Tuesday, 7 March 2017

Egypt tapped as top MENA market performer in 2017

TL;DR

What We’re Tracking Today

Greetings from Dubai, where if you’re not attending the EFG Hermes One on One, we’ve got you covered this morning.

A poll of nearly 700 institutional investors and top leading companies in MENA and frontier markets tipped Egypt as the market that will “perform best in MENA and frontier markets in 2017 in USD terms.” Participants in the EFG Hermes Consensus poll, which included more than 500 fund managers and institutional investors controlling AUM of more than 10 tn, were voting live in Dubai yesterday morning at the thirteenth EFG Hermes One on One, the largest MENA and frontier-dedicated investor event globally. The One on One continues today and tomorrow.

What other markets are in favor? 46% of respondents tipped Egypt as the best likely performer in MENA and FM this year, followed by the UAE at 16% and Pakistan at 13%. Although emerging markets outperformed MENA markets in 2016, 60% of respondents said they expect MENA to outperform global emerging market this year. Some 32% of respondents think healthcare stocks will perform best this year, followed by banks (27%) and consumer plays (22%).

If you invest or do business in MENA or frontier markets, you’ll want to have a look at the chart-heavy survey results (pdf) and the accompanying note from the EFG Hermes Research team. Questions cover everything from key risk factors to views on oil prices, expectations of key markets, and some inside baseball stuff near and dear to our hearts— including whether passive funds will continue to effectively take AUM from actively managed funds and whether respondents are willing to pay for research as the industry braces for MiFID II.

Also at the One on One yesterday: Investment and International Cooperation Minister Sahar Nasr and Emaar Properties boss (and prolific MENA and EM investor) Mohamed Alabbar took to the stage to talk about change. We’ll have full coverage of their remarks later this week.

It was a big day for: EFG Hermes… Aside from this year’s gathering being the largest One on One yet, it marked the first conference where non-GCC frontier companies turned out in force. EFG Hermes Group CEO Karim Awad told attendees yesterday that, “Mirroring our geographical expansion ambitions, this year our flagship One on One conference sees a marked increase in market representation with companies from 19 countries spanning the UAE, Egypt, Saudi Arabia, Pakistan and Kenya, among many others.” Half of the almost two dozen participating FM companies are from Pakistan, which will be upgraded to MSCI Emerging Market status in May. Pakistani companies attending this week are expected to account for c.44% of the MSCI Pakistan Index when it launches. That comes just ahead of the expected closure of EFG Hermes acquisition of Pakistan’s IFSL.

…marking its transformation into the premier frontier markets finance house, structured along three business lines: The investment bank; a non-bank financing arm that includes leasing and microfinance (and, according to Awad, “soon consumer finance in Egypt); and a “merchant bank that manages our liquid balance sheet to enhance the Group’s future growth and return on equity,” Awad noted.

EFG Hermes also launched small and mid-cap coverage of some of the best stocks which it feels has gone unnoticed for too long, bringing their total coverage to 177 companies in the region.

It was also a big day for: Mohamed Ebeid and Karim Moussa, longstanding friends of Enterprise. EFG Hermes Group Chief Executive Officer Karim Awad noted that both men have been named co-CEOs of the investment bank at EFG Hermes, with Ebeid (the longtime co-head of brokerage) heading up the sell side, including brokerage, investment banking and research. Moussa, until his appointment the head of private equity at EFG, will be Ebeid’s counterpart on the buy side, building a new platform based on the firm’s private equity and asset management divisions. Mohamed El Wakeel, meanwhile, will head all back-office operations as chief operating officer, Awad noted in remarks yesterday, and Ahmed Waly becomes the sole head of brokerage.

Separately, Moussa announced that EFG Hermes’ renewable energy platform Vortex plans to close its GBP 470 mn acquisition of 24 solar parks from TerraForm power in May or June.

Away from Dubai, Trump’s travel ban lite: US President Donald Trump is reissuing his travel ban executive order with “significant concessions” from his prior directive, Politico writes. The new directive exempts existing visa holders from travel limits and removes Iraq from the original list of barred countries. “The new order will put a 90-day hold on issuance of visas to citizens of six countries: Iran, Libya, Somalia, Sudan, Syria and Yemen. It also stops refugee admissions worldwide for 120 days.” The rollout of this directive could be less chaotic than its predecessor’s as it includes a 10-day delay to allow coordination before the measure kicks in.

On The Horizon

The House of Representatives’ Housing Committee will be voting on the State Contractors Act in a plenary session next Monday, after giving a preliminary nod to the bill on Monday, Al Mal reports. The legislation will compensate suppliers and contractors for FX losses incurred after the EGP float and has been in the works since December.

On the legislative agenda this month is also the Natural Gas Act, which will be voted on by the House general assembly at the end of March.

A World Bank delegation is due in town before mid-March to evaluate the economic reform. World Bank Country Director for Egypt, Yemen and Djibouti Asad Alam had good things to say on that front, stating that the reform agenda were doing wonders as far as attracting foreign investment and bolstering exports, Al Shorouk reports.

Enterprise+: Last Night’s Talk Shows

CI Capital’s IPO, which was slated for 2017, might be postponed to 1Q18, CEO Mahmoud Attallah tells Hona Al Asema’s Lamees Al Hadidi. Speaking on the sale of CI Capital, Attallah said that the after the Egyptian Financial Supervisory Authority (EFSA) approved requests from 12 out of 15 interested investors, with the remaining three investors having been denied approval for incomplete paperwork (watch, runtime 8:49).

Lamees then spoke to Beltone Financial’s Head of research Hany Genena about the depreciation of the EGP this week. He explained that this was due to a spike in demand for USD to import stocks for Ramadan. He adds another explanations, stating that elections in Europe have strengthened the USD. Genena added that the EGP’s depreciation is not a bad thing, encouraging importers to move into industry and benefit from the competitive value of exports.

El Hadidy then moved on to the news about bank’s covering banks’ SAR needs for the umrah season (more on that in Banking + Finance). She spoke to Emad Samy, the head of the religious tourism department at the Cairo Chambers of Commerce about the agreement between the National Bank of Egypt, Banque Misr, and Banque du Caire to supply the SAR 700 mn needed over the coming three months. He counters Lamees’ point that the move would add pressure to the currency market by stating that If the banks don’t do it, companies would have to rely on exchange bureaus, or worse, the black market (watch, runtime 41:39).

Banque Misr Chairman Mohamed El Etreby concurred, warning of the dire consequences if the parallel market should ever see a resurgence (watch, runtime 5:33).

Kol Youm’s Amr Adib spoke to Investment and International Cooperation Minister Sahar Nasr, who gave a keynote speech at the EFG Hermes’ One on One Conference in Dubai. “The main complaint I heard from investors was regarding bureaucracy,” Nasr said, adding that she was working towards cutting all the red tape and has just signed agreements last Sunday to that end, one of which allows new companies to register digitally. Nasr also said that businessman Mohamed Alabbar promised new investments in Egypt (watch, runtime 9:14).

Adib also spoke to MP and House Economic Committee member Solaf Darwish about the extensive size of Ramadan-related imports, like lanterns and nuts, and the unnecessary FX spent on these products that could easily be sourced locally. Darwish said she filed an inquiry to discuss the matter with Supply Minister Ali El Moselhy (watch, runtime 3:29).

Speed Round

Speed Round is presented in association with

The Ministerial Committee for Settlement of Investment Disputes is finalizing a draft settlement agreement with Germany’s Utsch AG over its international arbitration case filed against Egypt, Committee Chairman Deputy Justice Minister for Arbitration and International Disputes Moustafa El Bahabety told Enterprise exclusively.

The background: The case dates back to what was known as the “license plates” case in which former Prime Minister Ahmed Nazif, former Interior Minister Habib El Adly, and former Finance Minister Youssef Boutros Ghali were charged with corruption charges related to the 2008 purchase of car license plates from Utsch. Nazif and El Adly were cleared of the charges in 2015. The court in 2011 had also initially convicted Erich Utsch AG’s Chairman and CEO, Helmut Jungbluth, with the ministers, sending him to one year in prison in absentia. Having been sentenced in absentia, Jungbluth could not appeal the decision as he was not physically present in Egypt. The company responded and its subsidiaries Utsch M.O.V.E.R.S. International and Erich Utsch, as well as Jungbluth himself, filed an international arbitration case against Egypt seeking compensation for damages in ICSID Case No. ARB/13/37.

The good news: After the parties agreed to suspend case proceedings in July 2016, El Bahabety tells us an agreement has been reached and a settlement between Egypt, Utsch, and Jungbluth is currently being drafted and will be signed soon. The agreement was possible following a 2015 amendment to article 18-B of the criminal procedures law that allowed for lawyers to represent clients who were convicted in absentia in felonies and file to reinstate proceedings, which resulted in Jungbluth’s acquittal.

…Separately, sources told Al Mal that the office of President Abdel Fattah El Sisi is getting involved to help resolve disputes surrounding Orascom Housing Communities (OHC)’s Haram City affordable housing project. The project came to a halt in 2011, but Ittihadiya has reportedly tasked the Ministerial Committee for Settlement of Investment Disputes to resolve the disputes with international partners in the project. El Bahabety could not confirm Al Mal’s assertion of Ittihadiya’s involvement, but told us talks with OHC are still in preliminary stages and all parties are considering means to settle the dispute. OHC says the state’s New Urban Communities Authority (NUCA) was contracted to provide it with 2,000 feddans for the project, but ended providing 620 feddans only.

Expenditures on the FY2017-18 budget may surpass EGP 1 tn for the first time, Al Ahram reports, citing unnamed Finance Ministry sources. According to Deputy Finance Minister Mohamed Maait, the increase in the budget is due in large part to fulfilling the constitutional requirement on health and education spending. The EGP float also drove up the cost of imports and subsidies, particularly as global oil prices have increased since last year. Expenditures on the FY 2016-17 budget had reached EGP 975 bn. The budget should be ready at the end of this week and the Ismail government is expected to review the draft in two weeks’ time before handing it over to the House of Representatives by the end of March. Next fiscal year’s budget anticipates GDP growth will reach around 5%, and a budget deficit of up to 9.5%.

Emirates NBD Global Chief Economist and Head of Research Tim Fox follows up on the PMI results by saying Egypt is starting to see the benefits of the “bold step” of devaluation in terms of improved confidence, inflows into the country, and export orders looking “pretty firm.” Fox tells Bloomberg TV the EGP will consolidate over the course of the year. Growth will naturally start to recover and will be buoyed by a healthier export environment, but it will be a slow process. There will not be an immediate turnaround on the employment front, he cautions, “the employment picture will change with quite a significant lag when you start to see a more persistent trend of improvement in activity … but it will take place over time as long as policies are maintained that promote stability” (05:33).

Meanwhile, the EGP weakened further yesterday as demand for imports ahead of Ramadan picked up, Reuters reports. Banks were selling USD for EGP 16.85-16.9 per USD 1, weaker than the rates of EGP 16.1-16.2 quoted last week. "Now is the time for importers to make the orders for Ramadan so demand has risen over the past two weeks," one banker told Reuters, adding that demand for USD began piling up again at banks.

The Central Bank of Egypt announced that preliminary data shows remittances of Egyptians abroad having increased by 23% y-o-y in January to USD 1.6 bn, according to an emailed statement. The CBE says the remittances in January 2016, prior to the flotation of the EGP, were USD 1.6 bn and notes that remittances in the period between November 2016 to January 2017 have seen a 19.7% y-o-y increase and have reached a total of about USD 5 bn.

The Consumer Protection Act will enact more stringent penalties for hoarding and price gouging, warned Prime Minister Sherif Ismail. He added that further restrictions are also in place against hoarding commodities without elaborating further on the details, AMAY reports. The move is part of a series of amendments to the legislation by the government to guard against inflation, which also include making manufacturers print manufacturing costs on their products to prevent merchants from over-inflating prices. In the meantime, the government to continues to reassure the private sector that price controls are a thing of the past.

Saudi conglomerate Al Rashed did not exit its investments in Egypt, as was reported incorrectly in some media outlets yesterday. The company just restructured its EGP 6.1 bn in holdings in 13 Egyptian companies to be under its subsidiary RIMCO EGT, as Director Karim Radwan explained to Al Borsa. Radwan says the Al Rashed plans to increase its investments in Egypt. RIMCO EGT took over Al Rashed’s holdings in companies including CIB, Juhayna, SODIC, Talaat Moustafa Group and EFG Hermes, among others.

MOVES- Yasser Elnaggar was appointed Chairman of the Egyptian Petrochemicals Holding Company (ECHEM), Al Mal reported. Elnaggar was Deputy Chief of Mission and Minister Plenipotentiary at the Egyptian embassy in Washington, DC. He was also a board member of ECHEM.

MOVES- Orascom Development Holding appointed Ashraf Nessim as Chief Financial Officer and an Executive Management member after having already served in this function on an ad interim basis since May 2016. The company also appointed Nermine Faltas, Group Chief Human Resources & Organization Development Officer, and Tarek Gadallah, Group General Counsel as members of the Executive Management.

Peugeot-Citroen has reached an agreement with General Motors to buy its European unit, including the Vauxhall and Opel operations, BBC news reports. PSA Group, the owner of Peugeot-Citroen, would, after the agreement, become Europe’s second largest carmaker, behind Volkswagen but overtaking Renault-Nissan. The transaction is valued at EUR 2.2 bn, according to Bloomberg, and PSA will pay EUR 1.3 bn for “Ruesselsheim, Germany-based Opel and its U.K. nameplate Vauxhall, with the rest for the financing unit, which is being evenly split with BNP Paribas SA,” adding that “the combination of the two automakers is expected to generate annual savings of EUR 1.7 bn euros by 2026, through combining development, sharing investment in factories and purchasing. Implementing the savings measures will cost about EUR 1.6 bn.”

The move will have no bearing on Mansour Group’s status as distributor for Opel in Egypt, a top General Motors Egypt official tells Al Mal.

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Spotlight

Spotlight on Egypt as the belle of the ball in international diplomacy

Egypt has found itself being courted by numerous international powers, all with varying agendas that see the country as crucial to implementing their goals in the Middle East. This appears to be giving Egypt significant leverage on the international arena, allowing it to assert its policies and vindicating President Abdel Fattah El Sisi’ multi-polar foreign policy doctrine.

Over in Brussels — where the endgame for the EU is stemming the flow of illegal migrants from North Africa — Egypt was promised further support through development programs by the European Commissioner for Migration, Home Affairs and Citizenship Dimitris Avramopoulos who met with Foreign Minister Sameh Shoukry. Shoukry reasserted Egypt;s position that it will not hold detention camps for migrants and refugees, Ahram Gate reported. The meeting, which is part of a series of talks which could see Egypt reach and Turkey-style migration agreement with the EU, follows a state visit by German Chancellor Angela Merkel last weekend, where she signed for USD 500 mn in new aid for Egypt and promised El Sisi additional aid to help thwart migration.

Egyptians were spared entry into Trump’s Muslim ban a second time around. President Donald Trump has not made his admiration of President Abdel Fattah El Sisi a secret, as some of his top advisers advocate for forming a regional alliance with Egypt at the center, despite some in the US press decrying that this comes at the expense of human rights. It appears we are heading that way following United States Central Command Commander General Joseph L. Votel’s visit last month where he called for renewing the Bright Star joint military exercises. the Jerusalem Post’s Joel Rosenberg makes the argument for why Trump must do more to court President Abdel Fattah El Sisi, which he describes as having leading a reformation of Islam in the region. Rosenberg dismisses human rights violations and feels this strengthening of ties will lend itself well to isolating Iran.

On the flipside, Iran has seen an opening in the fallout between Egypt and Saudi Arabia and is more openly making overtures to Egypt. Most recently, Iran’s Foreign Ministry spokesman expressed the hope for the removal of obstacles to stronger relations with Egypt, which he described as a “major” country in a weekly presser in Tehran on Monday, Iran’s Tasnim News Agency reports.

Iran’s ally Russia also sees Egypt as crucial to regaining influence in the region. While it continues to play coy on the tourism front — hinting at a trade off of Russian tourists for the USD 29 bn Daba’a power plant — it is looking to expand bilateral and economic ties. 17 agreements were signed this week during a Russian trade delegation visit to expand the Russian Industrial Zone in the Suez Canal.

Image of the Day

The Fresh Prince meets the boy king: Will Smith looks like he enjoyed Cairo. After seeing the Giza Pyramids, he visited the Egyptian Museum and snapped selfies with relics there, including the mask of Tutankhamun. In related news, the bigger, more organized Grand Egyptian Museum will be opened mid-2018, Antiquities Minister Khaled El Enany announced. Earlier reports had indicated that the first phase would be opened late 2017 with the Museum’s grand opening slated for 2020 upon completion.

… Smith is not the first to photograph the boy king, of course: Modern photographer Harry Cory Wright travelled to the Valley of the Kings to learn how Harry Burton, the first man to photograph Tutankhamun after his burial site was uncovered in 1922, as Rob Hastings writes for iNews. Wright marvels at how Burton could have shot the pictures of Tutankhamun and in the dust of the desert with such technically demanding equipment as he documents and tries to recreate Burton’s work for BBC Four’s current “Britain in Focus” photography season. “For me, that is the big story: recognition of the power of what a photograph could do,” says Cory Wright.

Egypt in the News

In a thankfully slow night for Egypt in the foreign press, we have managed to catch some interesting reads (both good and bad).

Reuters is running an analytical piece which again cautions Nigeria to follow in Egypt’s footsteps and adopt a full devaluation of the EGP. Those afraid of a currency collapse need only to look at Egypt and be reassured, as it quickly regained 20% of its value following a nosedive of 50% following the float, said Hasnain Malik, head of frontier markets strategy at Exotix in Dubai. The benefits of attracting capital inflows should not go unnoticed. "What Egypt does show is that foreign capital is comfortable pricing risk and returning to a market when there is a liquid, functioning FX market for all," Malik added.

Egypt is pursuing a “sneaky military strategy against Ethiopia’s Grand Ethiopian Renaissance Dam (GERD),” some guy called James Moises, identified as a former Ugandan intelligence agent, told the South Sudan News Agency. Spy Kid Moises also says he has information that Egypt is assisting South Sudanese government in its war against the Sudan People’s Liberation Movement/Army-In Opposition and providing it with modern weapons and military aid managed by Uganda. Moises says Egypt is joining forces with Uganda as the interests of both countries converged. “First of all, Egypt’s diplomatic campaign to stop Ethiopia from constructing GERD has failed. Secondly, Uganda failed to destroy South Sudanese rebels. These two different interests are the ones uniting Cairo and Kampala … This is a sneaky strategy against the Ethiopian government,” he notes.

A number of hecklers attend Bassem Youssef’s shows and screenings on behalf of Egyptian authorities, Andrew Marantz writes in The New Yorker. “They are conservative Egyptians who live here, but they are hired by the Sisi regime to heckle … It happens at every show,” Youssef’s manager told a theatre house manager who hosting a performance. “I can always spot them … They’re older than the rest of the crowd, and they all sit in one row wearing baggy suits and not laughing,” Youssef says.

Other international coverage worth a skim:

  • Amr Hamzawy writes in Al Jazeera that the clampdown on students in Egypt did not achieve the complete depoliticization of public universities and that their interest in “public affairs and political matters was not quashed.”
  • Arutz Sheva has a report suggesting that the friction between Palestinian President Mahmoud Abbas and Egyptian President Abdel Fattah El Sisi is over the peace initiative. The friction is because of Abbas objecting to Egypt’s regional peace initiative plan that included Israeli Prime Minister Benjamin Netanyahu.
  • Famagusta Gazette Cyprus says Cyprus and Egypt are heading towards “excellent relations” following a meeting between Cypriot House Speaker Demetris Syllouris and Egyptian Investment and International Cooperation Minister Sahar Nasr.
  • Middle East Now cultural festival’s eighth edition will open in Florence on Tuesday, 4 April, ANSAmed reported. Screenings include Egyptian movies “In the Last Days of the City” by Tamer El Said and “Ali, the Goat and Ibrahim” by Sherif Elbendary.
  • BBC reports on a Sunny cooking oil campaign to defy gender stereotypes that backfired, culminating into the Consumer Protection Agency legally intervening. You must have seen the “Are you a spinster?” billboard.

On Deadline

The lack of media coverage on the situation in Sinai is only opens the door to misinformation, and serves to isolate the rest of the country from the struggles facing the military and the peninsula’s population, Emad El Din Adib writes in a rare to-the-point column for El Watan.

Energy

Middle East needs more creativity in oil and gas exploration

Eni’s success in Egypt and new Iraqi oil discoveries show that “the Middle East and North Africa region does not explore enough, or in the right way,” Robin Mills writes for The National. “The remaining potential, particularly in underexplored regions such as Iran, Iraq and offshore Lebanon and North Africa, is vast,” he says. Mills believes that national oil companies need to relax their grip and be open to more investment. He says “the region’s national oil companies can think more creatively and proactively about exploration, perhaps creating special divisions with some freedom and an international mandate. Underexplored areas can be opened to international players, including imaginative specialists.”

Elsewedy Electric, Infinity Solar submit bids for solar power plant projects in Kenya

Elsewedy Electric and Infinity Solar submitted bids to build 30 MW and 250 MW solar power plants in Kenya, Khaled Abol El Makarem, head of the committee formed to increase exports to Africa, told Al Mal. The companies will fund the plants with their own investments and will sell electricity to the Kenyan government as per its feed-in tariff program. Both companies were part of the business delegation that visited Kenya last month.

EGEMAC wins bid to establish two transformer stations worth EGP 200 mn

The Egyptian German Electrical Manufacturing Company was awarded an EGP 200 mn contract to build two transformer stations in Sadat City for the Egyptian Electricity Transmission Company, Chairman Medhat Ramadan told Al Mal. The project will be completed in eight months, Ramadan said.

Infrastructure

USAID funds Luxor wastewater plant expansion

USAID is funding an expansion of Luxor’s wastewater treatment plant to double the capacity of the system, according to a US Embassy statement. The project is carried out in partnership with the Luxor Potable Water and Sanitation Company, the expansion will provide improved wastewater treatment for Luxor and El Bayadeya to meet projected population growth for the next two decades. The exact cost of the project was not outlined.

Government working on EGP 1.5 bn development projects in Halayeb and Shalateen

The government is working on implementing development projects in Halayeb and Shalateen worth EGP 1.5 bn, Red Sea governor Ahmed Abdallah said, Al Shorouk reports. The projects include establishing three water desalination plants and three solar power plants. This comes despite continued statements and egging by Sudan that the area falls under its sovereignty.

Basic Materials + Commodities

Sherif Ismail exempts raw sugar from import tariffs

Prime Minister Sherif Ismail exempted raw sugar imports from tariffs, to be applied retroactively from 1 January until 31 December, Al Mal reports. Ismail had reinstated the levy on imported sugar in January, but reduced the tariffs from 20% to 14%. According to an unnamed source, the government is looking to import 1.2 mn tonnes of raw sugar throughout this year. Supply Minister Ali El Moselhy had reduced the price of sugar earlier this week to EGP 10.5 per kg for regular consumers, and set the price of sugar sold to traders at EGP 9,250 per tonne. The decision was welcomed by Federation of Egyptian Industries (FEI), with chairman of the FEI’s sugar division Raafat Razika telling the newspaper that importing greater quantities of raw sugar is beneficial to local factories, which will be responsible for the refining process.

Supply Minister reaches agreement to buy rice from private mills

The government has reached an agreement with private rice mills to produce white rice, Reuters reports. The agreement, which could end a standoff over the buying price of rice, has the Supply Ministry paying private mills EGP 6.3 per kg or white rice, which the government would then sell for EGP 6.5 per kg in its outlets. Farmers last year refused to sell government mills their crops despite a plentiful harvest, arguing that the buying price was too low. The new agreement means that private mills will instead buy up the paddy at the current market price of about EGP 4,200 before selling it on to the government, Reuters explains. However, the newswire warns that “any subsequent jump in the local paddy price, however, could make the recently struck [agreement] untenable given the tight profit margin agreed to by the private mills under the new deal.”

Juhayna hikes prices by 42% following EGP float

Juhayna increased prices by 42% due to a 50% spike in costs incurred by the EGP float, CEO Seif Thabet told Al Arabiya.

Manufacturing

LG reduces home appliances, entertainment devices

LG says it is reducing prices of its home appliances by 9% and home entertainment products by 11% after as the EGP strengthened, Al Mal reported. Samsung is following suit and also reducing television prices by 20-22% until 15 March and has already reduced smartphone prices by 25%.

Tourism

AccorHotels, Rixos form joint venture

AccorHotels and Rixos formed a joint venture, through which they will co-develop and manage Rixos branded resorts & hotels worldwide,” Reuters reported. AccorHotels will have a 50% stake in the joint venture management company. AccorHotels operates 17 hotels in Egypt, with 14 more in the pipeline, and Rixos Egypt owns three hotels.

158% increase in nights spent by Chinese in Egypt since 2015, Cairo ranked “most stylish”

Chinese tourists are staying longer, with overnight stays in Egypt increasing 158% year-on-year in January 2017, Egypt’s tourism consultant in Beijing Abou El Maati Saleh Shaarawi told Al Masry Al Youm. Cairo ranked as “most stylish” destination for Chinese travelers, according to Chinese travel services provider Ctrip destinations ranking for February 2017, according to Saleh, who received the award.

Aleppo-Cairo flights to resume “soon” -SyrianAir

Flights between Aleppo and Cairo are expected to resume in the near future, SyrianAir regional manager Mohammed Suliman said, Sputnik reported, citing Sada El Balad. Flights have been halted for four years, as the airport in Aleppo was not operating.

Automotive + Transportation

Egyptian Kuwaiti Company for Castings injects USD 30 mn in car brakes

Automotive supplier Egyptian Kuwaiti Company for Castings will invest USD 30 mn in an automotive castings plant to manufacture brakes, Vice Chairman Ahmed Fikry Abdel Wahab told Al Mal. The factory will be operational by the end of the year and targets tripling the company’s production to 3 mn disc brakes annually, Abdel Wahab said. Egyptian Kuwaiti Company for Castings (also referred to as Egyptian Kuwaiti Foundry) is a joint venture between the Egyptian German Automotive Company, the National Automotive Company, and Kuwait Foundry Company.

Banking + Finance

NBE says it will net almost EGP 12.5 bn in FY2016-17

National Bank of Egypt (NBE) expects to match its profit levels of EGP 12.5 bn recorded in FY2015-16 after making EGP 6 bn in 1H2016-17, Deputy Chairman Yehia Aboul Fotouh told Al Mal. He says the bank’s credit portfolio increased by 50% y-o-y by December’s end, recording EGP 350 bn, with deposits also up by 34% y-o-y to EGP 750 bn. Aboul Fotouh also noted that NBE’s AGM agreed to increase the bank’s paid-in capital by EGP 13.65 bn to reach EGP 28.65 bn.

State-owned banks to cover SAR needs for umrah -CBE

National Bank of Egypt, Banque Misr, and Banque du Caire have reached an agreement with the head of the tourism chambers of commerce to provide tour operators’ entire requirements of Saudi riyals for this year’s umrah season, according to an emailed central bank statement. The central bank estimates that the total requirements for this season is SAR 700 mn. The central bank also stresses that all umrah bookings should be made in EGP and adds that the three state-owned banks have committed to making SAR 1,000 available to each traveler. The mechanism to manage the hajj season will be looked into this month, the central bank added.

CBE issues amendments to SME’s lending initiative

The Central Bank of Egypt issued amendments to its EGP 200 bn SMEs lending initiative, allowing renewable energy companies established from February 2016 to benefit from its terms, according to a CBE statement issued on Sunday. The amendments also set an interest rate of 5% for lending to micro-enterprises with an annual turnover of EGP 1 mn and small companies with a turnover less than EGP 20 mn. Interest rates for medium-sized businesses have been set at around 12%. Banks will be compensated for the interest rate differential through the waiver of reserve requirements on these balances.

Egypt Politics + Economics

Supply Minister Ali El Moselhy considers cuts to bread point system

Supply Minister Ali El Moselhy is reportedly looking into a proposal to cut the number of loaves of bread under the bread points subsidy program to three loafs from five, Al Masry Al Youm reports. Last week, El Moselhy had come out strongly against the bread points system which he said had been costing the state EGP 500 mn per month.

National Security

Armed Forces’ Chief of Staff meets with NATO Military Committee Chairman in Cairo

Armed Forces Chief of Staff Mahmoud Hegazy met with NATO Military Committee Chairman Petr Pavel in Cairo yesterday to exchange views on regional security issues, including terrorism and the situation in Libya, Al Masry Al Youm reports.

On Your Way Out

Innoventures announced applications are now open for the fourth cycle of its accelerator programme Startup Reaction, CPI Financial reported. The programme is in partnership with Venture Capital for Africa (VC4A). Innoventures also launched a new EGP 30 mn venture capital fund. Startup Reactor offers seed funding up to EGP 300,000 and partner VC4A offers cash prizes of EUR 15,000.

The markets yesterday

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EGP / USD CBE market average: Buy 16.6009 | Sell 16.7065
EGP / USD at CIB: Buy 16.75 | Sell 16.85
EGP / USD at NBE: Buy 16.7 | Sell 16.8

EGX30 (Monday): 12,623 (+1.0%)
Turnover: EGP 1.3 bn
EGX 30 year-to-date: +2.3%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session up 1.0%. CIB, the index heaviest constituent rose 0.4%. The EGX30’s top performing constituents were: Heliopolis Housing up 8.3%, Ezz Steel up 6.3%, and Madinet Nasr Housing up 4.1%. Yesterday’s worst performing stocks included Domty down 4.4%, Eastern Co down 4.0%, and Juhayna down 1.8%. The market turnover was EGP1.3 billion, and local investors were the sole net buyers.

Foreigners: Net Short | EGP – 10.6 mn
Regional: Net Short | EGP – 16.2 mn
Domestic: Net Long | EGP + 26.8 mn

Retail: 52.3% of total trades | 10.9% of buyers | 93.8% of sellers
Institutions: 47.7% of total trades | 89.1% of buyers | 6.2% of sellers

Foreign: 4.0% of total | 3.9% of buyers | 4.1% of sellers
Regional: 83.6% of total | 83.5% of buyers | 83.7% of sellers
Domestic: 12.4% of total | 12.6% of buyers | 12.2% of sellers


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PHAROS VIEW

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WTI: USD 53.14 (-0.11%)
Brent: USD 56.01 (+0.20%)
Natural Gas (Nymex, futures prices) USD 2.88 MMBtu, (-0.86%, April 2017 contract)
Gold: USD 1,226.10 / troy ounce (+0.05%)TASI: 6,976.4 (+0.1%) (YTD: -3.2%)
ADX: 4,604.3 (+0.9%) (YTD: +1.3%)
DFM: 3,556.8 (+0.4%) (YTD: +0.7%)
KSE Weighted Index: 425.7 (0.0%) (YTD: +12.0%)
QE: 10,622.5 (-0.9%) (YTD: +1.8%)
MSM: 5,799.9 (-0.1%) (YTD: +0.3%)
BB: 1,338.1 (-0.3%) (YTD: +9.6%)

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Calendar

06-08 March (Monday-Tuesday): EFG Hermes One on One Conference, Atlantis, The Palm, Dubai. 15 March (Wednesday): Arab Women Organization’s event: Investing in refugee women, UN General Assembly Building, New York City. 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. 04 April (Tuesday): Emirates NBD Egypt PMI reading for March announced. The report will be available here. 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. 20-23 September (Wednesday-Saturday): 2017 Automech Formula car expo, Cairo International Convention Center, Nasr City, 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. © 2021 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of Commercial International Bank (tax ID: 204-891-949), the largest private-sector bank 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; and Act Financial (tax ID: 493-924-612), the leading activist investor in Egypt; and Abu Auf (tax ID: 584-628-846), the leading health foodmaker in Egypt and the region.