Sunday, 19 February 2017

Keep an eye on the EGP today


What We’re Tracking Today

Keep an eye on the EGP today. The pound is flirting with the EGP 16.00 barrier this morning, with the CBE quoting a 16.0038 / 16.1062 buy / sell split in its table of average market rates for Thursday. Anecdotal evidence over the weekend suggests to us that small-time USD hoarders are selling into the fall. Where does the EGP settle? Buried in a Financial Times piece are suggestions from RenCap (12.90) and Capital Economics (14.00), while a Federation of Chambers of Commerce official told Lamees El Hadidy last night that the organization expects the EGP to strengthen to 14-15 to the greenback by the end of April. (More in Speed Round and Last Night’s Talk Shows, below).

HDBK to spin off real estate holdings: The board of the Housing and Development Bank (HDBK) voted last week to move forward with a demerger that will see it spin off its real estate holdings into a separate company, the bank said in a statement (pdf).

The Donald is revising his travel ban, aiming to make it bullet-proof with the courts by exempting permanent residents or so-called “green card” holders. The ban would, however, include temporary bars on immigration and refugees from the same seven Muslim majority countries, according to the Wall Street Journal (paywall) which has seen a State Department memo on the subject. The revised executive order could be issued as soon as Tuesday. Meanwhile, Cairo veteran Abigail Hauslohner reports for the Washington Post that a fringe “grass roots national security group” that claims to have a “direct line” to US President Donald Trump is lobbying to expand the executive order to include Egypt and Saudi Arabia.

The big global business news this morning: Unilever rebuffed on Friday a USD 143 bn takeover offer from Kraft Heinz to create the world’s second-largest food company. Other large industry players are “probably breathing a sigh of relief, but then it becomes a question of what’s next. Sales [at major global players] aren’t getting better and at some point the cost cuts are going to run out,” one analyst tells Bloomberg is a solid recap of what could be next, and the New York Times joins it in expecting more transactions in the sector.

100% Egypt Cotton, a fashion installation featuring some of Egypt’s best emerging designers, continues at London’s International Fashion Showcase 2017 until Tuesday. The installation, sponsored by our friends at CIB, opened Thursday night. Designers were welcomed at the Egyptian ambassador’s residence for a reception on Friday night. A friend who sent in photos from the installation writes: “The backdrop is Egyptian cotton hand woven with a scene of cotton field. Light changes to reflect time of day. Dawn to dusk — it’s magical. The launch was Thursday night and the Egypt exhibit was packed — more than any other country.” Egypt is the only Arab country invited to attend.Adds CIB retail banking chief Ahmed Issa: “Egyptian cotton is synonymous throughout the world with quality and luxury. We are proud to sponsor this exhibition that so beautifully showcases our great country.” Attending designers included:

Tap any one the designers above to learn more about them, or download the 100% Egyptian Cotton press release here (pdf).

On The Horizon

Finance Minister Amr El Garhy will appear before the House of Representatives next week to discuss budget deficit projections, public debt, and what MPs are characterizing as a delay in presenting the USD 12 bn IMF loan agreement to the House for review, sources tell Al Borsa. Representatives have reportedly been growing concerned with the widening budget deficit and soaring inflation.

Foreign Minister Sameh Shoukry will be flying to Washington on 25 February in his first official visit to the Trump White House, Al Shorouk reports. During his two-day visit, Shoukry will meet his US counterpart and other senior government officials to talk terrorism, Syria, Yemen, Libya, and the Palestinian-Israeli conflict.

Among the investor conferences on the horizon:

  • JP Morgan’s Global Emerging Markets Corporate Conference kicks off in Florida on 27 February.
  • The EFG Hermes One on One takes place in Dubai starting 6 March 2017.
  • Renaissance Capital will host its Egypt Investor Conference in Cape Town 24-25 April 2017.

A delegation from the International Monetary Fund will arrive in March to check up on the health of the Ismail government’s economic reform program before approving the release of the second tranche of the USD 12 bn facility, Al Masry Al Youm reminds us.

The Oscars will take place from about 3:30am through 7:00am CLT on Monday, 27 February.

Enterprise+: Last Night’s Talk Shows

Prices and why aren’t they falling fast enough was all the talking heads could discuss last night, and in a blessed change of pace after hours of complaints from The Talking Heads that prices aren’t falling in lock-step with a strengthening EGP, Trade and Industry Minister Tarek appeared with Lamees El Hadidy on Hona Al Assema to discuss the ministry’s new investment road map. Kabil also explained how the Industrial Permits Act would allow SMEs to obtain licenses by simply notifying the ministry, in a bid to reduce red tape. Temporary licenses will be issued to SMEs until the law is released, he added. Speaking on Egypt’s trade figures, Kabil said that exports were up USD 2 bn in 2016; that, combined with lower imports, saw the trade deficit fall by USD 9 bn. “In January alone, Egyptian exports soared by 23%,” he said. The trade deficit is expected to decline by 50% by 2020, the minister added (watch, runtime: 10:41).

Al Hadidy’s reporters interviewed some of the newly-appointed governors. Egypt’s first female governor, Nadia Saleh, governor of Beheira, said she will address water and sanitation issues in the governorate. “I served as deputy governor for Beheira over two terms that’s why I know the issues faced by the residents there,” she said (watch, runtime: 9:39). Ditto Alexandria’s new governor Mohamed Sultan (watch, runtime: 9:31).

Lamees then hopped on the price bandwagon, interviewing the Federation of Egyptian Chambers of Commerce’s Alaa Ezz on how a lower custom exchange rate will help reduce prices. He tells her that the impact of the reduction in the customs USD will be felt in the prices of cars, refrigerators and other appliances over the next 10-15 days. The Chambers of Commerce expect EGP to strengthen to 14-15 to the greenback by the end of April. (watch, runtime: 08:09).

Kol Youm’s Amr Adib called on traders to slash prices and offer discounts to encourage consumer spending. “The recession” (yes, it’s a fait accompli to Amr) is worsening by the day (watch, runtime: 4:55). Adib also called on Prime Minister Sherif Ismail to sit with traders to work out a plan to reduce prices. International news outlets are reporting positive forecasts about the Egyptian economy, but people can’t feel any change because of the prices, he bellowed (watch, runtime: 4:29).

On Al Hayah Al Youm, El-Saba Automotive Group’s chairman Alaa El-Saba tied himself in knots explaining to host Lobna Assal why car prices are so high (watch, runtime: 2: 26).

In non-Egypt news, Youssef Al Hosseini interviewed Libya’s Gen. Khalifa Haftar in Benghazi last week. The interview was broadcast last night on ON Live’s Bi-Tawqit Al Qahirah. Haftar is the top military commander of the internationally recognized Libyan government (watch, runtime: 50:03).

Speed Round

Speed Round is presented in association with

CBE leaves key interest rates on hold for the third consecutive meeting: As many had been anticipating, the Central Bank of Egypt’s Monetary Policy Committee (MPC) decided on Thursday to leave overnight deposit and lending rates unchanged at 14.75% and 15.75%, respectively, according to a CBE statement (pdf). January’s record-high inflation rate was the primary motive for the MPC’s decision, with the CBE taking the view that the spike is transient. “Annual inflation is expected to drop after transitory cost-push effects subside and monthly inflation rates decline,” the statement said. Experts had predicted that hiking rates “would have done little to temper the country’s high inflation, which is largely the result of a weaker currency,” Naeem Brokerage’s Head of Research Allen Sandeep tells Reuters.

Meanwhile, yields on EGP-denominated treasuries inched up on Thursday, rising 1.1% to 18.82% from 17.72% the week before, according to Al Borsa. Yields on t-bills have been declining from 19.6% at the 2 February issuance. Finance Ministry sources tell the newspaper that the uptick in yields came in anticipation of the MPC meeting, where banks expected it to raise interest rates. The newspaper’s sources expect yields to contract once again this week after the MPC left rates on hold.

International optimism about Egypt’s economy continues: Economists at Bank of America Merrill Lynch see declining bond yields as one of the primary indicators that stabilizing foreign reserves and an appreciation of the EGP are drawing in foreign investors, according to its February insight report. The report takes the view the reform agenda has galvanized demand from bond investors, but these would hinge on Egypt receiving a positive review from the IMF when it arrives in March and the patience of the Egyptian street. “We expect a positive review based on end-of-December targets, which should unlock USD 1.25 bn in IMF financing. The key aspect of the review is whether fiscal targets would be reviewed in light of the weaker-than-anticipated USD/EGP exchange rate—EGP 12-14 per USD is implicitly assumed in the program. This could, in our view, ease reform slippage risk,” said the report, according to Amwal Al Ghad. The big downside risk highlighted by the report: “Slippage” in view of popular discontent with inflation ahead of the 2018 presidential elections.

The bank continues to take a decidedly optimistic view regardless, as Jean-Michel Saliba, economist and strategist for Bank of America Merrill Lynch MENA, tells the Financial Times’ Steve Johnson that rising international reserves and a narrowing of Egypt’s trade deficit will help relieve pressure on the currency further. A 30% year-on-year decline in imports in November could be the first sign of a rebalance, he added. Renaissance Capital’s chief global economist Charles Robertson has his hopes up on Egypt being the second “Trump trade” after Russia. Johnson’s epic piece for the FT’s EM Squared section is headlined “Foreign investors return to beaten-up Egypt” and notes that the market has “turned bullish even as Egyptians battle food inflation of 37%.”

Where does the EGP settle? Johnson quotes RenCap and Capital Economics, giving a range of EGP 12.90 to EGP 14.00 to the greenback.

The Ismail government’s reforms are boosting appetite for the EGP, the Financial Times’ Heba Saleh writes. EFG-Hermes economist Mohamed Abu Basha tells Saleh, “We are starting to turn a corner because now there is liquidity and the [USD] is coming down … Companies now say they are finding the [USD] they need in the banks and some are holding off buying because the price will come down.” A London-based economist told Saleh, “the mood among international investors toward Egyptian risk is currently very positive — the global environment is supportive and the market recognises the improvement in Egypt’s prospects since the IMF deal … But for now, the support is still short term. Egypt needs to prove it can follow through with reforms and rebalancing if the hot money in its local market is to turn into long-term financing.” Pharos Holding’s head of research Radwa El-Swaify says, “Hoarders have been offloading their [USD] after they heard that foreigners are now entering the market,” and adds that “one thing reassuring investors is that the IMF continues to monitor Egypt. Investors think there is huge potential but they are still testing the water.”

Meanwhile, CI Capital senior economist Hany Farahat sees rising FX liquidity and the clearing of the investor backlog as steps in the right direction, telling Bloomberg TV (runtime: 5:59) on Thursday he sees a stronger EGP in 2017.

Demand for Egyptian agricultural exports is rising: Demand is up and new markets are opening for agricultural exports four months after the EGP float, writes Reuters’ Arwa Gaballa. "Demand has doubled, with every product gaining one or two markets," says Mostafa al-Naggari, chairman of Fresh Fruit Co. Exporter PICO Modern Agriculture Co also says demand from the GCC has risen 50% in the past two months. Exports should rise about 15% this year above the USD 2.2 bn figure recorder in 2016, says Abdel Hamid Al-Demerdash, head of the Agriculture Exports Council.

IPO Watch- MM Group for Industry and International Trade will list 25% of its shares on the EGX in March, Beltone Financial investment banking’s Mohamed El Akhdar told Al Mal. El Akhdar says EFSA has approved a fair value assessment for the company of EGP 6.75 per share, giving MM Group a total value of EGP 2.7 bn. He added that 80% of the listing will be marketed to institutions, with the balance comprising a retail offering. MM Group had said last June it was looking to raise EGP 400 mn from floating 25% of subsidiary MTI on the EGX. In December, however, sources told Al Mal MM Group will float 30%-40% of its shares on the EGX in 1Q2017. Beltone Financial is managing the transaction.

M&A Watch- Nestlé SA has closed the acquisition of Caravan Marketing Company on Thursday when it paid EGP 364.88 mn to complete the transaction, according to Al Borsa. Nestlé had announced it is acquiring Caravan, the owner of the Bonjorno instant coffee brand, in January. Reports at the time valued the transaction at EGP 400-500 mn.

Egypt’s oil and gas sector needs a 21st century revamp, James House, senior regional vice president of Apache told Platts. The country needs to rethink its JV model, which, he says "tethered" in various ways to state agencies, was a "limiter" to progress, and welcomed a recent initiative by the Oil Ministry to look at updating the model. He says the “current way of doing business serves to block ‘tough decisions,’ and ‘younger minds’ are needed in the industry, he said, adding that more ‘external resources’ would also be helpful in the modernization process.” House also said Apache was going to increase its capital spending in Egypt this year from last year’s level of USD 300 mn and that the company could add another rig to its current fleet of 12. He added that Apache will remain focused on the onshore in Egypt, saying “we’ve got plenty of opportunities onshore to pursue … It’s about staying true to form and playing within your strengths. We’re the biggest acreage holder in the Western Desert and we’ve learned a few things over two decades and so we’ve picked up two concessions that we felt like we could add a lot of value to."

Juhayna is cutting investments in 2017 because it believes Egyptian consumers’ purchase power is being eroded, Ehab Farouk writes for Reuters. CEO Seif El Din Thabet told Farouk Juhayna will raise prices by 5-10% this year as he expects 1Q2017’s profits to fall, before beginning to improve in 2Q2017. "We have invested around [EGP 450 mn] in 2016 from a total of [EGP 500 mn] of expected investments …Our production capacity sufficient for our needs until 2018, accordingly there is no urgent need for expansion. We want to focus on improving our cash flow,” Thabet says.

Meanwhile, Cheese maker Obour Land announced it could reduce prices by up to 15% if the EGP continues to appreciate to rate of EGP 15 per USD 1, Chairman Mohamed Hamed told Al Borsa. He says the market fundamentals remain strong in Egypt and that consumption will continue to grow strongly “as we saw from our experiences since 2003.” Hamed says the company will continue to invest in its current operations and will introduce new products.

Nadia Abdo Saleh became Egypt’s first female governor after she was appointed governor of Beheira on Thursday, a cabinet statement said. Saleh, who has served as deputy governor of Beheira for going on four years, is an engineer by training and replaces Mohamed Ali Sultan, who was reassigned to Alexandria. Sultan, who studied orthopedic surgery, occupied various high-ranking public posts within the health ministry over the last 20 years. President Abdel Fattah El Sisi also appointed new governors in Qalyubiyah, New Valley, and Dakahlia. President Abdel Fattah El Sisi also swore in the nine new ministers announced on Wednesday; Investment and International Cooperation Minister Sahar Nasr was sworn in again after the merger of the investment ministry with her previous post of international cooperation.

Those new ministers were highly vocal over the weekend. In addition to press conferences and interviews, six of the ministers attended one-on-one meetings with Prime Minister Sherif Ismail on Saturday, according to a cabinet statement. Among the highlights:

Investment and International Cooperation Minister Sahar Nasrhas the Investment Act on her mind, she said, and will rung an international campaign to promote foreign investment.

Supply Minister Aly El Moselhy continued to make noise about subsidy reforms, and chatter suggests he might be moving to increase ration card holders’ monthly allowance. El Moselhy said, however, that he was primarily concerned with cleaning up the subsidy system. The House will reportedly be summoning the minister in 10 days’ time to discuss his strategy for the phase-out of subsidies, Al Borsa says.

Agriculture Minister Abdel Moneim Al Banna plans on forming a committee to oversee wheat collection and storage ahead of the April harvest. His long-term priority will be food security and curbing imports.

Transport Minister Hisham Arafat told railway officials he is unhappy about the slow pace of modernization and pledged to continue upgrading public transport nationwide, Al Borsa says.

Higher Education Minister Khaled Abdel Ghaffar noted that while public education will remain free, he would like to find a way of allowing public universities self-fund upgrades, according to AMAY.
Planning Minister Hala El Said intends to present the House of Representatives with Egypt’s social and economic development strategy for 2017-18 by end of March, she said. Her longer-term focus will be on administrative reforms within the bureaucracy.

Russia and Egypt agreed to sign a civil aviation security protocol ahead of the anticipated resumption of air service between the two countries, but Egypt still needs to fulfill a laundry list of Russian requirements to upgrade airport security measures, Russian news agency TASS reports. The agreement allows Moscow to set up a committee made up of Federal Air Transport Agency (Rosaviatsia) experts who would be solely concerned with monitoring safety measures in Egyptian airports. It is unclear whether the committee would continue its work once air travel officially resumes, but the report says that the experts would be able to okay or refuse flights from Egypt to the Russian Federation based on an airline’s level of compliance with Moscow’s stipulations. Egyptian Civil Aviation Minister Sherif Fathy is expected to sign the protocol in an upcoming visit to Moscow, whose dates are yet to be announced, according to Ahram Online. Fathy was set to visit Moscow on 8-9 February, as we had previously noted.

Also from Russia: The state-owned Rostec Corporation has plans to expand its presence in Egypt to accommodate the “growing number of military and technical cooperation orders,” including one for helicopters, the company’s International Cooperation Director Victor Kladov told reporters, according to Sputnik.

With the 2018 presidential elections looming, the Free Egyptians Party carefully aims the .45 at its right foot… Egyptian political parties never seem to miss an opportunity to miss an opportunity, so why should this year be any different? The spat between bn’aire Naguib Sawiris and the FEP (of which he is a founder) continues, with the party having now summoned him for questioning about his “slanderous” remarks and for having allegedly used “sectarian” language and — gasp — given the impression that he speaks for the party… Al Ahram has the latest, and we have background here and here.


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Egypt in the News

Jama’a Islamiyah founder and mastermind behind 1993 attack on World Trade Center dead at nearly 80: The death of “blind sheikh” Omar Abdel Rahman at nearly 80 years old in his North Carolina prison cell on Saturday received wide coverage from the international press, as Abdel Rahman, effectively the Osama Bin Laden of his time, was the founder of the Jama’a Islamiyah in Egypt and the mastermind behind several attacks on New York City in the 1990s, including the 1993 World Trade Center bombing. The cleric, who remained “a spiritual leader for radical Muslims even after more than 20 years in prison,” Reuters says, reportedly died of “natural causes” but had suffered from diabetes and heart disease. The Associated Press, USA Today, The Washington Post, and BBC all have the story.

The judiciary and Al Azhar seek to preserve what they both see as their autonomy from the presidency, Nathan Brown and Mariam Ghanem write for the Carnegie Endowment for International Peace. They say both institutions are willing to act to keep that autonomy “and insist that their specific expertise be respected even if it leads in directions that do not serve the short-term desires of the country’s rulers.” Brown and Ghanem write that Al Azhar and the judiciary have caused President Abdel Fattah El Sisi headaches first “with occasional judgments that deal the regime embarrassing setbacks” and also “by insisting that it takes orders from nobody on religious law or educational reform.”

On Deadline

Writing for El Watan, Mahmoud Khalil comes away from Israel’s surprise recall of its ambassador to Cairo wondering whether it’s part of Tel Aviv’s plan to pressure Egypt to join forces with Israel and Saudi Arabia in a Trump-promoted coalition against Iran.

Diplomacy + Foreign Trade

Egypt remains committed to a two-state solution to the Israel-Palestine conflict, Reuters quotes a foreign ministry spokesman as saying.

Drive to deepen ties with Kenya: President Abdel Fattah El Sisi met yesterday with his Kenyan counterpart Uhuru Kenyatta, during which the two leaders agreed to eliminate double taxation on imports as a way to boost investment and trade, Egypt Independent reports. The two also discussed security issues and means of ensuring all Nile Basin countries benefit equally from the Nile, Al Ahram reports.

Sisi’s arrival in Nairobi came as the Egyptian Exporters Association and the Egypt-Kenya Business Council were wrapping up a seven-day trip to Kenya and Uganda. Egypt and Kenya pledged to more than double trade to USD 1 bn (from USD 450 mn today) within two years, Al Masry Al Youm reports.

El Sisi’s epic Thursday: President Abdel Fattah El Sisi had a busy schedule on Thursday. He received Togo’s President Faure Gnassingbé, who is on a private visit to Egypt, and UN Secretary-General António Guterres. El Sisi also awarded Irina Bokova, Director-General of the United Nations Educational, Scientific and Cultural Organization (UNESCO) the Order of the Republic, First Class, in recognition of her efforts to promote cooperation between Egypt and UNESCO, Ittihadiya said in a statement.

Japanese investments in Egypt may be at risk of shrinking in the near future, Japan’s ambassador to Egypt Takehiro Kagawa told Al Shorouk. Investments, which stand at around USD 100 mn per annum, have been put at risk due to the depreciation of the EGP since the November float. Some of these have been suspended due to the weakening EGP, and will be reevaluated when Egypt’s economy stabilizes. Kagawa’s statements came despite Trade and Industry Minister Tarek Kabil announcing that a delegation of major Japanese food and agriculture companies would be visiting Egypt to explore potential investment opportunities, the newspaper reported.

Turkish companies participating in the Egyptian-Turkish business forum conference yesterday expressed interest in investing in Egypt’s pharma, fertilizer, engineering, CIT, and construction industries, but have yet to sign any official agreements, Al Borsa reports. According to Atilla Atasevin, the head of the Turkish businessmen’s association, investors from both countries are planning on holding a joint conference in September.


Oil Minister meets with IOC delegations

Oil Minister Tarek El Molla met with delegations from several international oil companies, including France’s Total and the French Institute of Petroleum, to discuss increasing the scope of their Egyptian investments, Al Shorouk says. Total are looking to increase investments at their North El Hammad concession, he said, while the French Institute of Petroleum are interested in entering the Egyptian market. Additionally, Halliburton confirmed they are committed to their operations in technology, training, and increasing machinery efficiency.

Basic Materials + Commodities

Bissolo Gabriele exporting fruit to Egypt

Italian fruit producer Bissolo Gabriele says it is now working with Libya, Egypt, and Jordan. Manager Patrizio Destro told Fresh Plaza "Russia closed its borders, so we went and focused on North Africa… Some may see it as a gamble, but the business with countries like Libya, Egypt and Jordan is going well… We sell mostly apples, pears, kiwis and table grapes." He says, however, that even though high quality products are demanded, “Egyptian consumers find it difficult to make purchases,” following the EGP float.

360k tonnes of wheat imported from Russia, Ukraine and Romania

GASC has purchased 360k tonnes of wheat from Russia, Ukraine and Romania for delivery in 16-25 March, Al Borsa reports.


Trade and Industry Ministry launches first phase of Upper Egypt investment map

The Trade and Industry Ministry has launched the website for its Upper Egypt investment road map, Al Borsa reported. The road map includes around 600 investment opportunities in seven governorates including Qena, Sohag, Beni Suef, Luxor, Minya, Aswan, and Assiut, Trade and Industry Minister Tarek Kabil said. These are projects are only the first wave in a larger investment initiative spearheaded by the ministry.

SEMAF sourcing 15% of components for trams domestically

The Arab Organization for Industrialization’s SEMAF factory has contracted a Ukrainian company to build and supply 15 trams to Alexandria at a total cost of USD 17.5 mn, head of the Public Transportation Authority in Alexandria Khaled Elewa told Al Borsa. Fifteen percent of the tram components will be sourced domestically by SEMAF, government source said.

Health + Education

Social Solidarity Minister Ghada Wali denies suggesting penalties for over-reproduction

Social Solidarity Minister Ghada Wali denied making a statement advocating for setting penalties for over-reproduction a la China’s one child policy, saying she was misquoted. What she meant to say is that parents who have several children and fail to raise them correctly by giving them a proper education should be punished (we could get behind that idea), Al Shorouk reports.

Real Estate + Housing

Administrative Capital for Urban Development taps Arab Contractors for House of Representatives building

The Administrative Capital for Urban Development company has tapped the Arab Contractors to construct the new House of Representatives building at the government block of the Administrative Capital, Arab Contractors Vice President Emam Afifi told Al Borsa. The project will be completed within 18 months, he added. The value of the agreement was not revealed.

Heliopolis Housing reaches agreement on Merryland Park

The Heliopolis Company for Housing and Development (HCHD) has reached an agreement with Magic Dreams and the Defense Ministry that will see Magic Dreams finalize its development of Merryland Park by the end of August, Al Mal reports. The agreement will also see the ministry becoming the financial guarantor for the project instead of HCHD. As we noted last year, HCHD was looking to enforce a court order to evict Magic Dreams from the plot, and had begun tendering parts of the park for development.


Malaysian outbound agents putting Egypt back on their radar

Outbound agents are looking to put Egypt back on the travel radar for Malaysians by leveraging cheaper ground prices and promoting the destination aggressively at the upcoming MATTA Fair in Kuala Lumpur next month, TTG Asia reported. “In general, ground arrangements are around 20-30% less throughout the country as compared to 2013 rates. For USD 100, we can now get a five-star hotel in Cairo and Aswan; in the past, USD 100 could only fetch a four-star property,” said one convention goer.

Tourism Ministry rejects CPA decision to ban minimum charge in ministry-affiliated facilities

The Tourism Ministry furious that the Consumer Protection Agency’s (CPA) is meddling in its policy of allowing licensed tourist restaurants and cafes to impose minimum charges, Al Borsa reports. The CPA has tried to ban the practice, which is common in establishments licensed by the Tourism Ministry.

Automotive + Transportation

GB Auto and Kastour Egypt begin delivering new buses to Alexandria Transport Authority

GB Auto has delivered 30 out of 50 new buses to the Public Transport Authority in Alexandria, under a EGP 87.5 mn contract that should be fulfilled by July, Al Borsa reports. Kastour Egypt has also delivered 40 out of 81 mini buses that are costing the authority some EGP 55 mn.

Other Business News of Note

Airlines refusing to repatriate profits following EGP float-induced losses

Some international airlines are refusing to repatriate profits from Egypt following the losses they have incurred after the EGP devaluation, Al Mal reported. A source said the central bank has asked the airlines to wait until June to repatriate their profits, and that they are working together to resolve the issue.

L’Oréal targets 50 percent increase in production

L’Oréal Egypt is targeting a 50% increase in production to 120 mn packs of makeup and other cosmetics, country managing director Benoit Julia said, according to Al Mal. Operations were not affected by the EGP float, as L’Oréal Egypt exports 90% of its production to the MENA region, Julia added.


Court ruling could force the government to develop slum areas

The Supreme Administrative Court issued a verdict on Saturday that obligates the state to develop infrastructure and provide basic services to citizens in slum areas, Ahram Online reports. The plaintiff is a resident of Helwan, south of Cairo, who had filed a suit after he was denied access to the state’s electricity grid for living in an “informal settlement.”

Egypt Politics + Economics

Cotton exports up by 63.9% y-o-y in September-November 2016

A breath of fresh air for Egyptian cotton: Cotton exports rose a sharp 63.9 percent between September and November of last year, according to CAPMAS numbers. “According to the statement, the rise can be attributed to leftover cotton stock from the previous year,” writes Ahram Online.

National Security

Roadside bomb kills five soldiers in North Sinai

Five soldiers were killed and two injured when a roadside bomb took out an armored vehicle in North Sinai, Reuters reported.


Egypt’s Youssef Ibrahim qualifies for the finals of squash Open d’Italia

Egypt’s Youssef Ibrahim qualified last night for the finals of the squash Open d’Italia 2017 after beating Briton Patrick Rooney. Ibrahim will face France’s Baptiste Masotti in the finals later today.

On Your Way Out

Motorcycles banned from north and central Sinai: Prime Minister Sherif Ismail has banned all motorbikes and their spare parts from North and Central Sinai for one year, Al Shorouk reports.

The markets yesterday

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EGP / USD CBE market average: Buy 16.0038 | Sell 16.1062
EGP / USD at CIB: Buy 15.9 | Sell 16
EGP / USD at NBE: Buy 16 | Sell 16.05

EGX30 (Thursday): 12,651.97 (+1.64%)
Turnover: EGP 1.013 bn (133% above the 90-day average)
EGX 30 year-to-date: +2.487%

THE MARKET ON THURSDAY: The EGX30 ended Thursday’s session up 1.6%. The top performing constituents were Arab Cotton Ginning, Global Telecom, and TMG Holding. Thursday’s worst performing stocks included Juhayna, GB Auto, and Elsewedy Electric. The market turnover was EGP 1.0 bn and regional investors were the sole net buyers.

Foreigners: Net short | EGP -30.8 mn
Regional: Net long | EGP +58.1 mn
Domestic: Net short | EGP -27.3 mn

Retail: 57.2% of total trades | 54.1% of buyers | 60.2% of sellers
Institutions: 42.8% of total trades | 45.9% of buyers | 39.8% of sellers

Foreign: 28.8% of total | 27.3% of buyers | 30.3% of sellers
Regional: 7.4% of total | 10.3% of buyers | 4.6% of sellers
Domestic: 63.8% of total | 62.4% of buyers | 65.1% of sellers


The EGP is on a roller-coaster, but is it sustainable?

The EGP’s current rally is attributable to a combination of internal and external factors. On a global scale, the initial rallying of the USD following US President Donald Trump’s election has since been reversed on the back of his inauguration and executive order on immigration. Internally, commercial banks’ foreign currency liquidity has witnessed a marked improvement since the EGP float in November, which, coupled with weaker local demand, contributed to halting the EGP depreciation. Despite certain factors that are expected to add downward pressure to the EGP over the short term, such as the Ramadan season, which typically witnesses higher import and consumption levels than the rest of the year, the disbursal of the second tranche of the IMF loan in the spring and the sustainability of the current high foreign demand of local treasuries should add upward pressure to the local currency. We maintain our position that the EGP will strengthen over the next couple of years. Tap here to read the full note.


WTI: USD 53.40 (+0.07%)
Brent: USD 55.81 (+0.29%)
Natural Gas (Nymex, futures prices) USD 2.83 MMBtu, (-0.70%, March 2017 contract)
Gold: USD 1,239.10 / troy ounce (-0.20%)

TASI: 7,131.27 (+0.81%) (YTD: -1.10%)
ADX: 4,643.21 (+1.01%) (YTD: +2.13%)
DFM: 3,650.76 (+0.16%) (YTD: +3.40%)
KSE Weighted Index: 428.76 (-0.04%) (YTD: +12.80%)
QE: 10,819.30 (+0.82%) (YTD: +3.67%)
MSM: 5,843.11 (+0.20%) (YTD: +1.04%)
BB: 1,323.71 (+0.16%) (YTD: +8.46%)

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20-21 February (Monday-Tuesday): Fulbright Student Alumni Regional Conference: Contemporary Health Issues, Conrad Hotel, Cairo.

20-22 February (Monday-Wednesday): 20th International Conference on Petroleum Mineral Resources and Development, Egyptian Petroleum Research Institute, Cairo.

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.

15 March (Wednesday): Arab Women Organization’s event: Investing in refugee women, UN General Assembly Building, New York City.

15-19 March (Sunday-Thursday): 2017 Automech Formula car expo, Cairo International Convention Center, Nasr City, Cairo.

18-19 March (Saturday-Sunday): Delegation of Japanese food industries companies visits Egypt.

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.

22-23 May (Monday-Tuesday): North Africa Mobile Network Optimisation Conference, Cairo.

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.

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