Tuesday, 2 May 2017

Look busy — the IMF delegation has arrived

TL;DR

What We’re Tracking Today

Good Tuesday morning, folks. It may feel rather a lot like Sunday, but it’s actually hump day and we’ve wrapped the last holiday we’ll have until after we slide into Ramadan. And because today is also the second day of May, we have a ream of economic and industry data to which to look forward over the coming week, including the Markit / Emirates NBD Egypt, UAE and Saudi purchasing managers’ indexes (all of which will be posted here tomorrow at 6:15am) and the Central Bank of Egypt’s reserves figures.

Also this month: The Central Bank of Egypt’s monetary policy committee will hold a rare Sunday meeting when it gathers on 21 May to review interest rates ahead of Ramadan. The meeting was reportedly pushed forward from 18 May as CBE Governor Tarek Amer is scheduled to attend an annual gathering of central bankers from francophone countries.

Be on your best behavior this morning, ladies and gentlemen: The IMF arrived in town on Sunday. The delegation, here until 11 May, is benchmarking the Ismail government’s progress on the economic reform program to which it agreed as a condition of a USD 12 bn IMF bailout. The IMF team met yesterday with Deputy Finance Minister Ahmed Kouchouk, AMAY reports, and inflation weighed heavily in the talks. The officials, who will recommend whether or not the IMF disburses the second tranche (USD 1.25 bn) of its USD 12 bn facility, will be meeting with Finance Minister Amr El Garhy today to talk about upcoming legislative reforms as well as Central Bank Governor Tarek Amer, according to Al Mal. A sit-down with Deputy Finance Minister Amr El Monayer on tax reforms is set to happen on Wednesday, the newspaper adds. Subsidy cuts, budget deficit, curbing inflation, and legislative reforms are among the top items on the agenda, according to Al Ahram.

The acquisition of Barclays Bank by Attijariwafa hasn’t been finalized, we’re told. A source close to the transaction tells us that media reports to the contrary are wrong. The transaction was announced in October 2016; some claimed at the time that it was due to close by year’s end, which struck us as ambitious. Another source tells us we can expect an announcement in a week or so that the transaction has been executed.

Shares of Apple surged to an all-time high yesterday, the Financial Times reports, ahead of the company’s earnings release and analyst call, both scheduled for today. More on that last bit on Apple’s investor relations website. The WSJ, meanwhile, is speculating that Apple will report its cash pile has grown to USD 250 bn, which it says will “ratchet up pressure on the tech giant to dole out more money to shareholders or make splashy acquisitions.”

Sound smart this morning: Apple has more cash than Canada has foreign currency reserves. Or as the WSJ puts it, the tech giant’s cash hoard is “greater than the market value of either Wal-Mart Stores Inc. or Procter & Gamble Co. and exceeds the foreign-currency reserves held by the U.K. and Canada combined.”

The US has issued a travel alert for Europe, citing an elevated threat of a terrorist attack, Reuters reports this morning, and “saying U.S. citizens should be aware of a continued threat of terrorist attacks throughout the continent.” You can read the warning for yourself here.

Dubai has created its own font. How quaint. The New York Times has more.

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That is all.

On The Horizon

Egypt expects to receive its first 2 mn bbl shipment of crude oil from Iraq on 12 May, Oil Minister Tarek El Molla tells Youm7. According to the minister, the one-year agreement will see Iraq sending 2 mn bbl every second month for a total of 12 mn bbl.

Enterprise+: Last Night’s Talk Shows

President Abdel Fattah El Sisi’s call-in to Kol Youm’s Amr Adib was the highlight of the night on the airwaves. The call centered mostly around the rehabilitation and development of Egypt’s most impoverished neighborhoods and villages (watch, runtime 7:18).

El Sisi said that the government plans to complete work on 180k residential units by 30 June next year to relocate the citizens of these areas, where infrastructure is severely underdeveloped and population density is significantly above average. El Sisi also urged banks to also include these types of development initiatives to their CSR programs. The administration is also starting to take steps to keep population growth in check, the president said (watch, runtime: 16:35).

Adib also spoke to the head of the Armed Forces’ Engineering Authority Kamil El Wazir, who told the host that he allocated EGP 1 bn to 78 of Egypt’s neediest villages, mainly for work on infrastructure development (watch, runtime 11:47).

On Hona Al Asema, Lamees Al Hadidi spoke to Egypt’s ambassador to Germany, Badr Abdel Aaty, about the German government launching an investigation into the death of 22-year-old Egyptian student Shaden Mohamed El Gohary in a car accident. There are persistent reports that the woman’s death not an accident, but a hate crime (watch, runtime 11:53).

The ‘citizenship-for-sale’ debate will erupt in 5, 4, 3… Lamees then moved on to discuss draft legislation before the House suggesting that residents who have been in the country for more than five years could obtain Egyptian citizenship in return for making a substantial deposit an Egyptian bank. MP Alaa Abdel Moneim phoned in to discuss his concerns about the proposed law, which he said would compromise the notion of Egyptian identity (watch, runtime 4:33).

Over on Al Hayah Al Youm, Deputy Finance Mohamed Maait told host Lobna Asal that the country has already survived the most challenging parts of the economic reform program. He added as well that GDP growth ideally needs to stand somewhere between 7-8% if Egypt’s population growth remain at 2.6% (watch, runtime: 538).

Speed Round

Speed Round is presented in association with

Egypt has made significant progress on the economic front but still has a long way togo, the IMF will say today in its Regional Economic Outlook on the Middle East and Central Asia report, Al Borsa reports based on what it says is a leaked copy of the report due to be released at 8:00am today. Egypt needs to bolster its reserve ratio to be better equipped to handle its current economic challenges, but more importantly, the government needs to come up with a strategy to fight inflation, which crossed the 30% barrier earlier this year, the report will allegedly say.

IMF sees inflation averaging 24.8% this year, up from previous forecast of 22%:Planned legislative and fiscal reforms are expected to put downward pressure on inflation, but the IMF is now predicting we’ll see an average of 24.8% this year, up from its previous estimate of 22%. The institution sees inflation cooling to 11.6% in 2018. Central bank interest rates are one way to fight inflation, but a more restrictive fiscal policy might affect loan growth this year, the report warns.

Oil prices are a double-edged sword: Expected increases in global crude oil prices might also make it difficult for the government to maintain its high rate of spending on further development as well as subsidies. Oil imports are also expected to increase by 30% this year compared to the previous one, the report states, warning that further increases might lead to greater austerity measures. On the other hand, higher oil prices worldwide might increase foreign currency inflows through remittances and foreign investment.

Exports growing: Revenues from exported goods and services are expected to reach USD 39.1 bn this year and grow to USD 43.9 bn next year, while imports are expected to stand at USD 69.9 bn and grow to USD 72.8 bn next year. The country’s current deficit is also seen shrinking to 5.3% from 5.6% last year, before falling to 3.9% next year.

Enhance competition: Egypt has also taken great strides on the structural reforms and infrastructure development front, but needs to place more emphasis on encouraging healthy competition.

The full IMF report will be available for download hereat 8am CLT (10am Dubai time) today.

BNP Paribas’ Emerging Markets commentary from IMF / World Bank Spring meetings said that, in Egypt, the “authorities expect a strengthening in the export base after the currency devaluation and also see an improvement in tax revenues with the implementation of various fiscal reforms.” The bank says the meetings showed an expectation for tax revenues to grow “by some 1% of GDP per year in the next 5 years.” It also said there would be “no new Eurobond issuance expected before 1Q2018,” but this came before remarks from El Garhy who said Egypt was considering issuing a USD 1.5-2 bn eurobond in the coming weeks.

The House of Representatives’ general assembly is set to begin debate on theproposed Investment Act today. The prelude to a final vote on the bill comes after the House Economic Committee concluded its review, according to Al Borsa. We’ll believe that when we see it, as the government is reportedly yet to sign off on new amendments recently introduced by the House’s Economic Committee that don’t seem to be sitting well with the Finance Ministry, particularly a decision to bring back private free zones, but with added stipulations, state officials tell Al Mal.

Private-sector owned free zones: Real controversy or straw man? Economic Committee chair Amr Ghallab had announced on Sunday night that private free zones were a necessity in light of Egypt’s economic difficulties and the need to attract more investment. The decision, which makes the establishment of new private free zones subject to government approval, is not yet final, high-ranking government officials also tell Al Borsa. New private free zones were banned by amendments introduced to the Investment Law in 2015, but existing zones were allowed to continue operations until the end of their contracts. MPs and members of the business community have been lobbying for their comeback since discussions over the new Investment Act began, but the Finance Ministry had voiced repeated objections to the idea over the last several months. The Federation of Egyptian Chambers of Commerce and other businessmen and associations naturally applauded the move. The Finance Ministry is yet to issue a formal response on the issue but Investment and International Cooperation Minister Sahar Nasr is set to attend the discussions at the general assembly session, she told the press on Monday.

Investment incentives and a ‘new’ one-stop shop: Other amendments to the Investment Act, which has now been reduced to 95 from 99 articles, include slightly amending the one-stop-shop window to an Investor Service Center that would operate under the jurisdiction of the General Authority for Free Zones and Investment (GAFI). In addition to setting the cap for foreign labor at 20% at most for exceptional cases, the amended bill also offers further incentives, such as allocating free land and offering higher tax rebates to investors operating certain types of projects in strategic locations, including Upper Egypt, Fayoum, Marsa Matrouh, and the Suez Canal Economic Zone, to name a few.

Retroactivity — in a good way: Under the amendments coming out of the Economic Committee, any investment or new company that formed up to 30 months before the law’s passage would be eligible to benefit from the incentives outlined in the act and its subsequent executive regulations.

Caveat: The law sets a broad framework, but you’ll want to read it against (a) the policy framework it’s designed to turn into reality and (b) the executive regulations on the act, which are where the proverbial rubber meets the road. Investment Minister Sahar Nasr has promised to do her best to expedite issuance of the executive regs for the act.

Background on the framework: This is all in line with the broad principles handed down last year by the Supreme Investment Council headed by President Abdel Fattah El Sisi

This is a developing story, so look for more tomorrow as additional media reports surface. In the meantime, start with a read of Al Ahram’s rundown of the amendments passed by the committee.

Is Donald Trump Middle East-bound? Enterprise paid a visit to the non-profit Middle East Institute in Washington, DC, as part of a media delegation on the sidelines of the AmCham Doorknock mission that kicked off Monday. We sat with Paul Salem, MEI’s vice president for policy and research, and Gerald M. Feierstein, director of the MEI’s Center for Gulf Affairs. Key takeaways from the briefing:

  • US President Donald Trump could do a regional tour in the coming months;
  • The US is very interested in seeing Egypt serve as a hub for exports to Africa, but we face tough competition from Morocco and Algeria;
  • It is unclear whether US non-military aid to Egypt will be trimmed as part of the Trump administration’s cutbacks on foreign assistance;
  • The Trump administration places a higher premium on security coordination than did the Obama White House. The new administration will be more willing to lift restrictions on security assistance, but the view in Congress could differ, given concerns including on the ability of opposition voices to be heard and the effectiveness of counterterrorism efforts;
  • Good news for the Egyptian Defence Ministry: The Trump administration is more interested in dealing with the security situation in Libya, a key foreign policy concern for Egypt. This contrasts with the Obama’s focus on a political solution through the formation of coalition government in Tripoli;
  • There is no more talk about designating the Muslim Brotherhood a terrorist organization;
  • The US has retreated from the idea of moving its embassy from Tel Aviv to Jerusalem.

EU delegation brassed-off about ‘automotive directive’: The proposed automotive directive, which given cash incentives to Egyptian car assemblers who go further up value chain into manufacturing, would violate the terms of Egypt’s free trade agreement the European Union, EU Mission Chief to Egypt Ivan Surkoš told reporters on Sunday, Al Mal reports. The bill proposes giving local assemblers give tax breaks and payouts from an incentive fund to protect them against what the industry says are unfair advantages enjoyed by EU, Turkish and Moroccan imports. European car makers and their domestic importers have previously complained to the European Commission and are claiming that bill might be harmful to exporters in the long run. European carmakers had warned in their letter of complaint that the bill could also impact future European investments in Egypt’s auto industry. (Not that pure exporters of CBU vehicles to Egypt have invested a penny here in the past decade or ten…) The EU plans to discuss the automotive directive with Trade Minister Tarek Kabil in Brussels soon, Surkoš added.

In other industry news: The Federation of Egyptian Industries automakers’ divisionasked car distributors to stop imports until existing stocks are sold, division head Hassan Sleiman tells Al Mal. Car sales have been in a slump since prices soared as a result of the EGP float last November.

EFG Hermes has again topped the securities brokerage league tables with a 25.6% market share for the month of April, while Beltone is giving perennial number-two finisher CI Capital a run for its money. CI Capital had a 9.5%market share in April, followed by Beltone at 7.3%, Pioneers at 4.2% and Mediterranean for Brokerage at 3.2%. On a year-to-date basis, EFG Hermes has a 22.3% market share, followed by Al Rowad Securities (9.9%), CI Capital (8.3%), Pharos Holdings (4.6%) and Beltone (4.3%). You can download the YTD league table here or the April table here. Both are pdfs.

Riad & Riad law firm is unhappy with the new, controversial amendments to the Judicial Authorities Act, calling them “clearly tainted with unconstitutionality.” It says claims that the amendments will not affect judicial independence are “flawed … For example, the head of the State Council, in his capacity and by default, is the president of the Supreme Administrative Court which reviews and decides on the challenges initiated against the decrees issued by the government and the President. He is also the head of the judicial panel which decides on the challenges initiated against the results of the presidential election. To add more, the president of the Court of Cassation, in his capacity, is one of the members of the judicial panel which adjudicate the President in case of impeachment according to Article 159 of the Constitution.” This makes the positions of the heads of judicial authorities carry a “serious and sensitive judicial implications and not a mere administrative job.”

The judiciary isn’t staying quiet, either: The Judges Club of Egypt’s advisory board met yesterday and is considering writing its own, alternative Judicial Authorities Act, Al Masry Al Youm says, citing unnamed judicial sources. Club executives are increasingly unhappy that the Court of Cassation (the nation’s highest appeals court) refuses to call for an assembly of all the nation’s judges on Friday to discuss issue. The club ultimately decided to indefinitely postpone its general assembly meeting, spokesman Hazem Rasmy said yesterday, according to the newspaper.

MOVES- President Abdel Fattah El Sisi appointed head of the Suez Canal Authority Mohab Mamish as the head of the Suez Canal Economic Zone (SCZone). Mamish, as was speculated, replaces Ahmed Darwish, who said he did not resign from his position, but that he respects El Sisi’s wishes and vision, Al Masry Al Youm reports. The primary focus for the zone in the coming period will be attracting investment as it presses ahead with infrastructure projects and a comprehensive plan to develop the zone’s ports, Mamish said in an interview with Al Ahram.

MOVES– Hussein El Refaie was appointed as the new president of the Suez Canal Bank, succeeding Tarek Kandil, Al Borsa reports. Prior to his appointment, El Refaie served as the National Bank of Egypt’s chief financial officer and executive director.

Only 37% of Egyptians are dissatisfied with the House of Representatives’ performance over the past year, according to a poll the Egyptian Center for Public Opinion (Baseera) released on Sunday. Thirty percent of respondents said they believe the House is doing a good job, while the remaining 33% were undecided. The poll notes that there is an inverse relationship between respondents’ education level and their satisfaction level: 19% of respondents with education beyond thanawiya amma report they approve of parliament’s performance. That rate rises to 40% among those who left school before thanawiya amma.

Not the Onion: The moderately popular House of Representatives may put the fate of the Tiran and Sanafir handover agreement in the public’s hands through a popular referendum, deputy chair of the House Defense Committee Yehia Kedwani tells Al Shorouk. Odds of this happening: Roughly on par with those of Cairo being buried under a blizzard this afternoon.

Two police captains and one other officer were killed in a drive-by shooting in Cairolate last night at the intersection of the Waha Road and the Ring Road near Nasr City, according to an Interior Ministry statement. Five other members of the police service were injured in the shoot-out. As of dispatch time, the ministry had not released any information on the identity of the perpetrators.

A handful of international stories worth your time this morning if you have a moment:

The folks running the Statelet of Qatar are going to be having a Maalox Moment (watch, run time: 0:28) now that France has become the latest country to have opened an investigation into the process that saw Hades awarded the 2022 World Cup.

The Financial Times is (very subtly) warning us that “Hedge funds bolster staff despite performance worries,” which — reading between the lines — augurs poorly for the hedgies. Despite redemptions of USD 110 bn last year, headcount in the industry is up 15% over 2010 levels…

Meanwhile, Goldman Sachs is getting its hands dirty, the Wall Street Journal writes. “The firm has been opening its checkbook … to finance corporate takeovers, lend against mansions and art, and make personal loans for things such as kitchen remodels and fixing broken windshields. It is exploring new credit businesses such as trade finance, equipment leasing and extending credit that consumers use for online purchases, according to people familiar with the discussions. ‘We’re a bank,’ Chief Executive Lloyd Blankfein said in a February interview. ‘We should act like one.’” Sounds to us a lot like the playbook just about every Egyptian investment bank is following…

CORRECTION- In reference to our piece on Sunday regarding Germany’s parliament approving a security cooperation pact with Egypt, our favorite German (and good friend) Andre El-A points out: “Happy ‘Loyalty Day’ … The Reichstag was established 1871 and disbanded in 1918 — it was succeeded by the Weimar National Assembly which led to the NSDAP gaining the power and – well the rest is history… Today the German Bundestag can approve and disapprove things, and they — post re-unification — do meet in the former building that the Reichstag used in Berlin.”

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Egypt Holiday Photo of the Day

Today’s Egypt Holiday Photo of the Day is of the sand dunes surrounding the Siwa Oasis. Pristine dunes surround Siwa Oasis, one of Egypt’s most isolated settlements with only about 23,000 Berbers living in the area who developed a unique culture and distinct language called Siwi. The image was shot for CIB’s 2016 Annual Report (microsite and print edition) by Zeina Abaza at Inktank Communications, which has produced the bank’s annual report for the past eight years.

Egypt in the News

It’s a blessedly quiet morning for Egypt in the international media, with little coverage and no single story dominating the imagination of the world’s scribes. Wire services including Reuters and AFP are covering the rare drive-by shooting in Cairo of three members of the police service, including two captains, so look for more pickups of this overnight story as the day wears on.

Also getting attention: UN High Commissioner for Human Rights says Egypt’s “heavy-handed security measures … were fostering the very radicalisation it was looking to curb,” Reuters reports.

Pope Francis’ visit to Egypt is also getting the last bit of coverage this morning, including images of the papal trip and input from various attendees of the pope’s homily at the Air Defense Stadium on Saturday. Vatican Radio also has the full text of the pontiff’s presser on board his flight back to Rome, during which he touched on concerns about voicing his support for the Egyptian government, among other topics.

Pope Francis’ visit to Egypt has the possibility to go down as an important historic moment, John L Allen Jr writes in Crux. Allen says “perhaps what Pope Francis’s brief outing to Egypt captured was the collision of one of the most important Muslim nations in the world ready to draw a line against fanaticism, and the single Christian leader in the world most capable of helping them pull it off.” The Hill says the Pope’s visit delivered a message of peace in Egypt.

…The Pope’s visit defies all critics, Basma Elbaz writes in the Huffington Post. She says the visit “was full of positive signs and it represented a victory on different fronts, not only on the front of mending ties with the Muslim world – especially that it suffered tensions during Benedict years – but also on the front of ecumenism. He sent a message of hope and peace to Muslims and Christians alike.” However, Robert Fisk was less optimistic in his piece for The Independent, in which he writes that Christians face deeper challenges than the Daesh attacks. He says Christians in Egypt have needed the regime to protect them, but this has led to them becoming “associated with the regime itself.”

Other coverage worth a skim:

  • Amnesty International says Egyptian workers and trade unionists have been faced with a punitive campaign to deter and punish them from mobilizing or going on strike.
  • Some of the Israelis who were expelled from Sinai following the signing of the peace agreement with Egypt are asking the Israeli government to recognize and remember them, reports Arutz Sheva.

On Deadline

How did Egypt’s pharma production fall from such great heights? In the 1960s and 1970s, pharma production in Egypt was on the rise in both quality and quantity as pioneers in the industry actively sought to develop the country’s know-how, which stands in stark contrast with contemporary practices, Nahed Youssef writes in a column penned for Al Shorouk. The decline was put in motion by Sadat’s economic policies, and was carried through by successive governments over the course of 50 years. Youssef says that Egypt has enough resources — in terms of a labor force, factories, and available capital — and simply needs the implementation of the correct policies to reverse the downward trend. Correct policies starting with a return to state socialism, Nasser style, right?

Diplomacy + Foreign Trade

President Abdel Fattah El Sisi has urged the US to help restart negoti­ations between Israel and the ­Palestinians, saying it is “important that the US returns to play an ­active role in efforts to resume ­negotiations between the Palestinians and Israel,” according to AFP. This came as Egypt and the Palestinian Authority coordinated their positions in the meeting between El Sisi and Palestinian Authority President Mahmoud Abbas, JPost reports. The meeting took place ahead of Abbas’ planned meeting with US President Donald Trump in which a peace plan is likely to be presented. JPost says the peace plan “would outline an independent Palestinian state based on the pre-1967 borders with east Jerusalem as its capital.”

Foreign Minister Sameh Shoukry is scheduled to meet Ugandan President Yoweri Musevini today to discuss water security and cooperating with the Nile Basin countries, Ahram Gate reports. Uganda is set to host the Nile Basin Initiative’s first presidential summit later this month.

Energy

OC fully withdraws from FiT phase two projects

Orascom Construction (OC) has fully withdrawn from feed-in tariff phase two projects entirely, Al Mal reports. Concessions Director Khaled El Degwy says the withdrawal is likely because the project is no longer financially feasible and that OC is ready to return the land it was allocated for a 50 MW solar power plant in Benban. The withdrawal is not because OC failed to secure funding, El Degwy says, as the company has already presented initial funding approval letters.

EEHC receives 3 offers for Hamrawein

The Egyptian Electricity Holding Company received three offers from American, Chinese, and Japanese conglomerates for the 6,000 MW Hamrawein “clean coal” power plant, unnamed Electricity Ministry sources tell Al Borsa. The plant is expected to take seven years to complete, with an investment value of as much as USD 10 bn. We like energy. Lots and lots of energy. But at this stage, with Zohr due to come on stream and the increasing economic rationale for solar power, we have to ask: Why are we talking about burning coal?

EEHC chief in Riyadh for talks on Saudi power linkage project

Egyptian Electricity Holding Company (EEHC) Chairman Gaber El Dessouki is in Riyadh to the link-up of the Saudi and Egyptian electricity grids, Al Masry Al Youm reports. The interconnection project will see Egypt and KSA exchange up to 3 GW of electricity, with trial operations slated to begin in 2019.

NREA to begin receiving offers for 250 MW Gabal Al Zait wind power station on 20 May

The New and Renewable Energy Authority will begin receiving offers for a 250 MW wind power station in Gabal Al Zait as of Saturday, 20 May, sources tell Al Borsa. Ten companies, including Siemens, Axion, and Vestas, are expected to bid. The project will be financed by global institutions including Germany’s KfW and the European Investment Bank.

Infrastructure

AOI to develop EGP 700 mn water stations in Ismailia

The Arab Organization for Industrialization reached an agreement to develop two water stations in Ismailia at a total cost of EGP 700 mn, Al Borsa reports. The stations are expected to be completed by the end of September.

Basic Materials + Commodities

Winvest sells majority stake in Seven Sky for EGP 40 mn

Winvest Capital for Development and Investment (WCDI) has completed its exit from food producer Seven Sky, the owner of the Kenzy brand, according to Al Mal. A consortium of businessmen, led by Seven Sky’s Chairman Sherif Ghaly purchased WCDI’s 51% stake for EGP 40 mn. WCDI had increased its stake in Seven Sky to 51% from 20% through a capital increase in 2014. The company says its return on investment since the capital increase was 25%.

Gov’t bought 237k tonnes of wheat from local farmers so far

Egypt bought 237k tonnes of wheat from farmers since the start of the local harvest season early April, the Supply Ministry said, according to Reuters. Minister Ali El Moselhy had said the government is targeting buying about 3.8 mn tonnes of wheat from local farmers throughout the current harvest season, which runs until the end of July.

Manufacturing

Trade Ministry to launch eight industrial complexes in Upper Egypt mid-May

The Trade Ministry is planning to launch eight licensed industrial complexes in Upper Egypt in mid-May, Trade Minister Tarek Kabil announced on Friday, Al Masry Al Youm reports. The complexes, each of which has the capacity to accommodate up to 200 factories, are in Sohag, Assiut, Qena, Beni Suef, Fayoum, Luxor, and Aswan.

Real Estate + Housing

Oriental Urban Development to invest EPG 4 bn in 2017-18, mulls 2018 IPO

Oriental Weavers Group subsidiary Oriental Urban Development is planning on investing EGP 4 bn in Egypt during 2017-18 to develop a mix of touristic and residential projects on some 5 mn sqm of company-owned land, according to owner and founder Mohammed Farid Khamis, Al Borsa reports.

Tourism

Cairo Airports begins granting visas on arrival for North African tourists

Cairo Airport began yesterday granting entry visas on arrival for North African tourists currently living in Gulf countries, Al Masry Al Youm reports. The new measure does not apply to citizens of Arab countries such as Syria, Sudan, Lebanon, Jordan, and Palestine.

EgyptAir receives 25 offers from global financing institutions for fleet overhaul

EgyptAir is looking into 25 offers from global financing institutions for the planned overhaul of its fleet, EgyptAir Holding chairman Safwat Mosallam told Al Borsa. According to Mosallam, the company will complete its review of the offers and decide on the framework for the fleet update by mid-July.

Banking + Finance

EFSA lifts Acumen-BPE suspension

The Egyptian Financial Supervisory Authority (EFSA) has lifted a three-year suspension it had placed on asset manager Acumen-BPE in February, Al Mal reports. Acumen-Beltone is a JV between Acumen Holding and BPE Partners (formerly Beltone Private Equity). The asset manager’s suspension came after the company’s general assembly voted to suspend activities until it rebranded as Acumen-BPE and secures new business. Chairman Hany Tawfik the move was made in order to avoid certain fixed costs and was reversed once the company submitted a request to EFSA to do so.

CI Capital to launch EGP 50 mn equities fund in 2H2017

CI Capital is in talks with an unnamed bank to set up a new EGP 50 mn equities fund, the investment bank’s Head of Asset Management Amr Abol Enein told Al Mal. He says CI Capital is looking to launch the fund in 2H2017.

NBE lifts caps on international credit card spending

The National Bank of Egypt has lifted caps on international use of its credit cards, and is looking into doing the same for debit cards, NBE Vice President Yehia Aboul Fotouh tells Youm7.

Other Business News of Note

El Sisi to support workers’ emergency fund with EGP 100 mn from Tahya Misr

President Abdel Fattah El Sisi announced transferring EGP 100 mn from the Tahya Misr fund to support the workers’ emergency fund, Al Masry Al Youm reports. The announcement came during El Sisi’s speech on Sunday in celebration of Labor Day. El Sisi also said the state will focus on supporting labor-intensive industries and will invest in developing the capabilities and productivity of Egyptian workers.

Egypt Politics + Economics

Customs exchange rate kept at EGP 16.5 per USD 1

The Finance Ministry has kept the customs exchange rate unchanged at EGP 16.5 per USD 1 for May, Deputy Finance Minister Amr El Monayer told Reuters. The newswire notes that the fixed rate is around 10% below the market exchange rate.

Egypt cancels seven-year treasury bond, bankers speculate rates were too high

The central bank cancelled a seven-year treasury bond sale on Sunday, according to Reuters. “The central bank and the finance ministry did not immediately say why the bond auctions were cancelled. But two bankers said most likely the bids from the banks were too high for the finance ministry to accept.” Yields on three-year bonds rose to 17.229% from 17.097% on Sunday as well.

Hamas cuts ties with Ikhwan

Hamas has cut its ties with the Ikhwan, leader Khaled Meshaal said while presenting the group’s policy document in Qatar yesterday, Reuters reports. Meshaal maintained that the group still associates with the Ikhwan’s school of thought, but is “an independent Palestinian organization.” Uh, whatever, dude.

On Your Way Out

The Sherif Ismail government has allocated EGP 1.72 bn to supporting various antiquities projects currently in the works, including development work at the Giza Plateau, the Baron Palace, the Jewish Synagogue, and the Greco-Roman museum, to name a few Al Borsa reported on Sunday.

The Armed Forces launched the beta phase of 4G services for its mobile network yesterday, Al Mal reports. Defense Minister Sedki Sobhy attended the ceremony.

Comedian Mazhar Abol Naga has died at age 75, Ahram Online reports.

The markets yesterday

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EGP / USD CBE market average: Buy 18.0312 | Sell 18.1341
EGP / USD at CIB: Buy 18.05 | Sell 18.15
EGP / USD at NBE: Buy 17.95 | Sell 18.05

EGX30 (Sunday): 12,434 (-0.7%)
Turnover: EGP 521.1 mn (52% below the 90-day average)
EGX 30 year-to-date: +0.7%

THE MARKET ON SUNDAY: The EGX30 ended Sunday’s session 0.7% down. CIB, the index heaviest constituent fell 0.4%. EGX30’s top performing constituents were: Porto Group 4.0% up, Domty 1.7% up, and Credit Agricole 1.0% up. Sunday’s worst performing stocks were: Cairo Oils and Soap 18.2% down, Egyptian Iron and Steel 3.6% down, and Amer Group 3.6% down. The market turnover was EGP 521.1 mn, which is the lowest turnover since 3 November 2016, and local investors were the sole net sellers.

Foreigners: Net Long | EGP +12.6 mn
Regional: Net Long | EGP +18.7 mn
Domestic: Net Short | EGP -31.3 mn

Retail: 70.9% of total trades | 68.8% of buyers | 73.0% of sellers
Institutions: 29.1% of total trades | 31.2% of buyers | 27.0% of sellers

Foreign: 13.3% of total | 14.5% of buyers | 12.0% of sellers
Regional: 11.1% of total | 12.8% of buyers | 9.3% of sellers
Domestic: 75.7% of total | 72.7% of buyers | 78.7% of sellers


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PHAROS VIEW

Judging The Current Interest Rate Structure in Egypt — Think in Real Terms, Not Nominal

Noting that the real interest rate for households is positive, while short-term corporate borrowing is less-expensive than the longer term, Pharos Holdings’ Ramy Oraby asks, “Was the CBE’s preemptive nominal interest rate hike, in addition to other monetary policy instruments useful in curbing the inflation rate reaction?” Tap here to read the full report.

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WTI: USD 48.74 (-0.20%)
Brent: USD 51.46 (-0.12%)
Natural Gas (Nymex, futures prices) USD 3.23 MMBtu, (+0.40%, June 2017 contract)
Gold: USD 1,257.30 / troy ounce (+0.14%)

TASI: 7,003.7 (-0.14%) (YTD: -2.87%)
ADX: 4,558.9 (+0.79%) (YTD: +0.26%)
DFM: 3,440.6 (+0.75%) (YTD: -2.56%)
KSE Weighted Index: 405.4 (-0.72%) (YTD: +6.65%)
QE: 10,110.5 (+0.46%) (YTD: -3.13%)
MSM: 5,528.7 (+0.28%) (YTD: -4.39%)
BB: 1,335.7 (+0.26%) (YTD: +0.44%)

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Calendar

04-07 May (Thursday-Sunday): Caféx, CICC, Cairo.

05-07 May (Friday-Sunday): Egypt Property Show, DWTC, Dubai.

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

9-11 May (Tuesday-Thursday): 2nd Egypt Oil & Gas Summit, Cairo.

10-12 May (Wednesday-Friday) The 15th Middle East & North Africa International Franchise Exhibition, AUC Downtown Greek Campus, Cairo.

10-12 May (Wednesday-Friday): RenCap’s 8th Annual Pan-Africa 1:1 Investor Conference, Lagos.

15-17 May (Monday-Wednesday): Morgan Stanley’s 3rd Annual GEMS Conference (EEMEA), London.

14-16 May (Sunday-Tuesday) CI Capital’s fifth annual Egypt Investor Conference, Gouna.

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

21 May (Sunday): Central Bank of Egypt’s Monetary Policy Committee Meeting.

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.

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