Monday, 27 February 2017

Want to help tourism, Boris? Restore flights to Sinai.


What We’re Tracking Today

Clifford Chance optimistic on Egyptian M&A in 2017. The multinational law firm says it “expects the consumer goods and retail sector to be particularly active given the demographics of the Egyptian economy. Other sectors will also benefit from private equity and strategic investors as the [EGP] trends towards a ‘new norm’ in FX markets.” The resurgent interest in emerging market and the EGP float mean that “the time is ripe for an uptick in Egyptian M&A… The FX see-saw is reaching a balance, giving greater confidence to buyers and sellers,” Clifford Chance Africa M&A partner Jason Mendens said. Several “critical players” have already approached the firm for opportunities in Egypt’s power sector, particularly in the “renewable space,” said Mohamed Hamra-Krouha, the firm’s Africa projects and finance partner.

Eye-opener of the morning: Does China have troops in Afghanistan? “China’s defence ministry on Thursday dismissed reports Chinese military vehicles were patrolling inside Afghanistan, saying the two countries were only carrying out counter-terrorism operations along their common border,” Reuters reports. The Financial Times, citing an Indian media report and another piece by a thinktank, is running with the story on its front page (digital) this morning, writing, “The motivations for China to deepen its involvement in Afghanistan are several. Beijing fears contagion from Islamic extremism, while Chinese companies also hold key mining and hydrocarbons concessions across Afghanistan.” Security nerds: Read this alongside the FT’s “Chinese private security goes global” and then the Wall Street Journal’s recent “Afghanistan struggles to access China’s New Silk Road,” which tells us that “Trains from China arrive full but go back empty amid fears that terrorists could profit.”

The 89th Oscars, hosted by late-night funnyman Jimmy Kimmel, kicked off a few hours ago at around 3:30 am CLT. By dispatch time, the Best Picture winner had yet to be announced, but notable winners include Mahershala Ali as Best Supporting Actor for his role in Moonlight and Viola Davis as Best Supporting Actress for her role in Fences. Head over to the New York Times for a liveblog of results (and red carpet looks, if that matters to you).

Hours before the Oscars, 61-year-old Bill Paxton — who starred in The Terminator, Aliens, Apollo 13, and Twister, among dozens of other films — passed away due to complications from heart surgery, according to The Guardian. Paxton is the only actor to have been “killed” by a Terminator, and Alien and a Predator.

What We’re Tracking This Week

It’s a busy week for: Finance Minister Amr El Garhy, who is due to brief the House of Representatives on all things fiscal and whose team is sorting the executive regulations for the value-added tax after receiving feedback on them from the State Council. The Tax Authority, which ultimately reports to El Garhy, is meeting this week with international oil companies to discuss the VAT status of suppliers to Big Oil. El Garhy was included on Saturday in a meeting with President Abdel Fattah El Sisi to discuss the situation in northern Sinai and what the government can do to help Coptic Christians fleeing Islamist terror attacks there, according to a statement from Ittihadiya.

MPs will also be busy this week with the State Contractors Act due to come up for a vote before the House as a whole and the Industry Committee set to resume discussions of a law that would offer tax incentives to domestic automobile manufacturers.

Merkel and El Sisi to inaugurate the new Siemens power plants this week: German Chancellor Angela Merkel and President Abdel Fattah El Sisi will jointly inaugurate the first phase of the Siemens power plants in Beni Suef, Burullus, and the new administrative capital at the end of this week, during Merkel’s two-day visit to Egypt starting this Thursday (2 March), Al Borsa says. Merkel will also meet Pope Tawadros II and Al Azhar’s Sheikh Ahmed El Tayeb.

The German Chancellor’s visit will be a very friendly one: Merkel sang Egypt’s praises in a recent TV interview (runtime 3:19), applauding the country’s “bold economic reform program” and saying it offered “an example to follow” for how a Muslim-majority country can tend to the needs of its Christian minority “who have complete freedom to practice their religious rituals and the government’s full support.” When asked, Merkel said that she does plan to broach the subject of civil society and the NGOs law, but that the visit has a much grander purpose and outlook that extends to the Middle East peace process and helping Egypt achieve stability in the region.

Sound smart: Beyond the standard talk of trade, terrorism and the perpetual canard that is Israeli-Palestinian peace, look for El Sisi and Merkel to talk about Libya (a key issue for Cairo). We’ll also be parsing statements for any sign that Egypt could get a Turkey-style “aid and preferential visa access program” in return for doing more to stem the flow of refugees to Europe. Merkel has been a leading advocate of such a program since last fall. (Background on the migrant pack is here.)

Enterprise+: Last Night’s Talk Shows

Foreign policy dominated the airwaves last night in the wake of visits from UK Foreign Secretary Boris Johnson and United States Central Command boss Gen. Joseph L. Votel.

But first, backlash against Tarek Amer’s Friday interview: MP Enas Abdel Halim requested a probe into CBE Governor Tarek Amer’s statement during a televised interview on Friday that his previous claim that the USD could fall to EGP 4 was meant as “a joke,” she tells Yahduth fi Masr’s Sherif Amer. Abdel Halim is claiming that Amer’s statement on Friday was the direct cause behind the rapid depreciation of the EGP on the parallel market, and resulted in a loss of trust in the CBE’s ability to manage Egypt’s economic recovery.

Amer (the talkshow host, not the CBE governor) interviewed Boris, who came armed with plenty of platitudes and little substance. On the issue of tourism, Johnson could only muster enough to say that the UK is working diligently with Egypt to make certain it’s safe to bring flights back to Sharm El Sheikh. No dates, or specific procedures were mentioned. He really laid it in thick, by talking about how he loved Sharm El Sheikh, and added that 200K UK tourists arrived in Egypt in 2016. We’d like to thank Mr. Johnson for the lovely remarks, but what we need is a crystal clear policy direction and timeline, not a Lonely Planet review.

On terrorism, Johnson relayed his government’s support to Egypt and stating that the UK government concurs with the El Sisi administration on its strategy to combat terrorism.

Meanwhile, CENTCOM Commander Joseph L. Votel made an appearance on Hona Al Asema,where recapped his discussions on expanding US military aid with President Abdel Fattah El Sisi and Defense Minister Sedki Sobhi (watch, runtime: 12:56). Votel had made an earlier appearance on Nile News where he said that the US has resumed providing Egypt with military aid that was suspended in 2013, and that bilateral military relations have returned to their levels prior to the Obama administration (watch, runtime 9:14).

Lamees Al Hadidi then went on to grumble about prices. Federation of Chambers of Commerce member Alaa Ezz says the VAT and rising tariffs are why prices aren’t coming down. White goods retailer Mahmoud Khattab said prices haven’t dropped because the fundamentals of the EGP’s appreciation remain in question. Meanwhile, Juhayna CEO Seif Thabet said that as long as the food industry imports 60% of its production inputs, prices won’t be coming down (watch, runtime: 25:06).

Kol Youm’s Amr Adib was flabbergasted that the parallel market is still a thing (watch, runtime: 8:15). Commenting on Secretary Johnson’s visit, Adib said the trip was the UK’s way of showing us it wants to turn over a new leaf after letting us down numerous times on tourism (watch, runtime: 1:04).

Speed Round

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House to vote on Investment Act by end of March: The House of Representatives’ Economic Committee expects to bring the Investment Act to a vote before the House as a whole by the end of March, committee chair Amr Ghallab tells Al Borsa. Investment and International Cooperation Minister Sahar Nasr reportedly promised to attend all of the committee’s sessions on the bill to ensure a smooth and speedy round of discussions, Ghallab adds. Nasr, who appeared before the committee on Sunday alongside GAFI chief Mohamed Khodeir, reassured representatives that the executive regulations to govern the law were “a few short weeks” away from being complete and would be ready in time for the vote, the ministry said in an emailed statement.

Finance Ministry won’t amend VAT act: The Finance Ministry will not be revising the law for the value-added tax and we can expect the executive regulations “within a week or two at most,” high-ranking officials tell Al Borsa. The ministry plans to study Maglis Al Dowla’s (State Council) proposed amendments to the executive regulations and “notify the authority with its thoughts on some of the remarks,” according to Abdel Moneim Mattar, the former head of the Tax Authority who is now (as special commissioner) El Garhy’s point man on implementation of the VAT. Maglis Al Dowla had suggested 30 amendments to the regulations on Saturday, including some that the domestic press suggested could require revisions to the VAT Act. Council officials argued that provisions in the draft VAT regulations have no foundation in the act, including: The repricing of contracts that are subject to the VAT, but which had been signed prior to its issuance; tax-free shopping for foreigners; and the automatic registration of companies in the VAT system.

Shell, BP, and Eni will be at the head of the queue for payments owed by the government, a source told Al Mal. CBE Governor Tarek Amer had said he is coordinating with EGPC on USD 1.5 bn payment in arrears owed to international oil companies this year in his interview with DMC’s Osama Kamal on Friday. The source added to Al Mal that the three IOCs at the head of the queue account for more than 60% of the total amounts owed by EGPC. The USD 1.5 bn will be made available to EGPC in instalments and will be contingent on stability in the exchange rate and there not being any “crises,” the story claims.

World Bank rejects non-profit watchdog’s criticism of its energy program in Egypt: The World Bank Group is rejecting concerns raised by non-profit watchdog Bank Information Centre (BIC) over the impact of its development programs in Egypt on greenhouse gas emissions and the transition towards cleaner energy. The World Bank insists its engagement in Egypt “is focused on eliminating extreme poverty and boosting shared prosperity in a sustainable manner.” It says its engagement in Egypt is focused on moving toward cleaner energy and reducing the energy intensity of Egypt’s GDP, and has “a large program of renewable energy reform, including policy support, and technical assistance.” The bank’s development policy financing reform program “supports the use of economically priced gas, which is the cheapest way Egypt can meet demand for electricity and has potential to substantially reduce GHG emissions. It does not promote the use of coal.” The World Bank says that by addressing energy supply issues in Egypt, it has the potential to dramatically improve Egypt’s fiscal situation and reduce greenhouse gas emission. BIC says its mission is to advocate “for the protection of rights, participation, transparency, and public accountability in the governance and operations of the World Bank Group and regional development banks.”

A day after Daba’a contracts announced, officials say we’re closer to getting flights back from Russia: Egyptian officials reportedly said on Sunday that we’re inching closer to meeting all of Russia’s airport security demands, the Associated Press reports. The officials announced that they had installed a number of new security measures requested by the Russians including 16 fingerprint security gates for employees at two of Cairo airport’s main terminals, bringing us that much closer to the resumption of direct flights from Russia to Egypt. What the AP doesn’t point out is that Saturday saw the official unveiling of the terms of the USD 29 bn Daba’a nuclear power plant, which will be paid through loans from Russia and see Russians come on to help manage the facility. Based on reports and not-so-subtle prodding from the Russian state press, it is becoming increasingly clear that Daba’a may be the most important “recommendation” the Ruskies have. Russia’s Deputy Prime Minister Dmitry Rogozin will reportedly be in Cairo this week with a delegation from the Russian Energy Ministry, while Russian ministers of foreign affairs and defense will also visit Egypt early in March for cooperation talks. We expect that we should hear about a return of flights not long after the announcement that the Daba’a contracts have been signed.

Food manufacturers eye export opportunities, invest in growth: Cheese maker Domty will be expanding its business in African and Russian markets in the upcoming period, IR head Ahmed El Homossany told Al Mal. El Homossany said the company will discuss the volume of its investments and the specific markets it will look to enter in its upcoming AGM. Obour Land is also planning to expand into new markets by increasing its proportion of exports to total says by 3-5%, particularly banking on new products that will be issued in 2Q2018. Al Mal reports that the company is also self-financing an expansion to install juice production and packaging lines. Separately, confectioner El Rashidy El Asly will inaugurate an EGP 200 mn production plant in Sixth of October in 2018, CEO Mohamed Kandeel told Al Mal. The company will use the new plant to expand its product range. El Rashidy El Asly had hinted last May that it was considering an IPO this year. Also, fresh food producer Daltex said it plans to invest EGP 130 mn this year. EGP 30 mn will be allocated to refurbish and expand production lines, according to Al Mal, and EGP 100 mn will go towards land reclamation efforts.

Government looking to resurrect USD 5 bn, 3 GW solar power project signed duringEEDC? The government seems to be thinking about resurrecting a two-year-old solar power agreement with SkyPower and International Gulf Development to develop a 3 GW solar PV project at a cost of USD 5 bn. The cabinet economic group reviewed yesterday a report on the project, according to a cabinet statement. An agreement on the so-called “Green Giant Power” project was originally signed during the March 2015 Egypt Economic Development Conference, and phase one of the project was expected to reach commercial operation by the end of 2015, with additional generation capacity to come on stream over the following four years, according to a statement from SkyPower following the EEDC.

Cabinet economic group talks strategic crops: The cabinet economic group also discussed yesterday how to expand the cultivation of strategic crops, particularly corn, in hopes of expanding domestic manufacturing of cooking oil. In addition to corn, Agriculture Minister Abdel Moneim El Banna said that the ministry is planning on making more land available to plant rice, cotton and sugar beets.

Supply Ministry planning to raise ration card allowance to up to EGP 25 per person per month: Supply Minister Ali El Moselhy is planning to approach Prime Minister Sherif Ismail with a proposal to raise the monthly allowance for ration card holders to EGP 24-25 from a current EGP 21 once studies are complete at the end of March, ministry officials tell Al Shorouk. El Moselhy will reportedly not be asking the Finance Ministry for more money in the budget to fund the increase and has already tasked a committee with sorting out how to finance the expansion of the benefit program, the newspaper adds. The piece suggests that some of the funding will come from acknowledging on the books that the EGP’s strengthening against the USD means sugar and oil will now cost the state less.

El Moselhy also appears to want to scrap the bread points system, or at least amend it, as it has been costing the state an additional EGP 500 mn a month. He bluntly notes that the system is self-defeating, as any person willing to substitute bread points for other goods does not need subsidized bread. We’re giving El Moselhy full marks for the bread point initiative, but are still concerned about his remarks last week backing away from a full transition to a cash subsidy to qualified beneficiaries in place of today’s commodity subsidy program.

Beltone stock manipulation saga continues. The Egyptian Financial Supervisory Authority (EFSA) has submitted documents to the Administrative Court accusing some shareholders in Beltone Financial of manipulating stocks, Al Shorouk reports. Media reports don’t make this clear, but no allegations of wrongdoing have been lodged against Beltone or any company executive. The case dates back to 9 February of last year, when investors allegedly bid for large blocks of Beltone shares before canceling minutes later, prompting Beltone’s share price to pop. The EGX repeatedly reversed trades of Beltone’s shares and Beltone retaliated by suing the heads of the EGX and EFSA for “deliberately harming” Beltone Financial through repeated cancellation of its trades. In May, EFSA sent the Prosecutor General’s office its case file on the traders accused of market manipulation, with EFSA chief Sherif Samy saying at the time Beltone is not suspected of any wrongdoing.

We’re not buying this report until we see data on volumes, but Al Borsa is reporting that the USD hit EGP 18.50 on the parallel market on Saturday after changing hands at EGP 17.00 on Thursday. One trader speaking to the newspaper said that the strengthening greenback came as a result of increased demand that banks could not meet, with the majority of USD buyers being importers who are doing more business in the period between Chinese New Year and Ramadan, which begins in late May this year. The greenback was also bid-up by buyers looking to snap up USD after the recent strengthening of the EGP in anticipation that Egypt’s currency may weaken again, the story suggests. The average bank sell rate yesterday was 15.8609, according to the Central Bank of Egypt. We’re taking suggestions of a resurgent black market for USD with not a pinch, but heaping tablespoons of salt.

**Earnings watch: The National Bank of Egypt (NBE) reported a 145% year-on-year increase in net profits to EGP 12.5 bn in FY2016, Al Borsa reports.

Public service announcement for gear geeks: iSheep we may be, but our first real smartphone love was a BlackBerry (sorry, Nokia Communicator, you don’t make the cut). Enter the BlackBerry KEYone (dumb capitals and all), which was officially unveiled yesterday at MWC in Barcelona by the company that’s licensed the name from the once-iconic Canadian outfit. Android Central has the rundown, or you can hop over to this hands-on video (watch, runtime: 4:46). Oh, and for Samsung fans: The Korean company (whose boss recently visited the slam after being picked up on corruption charges) is set to unveil its S8 handset on 29 March in New York.


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The Macro Picture

Middle East and North African (MENA) governments are likely to issue less commercial debt this year as budget deficits improve after record issuances last year, Mahmoud Kassem writes for The National, citing an S&P Global Ratings report. The 13 MENA governments covered by S&P are set to issue USD 136 bn in debt, 20% less y-o-y in sovereign issues. S&P expects Saudi Arabia, Lebanon, and Egypt to issue 52% of total commercial government debt in the region this year. Kassem writes that “the decline in borrowing also comes as oil prices rebound following a move by the world’s main oil producers in November to limit supply to the market.”

Fitch Group’s BMI Research sees further political instability in the cards for the MENA countries if they do not invest in labor-intensive infrastructure projects or make necessary reforms to employment law — measures it deems necessary to secure employment over the coming 10 years for a large generation of youth now entering the workforce. The flipside to this is that the region may be entering the cusp of a “demographic dividend” if its countries succeed, with the benefit of significantly boosting economic productivity. BMI sees Egypt and Iraq as among the MENA countries most at risk of failing to absorb the mass of youth labor which will hit the job market in the coming decade.

Image of the Day

UK Ambassador John Casson tweeted a photo of UK Foreign Secretary Boris Johnson’s visit to the Pyramids. “UK Foreign Secretary visits Pyramids to boost tourism,” read the Arabic tweet. “UK tourist numbers are the second highest among EU countries, and it plans to become first,” the tweet continued. We would have suggested that adding the words “I’m restoring flights to Sharm” might help a little toward that goal.

Egypt in the News

Topping coverage of Egypt in the foreign press this morning for the second day is the displacement of North Sinai’s Christians, which the Associated Press and Wall Street Journal note continued for a fourth straight day. The displacement has reached an “unprecedented scale,” they said. Reuters’ coverage of a motion by a member of the House of Representatives to amend the constitution to extend President Abdel Fattah El Sisi’s term in office to six years instead of four came in at a close second in terms of pickup.

Despite all the positive press we’ve been getting over the past month, are investors still skittish about returning to Egypt? The AFP tries its very best to make that case, but ultimately can’t deliver. “Egypt’s economic recovery will come with a lag, until the government follows through on reform policies with a successful implementation,” said CI Capital’s Hany Farahat. Scandalous, right? Some investors are cautiously optimistic, including Schindler Egypt’s CFO Walid Allam, who believes a recovery will begin in 2018. But others feel that more needs to be done, including Esraa Ahmed, an economist with Mubasher, who says potential investors are keen to see additional structural reforms before committing to long-term investments.

The NSW Crime Commission has frozen the assets of prominent Egypt-born women’s refugee advocate Eman Sharobeem, following an investigation into allegations of “serious crime related activity” and her “unexplained wealth,” according to the Sydney Morning Herald. Sharobeem was chief executive of the Immigrant Women’s Health Service for 11 years until 2015.

Other coverage worth noting in brief this morning:

  • Love from our eastern neighbors: Cairo offers grandeur on an epic scale, from pyramids to traffic jams, writes Seth J. Frantzman for the Jerusalem Post reviewing Cairo’s tourist attractions. “Come here a year from now and you’ll see changes … Security is much better, you feel it everywhere,” Reverend Andrea Zaki, the head of the Protestant churches in Egypt, tells Frantzman.
  • Some random Huffpost contributor looks at Putin’s power play in the Middle East and how that could ultimately lead to a “Pax Russica” in the region. A key component of this strategy is lending Egyptian President Abdel Fattah El Sisi his “unconditional support.”
  • Egyptian journalists are gearing up for “divisive” syndicate elections, Ramadan Al Sherbini writes for Gulf News.
  • US authorities “came close” to deporting Egyptian-born French Jewish Holocaust-era scholar Henry Rousso, Jerusalem Post reports. “It seems like there’s much more rigidity and rigor in enforcing these immigration requirements and the technicalities of every visa,” a law professor says. JPost adds it is not clear what led to Rousso’s detention and near-deportation.

On Deadline

Why build a nuclear power plant in Daba’a when we have cheaper renewable alternativesat our disposal? In a piece penned for Al Masry Al Youm, Seliman Gouda wonders why the government is so determined to roll ahead with a project that appears to have such limited rewards in comparison to the cost. He argues that the power plant, which will add a further USD 25 bn to the country’s mountain of debt, could easily be replaced by a wind- or solar-based project with the same output “for a quarter of the price, or maybe even less.”

Worth Watching

Young Egyptians fighting for a right to a space for themselves: Director Selim El Sadek created a short film “about a rising generation of young Egyptians expressing themselves through rap, dance and unorthodox fashion — making their city a stage for creativity in a time of conflict and political imbalance.” He tells NOWNESS, which describes itself as “a movement for creative excellence in storytelling celebrating the extraordinary of every day,” that “the past six years have been a whirlwind for our generation. At a young age, we’ve experienced anger, victory, hope, defeat and unimaginable grief. This rapidly changing mixture of feelings has caused confusion but helped mould our identities into what they are today… I wanted to film those who are still fighting amidst repression for their right to a space for themselves” (runtime 04:40). H/t Cairobserver

Diplomacy + Foreign Trade

Welcome back, Bright Star? United States Central Command (CENTCOM) Commander Joseph L. Votel was in Cairo yesterday “for meetings with Egyptian senior leaders,” according to a US Embassy statement. Votel met with President Abdel Fattah El Sisi and Defense Minister Sedki Sobhi to discuss strengthening “partnership in the fight against terrorism and in promoting stability throughout the Middle East region.” Ittihadiya issued a statement saying El Sisi emphasized the strategic importance of Egyptian-US relations, adding that “that Egypt has spared no efforts to fight the spread of terrorism and extremist thought, particularly over the past three years.” The New York Times has picked up the story, suggesting that the meeting could see the return of the joint Bright Star military exercises, which then-US President Barack Obama axed in 2013 to protest Raba’a. The Times quotes Votel as telling Egyptian TV that, “It is my goal to get that exercise back on track and try to re-establish that as another key part of our military relationship.”

South Sudan’s government has denied claims that Egypt supplied its military with arms and ammunition, according to Radio Tamazuj. Sudan’s President Omar Al Bashir had made the claims last week that Egypt provided South Sudan with weapons. Mawien Makol, Spokesman of South Sudan’s Ministry of Foreign Affairs, said “the Republic of South Sudan is disturbed by this unfortunate, unfound (sic) and baseless statement … The ministry, therefore, calls on the leadership of the sisterly country, Sudan, not to forget its responsibility to work with South Sudan in the spirit of the cooperation agreement.”

Hamas has condemned Egypt for destroying tunnels with Gaza after three people died after inhaling toxic gas in a smuggling tunnel beneath the border with Gaza, according to Arutz Sheva. The Palestinian Authority’s Interior Ministry says “the three were working to repair the tunnel a day after the Egyptian military blew it up,” according to The Associated Press.


The second phase of Leviathan’s development will supply Egypt, Turkey

The first of the Leviathan gas field development project will supply the Israeli domestic market, the Palestinian authority, and Jordan, “while the second phase is planned to supply Turkey and Egypt,” Ofer Oberlander, Gas Pipeline project director at Delek, said, according to Turkey’s Daily Sabah. “We see Turkey not just as a gas market but also as a big economy with great people having regional significance in the area. We see [that] Egypt’s domestic market, which has abundant natural gas and lack of supply to the, is growing rapidly. We also see Egyptian energy facilities with established infrastructure and no construction risk," Oberlander says.

3 companies make the cut for FiT phase one, remaining 6 pushed to phase two

Three companies out of nine made the cut for phase one of the feed-in tariff (FiT) program, while the remaining six will be pushed to the second phase of the program, Egyptian Electricity Holding Company chief Gaber El Dessouky tells Al Borsa.

Basic Materials + Commodities

Grain traders to increase investment in Alexandria after nixing logistics project in Damietta

Grain traders Cargill, Louis Dreyfus, and ADM Medsofts are all planning on increasing their investments in Alexandria ports of Abu Qir and Dekheila, Al Mal reported. The expansions come after the Supply Ministry canceled a logistics area project in Damietta. The companies are set to increase their storage capacities, install new cranes, and automate processes. Al Mal says Cargill is planning to inject USD 10 mn in its facilities at the Dekheila Port, contingent on the revoking of articles within shipping law number 800/2016. The law’s article 41 allows the state to confiscate all construction built on ports by shipping companies after seven years, a provision that was described by the Alexandria Chamber of Shipping in January as akin to going back to “the era of nationalization.”

House Industry Committee forces PMI to repay Eastern Company’s arrears in USD

Philip Morris International (PMI) will be forced to pay the Eastern Company for tobacco seven months of arrears worth USD 78.2 mn in USD, rather than in EGP, the House Industry Committee decided on Sunday, according to an unnamed parliamentary source. PMI had reportedly rejected a proposal from Eastern Company to pay 60% of the arrears in USD and the remaining 40% in EGP, and threatened to withdraw from Egypt unless it was allowed to pay the full amount in EGP, Al Mal reports. Eastern Company subsequently waived its right to collect the payments in USD, but the committee decided that PMI will be paying Eastern Company the overdue payments in USD, and will then be allowed to pay the Egyptian company in EGP for one year until FX is more readily available.

Real Estate + Housing

PHD looking to borrow EGP 852 mn from Egyptian banks

Palm Hills Developments (PHD) says it is looking to borrow EGP 852 mn to finance a number of projects, according to a regulatory disclosure. PHD denied it has already reached a final loan agreement with National Bank of Egypt and National Bank of Abu Dhabi-Egypt for the funding and that it is still in talks with a number of banks to find the most suitable financing opportunity.

Le Meridien Heliopolis to be sold off in an auction on 30 March

State-owned Le Meridien Heliopolis hotel will be sold off in a sealed-bid auction on 30 March, El Wataneya Company for Housing & Development decided, Al Borsa reports.

Automotive + Transportation

Automech Formula postponed to September due to industry slump

The organizers of the 2017 Automech Formula decided to postpone the car expo from March to September, after it saw limited interest in participation from local industry players, who backed out due to an industry slump, Al Borsa reports.

Banking + Finance

T-bill yields continue to rise

Average yields on Egypt’s three-month and nine-month t-bills rose to an average of 19.09% and 18.49%, respectively, on Sunday, according to data from the CBE and Finance Ministry. Yields on nine-month bills also increased to 19.74% from 18.77%.

EFSA’s unified code for over-the-counter transactions comes into effect

The Egyptian Financial Supervisory Authority’s new unified code for the OTC market came into effect on Sunday after being published in the official gazette, according to Al Shorouk.

Egypt Politics + Economics

CBE to repay Libyan deposit in eight instalments

The central bank is repaying a USD 2 bn Libyan deposit over eight equal instalments ending in April 2018, Al Mal reported. The central bank has already repaid USD 750 mn over three instalments since mid-2016, and will pay a fourth in April. Libya had made a USD 2 bn interest-free deposit at the central bank in 2013.

House votes to drop Al Sadat’s membership

The House of Representatives’ Constitutional and Legislative Affairs Committee voted in favor of stripping MP Mohamed Anwar Al Sadat of his membership, based on recommendations from the parliament’s Ethics Committee, MP Mostafa Bakry said. Al Sadat was faced with charges he leaked a draft of the NGO bill to foreign embassies, communicated with the European Union without the parliament’s approval, and forged signatures on proposals he presented to the House — all of which he has denied, according to Al Mal. Al Sadat tells Al Shorouk that, while he respects the committee’s decision, he believes he was the subject of a witch hunt within the House. He had previously said that he would file a complaint with the Prosecutor General’s office if the House Ethics Committee were to take disciplinary action against him.

On Your Way Out

SAT examinations internationally to become more “secure”: The number of SAT college-entrance exams taken outside the United States will be reduced from six to four, the New York-based College Board said, Reuters reported. This is one of several measures taken to tighten the exam’s security, including “increasing the auditing of test centres” and “providing law enforcement and other government agencies with the names of test prep companies and individuals suspected of stealing test materials.” But the measures fell short of including a solution to the leakage that results from reusing tests taken in the United States. Tests had been leaked in 2013 in Egypt, South Korea, and Saudi Arabia.

The Egyptian Council of State (Maglis Al Dowla) issued a recommendation to grant imprisoned businessman Hisham Talaat Mostafa medical release, after Mostafa’s requests had previously been denied, Youm7 reports.

Qalaa Holdings reportedly has global bidders for its Rift Valley Railways (RVR) asset in Kenya and Uganda, including “America’s Emerging Capital Markets and South Africa’s giant logistics firm Transnet,” Kenya’s The Standard reports, but could face headwinds as the Kenyan government has made it clear that it will not compensate RVR for losing business to a new standard gauge rail system.

The markets yesterday

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EGP / USD CBE market average: Buy 15.7579 | Sell 15.8609
EGP / USD at CIB: Buy 15.7 | Sell 15.8
EGP / USD at NBE: Buy 15.7 | Sell 15.75

EGX30 (Sunday): 12,270 (+0.2%)
Turnover: EGP 613.2 mn (41% above the 90-day average)
EGX 30 year-to-date: -0.6%

THE MARKET ON SUNDAY: The EGX30 ended Sunday’s session little changed after choppy trading; up 0.2%. CIB, the index heaviest constituent fell 0.8%. The EGX30’s top performing constituents were: Egyptian Iron and Steel up 9.4%, Egyptian Resorts up 2.8%, and Credit Agricole up 2.3%. Yesterday’s worst performing stocks included Arab Cotton Ginning down 8.0%, Domty down 3.7%, and ACC down 3.6%. The market turnover was EGP 613.2 mn, which is the lowest turnover since flotation of pound, and regional investors were the sole net sellers.

Foreigners: Net Long | EGP + 1.4 mn
Regional: Net Short | EGP – 25.3 mn
Domestic: Net Long | EGP + 23.9 mn

Retail: 79.4% of total trades | 79.6% of buyers | 79.2% of sellers
Institutions: 20.6% of total trades | 20.4% of buyers | 20.8% of sellers

Foreign: 8.7% of total | 8.8% of buyers | 8.6% of sellers
Regional: 6.6% of total | 4.6% of buyers | 8.7% of sellers
Domestic: 84.7% of total | 86.6% of buyers | 82.7% of sellers

WTI: USD 54.01 (+0.04%)
Brent: USD 55.99 (0.00%)
Natural Gas (Nymex, futures prices) USD 2.63 MMBtu, (+0.38%, April 2017 contract)
Gold: USD 1,256.80 / troy ounce (-0.12%)

TASI: 7,049.5 (0.0%) (YTD: -2.2%)
ADX: 4,656.7 (+0.1%) (YTD: +2.4%)
DFM: 3,642.5 (+0.2%) (YTD: +3.2%)
KSE Weighted Index: 427.1 (0.0%) (YTD: 12.4%)
QE: 10,937.1 (+0.1%) (YTD: +4.8%)
MSM: 5,833.6 (-0.3%) (YTD: +0.9%)
BB: 1,350.1 (+0.1%) (YTD: +10.6%)

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23 February – 16 March (Thursday-Thursday): ‘Glimpses of Upper Egypt’ exhibition at Accademia d’Egitto in Rome.

02-03 March (Thursday-Friday): German Chancellor Angela Merkel’s visit to Egypt.

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.

14-15 March (Tuesday-Wednesday): The third Builders of Egypt conference, Ritz Carlton Hotel, 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.

29-31 March (Wednesday-Friday): Balanced Development of Siwa Oasis International Tourism Conference, Siwa Oasis.

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.

08-09 May (Monday-Tuesday): Third Egypt CSR Forum, Intercontinental Citystars Hotel, Cairo.

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.

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.

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