Sunday, 12 February 2017

The EGP is strengthening — and so is inflation

TL;DR

What We’re Tracking Today

Is the EGP strengthening? From lows in the range of 19.50 to the greenback, the EGP has strengthened to an average sell rate of 17.99. But we’re getting conflicting signals on what’s behind the stronger EGP: Lower demand or better supply? A leading manufacturer tells us it’s a drying up of demand as companies lack EGP liquidity to acquire USD, saying his company has declined offers of USD for non-essential imports. On the other hand, a top exporter says it’s a combination of strong inflows into the formal banking system (including remittances) and early signs of better export receipts. We see continued pressure on the EGP through mid-to-late fall from the nexus of spending on energy imports ahead of and during summer, pre-Ramadan commodity imports, the hajj as well as summer travel and back-to-school demand. Demand should ease as Zohr comes online this fall. The wild card: A pickup in tourism if Russia makes a move this month as has been hinted. (More on the EGP in Last Night’s Talk Shows, below.)

Either way, the CBE wants us to know that it has cleared an unspecified backlog of investors looking to repatriate funds, according to an unnamed CBE official speaking with Bloomberg. The source did not clarify the volume of funds cleared, and Bloomberg speculates the statement may only refer to investors in stock and bonds who had at least USD 100 mn awaiting repatriation as of mid-January, says senior economist at Arqaam Capital Reham ElDesoky. “This is a positive signal to the market. It should spur more investment in equities and debt going forward,” she added.

NBE is still financing imports: Deputy Chairman of state-owned National Bank of Egypt (NBE) Yehia Aboul Fotouh denied the bank has stopped financing imports. He tells Reuters that NBE financed about USD 5 bn worth of imports since November and that the bank gathered around USD 2.8 bn from individuals since the EGP float.

The EGX is still “relatively cheap,” Ahmed Badr, MENA CEO at Renaissance Capital, tells Bloomberg TV (runtime 04:18). “You also have to look at why the market has been rallying … Investors realize that consumers are not doing that badly … were able to absorb inflation, so things are moving. You also have the EGP which started strengthening because you actually got a lot of inflows recently,” Badr explains. “The story has just started,” Badr says, “and I think this is a catalyst that is going to continue.” He says remittances are strong “and this is just the start,” adding that foreign currency inflows are going to continue to arrive. Another interest rate hike is “not unlikely,” Badr suggests, but given that “the currency started strengthening a bit,” he thinks the hike could be delayed. Badr says the informal economy has buoyed Egyptian consumers and helped them absorb the inflation shock.

Will the new cabinet be announced today? Prime Minister Sherif Ismail is due to present his new cabinet lineup to the House of Representatives on Monday, Mustafa Bakry tells Al Mal, while MP Mohamed Elsewedy says the lineup will be unveiled today, Al Masry Al Youm reports. Other conflicting reports in Al Shorouk and AMAY — both citing unnamed “government sources” — suggest we won’t hear about the new cabinet until Tuesday, with the prime minister sending in the new list tomorrow. The House looks set to have just one day to deliberate and decide on the cabinet. Bakry claims the shuffle will include at least 10 ministers, among them members of the economic team that has been driving Egypt’s reform program.

Are we cozying up to Lebanon? That’s the first conclusion to which we jump after picking up on Lebanese President Michel Aoun’s interview in Beirut with Al Ahram’s editor-in-chief ahead of Aoun’s visit to Egypt today. Also today, the Egyptian-Lebanese Business Forum kicks off in Cairo, Youm7 reports.

Egypt’s future apparently belongs to Japanese green juice. The domain EgyptTheFuture.com, the once high-profile home of the Egypt Economic Development Conference, is now promoting “green juice” in Japanese. A behind-the-scenes blame game sees the government pointing fingers at various subsidiaries of WPP Group, while an unnamed organizer of the EEDC tells AMAY the site was transferred to the International Cooperation Ministry, which allegedly failed to renew a one-year hosting agreement. The March 2015 EEDC was “executive produced” by Richard Attias & Associates, a WPP company.

Emerging markets “will suffer a fourth consecutive year of capital outflows in 2017, despite an upturn in the macroeconomic background and a surge in portfolio flows to EM equities and bonds in the early weeks of the year, the Institute of International Finance said on Thursday,” according to the Financial Times. Outflows from China will lead the trend, Reuters adds in its coverage. Bloomberg’s coverage of what the IFF is dubbing “the Trumpstorm” is here. The IIF report dropped the same day that EM specialists Ashmore Group said it is seeing rising demand for its products and a nearly 2x surge in net income, according to Reuters and the Financial Times.

Wait, Greece? Again? “Greek Prime Minister Alexis Tsipras warned international lenders on Saturday not to heap new burdens on his country but said he believed the drawn-out bailout review with them would end well,” Reuters reports, putting a positive spin on comments headlined in the Financial Times as “Tsipras warns IMF and Germany over bailout talks.” The German press is taking a similar line. The talks roiled European markets last week and look set to take center stage again this week. At issue: The release of a tranche of funds from a EUR 86 bn bailout package that will allow Greece to make a EUR 7 bn debt paying in July.

What We’re Tracking This Week

New UN sec-gen to visit El Sisi: Newly-appointed UN Secretary General Antonio Guterres will be visiting Egypt, Qatar, Oman and the UAE as part of his Middle East tour, Reuters reports. The diplomat began his tour with a visit to Istanbul on Friday and is set to meet with Saudi Arabia’s King Salman today.

The Central Bank of Egypt’s Monetary Policy Committee will meet this Thursday (16 February) to review rates. The MPC’s full-year 2017 schedule is here.

“100% Egyptian Cotton” to be featured at London’s International Fashion Showcase 2017 presented by Mercedes-Benz. Due to run 17-21 February, 100% Egyptian Cotton is billed “a fashion installation featuring Egypt’s best emerging designers.” Egypt is the only Arab country to be represented in this year’s show. The installation is being curated by Susan Sabet, a rare Egyptian name on the Business of Fashion’s list of 500 most influential people in fashion, and features designers including:

The exhibition is supported by British Council Egypt and CIB, the largest private sector bank in Egypt. Sahara by Shahira Fawzy has provided the Egyptian cotton for the installation. You can learn more about the event here in the official press release (pdf).

On The Horizon

German Chancellor Angela Merkel is set to visit Egypt sometime in March, Egypt’s ambassador in Berlin Badr Abdel Atti said. This comes as US President Donald Trump has reportedly invited President Abdel Fattah El Sisi to visit the White House. We’re watching closely for signs the day may be announced.

Enterprise+: Last Night’s Talk Shows

It was an eventful night at the airwaves, with the talking heads discussing everything from the economy to Trump campaign adviser Walid Phares, to Lionel Messi’s visit to Egypt this week.

Hona Al Assema’s Lamees Al Hadidi appeared weary of the optimism about a strengthening EGP. Despite an improved exchange rate, importers seeing the backlog getting cleared, the banking sector returning to form, our economy is still slowing down, said Al Hadidi. “We did not see a surge in local production or exports. The rise in [CBE] reserves was on the back of loans,” she added (watch, runtime: 5:51). Banque Misr Chairman Mohamed El Etreby told Lamees that the banking sector has tripled its intake of USD since the EGP float. Banque Misr has brought in USD 6.8 bn since the float just from remittances alone, he said, adding that tourism has started to rebound (watch, runtime: 10:02).

A stronger EGP should not be our target, said Beltone Head of Research Hany Genena, who added that he expects the rate to stabilize at around EGP 17 to the greenback. Speaking on inflation, he tells Lamees that the prices of food and other commodities have gone up worldwide. Genena predicts that export figures will improve either by the end of 2017, or at beginning of 2018. He also urged the government should further raise the minimum income required to pay taxes by the end of 1H 2017 (watch, runtime: 3: 34).

Lamees talked cabinet shuffle and the House’s expected vote on it with MP Ahmed El Sherif. The perception appears to be that those tapped to head ministries are refusing due to the expected salary cuts, as Lamees called on Ismail to raise cabinet salaries to attract “qualified ministers.”

Lamees interviewed Lebanese President Michel Aoun ahead of his state visit to Cairo to discuss the Syrian conflict and the Egyptian-Lebanese relations (watch, runtime: 41: 17).

Naturally, the first thing on Kol Youm’s Amr Adib mind is Barcelona star Lionel Messi, who will be arriving in Egypt this week to promote the Tour n’ Cure hepatitis C medical tourism program, said Tamer Wagih, chairman of Prime Pharma, which is spearheading the campaign (watch, runtime: 20: 56). He reminded viewers that Messi’s Real Madrid rival, and FIFA Ballon d’Or winner Cristiano Ronaldo, will also be in Egypt at some point for his own CSR work.

Adib interviewed Walid Phares, Donald Trump’s advisor on the Middle East during his campaign. Adib asks Phares why Human Rights Watch, the New York Times, the Washington Post and LA Times are warning Trump against including the Ikhwan on the list of terrorist organizations. Phares’ reply was cut from the same cloth as Sean Spicer and Kellyanne Conway: That most of those who work at these organizations attended universities that count a large number of Ikhwanis among their faculty. In other words: Liberals are beard-huggers (watch, runtime: 11:07).

Adib then spoke with senior Siemens executive Sherif Qotab on progress on the power plants in Beni Suef, Burullus and the New Capital. The take-home message: The plants will save Egypt USD 1.3 bn in natural gas bills per year (watch, runtime: 6:26).

Speaking on Al Hayah Al Youm. Consumer Protection Agency (CPA) head Atef Yacoub called on citizens to use the CPA’s mobile application to report restaurants and cafes that impose minimum charges. (watch: runtime: 5:23).

Speed Round

Speed Round is presented in association with

Headline inflation hit 29.6% in January, upfrom 24.3% in December, Ahram Online reports. The number is the highest level since the EGP float and was caused by price hikes in basic goods, the state statistics agency CAPMAS says. Food and beverages prices rocketed 38.6% y-o-y in January 2017. Urban inflation increased to 28.1% in January, from 23.3% in December, Reuters reported. Pharos’ Radwa El Swaify tells Al Borsa that it will get worse before it gets better. She expects inflation to drop by early 2H17 to around 25% and sees it easing to 14% by year’s end. This will be contingent on oil prices not rising in July and on the government holding the course on plans to cut energy subsidies.

Dana Gas says it is freezing investments in Egypt. The company will not inject new investments in the country because of delays in obtaining payments owed to it by the government, CEO Patrick Allman-Ward said, according to Reuters. Dana Gas says it is owed USD 265 mn as of the end of 2016, up from USD 221 mn by 2015’s end. "As uncertainty remains we must therefore be rigorous in balancing any additional capital investment in Egypt with actual collections," Allman-Ward said. His eyes are on the USD 5.5 bn Egypt raised through eurobond issuances and loans from the World Bank and African Development Bank, which he believes could be used to pay down debt owed to IOCs. Dana Gas recently announced it posted a USD 7 mn net profit in 4Q2016, down from USD 134 mn in 4Q2015.

Asset manager Acumen-Beltone handed three-year suspension. The Egyptian Financial Supervisory Authority (EFSA) has handed asset manager Acumen-Beltone a three-year suspension, Al Mal reported. Acumen-Beltone chairman Hany Tawfik tells the newspaper that the move came after the company’s general assembly voted six months ago to suspend activities until it rebrands as Acumen-BPE and secures new business. Acumen-Beltone is a JV between Acumen Holding and BPE Partners (formerly Beltone Private Equity) that was most recently chosen by the Housing and Development Bank to manage its EGP 500 mn real estate fund. Beltone Financial Holding released an emailed statement noting it has no financial, management or other ties to Acumen-Beltone.

In other industry news this morning, EFG Hermes is reportedly in the lead to manage an EGP 500 mn portfolio for the Ministry of Religious Endowments, Al Borsa reports.

Which state energy company will tap the equity market first, AMOC or Enppi? Alexandria Mineral Oils Co (AMOC) Chairman Amr Moustafa tells Reuters that he believes his company’s secondary offering of 10-20% will be the first issuance by a state-owned energy company since the government announced its IPO program last year. He expects the issuance will go to market in 1H17, adding that the issue price would be the average stock price for the six months preceding the listing. He also said that the company plans to make dividend payments of no less than EGP 7-8 per share from FY 2016-17 profits, up from EGP 5.5 in 2015-16. AMOC is also planning to list 10% of its shares as GDRs on the London Stock Exchange.

This comes as Prime Minister Sherif Ismail named Enppi as one of the companies which received preliminary approval from his cabinet for a float on the EGX. Al Masry Al Youm is choosing to interpret the statement as Enppi being the first to list. The listing program will be on the agenda at the end of the month in talks with a visiting IMF delegation.

The Petroleum Ministry has requested that the Finance Ministry appropriate extra funds for fuel subsidies, which will cost more than EGP 70 bn this fiscal year, unnamed sources from the Petroleum Ministry tell Al Borsa. The current budget allocates around EGP 35 bn to fuel subsidies, but the float of the EGP and a spike in oil prices to north of USD 55 from USD 40 have pushed subsidy costs to double, according to the sources.

Is Souq.com under investigation? The Consumer Protection Agency (CPA) has referred e-commerce platform Souq.com to the Prosecutor General’s Office, alleging it is distributing unlicensed meds and vitamins and acting as a pharmacy without a license, Al Mal reports. The investigation was prompted by a complaint from a Souq customer. Souq’s CEO denies the company is under investigation, saying the complaint was lodged against another company also called Souq that operates in the Middle East, but does not have the same logo as the e-commerce platform, Al Borsa reports.

PHD denies rumors of share buy-back: Palm Hills Developments (PHD) announced it has no intentions to use the profits generated in 2016 for a share buy-back instead of distributing dividends, according to a regulatory filing. The company announced last week an 8% y-o-y rise in net profit after tax and minority interest to EGP 640 mn in FY2016.

** Earnings Watch: Amer Group reported a 9.88% y-o-y increase in net profit after tax and minority interest for FY2016, coming in at EGP 184.45 mn compared to EGP 167.87 mn in FY2015, according to a regulatory filing. The news came as sister company Porto Group’s board of directors approved a global depositary receipt program, according to a company disclosure. Arqaam Capital will be managing the issuance, while Matouk Bassiouny is legal counsel, Al Shorouk says.

European ride-hailing app Taxify is setting up shop in Egypt this month, marking the company’s first venture in the Middle East and North Africa, Youm7 reports. The company, which was founded by a group of Skype employees in 2013 and has investments of over EUR 1.5 mn, currently offers its services in 17 European and African countries. Taxify’s arrival in Egypt will see it go up against Careem, Uber, Ousta, and Kalax.

Denmark and Norway lifted on Thursday travel warnings for Sharm El Sheikh, Dahab, and St. Catherine, Ahram Online reported. “Denmark is no longer warning its nationals of travelling to major touristic destinations in Egypt including Cairo, Alexandria, the Red Sea, Luxor, Aswan and South Sinai,” reads a Danish embassy statement, per state news agency MENA. The Tourism Development Authority (TDA) is reportedly looking to take advantage of the lifting of the warnings by launching promotional campaigns in Denmark, Norway, Finland, and Sweden with advertising agency JWT, TDA head Hany El Demery said, according to Al Borsa. Tourism Minister Yehia Rashed told Al Shorouk that he expects tourism from these countries to pick up, albeit slowly.

As for the Russian ban, Rashed said that there is no official information from Russia on when flights to Egypt will be restored. We have had our hopes up since state-owned Russian news service Sputnik said that 23 February was the likely date for the resumption of flights to Egypt from Russia. The Egyptian Civil Aviation Ministry has since said no date has been set.

Speaking of the Ruskies, the Electricity Ministry is getting ready to announce the details of the USD 30 bn Daba’a nuclear power plant agreement in a press conference “soon,” unnamed officials tell Al Borsa.

The National Telecommunications Regulatory Authority (NTRA) is considering delivering 4G spectra to “the three” mobile network operators (MNOs) in succession, “with short periods of time in between,” a source told Al Mal. The source did not mention how or when Telecom Egypt (TE) will be given its own spectrum. The three MNOs operating locally, along with state-owned landline monopolist TE, bought the rights to provide 4G services last year. A source said Vodafone Egypt, Orange Egypt, and Etisalat Misr have not been given an official timeline on the freeing up of the spectra. The CIT Ministry had said it will provide MNOs with 4G spectrum in April, following up on remarks earlier in the year by CIT Minister Yasser El Kady that the spectrum will be freed up in stages and not in one go. A CIT Ministry source says there is no delay and that the spectra are being cleared according to a pre-set timeline with NTRA. Delays in receiving each of the MNOs’ allotted spectrum are behind TE’s failure to reach a domestic roaming agreement with the MNOs, Al Mal speculates.

The terms and conditions of land tenders in the 40k feddan first phase of the New Capital, which will be issued today, have leaked courtesy of Al Mal. As we noted last week, the Administrative Capital for Urban Development Company will auction off 15 pieces of land, with each piece ranging between 50 and 500 feddans. According to the terms, construction on land parcels ranging from 20-50 feddans must be complete within three years, while parcels ranging from 60-200 feddans are allotted four years. The 500-feddan block will be allowed five years to complete construction.

US President Donald Trump is thinking about issuing a “brand new order” on immigration while his first executive order banning citizens from seven Muslim-majority countries makes its way through the legal system, the Guardian reports. Trump said part of the logic behind issuing a new order is “speed for reasons of security,” but maintains he will win the fight for his first order.

Egypt in the News

On a busy news weekend for Egypt, the international media have zeroed-in on Egypt’s record-high inflation rate for January, attributing the increases to the Central Bank’s decision to float the EGP in November, says the Associated Press. The ballooning cost of living is burdening the working- and middle-class and raising “concerns about the economic health of the Arab world’s most populous nation,” Nikhil Lohade and Dahlia Kholaif also write for The Wall Street Journal (paywall).

Also getting wide pickup this morning: The world’s heaviest woman, 36 year-old Egyptian national Iman Abdel-Atti, was flown out of Cairo to Mumbai on a cargo plane this weekend for surgeries that should help reduce her weight from a current 500 kilograms, The Associated Press says. Abdel-Atti has reportedly not left her house in 25 years. The Guardian also has the story.

The New York Times picked up the story on authorities shutting down the Al Nadeem Center for Rehabilitation of Victims of Violence.

A large shipment of North Korean weapons was seized in an Egyptian port in August, according to Japan Times. “The DPRK is flouting sanctions through trade in prohibited goods with evasion techniques that are increasing in scale, scope and sophistication,” a UN expert’s report suggests. “According to the report, the problem was laid bare when in August the largest shipment of ammunition in the sanctions period was discovered. Maritime databases, which track vessels, indicated that the Cambodian-flagged ship reached a port in Egypt… A source informed Kyodo News the Egyptian port was not the general cargo ship’s final destination, despite its strategic location near a number of regional conflict hot spots. However, the report said that seizures like it demonstrate ‘the country’s use of concealment techniques as well as an emerging nexus between DPRK entities trading in arms and minerals.’”

The US listing the Ikhwan as a terrorist organization is a “senseless political [act] that misses the mark,” a Washington Post op-ed picked up by the Portland Press Herald says. Why? The writer says that the Ikhwan are “not a single cohesive unit but rather a sprawling organization” that is more political than violent, especially in countries like Egypt and Tunisia, and even if some of its members have turned to violence.

Egypt to play a role in Trump’s Israel-Palestine peace drive? US President Donald Trump says Israel has a chance to make peace with more than just the Palestinians if it can “be reasonable with respect to peace,” he said in an exclusive interview to Israel Hayoum. “[Trump] appeared to be suggesting that peace talks would involve moderate Arab nations such as Jordan, Egypt, and Saudi Arabia.” This comes as Israeli observers are trying to get their heads around what they see as warming ties between Egypt and Hamas, Zvi Mazel writes for the Jerusalem Post. Meanwhile Times of Israel suggests that Egypt consulted with Israel on the transfer of Tiran and Sanafir to Saudi Arabia

Other international coverage over the weekend with noting in brief:

  • A Daesh-affiliated group in North Sinai claims to have executed five civilians for reportedly aiding the Egyptian Army.
  • BBC’s Business Daily podcast looked into issues of divorce in Egypt to raise the questions of whether a man saying "I divorce you" three times is legitimate and fair to women (runtime 17:42).
  • Making mannequins is a “thriving industry” in the village of Al Kharqaniyah north of Cairo, Amr Nabil writes for The Associated Press. “The industry earns its skilled workers a weekly wage between [USD 16] and [USD 45], a decent income by Egyptian standards,” Nabil writes.
  • Human Rights Watch wants Egypt to drop charges against workers who were arrested in connection with strikes and is asking parliament to “revise a new trade unions draft law to fully legalize independent unions and amend penal code provisions that criminalize the right to organize and strike.”
  • Unrest in Egypt and Turkey has sent around 20% more tourists to Spain, helping the country maintain record arrival levels in the last four years, Reuters says.

On Deadline

Top exporter doesn’t like globalization. Globalization’s failures outweigh its successes, particularly for developing countries, Mohamed Fareed Khamis writes for Youm7, saying it is just another way for the West to impose global dominance. Khamis is the founder of Oriental Weavers, one of the nation’s highest-profile exporters.

Worth Watching

Mawlana Mortada: Zamalek won the Super Cup, and we congratulate them on that. So what better opportunity is there to troll the team’s chairman, Mortada Mansour — bearing in mind any occasion is an appropriate one on which to troll Mansour. This video (runtime: 0:32) satirizes how he feels history will remember him, while simultaneously paying homage to the Thug Life video memes. If you want to see just how Trump-like he is, you need only to listen to his statements after Zamalek’s win (watch, runtime: 6:01). Mansour (who routinely blames defeat on the opposing team using sorcery and witchcraft) showered himself with praise, accused his current mortal enemy actor Farouk El Feshawy of snorting drugs, and cursed a television presenter’s mother with his signature “Omak,” all before the second minute of the clip was up.

Diplomacy + Foreign Trade

Foreign Minister Sameh Shoukry and a US congressional delegation headed by Rep. Dana Rohrabacher — leader of the ‘Friends of Egypt Caucus’ — discussed Egypt’s counter-terrorism efforts, economic reform program, and role in resolving regional conflicts on Saturday, Ahram Online reports. Also on Saturday, Shoukry phoned his US counterpart Rex Tillerson to congratulate him on his new appointment, AMAY says.

Energy

Cabinet approves EGP 37 bn loan to fund power grid capacity build-up

The Ismail cabinet reportedly signed off on EGP 37 bn in loans to the Egyptian Electricity Transmission Company (EETC) to fund expansions to absorb a production capacity of 18 GW by 2018. The National Bank of Egypt will be arranging a EGP 19 bn loan, while Banque Misr will arrange a EGP 18 bn. The 15-year loans come with a three-year grace period, said EETC head Gamal Abdel Rahim. He added that the government is expected to sign for the loans at the end of the week, he tells Al Borsa.

Basic Materials + Commodities

Supply Ministry to diversify wheat imports, Agriculture Ministry to increase wheat harvest

The Supply Ministry is looking to diversify its wheat imports to attract a bigger number of offers and fetch better prices, Supply Minister Mohamed Ali El Sheikh said, according to Al Borsa. Demand for Egypt’s wheat tenders dropped significantly last year during our backward cartwheel, hula-hoop flip-flop on ergot policy, and has been playing catchup. According to El Sheikh, the country’s strategic reserve of wheat is enough to last four months. Meanwhile, Agriculture Minister Essam Fayed said the ministry will raise the domestic wheat harvest to 10 mn tonnes, from a current 8 mn tonnes, within three years by increasing the area of cultivated land and increasing the crop yield, Al Mal reports. We’re not putting too much stock in the figure as CAPMAS itself said last week that climate change is likely to reduce Egypt’s harvest to as much as 7.9 mn tonnes. That’s not counting Egypt’s water shortages.

Real Estate + Housing

TDA to open bidding window for Ras Sudr airport and touristic resort by mid-March

The Tourism Development Authority (TDA) and Airport Holding Company will launch the tender for the Ras Sudr Airport and resort project by mid-March, Al Borsa says.

Tourism

TDA has begun repaying JWT

The Tourism Development Authority (TDA) began making payments to ad agency JWT, Chairman and CEO of JWT Hany Shoukry told Al Mal. TDA had acknowledged last week that it is behind on payments to JWT. Shoukry said TDA head Hisham El Demery acted swiftly and instructed the authority to expedite the invoice review process and make the payments.

Banking + Finance

Treasury bill yields down 2.4% in Thursday’s auction

The yield on EGP-denominated treasury bills eased 2.4 percentage points to 17.7% in the Central Bank’s latest issuance on Thursday, down from 19.6% on 2 February, Al Borsa reported.

Other Business News of Note

Welspun reaches agreement with Cotton Egypt Association, considers expanding into Egypt

India’s Welspun announced it entered into a “strategic agreement” with the Cotton Egypt Association, Reuters reported. The agreement allows Welspun to use the Egyptian cotton logo for the five years ending in 2022. The company said it will invest a total of USD 3 mn in a stage wise manner over next few years to support the joint initiatives and is exploring options to expand in Egypt to include a manufacturing facility. The Cotton Egypt Association investigated Welspun in September following its role in selling products mislabelled as “Egyptian cotton” to US retailers, and Welspun representatives flew to Egypt in October to resolve the issue.

Legislation + Policy

Committee amending the Capital Markets Act meets

A committee tasked with drafting amendments to the Capital Markets Act held its first meeting on Saturday, Al Masry Al Youm reports. The amendments could entail changes to how private placements are regulated and will also cover the issuance of sukuks and allow trades on the EGX to be reversed when international money laundry is suspected, said Egyptian Financial Supervisory Authority (EFSA) chief Sherif Samy. As we noted last month, the amendments would also give the EGX flexibility to set lower listing fees to attract smaller companies to the bourse.

Egypt Politics + Economics

El Sisi meets with CBE governor and ministers to discuss Egypt’s economic indicators

Global forecasts on Egypt, such as PwC’s, prove the economy is on the right track, President Abdel Fattah El Sisi said during a meeting to follow-up on economic indicators, AMAY reports. Prime Minister Sherif Ismail and Central Bank Governor Tarek Amer were in attendance.

National Security

Daesh affiliate claims responsibility for rockets fired into Israel

Daesh affiliate Wilayat Sinai claimed responsibility for the “several” rockets that were fired into Israel and intercepted by its iron dome, Reuters said. The group said it fired "a number of Grad rockets against gatherings of Zionist occupiers" in Eilat. The attacks caused no casualties.

Hasm declared a terrorist group by Cairo court

A Cairo court ruled the Ikhwan-affiliated militant group Hasm a terrorist organization on Saturday. Ahram Online has the story.

On Your Way Out

The feature film “The Chosen Guard” will be shot in Egypt starting April, bringing together "an American production team and Egyptian cast and crew," PR Newswire says. The movie stars Egyptian actor and martial artist Youssef Mansour as Sabaa, a man picked by the ancient Egyptians to defend the Golden Temple, the last untouched relic from ancient times. Mansour will also co-direct the film with the US’s Courtney Miller. You can expect “lots of action,” some dancing, and a bit of drama. The film will apparently also cast “large dance numbers” and Miller will be holding auditions in Cairo during March.

Egypt recently reopened its Hunting Museum at the Manial Palace in Cairo, Xinhua reports. The museum, closed in 2007 for restorations, features mummified animals and birds hunted by the royal family.

The markets yesterday

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EGP / USD CBE market average: Buy 17.8823 | Sell 17.9937
EGP / USD at CIB: Buy 17.6 | Sell 17.7
EGP / USD at NBE: Buy 17.77 | Sell 17.82

EGX30 (Thursday): 13,114.86 (-0.86%)
Turnover: EGP 978.6 mn (125% above the 90-day average)
EGX 30 year-to-date: +6.237%

THE MARKET ON THURSDAY: The EGX30 ended Thursday’s session 0.9% down. The top performing constituents were Egyptian Iron and Steel, Domty, and Telecom Egypt. Thursday’s worst performing stocks included Ezz Steel, Sidi Kerir Petrochemicals, and Oriental Weavers. The market turnover was EGP 979 mn and local investors were the sole net buyers.

Foreigners: Net short | EGP -7.8 mn
Regional: Net short | EGP -29.4 mn
Domestic: Net long | EGP +37.2 mn

Retail: 57.6% of total trades | 59.8% of buyers | 55.4% of sellers
Institutions: 42.4% of total trades | 40.2% of buyers | 44.6% of sellers

Foreign: 24.9% of total | 24.5% of buyers | 25.3% of sellers
Regional: 5.4% of total | 3.9% of buyers | 6.9% of sellers
Domestic: 69.7% of total | 71.6% of buyers | 67.8% of sellers

WTI: USD 53.86 (+1.62%)
Brent: USD 56.70 (+1.92%)
Natural Gas (Nymex, futures prices) USD 3.03 MMBtu, (-3.41%, March 2017 contract)
Gold: USD 1,235.90 / troy ounce (-0.07%)TASI: 6,969.26 (+0.03%) (YTD: -3.34%)
ADX: 4,569.49 (-0.10%) (YTD: +0.51%)
DFM: 3,682.81 (-1.16%) (YTD: +4.30%)
KSE Weighted Index: 420.28 (-1.30%) (YTD: +10.57%)
QE: 10,629.13 (-0.23%) (YTD: +1.84%)
MSM: 5,819.52 (-0.14%) (YTD: +0.64%)
BB: 1,306.83 (-0.25%) (YTD: +7.08%)

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Calendar

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

16 February (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

23 February (Thursday): Potential date for resumption of flights between Egypt and Russia, according to Izvestia newspaper.

06-08 March (Monday-Wednesday): 13th EFG Hermes One on One Conference, Dubai, United Arab Emirates.

08 March (Wednesday): Microfinance forum, Nile Ritz-Carlton, Cairo.

09-11 March (Thursday-Saturday): Egypt Projects Summit, Cairo International Convention Center, Cairo.

29-30 March (Wednesday-Thursday): Cityscape Egypt Conference, Nile Ritz-Carlton, Cairo.

30 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

31 March – 03 April (Friday-Monday): Cityscape Egypt Exhibition, Cairo International Convention Center, Cairo. Register here.

03-06 April (Monday-Thursday): Agri & Foodex Africa, Khartoum International Fair Ground, Khartoum, Sudan.

08-10 April (Saturday-Monday): Pharmaconex, Cairo International Convention Center, Cairo.

16 April (Sunday): Coptic Easter Sunday.

17 April (Monday): Sham El Nessim, national holiday.

20 April (Thursday): Closing date for the Egyptian Mineral Resources Authority bid round number 1 for 2017 for gold and associated minerals.

24-25 April (Monday-Tuesday): Renaissance Capital’s Egypt Investor Conference, Cape Town, South Africa.

25 April (Tuesday): Sinai Liberation Day, national holiday.

30 April – 03 May (Sunday-Wednesday): Cement & Concrete 2017, Riyadh International Convention & Exhibition Center, Saudi Arabia.

01 May (Monday): Labor Day, national holiday.

16 May (Tuesday): Official expiry date for the decision to suspend capital gains taxes on stock market transactions.

27 May (Saturday): First day of Ramadan (TBC).

26-28 June (Monday-Wednesday): Eid Al-Fitr (TBC).

30 June (Friday): 30 June, national holiday.

23 July (Sunday): Revolution Day, national holiday.

02-05 September (Saturday-Tuesday): Eid Al-Adha, national holiday (TBC).

17-19 September (Sunday-Tuesday): Pipeline-Pipe-Sewer-Technology Conference & Exhibition, Intercontinental Citystars Hotel, Cairo.

22 September (Friday): Islamic New Year, national holiday (TBC).

06 October (Friday): Armed Forces Day, national holiday.

01 December (Friday): Prophet’s Birthday, national holiday.

08-10 December (Friday-Sunday): RiseUp Summit, Downtown Cairo.

01 January 2018 (Monday): New Year’s Day, national holiday.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.