Tuesday, 21 March 2017

Laptops, iPads to be banned this morning from cabins of US-bound flights out of Cairo International Airport

TL;DR

What We’re Tracking Today

** What are the biggest challenges facing businesses in Egypt? Were the last three months good for doing business? Where do you and your business see the exchange rate stabilizing? Help us help you find out by taking Enterprise’s quarterly reader poll for 1Q2017. The survey would only take a couple of minutes to complete and, as always, you don’t need to answer every question — but we’ll be ridiculously grateful if you do. And taking the couple of minutes to fill it out will benefit everyone in the community by serving as a snap poll of sentiment.

Fill out the survey and maybe we’ll take you to lunch at the Four Seasons Nile Plaza. We’ll draw the names of two readers who filled in all survey questions and send them to lunch with the editors of Enterprise at the Four Seasons Nile Plaza (that’s the one in Garden City). Each reader will be entitled to bring a friend or colleague. If you’re interested, make sure you leave your full name, email address and best telephone number at the end of the survey.

“Large” electronic devices are banned from the cabins of US-bound flights out of CairoInternational Airport as of this morning. The United States will announce at around 9am CLT that it is “barring passengers on certain flights originating in eight countries from bringing laptops, iPads, cameras and most other electronics in carry-on luggage” starting immediately and for an indefinite period, the Associated Press reports. The ban, which appears to have first been broken by the Financial Times, applies to flights originating from at least 10 international airports, including all nonstop flights to the US from Cairo, Dubai, Abu Dhabi, Riyadh, Jeddah, Istanbul, Amman, Kuwait City, Casablanca, and Doha. The ban, which the AP says does not include cellphones or medical devices, may have been promoted by intelligence “from a recent U.S. Special Forces raid in Yemen” according to CNN. We hope you enjoy pocket novels of the printed (non-Kindle) form and figure the big winners here will be the ladies from Diwan.

The electronics ban will take place one day before Foreign Minister Sameh Shoukry is due in Washington, DC, for a meeting of the US-led anti-Daesh coalition.

Things are getting heavy with KSA. In the latest sign that the kingdom once again wants to be our BFF: “Egypt’s expatriate affairs minister Nabila Makram announced on Monday that Saudi Arabia has decided to pardon 30k Egyptians accused of visa violations in the country, state news agency MENA reported,” according to Ahram Online. That means the alleged offenders will not be deported and will not face a 10-year ban on entry to the kingdom.

Today’s cabinet meeting will focus largely on the economy, including discussion of the draft 2017-18 state budget ahead of its presentation to the House of Representatives, Ahram Gate reports. Also on the agenda is the stamp tax on stock market transactions, which the cabinet economic group approved last week, as well as basic commodity supplies and prices.

Lebanese Prime Minister Saad Al Hariri arrives today in Cairo to meet with President El Sisi and Prime Minister Sherif Ismail.

Do you manage money? Fear the rise of the index funds and the robo investors? Read the Financial Times’ “Asset management: Passive resistance,” which takes a deep dive into Capital Group, the quiet giant with USD 1.5 tn in AUM that’s gone into a full-offensive mode to make its case for active fund management to remain a tool for investors. It’s also changing how it reports its distribution fees in a bid to show that fewer active fund managers are falling short of the index.

David Rockefeller is dead at 101. The veteran banker and “Cold War emissary for capitalism” who ran Chase Manhattan at the height of its power “in an era before bond traders came to dominate the world of international finance” has died. Nice obits in the Financial Times, New York Times, Wall Street Journal and Reuters.

Apple is widely expected to (quietly) introduce a new product or two today, and speculation is that it will be a 128 GB iPhone SE (the tiny one that’s iPhone 5s in size, but with iPhone 6s internals) or maybe a Product Red iPhone 7 / 7 Plus. Either way, Apple’s online store will be down from about 9am CLT until 2:30am CLT ahead of the launch, Cult of Mac reports.

** Public service announcement: It is Mother’s Day in Egypt. Call your mom. Be kind to the mother of your children. Think of a present. Don’t be a jerk tomorrow because you remembered to be nice today. That is all.

Enterprise+: Last Night’s Talk Shows

Hona El Asema’s Lamees El Hadidi was all about the economy last night, covering inflation as well as the role of the Central Bank of Egypt and subsidies.

But first, she spoke to CI Capital chairman Mahmoud Attallah on the conclusion yesterday of CIB’s of the investment bank to a consortium of investors (which we cover at length in the Speed Round). When pressed, Attallah didn’t have much to say about CI Capital’s potential IPO, telling Lamees that the issue has yet to be discussed with CIB. He also told Lamees that CI Capital has reached an agreement with its new shareholders on its expansion plans, including branching out in the UAE and covering GCC markets (watch, runtime 6:19).

Supply Minister Ali El Moselhy phoned in to tell El Hadidi that, as of 1 April, that only cooking oil, rice, and sugar will be covered under the commodity subsidy program (watch, runtime: 6:14). At the moment, welfare recipients can choose to use their EGP 21-per-month subsidy ration to purchase some 56 subsidized commodities. State-owned grocers participating in the system will begin dispensing packages containing the three products, while other products will be sold at market prices. According to El Moselhy, the move would curb subsidies fraud and leakage into the black market. The minister also took the time to explain his efforts to clean up the ration card system by pointing out that out of 91 mn citizens, 71 mn Egyptians are subsidy beneficiaries (watch, runtime 10:34).

The conversation segued nicely into your regular Hona El Asema programming of railing against inflation, with the CBE bearing the brunt of Lamees’ rage last night. She said the CBE is falling short of its mandate of maintaining and ‘inflation-targeting’ monetary policy (watch, runtime 7:25). Union Capital CEO Hany Tawfik phoned in to say that the House of Representatives — of which he’s pleasantly skeptical — has the right to summon the CBE governor and the Finance Minister to explain their policies (watch, runtime: 3:45).

Lamees also covered the finances of the Cairo Metro, with senior Metro official Essam Mounir suggesting the operator will attempt to brave public backlash yet again to hike ticket prices. According to Mounir, the company wants to double ticket prices to EGP 2, as this will be the fastest way to rescue the Metro from its mountain of debt (watch, runtime 6:53). We’ve heard that one before.

Yahduth fi Masr’s Sherif Amer spoke to Deputy Finance Minister for Tax Policies Amr El Monayer about the upcoming stamp tax, which El Monayer confirmed will be referred to today’s cabinet meeting for approval. El Monayer seemed perplexed by the stock market losing EGP 3.7 bn yesterday, maintaining that the stamp tax came as a surprise to no one.

DMC’s Eman El Hossary interviewed Administrative Prosecution Authority head Ali Rezk to talk about corruption (watch, runtime 1:55).

Speed Round

Speed Round is presented in association with

CI Capital is off CIB’s books: CIB announced it has executed the transfer of 74.75% of subsidiary CI Capital’s shares to a consortium of investors and to CI Capital’s management successfully for EGP 710.16 mn, according to a regulatory filing. The transaction gave CI Capital a valuation of EGP 950 mn and CIB retains a 25.24% stake “for the time being.” Total shares sold exceeded the 60-65% about which the market was speculating last week. CI Capital’s management team bought a 9.75% stake of CI Capital and the investment consortium bought 65%.

Of the investors, Arafa Group’s Alaa Arafa, Habitat Furniture owner Ismail El Turk, and construction magnate Mahmoud El Gammal took the largest stakes of the transaction with just shy of 9.9% each. They are followed by Fahad Khater, who bought 7.6%; Yasser El Adawy, with 6.2%; and Infinity Capital Investment, which took in 5.9% of the shares. Other members of the consortium include Seddik Afifi, members of Zahran family, Compass Capital, and Ayman Mamdouh Abbas. Al Mal says Mamdouh Abbas intends on buying a 1.5% stake in CI Capital soon.

CI Capital Deputy Chairman and CEO Mahmoud Attallah said a new board of directors for the investment bank will be appointed within two weeks as a general assembly is called. He added that the general assembly will also decide on what to do with the remaining shares, but market sources said they expect CIB to eventually offer its remaining shares on the stock exchange, according to Reuters. Al Borsa says the general assembly meeting has been set for 9 April, quoting Attallah, who reportedly also said CIB “will not sell more than 2% of its remaining stake” in the investment bank. The transaction will not be subject to the 0.125% stamp duty that is now in cabinet’s pipeline.

Speaking of which, the government will begin implementing the stamp tax on 1 May, Deputy Finance Minister Amr El Monayer said, adding that it will be collected on transactions in listed and non-listed stocks, bonds, and over the counter securities, as well as mergers and acquisitions, according to Reuters. El Monayer also said the stamp duty may also include for the first time a 0.3% levy for investors acquiring more than a third of a company’s shares. The ministry is targeting revenues of EGP 1-1.5 bn in the first year of the tax.

…The Finance Ministry is expecting to collect a total of EGP 433 bn in taxes in FY2017-18 and collected EGP 200 bn from income taxes and the value-added tax as of the end of February, El Monayer told Extra News in an interview on Monday (runtime 27:29).

Foreign direct investment in Egypt will hit USD 13-15 bn in FY 2017-18, Minister Amr El Garhy told Reuters. Anything in that range would be the highest volume of FDI in Egypt’s history. El Garhy also narrowed the band of the average oil price that will be used in the FY 2017-18 budget to USD 55-57 per bbl from an earlier suggestion of USD 55-60 per bbl. The budget is due to be presented to parliament by the end of March, he added.

“I think Egypt … should be able to attain the target of 4% [GDP] growth this year. I am pleased to see they started a process of reducing subsidies. It is not going to be easy,” former Chairman Deutsche Bank MENA Henry Azzam said on Bloomberg Markets: Middle East. Azzam also spoke about growth in Saudi Arabia and suggested that GDP growth figures do not reflect the whole picture due to the divergent performances of the oil and non-oil GDP there (runtime 03:59).

MM Group filed its public subscription notice for a local offering yesterday, announcing it will offer 118.8 mn shares, representing a 30% stake in the company on the EGX for a maximum price of EGP 6.06 per share. 85% of the offering, representing some 100.98 mn shares, will be earmarked for an institutional offering, while the remaining 17.82 mn shares will be offered to retail investors in Egypt. The final pricing of the offering will be announced on Tuesday, 4 April and the subscription period will close on Thursday, 6 April. MM Group’s operations focus on four main business segments: Luxury cars, tractors and pipelines, retail and distribution services for telecom providers, and distributing electrical appliances and electronics. The company made a stand-alone net profit before tax of EGP 253.26 mn in the first nine months of 2016. Beltone Financial is managing the offering, Zaki Hashem & Partners are local counsel, and BDO is acting as the independent legal advisor. You can find here MM Group’s financial statements, AGM and EGM minutes, and fair value assessment.

Gov’t timeline to cut down on subsidies ends in 2019: The government does not plan to fully eliminate fuel subsidies, said Oil Minister Tarek El Molla in an extensive interview with Al Shorouk. The timeline to reduce spending on fuel subsidies will end in 2019, but the government will keep paying for fuel subsidies after that, he added. It is worth noting that Egypt had only committed to “reducing fuel subsidies” in its agreement with the IMF for the USD 12 bn loan, but had agreed to a complete phase-out of subsidies for electricity in the coming five years. Other takeaways from the interview:

  • International oil companies have committed to reinvesting the arrears Egypt pays them, pledging USD 10 bn in new investments this year alone.
  • The private sector will not begin importing natural gas to Egypt until 2018, said El Molla on the deregulation of the gas market.
  • An agreement to process and export gas from Cyprus won’t come into effect for another two years.
  • Aramco halted fuel shipments to Egypt last fall because of internal business considerations related to oil prices.
  • Egypt will retain at least one FSRU even after it stops importing LNG.

The World Bank disbursed the second USD 1 bn tranche of its USD 3 bn development loan to Egypt yesterday, Reuters reports. “The government has taken important steps in implementing key policy and institutional reforms that are laying down the foundations for accelerated job creation and inclusive growth,” the bank’s country director for Egypt, Yemen and Djibouti, Asad Alam, said. The funds will, in the meantime, shore up Egypt’s foreign reserves, according to remarks that Al Masry Al Youm attributes to Deputy Finance Minister Ahmed Kouchouk’s. Egypt had received the first tranche of the loan last September and will be negotiating the disbursement of the third and final tranche in Washington at the end of next month, the World Bank Group’s Egypt Executive Director Mezra Hassan told AMAY.

Egypt is poised to become the world’s fastest-growing mortgage market in 2017, ahead of Algeria and Nigeria, according to Daily News Egypt’s pickup of Euromonitor International’s March report on Egypt (paywall). Egypt is a prime market for mortgages with the size and growth rate of its population, which are expected to drive an 18.9% increase in home mortgages this year.

Egypt’s non-oil output retreated 2.3% year-on-year in 2Q2016 to EGP 91.8 bn, according to CAPMAS figures released yesterday. Food production, which the state statistics agency says is the largest non-oil sector in the country, fell 2.1% y-o-y but rose 0.5% from the previous quarter on the back of a pre-Ramadan ramp-up in production, the agency says. Pharma was the only sector whose production output increased y-o-y.

** Earnings watch: Arabian Cement Company reports a consolidated net profit of EGP 245 mn in 2016, down 11.6% from EGP 277.2 mn a year before, according to a regulatory filing. Despite having no effect on consolidated results, the company incurred FX losses of EGP 81.1 mn due to the impact of the EGP float on its standalone results.

We’ve become a much less happy bunch, according to the 2017 World Happiness Report. Egypt is in the 104th spot on the global Ranking of Happiness, right below Mongolia, South Africa, Tunisia, and Palestine. Egypt is also in the bottom quintile in changes in happiness with a significant drop in the perception of happiness from 2005-07 to 2014-16. In an African context, Algeria is the happiest country on the continent, followed by Mauritius, Libya, and Morocco, with Egypt in 9th place. The report notes that the low levels of happiness in the region have not shifted much in 50 fifty years and “low levels of subjective well-being are likely not to be a recent development in Africa.” Overall, Norway, Denmark, and Iceland are the happiest nations in the world, according to the report. The UAE tops the Arab world in 21st place globally. The landing page of the report is here.

Elsewhere in the world: The UK will begin the process of leaving the European Union on Wednesday, 29 March. Prime Minister Theresa May will file the “divorce papers,” invoking Article 50 of the Lisbon Treaty that will launch two year of talks to exit from the EU, according to Bloomberg.

Three Questions For…

Three Questions for EFG Hermes’ Mostafa Gad on M&A flow in 2017

EFG Hermes sees manufacturing plays as the dark horse of Egypt M&A activity in 2017, is growing pipeline with UAE and Kuwait transactions: EFG Hermes is coming off a year that saw it become the top-ranked MENA-based house on the Reuters’ Middle East M&A league table for 2016. The firm has been best known in the past three years or so as an equity capital markets house (think: IPOs and secondaries) rather than as an M&A advisor, but Co-Head of Investment Banking Mostafa Gad says that’s changing after last year’s performance, which essentially amounted to a trial run of how the firm could use what he calls a “strong, liquid balance sheet” to kickstart a merchant banking franchise. “If you look at the league tables, two of our transactions stand out from last year. First, the Solb Misr advisory, which at c. USD 1.4 bn is the largest-ever Egyptian-to-Egyptian M&A to take place domestically. Then there’s the acquisition by DIFC-based Advanced Energy Systems, a top regional oil and gas services player, of rigs operating under contract to Saudi Aramco in KSA; the selling party was Hercules, a leading US-based rig operator. On that last one, we used our balance sheet to arrange the debt that backed the acquisition in a very complex multi-jurisdictional transaction.”

For the year ahead, Gad says EFG Hermes has three M&A transactions lined up for Egypt (one of which could close in the first half) and a further four split between the UAE and Kuwait. He’s bullish on IPO flow out of Egypt, the UAE, and Kuwait, but less so about Saudi Arabia. Between Egypt and the Emirates, he expects 4-5 offerings on listing venues including the EGX, London Stock Exchange and Nasdaq Dubai. We spoke with Gad yesterday for the latest in our occasional “Three Questions For…” series. Edited excerpts:

Enterprise: Are there any sectors set to dominate M&A flow in Egypt this year?

Mostafa Gad (MG): Education and healthcare will continue to be very exciting sectors, and I think we’ll see consumer cool off a little bit. There will still be interest in consumer flow given how large the market is, but it won’t be as frenetic as it has been the past couple of years. Companies that manage to provide the market with products that have inherent value propositions — backed by good R&D and prudent SKU management — will win the race. I think what will surprise most people will be the industrial sector — particularly companies with products that are import substitutes or have an export business contributing to their revenue lines

There’s been historically very little interest in manufacturing, particularly from foreign investors, because we had no pronounced or generalized competitive advantage. To be attractive, you either needed to have a strong technology base to go further up the value chain, or a China-type proposition: Low-cost production for a mass market. With the exchange rate where it is today, we can compete with most any Chinese or Southeast Asian producer — we’re simply very, very competitive in USD terms, even with whatever inefficiencies we may have because manufacturing has been challenged until now. The most interesting acquisition prospects will be those that have a maximum of 30-35% imported raw materials or production inputs in their cost structure

The ticket sizes for transactions won’t necessarily be huge. There are big players, but few giants — and even fewer of them will be for sale. But it’s going to be a very interesting sector to watch.

E: Will activity be led by domestic acquirers or by foreigners?

MG: It will be largely inbound. Coming out of our One on One conference in Dubai a couple of weeks ago, there was one theme that really surprised a lot of people: Foreign sentiment on Egypt is in many ways better than is sentiment among local players. Domestic firms are cutting back on capex — don’t expect them to go on an acquisition spree. Foreign investors are usually the skeptical ones, but they’re really excited. They can see the macro picture and how domestic players can springboard off it. Look, we as an economy took the pain for a long time — it’s time to start seeing why there’s room for optimism. The time to invest is ahead of a wave of growth, not after it starts to crest. Anyone who makes it through this year on solid ground will benefit in a very big way.

E: Will it be difficult for buyers to accept that their sale prices will, in USD terms, be half what they were a year ago?

MG: It might be an issue, but you have to remember that one of the reasons there was little activity in the second half of last year was because there was no clear benchmark for the exchange rate. At least today you have a clear rate and you can make an informed decision. There will be price gaps, but it’s about being creative in bridging them with, for example, the structure. But companies — if they’re not exiting 100% — need to take into consideration that yes, valuations have taken a tough hit in USD terms. But you’re going to be selling at higher prices going forward, your EBITDA will pick up as you grow — the numbers will shift for the better.

Egypt in the News

Hurghada seems to have been the main beneficiary of Sharm El Sheikh being off-sale in the UK, Rob Gill writes for tourism news website TTG. Andrew Grant, managing director of Red Sea Holidays, says: “Holidays for Hurghada, particularly the Makadi Bay area, are showing healthy increases in passenger numbers — the market is reporting an increase of 35%… Price has certainly been a contributor to the surge in sales, as popular resorts in Spain are demanding significant increases in prices.” Hope for a revival in Sharm El Sheikh has not been lost either as “some specialist operators to the Red Sea are optimistic that the FCO will soon change its advice on Sharm’s airport — Discover Egypt has even decided to include Sharm as a twin-centre option in its new brochure in anticipation that Britons will soon be able to fly to the resort.”

Could US President Donald Trump’s USAID budget cuts affect economic development aid to Egypt? While it remains unclear, the fear of that happening is definitely there, Ben Barber writes in the HuffPost. “The good news is that it won’t really hurt many in Egypt,” Barber says. Civilian aid to Egypt was cut from USD 900 mn in 2003 to USD 150 mn in 2015, which means the US gives Egypt about “USD 1.50 per Egyptian per year in aid.” Passage of any cuts isn’t a sure thing: Congress could refuse them, powerful US farmer lobbies could rally against them, and the pro-Israeli lobby “seeking a stable and strong neighbor” could also push the Trump administration into leaving Egypt’s development aid alone.

The greatest threat to the politically- and economically-fragile Egypt’s stability is not Daesh and armed militants but its fast growing population, which rose from 66 mn in the early 2000s to nearly 93 mn this year, according to Peter Schwartzstein writing for Newsweek’s European edition. With the country “in the throes of food and water shortages,” authorities need to shift their focus from “real and perceived” security threats to rethink their population control strategies, which had been effective until state support for family-planning initiatives was curbed in 2008-09 and NGOs began allocating resources to other projects.

The developments in former President Hosni Mubarak’s trial are “a reflection of the continued political chaos and people’s growing ambivalence about liberal democracy in the Middle East,” Simon Shen writes for Hong Kong portal EJ Insight. Shen believes “the continued political turbulence and poor economy since 2011 have led to widespread disillusionment with democracy among the Egyptian people, and many Egyptians are once again looking to another political strongman like Mubarak to restore order and stability to society.”

Other mentions of Egypt worth a skim:

  • Hopes for a thaw in relations with Tehran took a blow after Egypt’s foreign ministry spokesperson saying Iran meddles with internal affairs of Middle East countries, Tehran Times says.
  • Egypt increased its vegetable sales to the EU by 5.23% y-o-y in 2016, according to Fresh Plaza. The Netherlands was the biggest supplier of vegetables to the EU during the year, with a volume of 6.1 mn tonnes.
  • Egypt is moving from a shortage of electricity to sufficiency, but more focus on renewables is needed, Amr Emam writes for The Arab Weekly.
  • Hassan Hakimian, Director of the London Middle East Institute, writes that economists failed to predict the Arab Spring and that its incidents suggest “that improved economic performance cannot be viewed as an insurance policy against political instability” in a largely trite and facile piece in Project Syndicate.
  • The Sun is regurgitating the Foreign & Commonwealth Office’s travel advisory (and warnings) on Egypt to answer the question is Egypt safe. They don’t, so thanks for nothing, Sun.

On Deadline

Egyptian pundits are starting to get it (well, one at least): While the reasons behind inflation — the gradual phase-out of energy subsidies and the EGP float — are clear, Mohamed Youssef argues in a column for Al Shorouk that domestic manufacturers’ reliance on imported materials has trickled down to consumer prices. He urges the government to focus on encouraging and supporting domestic industries through economic policies, strategies, and incentives (such as the automotive directive for one) as one way to help battle inflation.

Worth Reading

How Egypt’s unique problems open up the doors for its startups: Despite the hurdles digital startups face in Omm El Donia ranging from poor education to a lack of funding, the market here is wide open for digital services startups, simply because the most mundane of tasks in Egypt “like paying bills and getting things fixed could turn into epic affairs,” RiseUp Summit co-founder Con O’Donnell tells Business Monthly’s Edmund Bower. The lack of competing services also means Egypt’s clientele is more forgiving than America’s, where customers will “simply go elsewhere” if they are not entirely satisfied with the service, he added. Which is why services by startups such as Elves, which combines artificial intelligence with human capabilities to field all types of these mundane requests, are taking off.

Worth Watching

“It’s so provocative. We wake up at 6 am and come home tired and nobody remembers us.” An exceptionally entitled group of Egyptian dads complained that they don’t get praise the way mothers do (watch, runtime 5:50) on CBC Egypt. One father complained that he had to sacrifice exercising to be a father, while the rest whined about having to be the breadwinners for their families. Here’s an idea, gents: There is a Father’s Day almost everywhere else in the world. If you’re a father who wants to be celebrated, let your kids know they should buy you presents on the third Sunday of June instead of belittling all the effort mothers put into raising their children.

Diplomacy + Foreign Trade

President Abdel Fattah El Sisi met with Palestinian President Mahmoud Abbas in Cairo yesterday for what media reports are calling a reconciliation meeting, according to the Associated Press. El Sisi reportedly promised Abbas to push for a resumption of the stalled peace process when he meets with US President Donald Trump next month. Both leaders reaffirmed their commitment to a two-state solution to the conflict, Xinhua said.

Sudan is escalating its dispute with Egypt over Halayeb and Shalatin: The Sudanese government is looking for “diplomatic means” to force Egyptians out of the disputed border area of the Halayeb and Shalatin Triangle, Anadolu Agency reports. The head of Sudan’s Technical Committee for Border Demarcation Abdallah al-Sadiq said that the panel has been meeting to draft a new plan of action for the disputed territory and is in possession of documents “that clearly prove that Halayeb is Sudanese territory,” the Sudan Tribune reported on Sunday.

Seven new ambassadors formally presented their credentials to President Abdel Fattah El Sisi yesterday, according to an emailed statement from Ittihadiya. New EU delegation chief Ivan Surkos said in a tweet after the credentials ceremony that he will “work tirelessly to strengthen” the EU’s partnership with Egypt. Those presenting included:

  • Jordan — Ali Hamdan Al-Ayed
  • Bangladesh — Muhammad Ali Sorcar
  • Finland — Laura Kansikas-Debraise
  • People’s Democratic Republic of Korea — Ma Tong Hui
  • European Union — Ivan Surkos
  • Ethiopia — Taye Atske Selassie
  • Kyrgyzstan — Abdilatif Jumabaev

Energy

Dolphinus in talks to import gas from Israel’s Tamar field

Representatives from major shareholders in the Tamar gas field in Israel were reportedly here over the weekend to discuss exporting gas to Egypt through Dolphinus Holdings, according to unsubstantiated reports from Masrawy picked up by Al Mal. Tamar field shareholders, including Delek, Noble, and Isramco, had reportedly agreed to supply 60 bcf from the Israeli field through a pipeline and had been here to iron out the details. This is the second such visit we have heard of in under a year after the Israeli Knesset reportedly approved last year an export agreement with Egypt’s Dolphinus. We are skeptical now as we were back then as this would appear to signal a reversal in Prime Minister Sherif Ismail’s stand against gas imports from Israel until the USD 1.76 bn international arbitration award won by Israel Electric against state petroleum companies EGPC and EGAS and pipeline operator EMG is cleared.

Drilling operations begin in South Disouq

SDX Energy has begun drilling operations the at South Disouq SD-1X well in the Nile Delta, the company said in a statement. Drilling is expected to take 30-45 days.

Solar power companies still lobbying for FiT increase, consider exiting projects

Seven companies signed on to the second phase of the feed-in tariff (FiT) program are reportedly considering backing out due to the rising costs, sources tell Al Borsa. The move appears to be the latest attempt by solar power companies to push for an increase in the tariff, and the first since the electricity ministry raised the companies’ tab under the new cost-sharing agreement. The companies, which were unnamed, are in talks with the Electricity Transmission Company to negotiate the possibility of raising the FiT and getting some tax breaks and incentives to offset the impact of added cost, the sources added.

Manufacturing

Looks like the Investors’ Association might lobby for a higher minimum wage

The commie-capitalists at the Union of Egyptian Investors Associations (UEIA) are at it again, forming a committee to lobby for minimum wages to be increased to EGP 2,000 per month, Al Borsa reports. Here’s an idea, chaps: Stuff the PR stunt and put your money where your mouths are by mandating that all your members start paying a living wage today.

Health + Education

AMECO plans to begin exporting its products to the US

The Arab Medical Equipment Company (AMECO) plans to begin exporting its products to the US in 2H17, company chairman Mohamed El Hambouly tells Al Mal.

Expenditures on hospital development in 2016 reached EGP 6 bn -Health Minister

Expenditures on hospital development reached EGP 6 bn last year, while a total of EGP 3.3 bn was spent on hospital supplies throughout the year, Health Minister Ahmed Rady said yesterday, Al Borsa reports.

Space sciences delegation to head for talks on higher education grants

A delegation from the National Authority For Remote Sensing & Space Sciences will head to Japan on 27 March for talks to get Japanese funding for Masters and PhD scholarships in aerospace engineering, Al Mal reports.

Tourism

Travelport to invest an extra USD 20 mn in 2017

Travel platform Travelport plans to invest an extra USD 20 mn this year, Egypt country manager Mervat Alfy tells Al Mal. The investments will go primarily towards developing an app for travel agencies and solutions for mobile payments.

Tourism Ministry to announce decisions to “mitigate” impact of visa hikes

Tourism Minister Yehia Rashed promised to take decisions which would “mitigate” the impact of raising prices of entry visas after acknowledging that the decision has drawn the ire of the sector. In an interview with Al Shorouk, he said these decisions will be announced in the coming weeks, but offers no suggestion as to what form the measures could take.

Telecoms + ICT

Egypt, China sign agreements for NileSat 2, SCZone technical education center

Egypt and China signed an agreement to conduct a feasibility studies for the USD 64 mn NileSat phase two project, Al Masry Al Youm reports. China will provide a USD 23 mn grant to establish a Satellite Assembly, Integration and Test Centre as part of the project. Another agreement was signed for a USD 7 mn Chinese grant to fund a technical education center at the Suez Canal Economic Zone.

Global Telecom completes USD 60 mn payment to Atheer

Global Telecom Holding (GTH) paid Atheer Telecom Iraq the USD 60 mn indemnity that an English High Court found it liable of in February, the company’s IR director Alaa Tayeh tells Al Mal. Both GTH and Orascom Telecom Iraq (OTI) had been forced to pay USD 60 mn, in addition to USD 7.75 mn in accrued interest and GBP 1.25 mn in interim legal costs, to Atheer on grounds of a tax dispute that originated in 2007 from the sale of OTI mobile subsidiary Iraqna to Atheer.

Banking + Finance

Banque Misr to receive USD 50 mn Sharia-compliant facility from GCC lenders

Banque Misr reached an agreement with the Abu Dhabi Islamic Bank (ADIB) to arrange a USD 50 mn syndicated loan from a number of GCC lenders, Banque Misr’s Vice Chairman Akef El Maghraby told Al Borsa. Banque Misr was initially seeking USD 150 mn, but settled on a third of that amount following negotiations with ADIB.

Sports

Egyptian cyclist suffers heart attack during African cycling championship

22-year-old Egyptian cyclist Eslam Nasser suffered a heart attack and died while competing in the African Continental Track Cycling Championships in South Africa yesterday, Ahram Online reports. Egypt’s delegation to the championships has yet to decide whether to forfeit the remainder of the competition.

On Your Way Out

Traffic cops in Ismailia, Luxor, and Beni Suef are kicking it up a notch after the Interior Ministry gave them shoulder cams to document traffic violations and keeping a closer eye on what’s going on in the streets in general, Al Shorouk says. The cameras will be distributed to traffic directorates across the country over coming weeks.

The markets yesterday

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EGP / USD CBE market average: Buy 18.0838 | Sell 18.1894
EGP / USD at CIB: Buy 18.10 | Sell 18.20
EGP / USD at NBE: Buy 18.00 | Sell 18.10

EGX30 (Monday): 13,023 (-0.5%)
Turnover: EGP 1.1 bn (151% above the 90-day average)
EGX 30 year-to-date: +5.5%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session down 0.5%. CIB, the index heaviest constituent declined by 1.5%. The EGX30’s top performing constituents were: Amer Group up 3.3%, Palm Hills up 1.6%, and Domty up 1.2%. Yesterday’s worst performing stocks included ACC down 3.0%, Heliopolis Housing down 3.0%, and Oriental Weavers down 2.9%. The market turnover was EGP1.1 billion, and local investors were the sole net sellers.

Foreigners: Net Long | EGP +15.7 mn
Regional: Net Long | EGP +7.4 mn
Domestic: Net Short | EGP -23.1 mn

Retail: 73.7% of total trades | 73.9% of buyers | 73.5% of sellers
Institutions: 26.3% of total trades | 26.1% of buyers | 26.5% of sellers

Foreign: 12.6% of total | 13.3% of buyers | 11.9% of sellers
Regional: 7.6% of total | 7.9% of buyers | 7.2% of sellers
Domestic: 79.8% of total | 78.8% of buyers | 80.9% of sellers

WTI: USD 48.22 (-1.15%)
Brent: USD 51.69 (-0.14%)
Natural Gas (Nymex, futures prices) USD 3.04 MMBtu, (+3.15%, April 2017 contract)
Gold: USD 1,234.00 / troy ounce (+0.31%)

TASI: 6,919.3 (-0.5%) (YTD: -4.0%)
ADX: 4,457.8 (+0.9%) (YTD: -1.9%)
DFM: 3,477.5 (-0.4%) (YTD: -1.5%)
KSE Weighted Index: 425.1 (+0.1%) (YTD: +11.8%)
QE: 10,406.8 (+0.7%) (YTD: -0.3%)
MSM: 5,670.7 (-0.2%) (YTD: -1.9%)
BB: 1,374.2 (-0.2%) (YTD: +12.6%)

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Calendar

29 March (Wednesday): First Time SME Equity Fund Managers in Egypt Opportunities and Challenges seminar, Marriott Zamalek Hotel, Cairo.

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.

25-26 April (Tuesday-Wednesday): MENA New Energy conference, Hyatt Regency, Dubai.

28 April – 08 May (Friday-Monday): IMF delegation visit to Egypt to assess economic reforms.

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. © 2022 Enterprise Ventures LLC.

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