Thursday, 25 May 2017

The countdown to Ramadan has begun

TL;DR

What We’re Tracking Today

Everyone is banning everyone else’s media outlets this morning, from Egypt (targeting pro-terror and alleged Islamist-leaning sites) to the GCC (where everyone — for a change —joined us in beating on the statelet that calls itself ‘Qatar’). We have coverage in Last Night’s Talk Shows and Speed Round.

President Abdel Fattah El Sisi will meet with Guinea’s President Alpha Condé in Cairo today to sign a number of security and military agreements, Ahram Online reports. Condé will also be looking to sign education and culture agreements and meet with Egyptian investors, Guinea’s ambassador says.

CBE Governor Tarek Amer is in Switzerland until Sunday, 28 May for an annual gathering of central bank governors from francophone countries, Al Masry Al Youm reports.

The Wall Street Journal’s series on quants continues, and while the Thursday stories weren’t out at dispatch time this morning, three pieces from yesterday are on our reading list for the weekend. Whether you’re buyside or sellside, they should be on your weekend reading list, too:

Wait, humanity emerged from the Mediterranean, not Africa? The Independent’s science editor reports that new research suggests humanity emerged from Eastern Europe and the Mediterranean, not Africa: “The discovery of the creature, named Graecopithecus freybergi, and nicknamed ‘El Graeco’ by scientists, proves our ancestors were already starting to evolve in Europe 200k years before the earliest African hominid.” (Read)

We’ll know this evening whether Ramadan is tomorrow or Saturday. (We think Saturday is most likely, but still, formalities are formalities…) From all of us to all of you, please accept our very best wishes for a happy, healthy month filled with the love and warmth of family and friends. Kolo sanna w ento tayebeen.

The nation’s banks will be open to clients during Ramadan from 9:30 am to 1:30 pm, the CBE announced in a statement (pdf). Bank staff will work from 9:00 am to 2:00 pm.

The trading session on the EGX will run 10:00 am to 1:30 pm starting Sunday.

Gastroporn being a thing in our office during Ramadan, we’re suggesting you also bookmark Bloomberg’s Around the World in 30 Steaks: The Best From Las Vegas to Tokyo. There are glaring omissions (Hy’s Steakhouse and Jacobs & Co in Toronto come immediately to mind), but isn’t the debate over who isn’t on the list almost as fun as discovering who is?

What will the Committee for the Promotion of Virtue and Prevention of Vice Consumer Protection Agency ban from the airwaves this year? Ads that ran afoul of the self-appointed morality squad last year included Juhayna (“dondoo,” for innuendo related to the milk produced by human mammary glands), Birell ([redacted] innuendo from the use of a flip-flopping logo and one character examining another’s netherparts in a public restroom), Cottonil ([Redacted] innuendo in a scene showing women exercising; promoting unsafe behavior by showing a family of five on Vespa); and Dice (again with the [redacted] innuendo and a closing shot showing a woman’s torso in briefs).

Will you join us this year in boycotting whatever idiocy it is that Ramez has planned? This year’s installment (“Ramez Taht El Ard”) apparently has something to do with quicksand and a (faux?) komodo dragon. Watch the trailer here, if you must (runtime: 2:20)

When do we eat? Iftar in Cairo will be at 6:48pm CLT on Saturday, while the cut-off for sohour will be at 3:15am CLT, according to Islamic Finder.

We will now go dread the pending withdrawal of caffeine.

On The Horizon

House studying alternatives to Contractors’ Compensation Act? Chatter in the halls of parliament had been suggesting that the Contractors’ Compensation Act could be coming to a plenary session vote at the House by 29 May, but members of the House of Representatives’ Housing Committee say they are studying alternatives to the act as it would cost state coffers more than EGP 10 bn, which may not be feasible at the moment, Al Borsa says. MPs had approved the bill in March and sent it to Council of State for a final review.

The Petroleum Ministry is expected to announce the results of its global gold exploration tender before the end of next week, officials said.

Enterprise+: Last Night’s Talk Shows

The controversy over what Qatari Sheikh Tamim bin Hamad al-Thani said or didn’t say on the Qatari News Agency’s website yesterday (and the GCC ban on Qatari media that it prompted) were center stage on the airwaves last night. (We’ve got full coverage in this morning’s Speed Round.)

On Al Hayah Al Youm, Lobna Asal spoke to Egyptian war veteran Mahmoud Mansour, who reportedly had helped form Qatar’s intelligence bureau in the ‘80s. Mansour said he has proof that Tamim’s statements were genuine and said in anger after he was ignored at the Arab-American summit in Riyadh earlier this week (watch, runtime: 3: 42).

Hona Al Asema’s Lamees Al Hadidi spent the first half of her episode shooting critical remarks at Qatar, accusing the country “of playing a major role in funding terrorist groups in Egypt” after ousted Ikhwani president Mohammed Morsi was removed from office (watch, runtime: 3:56).

Kol Youm’s Amr Adib marched to the sound of the same drum as his wife, saying that he doesn’t believe Qatar’s claims that the website was hacked or that Sheikh Tamim’s statements are fake. Qatar, he said, is trying to do some damage control after the remarks went viral and someone informed the sheikh that it was wrong of him to say what he did in the first place (watch, runtime: 5: 42).

Away from the Qatari scandal, Adib spoke to Housing Minister Mostafa Madbouly on (strangely enough) the increasing number women in Egypt’s debtors prisons. These women — who borrow money to cover family expenses and are then jailed for not repaying due to their poor economic conditions — will be accounted for in the state’s social housing programs and will not be asked to jump through the hoops of paperwork, Madbouly said. Businessman Mohamed El Morshedy rang Adib to announce that he was donating EGP 1 mn to the cause (watch, runtime: 5:33).

Lamees also announced the winner of the first season of the Hona Al Shabab competition last night: psych platform Chaiselong (watch, runtime: 11:18).

Speed Round

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Even more success with eurobond issuance round 2: Egypt raised USD 3 bn in a triple tranche eurobond sale on Wednesday, about twice as much as targeted and at lower cost than when the same bonds were first sold in January, Reuters reports. The government sold USD 750 mn worth of five-year bonds at yields of 5.45%, down from 6.125% in January’s eurobond sale. USD 1 bn of 10-year bonds were sold at yields of 6.65%, down from 7.50% in the last sale, while 30-year bonds raked in USD 1.25 bn at yields of 7.95%, down from 8.50%. 80% of the money raised from the bond sale came from North America and Europe, and that the proceeds would reach the central bank by May 31, said Finance Minister Amr El Garhy.

This is a great success and shows confidence in the economy," a Cairo-based banker told Reuters. “This shows that there is very good sentiment on Egypt and expectations that yields could fall further in the future.”

Heavily oversubscribed: Order books closed at USD 11 bn or 4x oversubscribed, a document issued by one of the banks leading the deal showed. BNP Paribas, Citi, JP Morgan, and NATIXIS were joint bookrunners. The issuance is listed in Luxembourg and London and governed by English law. We hope to have more color in Sunday’s edition.

Russians still playing hardball on resuming flights despite resurgence in Egypt tourism from other sources: Talks between Russia and Egypt are essentially going nowhere. That’s our take based on remarks by Russia’s Deputy Transportation Minister Valery Okulov carried in Sputnik Arabic, which suggest the Russians haven’t grown bored with their tourists-for-nuke-plant extortion tactics. Okulov refused to comment on when he expects flights to resume, adding that media reports on a change in the Russian position was conjecture. Russia has not changed its stance on the issue since February, he said.

At issue: The USD 30 bn Dabaa nuclear power plant, for which the final contracts are now said to be due for signing “before the month is out.” (We don’t see the nuke issue spilling over and hitting the sale of Russian shipborne Ka-52K Katran combat helicopters for Egypt’s Mistral-class helicopter carriers. Russian Deputy Foreign Minister Mikhail Bogdanov confirmed to Sputnik on Tuesday that the talks were taking place.)

…Maybe we should be saying “Dasvidaniya” to the Ruskies and “Willkommen” to the Germans? Egypt is expecting up to 1 mn German tourists in FY2017, Mohamed Abdel Gabbar, tourism director of the Egyptian embassy in Berlin, tells German tourism portal FVW. This would be around a 50% year-on-year increase from last year’s figure of just over 650K, he added. We had noted that number of German tourists visiting increased 35% y-o-y in 1Q17. The optimism appears reflected in the opinions of tour operators in Germany that took part in a workshop held by the outlet. Some, including travel agency Ihr Reiseladen’s Kerstin Hesse, praised security of key German hotspots and downplayed any danger from recent terror attacks (security concerns are the coat hanger on which the Russians are hanging their withholding of flights).

Prevailing wisdom among German operators is that the resurgence in German comes down to how cheap prices are. “The value for money is brilliant,” declared TUI’s Patrick Geyer. “Our partners have really invested in the product.”

The optimism about a resurgence of tourism isn’t limited to Germany. A number of other international operators tell Travel Weekly about spikes in bookings to Egypt. Intrepid has increased its Egypt departures by 140%, to 48, for 2017, compared with the 20 it offered in 2016, while Tourico Holidays, a Florida-based global travel distribution company, has also seen a 300% jump in reservations to Egypt compared with last year. US-based Viking Cruises is even relaunching its Nile cruise line.

Fake news in Poland about Zuk’s death threatens an important outbound market: The Polish media’s coverage of the death of Magdalena Zuk — the 27 year old Polish tourist who died in Hurghada — is unnecessarily causing a diplomatic rift between Egypt and Poland and contributing to the slump in tourism, writes Edmund Bower for the Independent. In an interesting investigative piece, Bower dives deep into the many wild (and often racist) conspiracy theories promulgated in the Polish press on the circumstances surrounding Zuk’s death. Motivations are said to include a desire by some TV charlatans to boost ratings, and a desire by neo-Nazi groups to play this as a nationalist cause. The spread of fake news is having a real and tangible effect on people in Egypt who rely on tourism, he argues. Bower states that the backlash now includes pressure on the Polish government to take unwanted, drastic diplomatic actions against Cairo.

Egypt blocks 21 websites for hosting pro-terror content and allegedly publishing fake news: The Ismail government has blocked access in Egypt to 21 news websites for publishing fake news and hosting content that security officials described as being “pro-terrorism,” Youm7 reported on Wednesday, citing top security official who spoke on condition of anonymity. The list reportedly includes local news website Mada Masr as well as Huffington Post’s Arabic service (the US site remains accessible), Qatari news network Al Jazeera, Cairo Portal, Egypt Window, Horria Post, and Ikhwan Online and the Ikhwan-affiliated Rassd, as well as Hasm and Hamas’ websites. Al Mal has most listed here and Al Arabiya also picked up the story. Mada Masr put out a statement late last night via Facebook confirming that even though its website had indeed been blocked, “we will continue to publish through existing platforms, as well as our website.” Reuters has the story in English.

The move comes on the heels of Saudi Arabia and the UAE blocking access to several Qatari news websites, including Al Jazeera, as a result of publishing the “fake news,” Bloomberg reports. Qatar, however, claimed that its state news agency had been “hacked after it reported remarks purportedly by Sheikh Tamim bin Hamad al-Thani criticizing aspects of US foreign policy in the wake of US President Donald Trump’s visit to Saudi Arabia. The comments were critical of the renewed tensions with Iran, calling it an "Islamic power" and saying Qatar’s relations with Israel were "good" during a military ceremony. Qatar News Agency (QNA) insists its “website has been hacked by an unknown entity. A false statement attributed to His Highness has been published … The statement published has no basis whatsoever, and the competent authorities in the State of Qatar will hold all those (involved) accountable.” The hackers also purportedly “took over the news agency’s Twitter feed and posted alleged quotes from Qatar’s foreign minister alleging a plot against the country by other Arab nations,” the Associated Press reports.

The QNA comments also said Qatar has recalled its ambassadors from Bahrain, Egypt, Kuwait, Saudi Arabia and United Arab Emirates over the “plot.”

Security forces arrested yesterday one of the attackers behind a drive-by shooting that killed two police captains and one enlisted member of the police service earlier this month. Investigators have also identified three other alleged perpetrators, the Interior Ministry announced yesterday. According to the statement, the men are members of the Hasm militant group (an offshoot of the Muslim Brotherhood) and are implicated in a number of other terrorist attacks. The ministry’s announcement came hours after Hasm released what appears to be video footage of the attack. (We have viewed the video and believe it has hallmarks that suggest it could be genuine. That said, we are not linking to it this morning, and the website to which it has been posted appears to have since been blocked by the authorities.)

The group had threatened earlier in the day to launch an attack in a “hail of bullets” at 7pm last night without providing further details, leading the US Embassy and some workplaces in Cairo to issue security warnings.

Is the government privatizing management of the Cairo Metro? The Transport Ministry is set to launch a tender for a private sector company to operate Cairo Metro Line 3, Transport Minister Hisham Arafat tells Al Borsa. A non-state-owned company will also be tasked with operating Cairo Metro Line 4. Tunneling operations of Metro Line 3’s phase 4A are currently being completed and will be delivered before the end of 2018.

Listed companies will now have to issue their first call for a general assembly at least 21 days in advance rather than 15, as was the case before new amendments to the Companies Act issued yesterday by Investment and International Cooperation Minister Sahar Nasr. Don’t have quorum after your first call? You’ll need to give seven days’ notice of a second meeting. The changes are expected to improve Egypt’s ratings on global indices, such as the World Bank’s Doing Business Report and World Economic Forum’s Global Competitiveness Report, the ministry said.

(Or, conversely, it could make it easier for crank shareholders with five shares apiece to show up and ask for handouts / demand more food / steal your silverware.)

EARNINGS WATCH- Elsewedy Electric doubled its consolidated net profit in 1Q2017 to EGP 1.54 bn in 1Q2017, according to a regulatory filing (pdf). Consolidated revenues increased by 108% y-o-y to EGP 9.78 bn in 1Q2017, Reuters reports.

El Sisi denies Al Bashir’s accusations of intervention in Sudan at Wednesday presser: Egypt’s foreign policy is “based on non-intervention in foreign countries’ affairs” and has never conspired against Sudan or any other country, President Abdel Fattah El Sisi told the press on Wednesday, according to a statement from Ittihadiya (pdf). The statements came during a joint press conference with Austrian Chancellor Christian Kern, who met with El Sisi and Prime Minister Sherif Ismail yesterday for cooperation talks.

Reuters quotes the president as saying, “The other point I must stress is that Egypt does not conspire. Would I conspire and let elements attack our brothers in Sudan? We practice honorable politics at a time when honor is rare.”

Former investment minister Mahmoud Mohieldin speaks with Al Mal: Egypt needs to focus more on creating employment opportunities away from urban centers and in rural areas, former Investment Minister Mahmoud Mohieldin told Al Mal in an interview. Creating job opportunities for the unemployed will have a more substantial impact on families than across-the-board increases in wages for state employees. Mohieldin, now senior vice president at the World Bank, says the state should provide the land for these projects and treat them like freezones. He says investors who are looking to expand right now will not be deterred by prevailing interest rates and those who want to start new businesses are keeping an eye on the projected path of prices and interest rates in the future. Now, the government has a duty to provide cash or commodity subsidies to the least well-off, he says, praising the Takaful and Karama programs. Mohieldin also praised the expansion in road networks nationally. The state could also embark on a universal health insurance scheme and, like the case of Thailand, could have it implemented relatively quickly. He would also like to see a more decentralised tax collection system that gives governorates the authority to collect some of the taxes rather than the central government.

Raising interest rates was “absolutely the right decision, and it was long overdue,” Patrick Werr writes in The National. He says inflation before the price shock that followed the EGP flotation was already high, placing the blame on the “rapid expansion of the money supply over the past few years.” He says governments, since 2011, relied, in effect, on printing money to finance deficits. Werr adds that concerns about the access to credit following the rate hike are not entirely valid as “the sad truth is that Egyptian banks haven’t been lending all that much to private businesses.”

Worth Watching

Forget markets. Think: The final frontier: “Space is becoming smaller, closer and cheaper, reinventing an industry that has stagnated for decades and making room for new applications, new technologies and competitors,” says Noah Poponak, aerospace and defense senior equity research analyst in Goldman Sachs Research. This plays out in three main areas, Poponak says: the first is the “traditional government market,” driven by the NASA and defense budgets. There is an expansion in satellite programs and there are new multi-year exploration program with a budget in the bns. The second major area is what is going on in the private world — arguably the most interesting development. Goldman Sachs is seeing companies related to or in Silicon Valley getting into space and “because they’re private, they’re not focused on cost … able to invest a tonne to be able to innovate quickly, bring down costs quickly.” Satellites could soon cost 100-times less than in five years ago, for example. The private sector is working on initiatives ranging from space tourism to attempts to create reusable rockets. The third major area of development, Popnak says, is the militarization of space. “It’s become very clear that some other nations that are not [the US’s] allies have figured out how to get to [US] assets higher and faster than we thought.” Spending on protecting these assets is likely to go up significantly sooner than later (Watch,runtime: 03:03).

Egypt in the News

The arrest of human rights lawyer and former presidential candidate Khaled Ali is once again leading the conversation on Egypt in the foreign press this morning. Most outlets, including the Independent and Al Jazeera, continue to suggest the move was politically motivated due to Ali’s hints making another bid for the presidency in 2018, despite noting statements by the Interior Ministry to the opposite. Almost right on cue with Al Jazeera’s piece was Amnesty International, which issued a direct accusation that the move was motivated to stop Ali from running.

Tying for second place were wire pickups of Egypt banning 21 websites(which Al Arabiya notes follows the ban by the UAE and Saudi of all Qatari media) and the back and forth between Sudan’s President Omar Al Bashir and President Abdel Fattah El Sisi on the former’s accusation of Egypt arming Sudanese rebels.

Also making the rounds on a slow pre-Ramadan news morning:

  • Tutankhamun’s chariot and funeral bed have been moved to the Grand Egyptian Museum set to open in 2018, Reuters’ Ahmed Aboulenein reports.
  • A 20-year-old Egyptian-Italian man was stabbed to death in the UK “after making eye contact” with four teenage boys, the Evening Standard reports.
  • Xinhua is running pictures of the beauty of lantern-making in Egypt during Ramadan.
  • Canada’s Global Research Center blames instability in Egypt and Nigeria on post-colonial Western imperialism.
  • The National’s Heba El-Sherif interviews director Mohamed Shaker on his highly-anticipated Ramadan family drama La Tutf’e al-Shams (The Sun Will Never Set).

On Deadline

Government: 0, Khaled Ali: 1. The arrest of human rights lawyer Khaled Ali only served to boost his popularity and undermine the government’s steadiness, Fahmy Howeidy writes in a column penned for Al Shorouk. Ali’s arrest was on shaky legal grounds and is either in retaliation for his lawsuit against the government over the handover of Tiran and Sanafir islands or a political warning to him and other potential presidential candidates. Whatever the case may be, the move backfired against the state and is unpaid publicity for his presidential campaign, Howeidy writes.

Worth Reading

The man reviving Egypt’s fortunes: Oil and gas news outlet Upstream is running a glowing piece on Oil Minister Tarek El Molla, which it credits with the resurgence in Egypt’s energy sector. Beginning with his tenure as head of the EGPC and now as Oil Minister, El Molla has made repaying arrears owed to international oil companies a priority, a crucial factor which retained key investments. The magazine credits this policy, coupled with incentives such as the introduction of a generous gas price for costly offshore developments, with a series of landmark events in the revival of the industry, including BP kickstarting their West Nile Delta project and Eni’s exploration endeavors which led to the discovery of Zohr. Upstream’s profile tracks his career from Chevron where he developed his strategic planning chomps and finding his kindred spirit in current Prime Minister Sherif Ismail, who has also been a champion of reforming the sector. (The story is behind a paywall, but you get one read without charge if you choose to register with them.)

Image of the Day

Replace the kheima with some authentic Cairo vibes this Ramadan: If you’re not really into the whole (ridiculously overpriced) ‘kheima’ thing for Ramadan, perhaps you should consider venturing into the jungles of Old Cairo sometime after iftar this year. There’s something about the month that seems to add to the area’s allure: The iridescent fawanees hanging outside of every shop, the aroma of honey-drenched atayef in the air, the music and whirling dervishes of Zeinab Khatoun; even the loudness of the crowds, pictured above in Amr Abdallah Dalsh’s image for Reuters, seem to melt away into the landscape to become a part of the whole experience, and for a brief moment you might actually find yourself enjoying the hustle and bustle of this mad city in which we live.

Diplomacy + Foreign Trade

Nasr discusses disbursing third tranche of World Bank loan, meets AIIB VP: Investment and International Cooperation Minister Sahar Nasr discussed disbursing the third USD 1 bn tranche of the World Bank loan to Egypt with Country Director Asad Alam, Al Masry Al Youm reports. A World Bank delegation is set to visit Egypt in the first week of June for talks on Egypt’s investment map and the private sector’s role in the economy. Separately, Nasr met with Asian Infrastructure Investment Bank VP for Policy and Strategy Joachim von Amsberg in Cairo to discuss new funding for Egypt, the ministry said in a statement. Funding is likely to go to solar power and transport projects including in the Suez Canal Economic Zone.

We have an Egypt-Cyprus Business Council: Trade and Industry Minister Tarek Kabil okayed the establishment of an Egyptian-Cypriot business council on Wednesday, a proposal inked in an agreement back in 2001, the Cyprus Mail reported.

Making nice with Ethiopia: Egypt congratulated former Ethiopian health minister Tedros Adhanom Ghebreyesus on his election as director-general of the World Health Organization, Ahram Online. Adhanom is the first African to head the WHO.

Coptic Orthodox Pope Tawadros II met Russian President Vladimir Putin in Moscow yesterday, Al Shorouk reports.

Energy

Libya Oil Egypt petroleum products sales pass EGP 2.1 bn in 2016

Libya Oil Egypt sold EGP 2.1 bn worth of petroleum products in 2016, general manager Mesbah El Shiaty says, according to Al Masry Al Youm. The total volume of the products sold during the year was 925,000 cubic metres, 10% above the year’s target, he added. El Shiaty also says the company is set to invest in bunkering in the Suez Canal Economic Zone.

Government postpones issuing waste-to-energy feed-in tariff to October

The government has decided to postpone issuing the new waste-to-energy feed-in tariff (FiT) to October due to a surplus of electricity in the national grid, while consumption levels have not increased in tandem, unnamed government sources tell Al Borsa. The government had set in March a base FiT rate for waste-to-energy projects at EGP 1.21 per kWh, and stipulated that 50% of the rate be calculated according to the exchange rate on the day of payment.

Infrastructure

Gov’t to tender for New Capital infrastructure projects within two months

The Housing and CIT Ministries are launching a number of tenders for the development of the New Administrative Capital’s infrastructure works within two months, sources tell Al Borsa. The tenders will include the supply of copper conductors and fiber optic cables, as well as communications systems.

Basic Materials + Commodities

Loesche to provide military’s cement plant with 18 vertical roller mills

The Defense Ministry’s six line cement plant being built at Beni Suef contracted Germany’s Loesche to supply 18 new vertical roller mills, Global Cement reports. China’s Sinoma CDI is building the plant, each of whose lines will have a capacity of 12.6 mn tonnes a year. Global Cement says “it is anticipated that the mills will be delivered within 2017, putting high demands on the delivery time of the mill components … Loesche was able to carry conviction to the Ministry of Defence and assure the expected quick market entry with an elaborated plan of delivery.”

Health + Education

Tatweer Misr to establish international university

Tatweer Misr is planning to construct an international university over a 100-feddan stretch of land under a PPP framework, and will set up an investment fund to finance the project, chairman Ahmed Shalaby said, Al Borsa reports. According to Shalaby, Tatweer Misr will submit a request for land allocation to the Housing Ministry next week The company has future plans to build a 500-feddan compound with residential and office units, in addition to three international schools, around the university. No details on the expected cost or timeline of the project were disclosed.

Advocacy group says gov’t is restricting academic freedom

Academics face a number of restrictions, according to the Association of Freedom of Thought and Expression’s 1Q2017 report, Mohamed Abdel Salam writes for Al-Fanar Media. Academic freedom is being limited with measures including travels bans and requiring official approval to travel abroad for faculty members.

Real Estate + Housing

Orascom Development to start building residential project in Gouna in 2H2017

Orascom Development Holding (ODH) will break ground on a residential project in Gouna in 2H2017, set to be completed by year-end, investor relations director Sara El Gawahergy tells Al Mal. The company is targeting USD 25 mn in sales from the project. Also in the pipeline is an EGP 60.5 mn real estate project in Fayoum that the company will invest in in 2Q2017. ODH will also complete the second phase of workspace facility G Space in Gouna by the end of the year, she added.

Tourism

Gov’t to issue CairoPass for admission to Cairo’s tourist attractions

The Supreme Antiquities Council will begin issuing in October a USD 100 CairoPass card to admit tourists to various museums and attractions in the Greater Cairo area for five days, Al Borsa reports.

Automotive + Transportation

Interest rates hike will exacerbate slump in the automotive market -Naggar

The CBE’s decision to hike interest rates by 200 bps will see the auto market contract by a further 50%, Egyptian Automotive and Trading Company Executive director Karim Naggar tells Al Mal. Auto companies are unlikely to make new investments, as they deposit their money in banks, and expect consumers to do the same, says Naggar.

El Dahshan looks to boost its auto spare parts exports to USD 1 mn by year’s end

Auto component manufacturer El Dahshan is looking to boost exports to USD 1 mn by the end of this year, Marketing Manager Yehia Kamal El Din told Al Mal on Wednesday. The company is targeting exports to a number of African markets, including Uganda, Rwanda, and Tanzania, where it has a competitive edge and can offer better prices compared to its foreign counterparts.

Banking + Finance

Banque Misr raises interest on savings accounts with variable interest to 2%

Banque Misr decided to raise the interest rate on variable interest savings accounts to 2%, Al Mal reported on Wednesday. We noted earlier this week that the bank was considering the increase following the CBE’s move to hike interest on overnight lending and deposits by 200 bps.

Other Business News of Note

LG Egypt to raise capital to EGP 3 bn

LG Electronics decided to raise its Egypt capital EGP 100 mn to EGP 3 bn, LG Egypt’s managing director Don Kwack informed Investment and International Cooperation Minister Sahar Nasr yesterday, Al Mal reports.

Egypt Politics + Economics

Parliament questions math on fuel subsidies allocations

The House of Representatives’ Budget Committee seems to think that the EGP 110 bn the state earmarked for fuel subsidies in the FY2017-18 budget is too high considering the announced rate of fuel subsidy cuts, Al Mal says. MPs on Wednesday asked Finance Minister Amr El Garhy to provide them with a breakdown for the fuel subsidy bill to explain the amount. El Garhy said the allocation came from the Oil Ministry and that its officials need to be questioned on the particulars.

Rights lawyer Khaled Ali referred to trial next week, released on EGP 1,000 bail

Human rights lawyer Khaled Ali will be standing trial on 29 May for charges of offending public morals with an “obscene hand gesture” outside the courthouse in January, the Associated Press reported on Wednesday. Ali was released on a EGP 1,000 bail yesterday after being detained for 24 hours and could be looking at a six-month sentence or sizeable fine if convicted. “A conviction could render him ineligible to run for Egypt’s highest office” in 2018, the AP says.

On Your Way Out

Enhancing financial inclusion and reducing the usage of cash are movingforward in Egypt, Doaa Farid writes in Wamda. There is still a wide gap between the needs of the population and the services provided, she says. Khaled Eid, marketing manager at the local electronic payment solutions Bee, believes the sector is currently witnessing a boom. e-commerce activity increased by 16% y-o-y in 2016, said Fawry’s CTO Mostafa El Nahhas. There is still room for growth, but more “flexible tools and regulations are needed to revamp the sector and the Egyptian culture needs to change,” Ahmed Al Salahy, Payfort regional manager in Egypt and North Africa, says. El Nahhas agrees, saying “these market conditions represent good opportunities to fintech entrepreneurs.” Entrepreneurs say the major obstacle standing now is the absence of clear regulations on electronic payments.

The EGX published its Annual Sustainability Report for 2016 yesterday, which lists the various initiatives that the bourse joined last year in the way of sustainable growth. Check out the full report here.

The markets yesterday

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EGP / USD CBE market average: Buy 18.0221 | Sell 18.1250

EGP / USD at CIB: Buy 18.05 | Sell 18.15

EGP / USD at NBE: Buy 17.95 | Sell 18.05

EGX30 (Wednesday): 12,884 (+0.7%)
Turnover: EGP 989 mn (40% below the 90-day average)
EGX 30 year-to-date: +4.3%

THE MARKET ON WEDNESDAY: The EGX30 ended Wednesday’s session up 0.7%. CIB, the index heaviest constituent ended up 0.8%. EGX30’s top performing constituents were: Elsewedy Electric up 4.4%, Orascom Construction upb3.6%, and Egyptian Resorts up 3.0%. Yesterday’s worst performing stocks were: Sidi Kerir Petrochemicals down 7.5%, Credit Agricole down 1.3%, and Ezz Steel down 1.0%. The market turnover was EGP 989 mn, and local investors were the sole net sellers.

Foreigners: Net Long | EGP +27.3 mn
Regional: Net Long | EGP +79.4 mn
Domestic: Net Short | EGP -106.7 mn

Retail: 64.5% of total trades | 60.0% of buyers | 69.1% of sellers
Institutions: 35.5% of total trades | 40.0% of buyers | 30.9% of sellers

Foreign: 17.0% of total | 18.4% of buyers | 15.6% of sellers
Regional: 11.7% of total | 15.7% of buyers | 7.7% of sellers
Domestic: 71.3% of total | 65.9% of buyers | 76.7% of sellers

WTI: USD 51.78 (+0.82%)
Brent: USD 54.45 (+0.91%)

Natural Gas (Nymex, futures prices) USD 3.21 MMBtu, (+0.09%, June 2017 contract)
Gold: USD 1,257.00 / troy ounce (+0.31%)

TASI: 6,901.43 (-0.50%) (YTD: -4.29%)
ADX: 4,532.24 (-0.30%) (YTD: -0.31%)
DFM: 3,351.51 (-0.36%) (YTD: -5.08%)
KSE Weighted Index: 402.52 (-0.43%) (YTD: +5.90%)
QE: 10,087.35 (-0.35%) (YTD: -3.35%)
MSM: 5,392.31 (-0.17%) (YTD: -6.75%)
BB: 1,314.02 (+0.32%) (YTD: +7.67%)

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

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

11 June (Sunday): Egyptian Private Equity Association’s annual Sohour, Four Seasons Hotel Nile Plaza, Cairo.

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

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

13-15 July (Thursday-Saturday): AGRENA’s 19th Annual Poultry, Livestock, and Fish show, Cairo International Convention Center, Cairo.

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).

25-27 September (Monday-Wednesday): Egypt Downstream Summit and Exhibition, Kempinski Royal Maxim Palace, Cairo.

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.

11-12 October (Wednesday-Thursday): 2030 Mega Projects Conference, Nefertiti Hall, Cairo International Convention Center, Cairo.

11-13 October (Wednesday-Friday): Middle East and Africa Rail Show, Cairo International Convention Center, Cairo.

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.

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