 2006.”

Brown Brothers Harriman & Co say this is a welcome signal as it signals slower inflation and lower future interest rates, with its head of emerging markets suggesting that, “Once the central bank feels that inflation has been squeezed out, it will cut rates. So the curve should move from inverted to positively sloped as the bank cuts.” Expect Egyptian asset prices to appreciate, Bryan Carter, head of emerging-markets fixed income at BNP Paribas Investment Partners, tells Namatalla, “the market fully believes that Egyptian assets, and especially the currency, will appreciate in the future … After a currency floats and devalues sharply there is a period of overshoot when it trades too cheap and then investors come back to re-establish fair value.”

Saxo Bank Chief Economist Steen Jakobsen agrees and expects the EGP to settle at EGP 13.50-14.00 per USD 1 by the end of 2017, Al Mal reports.

Regardless of where the exchange rate will stabilize, foreign companies and international airlines are reportedly refusing to repatriate profits from Egypt at current exchange rates, Al Mal says. They are complaining that the profits, held in Egypt as they were not able to repatriate them, were worth nearly twice as much in USD-terms prior to the EGP float, meaning that they would get around a 50% haircut upon repatriation. International operators are demanding repatriating their profits using the pre-flotation FX rate. Good luck with that, ladies and gents — we wouldn’t hold our collective breath, if we were you.

Next up to face this problem are the local mobile network operators, Al Mal notes. A source tells the paper Orange Egypt and Etisalat Misr are due to repatriate profits to their parent companies by the end of March, whereas Vodafone Egypt makes the transfer at June’s end. The source, who is simply identified as being from “a telecommunications company,” says the MNOs are waiting for the FX rate to drop to EGP 11 per USD 1, something they reportedly expect in 1H2017.

The Egyptian Financial Supervisory Authority (EFSA) released its criteria for approving acquisitions of a stake greater than 33% of any brokerage with a market share of 10% or more, in a statement on Wednesday. Under these criteria EFSA will assess: concentration risk of in the portfolio of the acquiring entity in a given sector; whether the acquisition adds value to the target company; whether the acquiring entity has the capability to operate in the sector of the target company; other shareholders who have the same stake in the company; and whether the acquiring entity has been cited for previous violations of EFSA regulations. Separately, EFSA mandated that rights issues will now be mandatory for all capital increases of listed companies. Previously, rights issues required approval of a general assembly.

These criteria will impact how the regulator views CIB’s sale of 71.94% of CI Capital, which meets the criteria. EFSA head Sherif Samy told Al Mal that the regulator will be looking into each of the investors looking to grab a piece of CI Capital. The criteria were prepared after Beltone’s failed bid for CI Capital.

On the CI Capital sale, Al Mal is reporting that Ismail Mansour, managing director of Manfoods, is among those looking to buy in.

Al Ahly Capital is planning to become a full-service investment bank in 2017 by merging NBE-owned financial services companies under its umbrella, CEO Khaled El Badawi told Al Mal. Al Ahly Capital will also add new services including financial consulting and brokerage, or acquire existing companies, he added. NBE owns several non-banking financial services companies including asset management, leasing, and real estate financing. The company, which manages assets on behalf of corporate parent NBE, is looking to increase its ownership in IPO candidates including Alexandria Mineral Oils Company and Misr Cement – Qena, El Badawi is quoted as saying.

Consensus on the Investment Law continues to elude the Investment Ministry: We’ve felt since the outset that the Investment Ministry’s goal of reaching a “consensus” within government and with industry on the investment law would be a tall order. That process includes reaching a final agreement with the Finance Ministry over the reintroduction of free zones, said the head of the General Authority of Free Zones and Investment (GAFI) Mohamed Khodeir at a workshop on the law on Wednesday that included business associations, law firms and think tanks. The Investment Ministry has apparently agreed to most of the Finance Ministry’s terms, which include giving the Customs Authority new oversight powers on customs, tariffs and licensing in the free zones, added Khodeir.

As for the private sector, the Federation of Egyptian Industries (FEI) is still adamant about that the base for change should be the old pre-2015 investment act (with amendments, of course), not Dalia Khorshid’s new draft, FEI board member Mahmoud Serg tells Al Borsa. He added that talks are ongoing but have not gotten anywhere. It is unlikely that any of the other business associations will be happy with the new draft after Khodeir announced that the law will maintain the “one-stop shop” policy, something which most associations want scrapped. It is unclear how the policy would work given legislation including the Industry Permits Act and State Land Act, which strip power away to other agencies. Khodeir insisted, however, that the associations’ input has been included in the new draft.

Either way, implementation will take time, as the ministry plans to release the law’s executive regulations three months after it has passed, said Khodeir (at least they are honest about it).

Khodeir appears to fancy himself Willy Wonka and announced that GAFI will be issuing “golden permits” which will allow investors to partake in key national development megaprojects, the newspaper reports. No details were given on the incentives planned for these permits or on whether GAFI is looking to hire Oompa Loompas.

Consumer Protection Authority head Atef “Smiley Face” Yacoub is calling for a new, three-month-long moratorium on consumption, this time taking aim at all foreign products in Egypt. He drew a parallel with post-Second World War Germany, where he said consumers refrained from purchasing foreign products and instead worked to produce all their necessities locally. The boycott is meant to help bring down the USD / EGP rate. Smiley Face had previously called for a day-long boycott on shopping on 1 December to “send a message” to traders and pressure them to lower prices — and got help from rainy, windy weather.

Cabinet was back to its usual Wednesday meeting schedule, where ministers were preoccupied with a basket of legislative and regulatory changes and the perennial challenge of cheating on exams in state-run schools, AMAY reported. Among the decisions made by cabinet yesterday:

  • Approving amendments to article 10 of the contentious protest law that would have the Interior Ministry seek court approval and present proof that a planned protest in fact threatens national security before it can disperse it or change its location;
  • Extending the deadlines for national projects by three months for all general works and six months for any electromechanical projects;
  • Approving the establishment of a new authority under Trade Ministry to govern SME activities in Egypt, under which the Social Fund for Development would be moved and renamed;
  • Sanctioning regulatory amendments that give the National Council for Human Rights vaster rights and authorities in political life, including inspecting detention facilities and reporting human rights violations and advising on legislation pertaining to human rights issues;
  • Establishing a committee to battle the “Shou Ming phenomenon” and find solutions to the increasingly widespread problem of cheating on final exams at Egyptian schools;
  • Postponing labor union elections for six months, pending the issuance of a new law to regulate the process or until the grace period expires.

Tariff hike to curb imports is exactly the wrong move? In his weekly column for The National, veteran finance writer Patrick Werr takes issue with the Finance Ministry’s raising of tariffs on non-essential goods as a means of slowing the FX burn on imports. The notion that tariffs will curb imports “fell apart when the government floated the pound last month. The official price of the pound fell by half almost overnight, and imports were suddenly twice as expensive, putting them out of reach of people’s budgets. Local products became far more attractive. This is why last week’s tariff increases are so confounding. They are counterproductive to the government’s efforts to stimulate growth and painful to consumers already trying to absorb austerity measures imposed over the past two months.”


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Egypt in the News

It’s a morning of what we call ‘commodity news’ for Egypt — not news about commodities, but news that’s all so interchangeable, it may as well be a commodity. To wit, headlines are being dominated by:

  • The meeting of top Egyptian prosecutors with Italian investigators and the Regeni family in Rome.
  • The noted human rights activist and feminist thinker Azza Soliman has been arrested in connection with an investigation into foreign funding for NGOs (Reuters | AP)
  • Cabinet’s amendment of the protest law is going nowhere in the eyes of an activist lawyer. (Reuters)
  • Egypt’s demographic growth is Europe’s problem (New Europe)

And there’s not a lot of meat to the story, but “Egypt’s beekeepers under threat as economy slumps” looks at how the sugar shortage is hitting the bee keeping industry.

Canard that won’t die? Or fire where there’s smoke? The most interesting string of stories runs beneath the surface this morning, and they’re all somehow about potential Egyptian involvement in Syria. All seem to have at their root this story from Assafir (the newspaper known for its pro-Assad stance) that Egyptian helicopter pilots had landed on the ground in Syria to support the Syrian President Bashar Al-Assad’s army. The report was promptly denied by Egypt’s Foreign Ministry, but the piece lives on in the echo chamber that is the interwebs. “The Consequences of Egypt’s Potential Military Engagement in Syria” does the best job we’ve seen yet of tracking back the spate of stories that broke the story in the first place. This two-week-old piece by Israel’s Debka file continues to be cited, Al Monitor has its usually thorough roundup in “Is Egypt considering military intervention in Syria?”, and the Italians are getting in on the act with Ansa’s “Egypt ‘to send 200 officers to Syria’ to help Assad.”

Okay, so we’ve sent troops to Syria? No, says Foreign Minister Sameh Shoukry in two high-profile interviews in the US.

Shoukry sat down with CNN’s Wolf Blitzer for an interview to weigh in on US President-elect Donald Trump and Egypt’s foreign policy. The FM said Egypt is not picking sides in Syria, but is “very heavily involved in trying to alleviate the humanitarian difficulties that exist … Egypt sides with the Syrian people … we have to move on … to a political solution … Enough is enough.”

Shoukry also said that Egypt’s relationship with the US has “always been one that’s been valuable to both sides,” despite some difficulties faced with the Obama administration, adding “we’re always interested in developing and enhancing the relationship.” He refused to speculate on how the next US administration would implement Trump’s proposed ban on Muslims coming to the country and said he has not raised the issue with President Abdel Fattah El Sisi. On international criticism of Egypt, Shoukry said “there has always been a discussion and healthy debate between us and our American partners related to many areas of our development and our reform policies … we have a clear understanding of what our society needs and how it should proceed in terms of reform.” The piece is also telling (exasperating?) for Blitzer’s insistent on calling the 30 June revolution a “coup.” (Watch, runtime 08:02).

The Foreign Minister was also hammered on Trump, Syria and human rights by Judy Woodruff for an interview that aired on the PBS Newshour (watch runtime: 7:42; transcript available at the same link). Shoukry’s best answer:

Woodruff: If the Syrian government asked Egypt to also send forces of any kinds, and there have been rumors to this effect, would Egypt send some to help him?

Shoukry: Categorically not.

El Sisi has invited Trump to Egypt: While in Washington, Shoukry told Al Shorouk that President Abdelfattah El Sisi has invited US president-elect Donald Trump to visit Egypt, but said no dates have been set.

A message to Riyadh: The foreign minister told Al Sharq Al Awsat from the US that “a special bond connects Egypt and Saudi” and that both countries have to adopt a similar attitude to many of the issues and challenges the region faces at the moment, “especially when it comes to Arab and Gulf national security.”

WikiLeaks shows Turkish interest in Egypt’s post-2011 power structure: Egypt’s post-2011 power dynamics were a matter of interest to the Turks, who seem to believe that the Egyptian military had a “power-sharing understanding” with the Muslim Brotherhood after the January 2011 uprising, according to new WikiLeaks. Despite this “informal partnership… the military appears incapable of marginalizing the rejuvenated alliance of Islamist and secularist protesters without resorting to violence,” one of the emails reads. The folks over there have released around 16 years’ worth of emails (about 58,000 messages) from the personal account of Turkey’s Energy Minister and President Recep Tayyip Erdoğan’s son-in-law, Berat Albayrak. (You can dig into the full cache here)

Worth Reading

You can’t look away: Daniel Berehulak’s gripping photo essay and accompanying text document 57 homicide scenes in 35 days as part of Philippine President Rodrigo Duterte’s crackdown on suspected drug dealers. Berehulak’s work is in many ways the child of Weegee, whose unique style of street, crime and murder scene photography in the 1930s and 1940s set a tone that echoes through photojournalism to this day. Berehulak covered Afghanistan and Iraq and “lived most of 2014 inside West Africa’s Ebola zone,” but writes, “What I experienced in the Philippines felt like a new level of ruthlessness: police officers’ summarily shooting anyone suspected of dealing or even using drugs, vigilantes’ taking seriously Mr. Duterte’s call to ‘slaughter them all.’”

Go check out “‘They are slaughtering us like animals’” in the New York Times, or read up on Weegee, check out a New York Time review of a retrospective of Weegee’s work, or have a look at what the Guardian thinks is some of Weegee’s best street photography.

Image of the Day

The Donald is Time’s Person of the Year: Time magazine picked Donald Trump, “the president-elect of the divided states of America,” as its 2016 Person of the Year. Last year, Trump railed against TIME for choosing German Chancellor Angela Merkel (“the person ruining Germany”) over him (“the big favorite”). You can read excerpts from Trump’s interview here, and the magazine’s explanation for choosing the president-elect here.

Diplomacy + Foreign Trade

PG Sadek meets Regeni’s family: Prosecutor General Nabil Sadek reassured the family of murdered Italian graduate student Giulio Regeni that Egyptian authorities will apprehend his killers, Al Mal reports. During his two-day visit to Rome, Sadek met with his Italian counterpart to discuss the latest findings in his investigation into Regeni’s murder in Cairo earlier in 2016.

President Abdel Fattah El Sisi met with the EU Parliament delegation currently inspecting security measures at tourist sites. El Sisi stressed Egypt’s role as a sanctuary for refugees and migrants and called for further economic assistance from the EU, AMAY reports.


EGPC signs USD 200 mn agreement with Afreximbank

The Egyptian General Petroleum Corporation (EGPC) signed a USD 200 mn facility yesterday with the African Export Import Bank (Afreximbank) on Tuesday to ensure uninterrupted supply of energy for Egypt’s industrial sector through the financing of import of oil and gas products, said Afreximbank’s President, Benedict Oramah in a statement. Contrary to reports we noted yesterday, the National Bank of Egypt will not be joining the financing, but will act as local operations bank for the transaction and as financial adviser to EGPC, along with Abu Dhabi Islamic Bank Capital.

OTMT-Lafarge Holcim resume EGP 300 mn RDF studies

The OTMT-Lafarge Holcim consortium has decided to resume feasibility studies on an EGP 300 mn project to use refuse-derived fuel (RDF) to generate energy, Al Borsa reported. The companies are in talks with three governorates with rehabilitate six non-operational recycling factories, OTMT board member Tamer El Mahdy said.

Electricity Transmission Company contracts Indian firm to connect South Helwan plant

The Egyptian Electricity Transmission Company (EETC) has contracted India’s KEC International to connect the South Helwan power plant to the Zahraa El Maadi transformer station, Al Mal reported. The project has an estimated cost of EGP 622 mn and will be financed through the World Bank, EETC Chairman Gamal Abdel Rehim said.


El Sisi to inaugurate five new roads next Tuesday

President Abdelfattah El Sisi will inaugurate five new national road projects built at a cost of EGP 1.5 bn next Tuesday, Al Mal reports. The transport, defense and housing ministries, have been building new highways and rehabilitating old ones as part of an exhaustive EGP 17 bn national project that stretches across some 3,400 km.

Ataba – Boulak Metro drilling postponed to January 2017

Drilling for the third phase of the Cairo Metro Line Three (Ataba to Boulak) has been postponed to January 2017, head of the National Authority for Tunnels central administration Tarek Abou El Wafa told Al Shorouk. The delay came because the project contractor did not complete drilling preparations, he added. The project is supported by EUR 900 mn in loans from the European Investment Bank and the French Development Agency and is scheduled to be completed in 2022.

Basic Materials + Commodities

Ministry of Supply denies rumors that Egyptian sugar is being exported

An unnamed source at the Supply Ministry denied rumors that Egyptian sugar is being exported after photographs of the white stuff allegedly snapped at an Egyptian port circulated online, Al Masry Al Youm reported. The source said that the photos aim to shake the country’s stability and security, and create chaos (a pretty standard refrain).

GASC postpones and halves white sugar tender

The General Authority for Supply Commodities (GASC) postponed its white sugar tender from yesterday to Saturday, December 10, seeking product for delivery by mid-January, Aswat Masriya reported, citing Reuters. The authority also halved the size of the tender, which we noted earlier this week was originally set at 50,000 tonnes, to 25,000 tonnes. The unexplained decision to postpone the tender comes as sugar prices continue to soar amid the ongoing sugar crisis, despite the Supply Ministry saying that Egypt currently has a 3-month reserve of sugar.

Supply Ministry to purchase 20k tonnes of chicken from domestic producers

The Supply Ministry signed an agreement with the Egyptian Poultry Association to buy 20,000 tonnes of chicken from local producers at higher prices than prior to the drop-and-return of customs duties on imported chicken, Al Borsa reports.

Health + Education

Were gov’t hospitals involved in the organ trafficking ring?

Government hospitals were allegedly among the eight hospitals and clinics busted for being complicit in an international organ trafficking ring, sources close to the investigation told Al Shorouk. These reportedly included Ahmed Maher Teaching Hospital and National Institute Of Urology and Nephrology. Health Ministry spokesperson Khaled Megahed was quick to deny any involvement of a government hospital in the case, stating that even though doctors who have been arrested do have rotations at those two hospitals, that does not mean the institutions were complicit. He insists that all hospitals involved were private sector. Other sources from the ministry tell the newspaper that the ministry’s unit charged with monitoring organ trafficking had not met in over a year.

In a surprising twist, shortly after making those statements, Megahed was suspended from his position for three months due to “administrative offenses,” which remain a mystery, AMAY reported. Sources close to the matter alleged that investigations into the offenses are ongoing and said that Megahed will be called in soon to answer to the allegations against him. It is not clear whether this is related to the organ trafficking case.

Real Estate + Housing

AlHokair Group investing EGP 9 bn into three new Mall of Arabia branches

The Egyptian Centers for Real Estate Development, a member of Saudi’s AlHokair Group, is investing EGP 9 bn in opening three new branches of Mall of Arabia, unnamed sources told Al Borsa. The branches will be located at the Administrative Capital, Ain Al Sokhna, and in Tanta, the sources added. The company is preparing a plan for the land it was allocated and will issue tenders to contractors next year, starting with the Administrative Capital branch, the sources said.


Tourism Minister meets with French ambassador to discuss resuming flow of French tourists

Minister Yehia Rashed met with France’s ambassador to Egypt, André Parant, to discuss ways to restore the flow of French tourism to Egypt, Ahram Gate reported. Rashed highlighted the improvement of security conditions in Egypt, as evidenced by the US classifying Egypt as a safe destination, while Parant noted that France does not have a travel ban in place against Egypt, nor warnings against the Egyptian cities to which French tourists typically flock.

Al Arabia Real Estate Company signs hotel management contract with AccorHotels

The Al Arabia Real Estate Company has signed a contract with AccorHotels to manage four hotels in the North Coast, Al Mal reported. The hotels include the Vermont and Swissotel hotels in Fouka Bay, and the Novotel and Ibis Styles in Alamein.

Public Enterprise Ministry to renovate downtown Cairo’s Intercontinental hotel

Because getting onto the Corniche from Downtown Cairo isn’t enough of a jam, the Public Enterprise Ministry intends to renovate the Semiramis Intercontinental hotel and build an adjunct shopping mall and a two-story deep parking garage, Al Borsa says. The ministry intends to establish a subsidiary with EGP 1.2 bn in capital to oversee the project. Negotiations over capital injection have already started, sources said, and the ministry is in talks with affiliated holding companies as well as the National Bank of Egypt, Banque Misr, and Banque du Caire, who will each hold a 5-10% stake in the new company. Sources added that the Holding Company for Tourism and Hotels’ stake is represented in the land allocated to the project.

Automotive + Transportation

General Motors-MCV partnership exports 100 mini buses to Ghana

Commercial vehicles manufacturer MCV and General Motors Egypt have reportedly broken into Ghana, Vietnam, and South Africa, Al Mal reported. The partnership manufactured and exported 100 minibuses to Ghana in 3Q2016 and is now selling spare parts to Vietnam and South Africa, said General Motors Egypt and North Africa Managing Director Tarek Atta.

Banking + Finance

Banking sector allocates USD 4.65 bn to import activities in first month of currency float

Banks have provided USD 4.65 bn for imports between 3-28 November, according to the Central Bank, Al Shorouk reported. Breakdown in the piece of the item-by-item earmarking of that sum.

CBE to amend financing targets for its EGP 200 bn SME finance initiative

The CBE is apparently revising the funding requirements for its EGP 200 bn SME finance initiative, said Banque du Caire President Mounir Zahid. The CBE is looking to change its definition for small, medium, and micro enterprises and funding rates allocated for each, Zahid tells Al Shorouk. Speaking on imports, Zahid said his bank has been making USD available to the automotive sector last week, in addition to the pharma and steel.

Egypt Politics + Economics

Government completes Golden Triangle project study

Cabinet has reviewed the completed Golden Triangle project study conducted with Italian consulting firm D’Appolonia, Trade and Industry Minister Tarek Kabil told Al Masry Al Youm. The project has an investment cost of USD 16 bn and will span 30 years, he said, and will include tourism, manufacturing, transportation, energy, and infrastructure projects. The Cabinet will approve forming an authority similar to the Suez Canal Authority that has full jurisdiction to handle the project, he said.

National Security

FEI to complain to PM about Heinz raid and “outrageous acts of censorship”

The Federation of Egyptian Industries’ food industries division has decried the raid on a Heinz factory in Egypt, calling it an “outrageous acts of censorship,” Al Mal reported. The division has requested a meeting with PM Sherif Ismail and Trade Minister Tarek Kabil to complain about excessive censorship. A member of the food industries division told the newspaper that Egypt has 13 food supervisory authorities. Forces had raided a Heinz factory in Cairo on Tuesday and seized an alleged 62 tonnes of rotten tomatoes and 919 kg of what it referred to as “bad” ketchup. Heinz has denied the claims.

On Your Way Out

Uber Egypt announced it will not be raising fares for its riders before 31 January 2017. It will also fully forgo the 20% service fee it charges drivers “in light of the current economic situation and increase in fuel prices,” according to press release, covered by Al Mal. The move to fully forgo the service fee is implemented starting from November 28 until the end of January 2017 until the company decides how it will best balance fare prices with the increase in fuel prices. The company’s competitors appear to be taking the opposite approach, with both Careem and Ousta raising prices on fares, and the latter announcing that they will keep charging drivers a service fee, Al Mal reports.

The markets yesterday

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EGP / USD CBE market average: Buy 17.82 | Sell 18.17
EGP / USD at CIB: Buy 17.65 | Sell 17.9
EGP / USD at NBE: Buy 17.7 | Sell 17.95

EGX30 (Wednesday): 11,348.37 (-1.34%)
Turnover: EGP 1.626 bn (274% above the 90-day average)
EGX 30 year-to-date: +61.98%

THE MARKET ON WEDNESDAY: The Egyptian benchmark index ended the day down 1.3%. Only three stocks ended the day in a positive territory including Heliopolis Housing, Edita, and Telecom Egypt. On the downside, Wednesday’s worst performing stocks included ACC, Orascom Telecom Media and Technology, and Domty. The market turnover was EGP 1.6 bn and local investors were the sole net sellers.

Foreigners: Net long | EGP + 202.8 mn
Regional: Net long | EGP + 94.0 mn
Domestic: Net short | EGP – 296.8 mn

Retail: 61.4% of total trades | 64.4% of buyers | 58.4% of sellers
Institutions: 38.6% of total trades | 35.6% of buyers | 41.6% of sellers

Foreign: 17.2% of total | 23.4% of buyers | 10.9% of sellers
Regional: 7.9% of total | 10.8% of buyers | 5.0% of sellers
Domestic: 74.9% of total | 65.8% of buyers | 84.1% of sellers


Beyond real estate development, let’s talk NAV

Land bank owners reconfirmed as our top picks: We looked at six real estate companies — Madinet Nasr for Housing and Development (MNHD), Heliopolis Company for Housing and Development (HELI), Emaar Misr for Development (EMFD), Talaat Moustafa Group Holding (TMGH), Orascom Hotels and Development (ORHD), and Egyptian Resorts Company (EGTS) — and conducted a net asset value (NAV) exercise that took into account each company’s net cash, receivables, and residual land bank. Here are the results (pdf).


WTI: USD 49.88 (+0.22%)
Brent: USD 53.00 (flat)
Natural Gas (Nymex, futures prices) USD 3.60 MMBtu, (–0.17%, January 2017 contract)
Gold: USD 1,179.10 / troy ounce (+0.14%)

TASI: 7,124.1 (-0.4%) (YTD: +3.1%)
ADX: 4,433.7 (+1.8%) (YTD: +2.9%)
DFM: 3,495.7 (+1.3%) (YTD: +10.9%)
KSE Weighted Index: 373.3 (+0.0%) (YTD: -2.2%)
QE: 9,989.3 (+0.1%) (YTD: -4.2%)
MSM: 5,656.4 (+0.0%) (YTD: +4.6%)
BB: 1,181.5 (-0.0%) (YTD: -2.8%)

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05-10 December (Monday-Saturday): Egypt Comix Week, various locations, Cairo and Alexandria

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

08 December: KarmSolar Annual Forum, a RiseUp Summit satellite event. Al Falaki Theater, Downtown Cairo. Registration:

09-11 December (Friday-Sunday): RiseUp Summit, Downtown Cairo.

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).

11-13 December (Sunday-Tuesday): The Middle East Fire, Security & Safety Exhibition and Conference (MEFSEC), Cairo International Convention Centre, Cairo.

12 December (Monday): African Development Bank votes on issuing second tranche of USD 1.5 bn loan.

13 December (Tuesday): Business News’ Third Annual Egypt Automotive Summit, Semiramis InterContinental, Cairo.

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

13-14 December (Tuesday-Wednesday): Arab Women Organization’s sixth annual conference, titled “Role of Women in the Arab Countries: Pathways to Reform and Change,” Marriott Hotel, Cairo.

19 December (Monday): LOGIC Management Consulting’s “Egypt Exports” workshop, Four Seasons Nile Plaza, Cairo. Registration information here.

20 December (Tuesday): World Bank board of directors votes on second tranche of USD 3 bn loan.

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

14-16 February 2017 (Tuesday-Thursday): Egypt Petroleum Show 2017 (EGYPS), CIEC, Cairo

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