Monday, 22 May 2017

Interest rate shocker: CBE hikes rates 200 bps

TL;DR

What We’re Tracking Today

Bad news this morning: The Central Bank of Egypt raised interest rates 200 bps overnight. We’re only starting to get our heads around the implications of the rate hike on borrowing costs for the state — let alone for investment by businesses, who will effectively be borrowing at what were once considered credit card interest rates, so you do the math — and bank margins. We have more in Speed Round, below.

We’re very happy this morning that Enterprise and Inktank are profitable and debt free. And we don’t really want to think at this instant about interest expenses for our friends, readers and clients going forward.

Good news this morning: US President Donald Trump confirmed he’s coming for a visit. His Riyadh speech wasn’t nearly as bad as it could have been. And he likes our president’s shoes. Again, we have chapter and verse in Speed Round.

Down the center: Speaking about borrowing costs for the state: Keep an eye out in the coming days for news of Egypt’s next USD 1.5-2 bn eurobond. The Finance Ministry has already tapped global debt markets in large part because borrowing costs there are so much lower, and the next eurobond issuance is expected this week. The eurobond and last night’s interest rate decision make Egypt one of the world’s emerging market hot spots this week, Bloomberg said last night.

Not a hot spot this month: Frontier markets, where flows remain negative even as emerging markets are running with the bulls — despite “strong growth and soft valuations” on the frontier. That’s a great opportunity for those with some gumption: Templeton’s Mark Mobius recently re-opened his frontier markets fund, saying, “We think it’s an incredible investment opportunity. [Frontier markets] are not owned by many people. They are often misunderstood. Of the 10 fastest-growing countries in the world, all are emerging markets, eight are frontier markets [Ethiopia, Ivory Coast, Myanmar, Uzbekistan, DR Congo, Cambodia, Tanzania and Rwanda, based on economic growth since 2012] … Demographics are very impressive. Urbanisation has a long way to go. Financial penetration is low, therefore there is big potential for growth,” the Financial Times quotes him as saying in a must-read if you have any interest in FM.

Get in touch with your inner finance geek (if you have a Wall Street Journal subscription) and read its series proclaiming that the quants have now officially taken over Wall Street. “For decades, investors imagined a time when data-driven traders would dominate financial markets. That day has arrived,” the paper declares. Installments out this morning are below; the series runs until Friday:

What We’re Tracking This Week

Budget talks at the House: Discussion of the FY2017-18 budget continue today at the House of Representatives, according to Al Mal, with Supply Minister Ali El Moselhy set to meet with members of the economics and budget committees. The budget committee is also expected to discuss spending priorities with the minister of sport. CIT Minister Yasser El Kadi is also due before the House’s Communications Committee this week for budget talks.

The Contractors’ Compensation Act — a bill meant to compensate contractors for losses incurred on government contracts after the EGP float — is expected to come to a plenary session vote at the House of Representatives’ before by 29 May and be enforced before the end of June, the Head of the Federation of Egyptian Contractors Hassan Abdel Aziz told Al Borsa on Sunday. MPs had approved the act in March and passed it on to the Council of State for a final review.

Enterprise+: Last Night’s Talk Shows

The Arab-American Islamic Summit in Riyadh was easily the topic of the night on the airwaves last night.

On Kol Youm, Amr Adib loudly sang Egypt’s praises, saying that the Arab world was mending its relations with the US thanks to Egypt’s good relations with the Trump administration (watch, runtime: 2:16).

Over on Hona El Asema, Adib’s rather more temperate wife Lamees Al Hadidi hosted Cairo University political science professor Moataz Abdel Fattah to weigh in on US President Donald Trump’s speech. Abdel Fattah said that Trump seems to be interested in forming “real alliances” with the Middle East to “remedy the mistakes of his predecessors” — George Bush was too involved, and Barack Obama tried to un-involve himself all too quickly, creating a vacuum that left the Middle East weak and allowed the threat of terror to grow and go global (watch, runtime: 4:27).

Lamees was also impressed with President Abdel Fattah El Sisi’s speech, saying that it clearly outlined what is needed to ensure the success of the US-Egypt partnership to fight terror — subtly implying that the US should designate the Ikhwan a terror group (watch, runtime: 6:37).

Other issues of interest on the airwaves last night:

  • Lamees spoke to Egyptian businessmen and member of the Advisory Council of Egyptian Scientists Hany El Nokrashy about the Dabaa nuclear power plant, which he said was unnecessary in light of Egypt’s recent natural gas discoveries and solar power generation capabilities (watch, runtime: 21:23).
  • Deputy Immigration Minister Nashwa Moussa told Al Hayah Al Youm’s Lobna Asal that her ministry is saving around EGP 12 bn that were earmarked for new premises by moving to the new administrative capital (watch, runtime: 4:04).
  • Planning Minister Hala El Said also told Al Hayah Al Youm that her office was nearly done putting in place a new electronic system to register births and deaths (watch, runtime: 2:34).

Speed Round

Speed Round is presented in association with

The central bank unexpectedly hiked interest rates last night by 200 bps to a new recordhigh: The Central Bank of Egypt’s Monetary Policy Committee moved against market expectations on Sunday night when it decided to raise key interest rates by 200 bps, bringing the overnight deposit rate up to 16.75%, overnight lending rate to 17.75%, and discount rate to 17.25%, according to a CBE statement. Despite monthly inflation levels being on a cooling trend, annual rates are still high, leading the MPC to decide “that tightening monetary conditions warranted a commitment to its price stability mandate.” While monthly headline inflation cooled to 1.69% in April (“its third consecutive month of decline due to fading cost-push pressures”), the MPC suggested it was concerned that “core inflation which excludes volatile food items grew by 1.10 percent (m/m) in April, recording a slight increase after decelerating in February and March.”

Throw in the 300 bps bump that accompanied the float of the EGP and interest rates are up500 bps since November.

The hike is “consistent with the targeted disinflation path,” the central bank said,and is in line with the CBE’s view that inflation will cool to something in the 13% band by the end of 2018 “and to single digits thereafter.” So why is a rate hike the way to go? In the language of the MPC, a rate hike can be used to “contain demand-side pressures and second-round effects resulting from supply shocks that may lead to deviations from inflation targets, as well as to achieve reserve money targets that were designed to be consistent with the inflation targets.”

It’s hard not to see the IMF’s hand at play here. Our friends in the banking community and just about every analyst with whom Bloomberg and Reuters spoke for their respective polls in the run up to yesterday said the rate hike was a bad idea. It would, Bloomberg said, be “counterproductive because the price gains are not being driven by excess demand.” To say nothing about interest rates being a lousy means of transmitting monetary policy in a nation as un-banked as ours, where (generously) perhaps one in five citizens has access to the banking system and SMEs still struggle to qualify for credit. And yet the IMF has — at the highest levels — made clear since April that an interest rate hike was the way to go to curb inflation. It could work. Then again, if our aunt underwent gender reassignment surgery, she could become our uncle.

REAX: Bloomberg quotes Arqaam Capital’s Reham El-Desoki as explaining that the decision “is the textbook answer to high inflation, but the data and the weak transmission channels in Egypt do not warrant an additional rate increase.”

Why would you invest in your business today? As an earlier research note from Arqaam noted before last night’s rate hike, a 200 bps rise in interest rates “would render investment irrational at such high cost of debt.” And don’t get us started on (a) the staggering implications on the cost of borrowing for the state or (b) the shift in the nation’s long-term debt structure if the treasury keeps tapping international debt markets in foreign currency because it’s so much more affordable to borrow in hard currency.

You can catch early news pieces on the late-night hike from Reuters and Bloomberg, and we’ll have a proper roundup of reactions for you tomorrow.

Expect The Donald in Omm El Donia “very soon”: US President Donald Trump met one-on-one with President Abdel Fattah El Sisi yesterday. According to The Associated Press, the meeting with El Sisi “underscored the kinship, with Trump saluting his counterpart on the April release of Egyptian-American charity worker Aya Hijazi.” Following an invitation by El Sisi, Trump said, “I will get to Egypt. We will absolutely be putting that on the list very soon.” Trump also said he was having “very, very important talks” with El Sisi, adding that they have “really been through a lot together positively” and that “safety seems to be very strong” in Egypt. El Sisi said Trump is a “unique personality that is capable of doing the impossible.” Trump praised El Sisi’s fashion choices, according to Politico and the New York Post, which quote him as telling El Sisi “Love your shoes. Boy, those shoes. Man.” Xinhua says the trip is planned to mend soured ties under Obama.

Besides El Sisi, Trump had also held individual meetings with several heads of statesbefore participating in a roundtable with the Gulf Cooperation Council and joining Saudi King Salman in opening Riyadh’s new anti-terrorism center. Trump and the leaders of the GCC states signed “an agreement to crack down on terror financing, including the prosecution of individuals who continue sending money to militants,” The Washington Post says. The agreement is the “farthest reaching commitment to not finance terrorist organizations … The unique piece of it is that every single one of them are signatories on how they’re responsible and will actually prosecute the financing of terrorism, including individuals,” Trump’s deputy national security advisor Dina Powell says.

Al Azhar Grand Imam Sheikh Ahmed El Tayeb also attended the summit, where he delivered a speech on fighting terrorism at the Twitter Forum, from where he reportedly left right before the Donald’s speech, Al Shorouk says.

During his speech yesterday, the US president spoke mostly of the need to militantlyunite to “drive out” the terrorists, Reuters says. “The US president did not use his signature term ‘radical Islamic terrorism’ in the speech, a signal that he heeded advice to employ a more moderate tone in the region,” notes the newswire. Trump did, however, point to Iran as the mutual enemy and a “key source of funding and support for militant groups,” prompting a fiery reaction from Iranian Foreign Minister Mohammad Javad Zarif on Twitter, who said Trump was “milking KSA of USD 480 bn.”

The western press seems to think that the speech “could have been worse,” given Trump’s anti-Muslim rhetoric during the elections and the fact that he tried to bar Muslims from entry into the US. Still, however, for a speech that was meant to be about Islam, “Trump did not say anything significant about Islam as a religion or civilization,” Mustafa Akyol writes in a reaction piece for the NYT. Instead, it focuses on the need to fight terrorism and Iran. “The main non-Sunni power, Iran, was bashed by both the American President and his Sunni hosts. This is not going to help anything other than adding to the sectarian divide,” he adds, noting that it is strange since “most radical Islamist terrorists in the region are Sunni, not Shiite” and that the speech was mainly geared towards Trump supporters on and off US soil.

The Egyptian press’ coverage of the Donald’s speech was mostly carried over from thewestern press last night, but we’ll be on the lookout for columnists’ reactions over the next few days.

Fighting terror with a four-point strategy: Egyptian President Abdel Fattah El Sisi urged Arab and Muslim leaders on Sunday to rise above their differences and collaborate with each other and the rest of the world to battle the growing threat of terrorism. Addressing an audience at the Arab-Islamic-American summit in Riyadh yesterday, El Sisi spoke of the need for a “clear action plan with a designated time frame to root out the funding and arming of terrorism.” The Egyptian president presented a “comprehensive” four-pillar counterterrorism strategy that goes beyond military and strategic tactics to tackle issues including ideology and support for terrorist organizations. “This includes effectively confronting movements that conceal and market themselves as political entities, when in fact they foster terrorists and infiltrate societies…to prey on popular will to practice their extremist and exclusionary policies.”

The strategy goes like this: To truly fight terrorism, we must recognize who the terrorists are (hint: the US needs to officially label the Ikhwan as a terrorist group), recognize their partners and support systems, prevent them from recruiting new followers by pursuing reforms to religious discourse and education systems, and restoring peace to the Middle East, the instability of which has helped it become a fertile breeding ground for extremist thought and action. “The comprehensive approach, based on the four aspects that I have mentioned, ought to lay the foundation for a new phase of cooperation among our countries and peoples,” El Sisi said, praising US President Donald Trump for his “robust policy to address the challenges of terrorism” and his willingness to help mediate resolution for the conflicts of the Middle East.

You can read El Sisi’s full speech here (pdf) in English.

Egypt has been lobbying the US congress to pass a bill that would designate the Ikhwan an illegal terrorist organization, arguing that the group’s existence poses a threat to the region. The UAE government echoed that sentiment on Sunday, describing the group as “the main beacon of terrorist and extremist thought” in the Middle East in a statement picked up by Sky News Arabia.

Dispatch from AmCham’s AGM: A speech from the US ambassador to Egypt. Enterprise attended the American Chamber of Commerce’s Annual General Meeting and Luncheon where outgoing President Anis Aclimandos handed the presidency to Tarek Tawfik. The new board of governors for 2017-19 was announced at the same gathering. The guest speaker was US Ambassador to Egypt Robert Stephen Beecroft. Takeaways from his remarks:

  • Beecroft described the AmCham Doorknock mission as “impressive. … It truly plays an important role in keeping vital communications open and ensuring there is an accurate exchange of information and understanding of each other’s countries.”
  • The successful mission indicates “new focus and new attention in and on a bilateral relationship,” which was clear in both presidents’ meeting in the US. The risk: That a “meeting becomes the high point in a relationship.” To avoid this, high-level meetings are taking place with “specific, meaningful engagement and partnership.”
  • Beecroft mentioned upcoming visits from the US Department of Treasury and from The Office of the United States Trade Representative. The latter will be probably in July to “lay the groundwork for a resumption of talks” on a potential trade liberalization agreement.
  • Planning is underway for the upcoming US-Egyptian Strategic Dialogue and Trade & Investment Framework Agreements talks. “We will work to open up markets and lower prices through competition for the benefit of both our countries.”
  • Joint Bright Star military exercises will take place later in the year.
  • A sign of US support to Egypt is that the US military assistance to Egypt has been “preserved at its current high level,” despite budget cuts.
  • The US is, in effect, a friend of Egypt at international institutions including the IMF, the World Bank, and the EBRD
  • The Overseas Private Investment Corporation and the Export-Import Bank of the United States are looking for new opportunities in Egypt.
  • “The Unites States’ commitment to helping Egypt counter terrorism is firm and ongoing. I would also characterize it as eager.”

CIB named Egypt’s best bank by publisher of Al Borsa. Business News, the publisher of Al Borsa, says CIB was awarded the prize after strong and balanced performance in 2017 as it improved its profitability and had adequate capitalization. In the award’s subcategories, CIB followed National Bank of Egypt in customer satisfaction, which also topped the list for ESG, Ahli United Bank was named the most effective bank, and Egyptian Gulf Bank was named the fastest growing. The best bank award aggregates a weighted average of its four subcategories. A separate award of the best retail bank was also won by CIB.

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Image of the Day

No, this is not a biometric scanner for the signing of state-level agreements: This image of President Abdel Fattah El Sisi, Saudi King Salman, and US President Donald Trump at the inauguration of a new center to monitor extremism is going viral on El Face and Tweeter — and it has very little to do with the anti-extremism center. The three leaders holding onto a glowing orb (for reasons we still have yet to understand) in a setup reminiscent of the three witches in the opening scene of Macbeth has inspired an avalanche of comment. Our favorites so far: A comparison to Marvel Comics’ terrorist organization Hydra and this reference to the El Sobky-produced World War III film.

Egypt in the News

Sisi-Trump meeting in Riyadh dominates international coverage of Egypt this morning: Pickups of wire service stories and the odd hot take on US President Donald Trump’s meeting with President Abdel Fattah El Sisi in Riyadh yesterday are leading international coverage of Omm El Donia this morning. US media have noted Trump’s support for Egypt and El Sisi, his pledge to visit Egypt “very soon” and his admiration of President Abdel Fattah El Sisi’s shoes. See Politico, the New York Post, the Los Angeles Times and Reuters for examples.

Also getting plenty of attention this morning: Prosecutors have referred 48 members of Daesh to a military court on terror charges stemming from the Palm Sunday bombings.

We’re also still getting some mileage from our latest discovery of mummies.

Elsewhere, the New Yorker’s Robin Wright writes about the shortage of electricity facing the Middle East. In Egypt, she writes, “the government has appealed to the public to cut back on the use of light bulbs and appliances and to turn off air-conditioning even in sweltering heat to prevent wider outages.” Wright explains “The Middle East, though energy-rich, no longer has enough electricity,” calling it the “challenge that doesn’t involve guns.”

On Deadline

Saudi Deputy Crown Prince Mohammed bin Salman’s (MbS) ascent to power was highlighted at the Arab-Islamic-American Summit, Alaa Al Ghatreefy writes in a column penned for Al Masry Al Youm. MbS’ diplomatic efforts two months ago paved the way for KSA to sign USD 460 mn worth of agreements with the US, which in turn lent the young prince credibility on his path to lead the kingdom. Al Ghatreefy says that The Donald’s attendance of the summit also signals America’s support for the ushering in of the “Age of Salman.”

Worth Watching

Scientists have yet to invent an IV coffee drip, but we may soon be able to make espresso from a smartphone case. Conceptualized by two Italians, Mokase “aims to make smartphones portable baristas,” The Culture Trip says. The engineers behind Mokase say a silicon aluminum tube is used to heat up a disposable packet of coffee inserted into the case, through the touch of a button on an app.

Diplomacy + Foreign Trade

Ethiopia has rejected Egypt’s “pre-conditions” for rejoining the Nile Basin Initiative (NBI), the country’s Water, Irrigation, and Electricity Ministry said. The planned NBI meeting to discuss Egypt joining the initiative, suggested by the President of Uganda, “was postponed at least for one more month upon the request of the Ethiopian government because of the so-called precondition points which were forwarded by Egypt,” The Reporter notes. The details of those “pre-conditions” were not made clear, but sources say they were related to water security and the dispute resolution mechanism in the cooperation framework. Egypt had denied it had ever asked to sign the cooperation pact, but said it was trying to find a way to cooperate with NBI countries outside of the Entebbe Agreement and has been in talks to reactivate its NBI membership.

Egypt and Sudan reached an agreement on Saturday to facilitate the movement of trucks across the two countries’ border, Al Masry Al Youm reports. Under the agreement, truck and bus drivers will be granted six-month visas, and each country will be responsible for disclosing the contents of all shipments. Earlier this month, Sudan refused to grant entry to 500 Egyptian trucks until the drivers received their entry visas and also imposed a daily cap on visas issued for truck drivers. Last month, Sudan also issued an entry visa requirement for all Egyptian males aged 18-50.

Foreign Ministry Sameh Shoukry is traveling to Greece today to address a security conference, Ahram Online reports. Officials from Southeastern Europe, the Mediterranean and the Gulf will be attending.

President Abdel Fattah El Sisi met with Iraqi President Fuad Masum on the sidelines of the Arab-Islamic-American summit in Riyadh for talks on bilateral ties, Ahram Online reports. The meeting comes a week after Egypt received its first shipment of Iraqi crude oil.

Lining up business in Libya: Egyptian companies will have a major role in Libya’s redevelopment, Libya’s Oil Minister told Ahram Gate. He says Egyptian companies are expected to have an advantage over other players in the reconstruction projects in Libya given their expertise, more competitive prices, and the availability of qualified labor.

Exports from Qualifying Industrial Zones (QIZ) rose 5% year-on-year to USD 191 mn in 1Q17, Daily News Egypt reports, up from USD 182.1 mn in 1Q16, according to Trade and Industry Ministry statistics (see slide 16). 98% of QIZ exports are ready-made garments, Ashraf El Rabie, head of the Ministry’s QIZ unit, said. QIZ imports enjoy tariff-free access to the United States provided they meet a minimum required amount of Israeli content.

Oil Minister Tarek El Molla met yesterday with a delegation from the German-Arab Chamber of Industry and Commerce to discuss investment opportunities in petrochemical projects in Egypt, Al Shorouk reports.

Energy

Egypt makes payment to Dana Gas covering 25% of what it is owed

Egypt has made payments covering 25% of the arrears owed to Dana Gas, the company said in disclosures to the ADX. Dana Gas received a USD 50 mn payment from the Egyptian government, according to a regulatory filing. The company had also received another payment of USD 20 mn in EGP-equivalent, it said. It is not clear if the USD 50 mn tranche was made in EGP as well or not. Both payment account for 25% of what Egypt owed Dana Gas as of the end of 1Q2017.

Electricity Ministry puts Siemens wind farm plans on hold to negotiate a lower feed-in tariff

The Electricity Ministry has put plans to build a 2 GW wind farm on hold pending further negotiations with Siemens to lower the feed-in tariff to around USD 0.04 per kilowatt from a current EUR 0.053 (USD 0.0593), Al Borsa said on Sunday. The ministry has set lowering the tariff as a condition for it to sign the contract with Siemens, especially now that it has signed a number of power purchase agreements at its desired rate from 250 MW wind farms that will be developed by Toyota, Orascom, and Engie.

Infrastructure

Al Nozha airport renovations to conclude within a month

Renovations to the Al Nozha Airport in Alexandria are expected to wrap up within a month, an unnamed source from the Egyptian Holding Company for Airports and Air Navigation tells Al Mal. According to the source, it was “illogical” to halt the EGP 380 mn renovation project after President Abdel Fattah El Sisi announced the airport would not be used, as the developments were 95% complete at the time. Saudi Binladin Group, which had been awarded the rights to develop the terminal in 2015, is carrying out the renovations it was contracted for and is not concerned with the fate of the terminal, sources tell the newspaper.

Red Sea Ports Authority to re-issue tender for multi-purpose station in Safaga

The Red Sea Ports Authority is planning to re-issue a tender for a USD 250 mn multi-purpose station at the Safaga Port, authority chairman Hesham Abou Senna tells Al Mal. The station will handle 1.2 mn containers and 1.5 mn tonnes, to be increased to 3 mn tonnes, of general goods per annum, Abou Senna said.

Real Estate + Housing

TMG drops EGP 1.8 bn lawsuit against NUCA

Talaat Moustafa Group (TMG) says it has dropped the court case filed against the New Urban Communities Authority (NUCA), Al Mal reports. TMG had filed a case seeking an EGP 1.8 bn from NUCA for infrastructure works at the Madinaty project, saying NUCA has not reimbursed the company. TMG says a committee was formed to resolve the dispute.

Al Tayyar looking to borrow EGP 1.6 bn to build a project in Nasr City

Al Tayyar Group-Egypt is looking to borrow EGP 1.6 bn from a consortium of banks led by Bank Audi and Abu Dhabi Islamic Bank, Al Mal reports. The funding would allow it to develop a project in Nasr City.

EGP 8-10 bn invested in first phase of New Alamein city

Phase one of the government’s New Alamein City in Matrouh governorate will cost EGP 8-10 bn Al Mal quotes Housing Minister Mostafa Madbouly as saying. That compares with a pre-float estimate of about EGP 3 bn suggested last summer. The first phase of the project, with the exception of the residential tower blocks, is slated for completion within two years. The government will tender land plots of 50-400 feddans to private investors by year-end, Madbouli said.

Tourism

King Tut’s funerary bed, Ramses II statue to be transferred to Grand Egyptian Museum

King Tutankhamun’s funerary bed will be transferred tomorrow to the Grand Egyptian Museum (GEM), after a team of Egyptian and Japanese team restored the bed at the Egyptian Museum in Tahrir, Al Borsa reports. The Ramses II statue currently at the Tahrir museum is also expected to be moved to the GEM within months, the museum’s general supervisor Tarek Tawfik said, according to Al Shorouk. According to Tawfik, the museum is on track to be partially opened early next year.

Telecoms + ICT

4G frequencies cleared and ready for use, NTRA says

The National Telecommunications Regulatory Authority (NTRA) is ready to hand over 4G spectra to the four local MNOs whenever they’re ready, sources close to the matter tell Al Mal. The MNOs are in the final steps of technical preparations to launch 4G services, CIT Minister Yasser Al Kadi tells Reuters.

On a related note, Vodafone Egypt announced that it is still in talks with Telecom Egypt (TE) over a domestic roaming agreement, according to Al Borsa.

Banking + Finance

El Said heads committee to restructure NIB

A government committee was formed to restructure the National Investment Bank (NIB), Planning Minister Hala El Said said, according to Al Borsa. The committee is headed by El Said and includes Deputy CBE Governor Lobna Helal, Deputy Finance Minister Mohamed Maait, and NIB’s Deputy Chairman Ahmed El Sayad. NIB’s mandate is to finance projects included in the state’s national economic and social development plan.

Other Business News of Note

Demand for glasses drops 40% as prices double y-o-y

Demand for prescription eyeglasses and sunglasses have dropped by about 40% from the levels of summer 2016 as prices have increased by more than 100% since then, Chairman of Magrabi Optical Ibrahim El Maghrabi told Al Mal. He says prices were impacted by the float of the EGP and, for sunglasses, the new value-added taxes (VAT). El Maghrabi says the opticians section of the Cairo Chamber of Commerce is preparing to send the Finance Ministry a memo asking for sunglasses to become exempt from VAT, as they are often prescribed to patients and could thus be seen as having medical purposes.

Legislation + Policy

House Manpower Committee disagrees over Labor Act clause on child labor

An article of the Labor Act guaranteeing child laborers’ right to pay sparked disagreements in the House Manpower Committee during discussions yesterday, Al Shorouk reports. MP Galila Othman claims the article would encourage children to drop out of school, while committee chairman Mohamed Wahaballah and Manpower Ministry representative Ehab Abdel Aty maintained it is geared towards protecting children’s rights if they are forced to work at a young age.

National Security

Prosecutor General refers 48 to military judiciary over accusations of church bombings

48 people were referred to military judiciary on accusations of being members of Daesh and for allegedly being involved in three church bombings, Reuters reports. “Public prosecutor Nabil Sadek said in a statement on Sunday that some of the suspects held leadership positions in Islamic State and formed cells in Cairo and the southern province of Qena to carry out the church attacks… The referral to the military judiciary paves the way for the suspects to face military trial,” the newswire notes.

On Your Way Out

An Egyptian fanous (lantern) maker is producing his lanterns with acrylic posters of celebrities in hopes of guarding local lantern production against competition from China, Reuters reports. Working out of his shop in Imbaba, Mohamed Gamal adorns his fawanees with the familiar faces of figures like President Abdel Fattah El Sisi, footballer Mohamed Salah, and even Abla Fahita. He tells the newswire that he wants to see his modern version of the traditional fanous reverse the trend of importing large quantities of lanterns from China, and instead have Egypt begin to export them.

The Court of Cassation dropped the verdict leveled against writer Ahmed Naji and ordered a retrial, Al Shorouk reports. Naji was convicted on public morals charges on the basis of an allegedly “obscene” chapter in a book he had written.

Taking Arab cultural pride to new heights: MP Badr Abdel Aziz is preparing legislation that would penalize Egyptian parents who give their children “Western” names, Egypt Independent reports. His logic is based on the idea that names like Lara, Mark, and Sam are not connected to Egyptian or Arabic culture, and that using these names will cause Egyptians to be disconnected from their true identity. He also says Egyptians struggle to pronounce these “non-Arab” names, and believes his bill would protect future generations from having their names butchered.

The General Authority for Free Zones and Investment (GAFI) is waiting for the executive regulations to the Investment Act to be issued before pressing ahead with establishing a government promotion company, GAFI head Mohamed Khodeir tells Al Borsa.

The markets yesterday

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EGP / USD CBE market average: Buy 18.0391 | Sell 18.1429
EGP / USD at CIB: Buy 18.05 | Sell 18.15
EGP / USD at NBE: Buy 17.95 | Sell 18.05

EGX30 (Sunday): 12,974 (+0.2%)
Turnover: EGP 690 mn (40% below the 90-day average)
EGX 30 year-to-date: +5.1%

THE MARKET ON SUNDAY: The EGX30 ended Sunday’s session up 0.2%. CIB, the index heaviest constituent ended almost flat. EGX30’s top performing constituents were: Arabian Cement up 3.0%, Egyptian Resorts up 1.9%, and Sidi Kerir Petrochemicals up 1.5%. Yesterday’s worst performing stocks were: Cairo Oils & Soup down 6.8%, Heliopolis Housing down 0.5%, and Juhayna down 0.3%. The market turnover was EGP 690 mn, and foreign investors were the sole net buyers.

Foreigners: Net Long | EGP +9.1 mn
Regional: Net Short | EGP -2.8 mn
Domestic: Net Short | EGP -6.3 mn

Retail: 64.9% of total trades | 65.7% of buyers | 64.1% of sellers
Institutions: 35.1% of total trades | 34.3% of buyers | 35.9% of sellers

Foreign: 17.6% of total | 18.2% of buyers | 16.9% of sellers
Regional: 7.8% of total | 7.6% of buyers | 8.0% of sellers
Domestic: 74.6% of total | 74.2% of buyers | 75.1% of sellers

WTI: USD 50.89 (+1.11%)
Brent: USD 54.15 (+1.01%)
Natural Gas (Nymex, futures prices) USD 3.29 MMBtu, (+1.07%, June 2017 contract)
Gold: USD 1,253.60 / troy ounce (-0.02%)

TASI: 6,990.53 (+0.76%) (YTD: -3.05%)
ADX: 4,570.36 (-0.24%) (YTD: +0.53%)
DFM: 3,386.44 (+0.25%) (YTD: -4.09%)
KSE Weighted Index: 404.46 (+0.20%) (YTD: +6.41%)
QE: 10,050.70 (-0.52%) (YTD: -3.70%)
MSM: 5,407.74 (-0.14%) (YTD: -6.48%)
BB: 1,308.54 (-0.02%) (YTD: +7.22%)

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Calendar

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

27 May (Saturday): First day of Ramadan (TBC).

07-09 June (Wednesday-Friday): 19th Annual Africa Energy Forum, Copenhagen, Denmark.

26-28 June (Monday-Wednesday): Eid Al-Fitr (TBC).

30 June (Friday): 30 June, national holiday.

15-19 July (Saturday-Wednesday): SSIGE’s GeoMEast 2017 International Congress and Exhibition, Sharm El Sheikh.

23 July (Sunday): Revolution Day, national holiday.

03-05 August (Thursday-Saturday): Watrex Expo Middle East, Cairo International Exhibition & Convention Center.

26 August (Saturday): 27th Egyptian-Jordanian Joint Higher Committee meeting, Amman Jordan. (TBC).

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.

18-19 September (Monday-Tuesday): Euromoney Egypt conference, venue TBD.

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).

03-05 October (Tuesday-Thursday): J.P. Morgan’s Credit and Equities Emerging Markets Conference, London, UK.

18-19 October (Wednesday-Thursday): Middle East Info Security Summit, Sofitel El Gezirah, Cairo.

06 October (Friday): Armed Forces Day, national holiday.

18-20 October (Wednesday-Friday): AfriLabs annual gathering with the theme “Smart Cities,” The French University, Cairo. Register here.

01 December (Friday): Prophet’s Birthday, national holiday.

03-05 December (Sunday-Tuesday): Solar-Tec, Cairo International Exhibition & Convention Centre.

03-05 December (Sunday-Tuesday): Electrix, Cairo International Exhibition & Convention Centre.

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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