Monday, 29 May 2017

Inflows for USD 1 bn after rate hike.
Plus: Enterprise’s secret coffee recipe for your sohour enjoyment.

TL;DR

What We’re Tracking Today

Russian Foreign Minister Sergei Lavrov and Defense Minister Sergei Shoigu arrive in Cairo today for talks with their Egyptian counterparts. On the agenda are terrorism and the conflicts in Syria and Libya, Youm7 reports. Private-sector intelligence consultancy Stratfor suggests the Kremlin will be looking to expand its Libya operations and build up its rumored Sidi Barrani air base in Western Egypt, whose existence both countries have denied. Egypt can now “leverage its healthier relationship with the US under Trump to try and extract concessions from Moscow,” says the brief. Egypt’s ambassador to Russia tells Al Shorouk that the two sides will also talk about restoring flights between the two countries and finalizing contracts for the Daba’a nuclear power plants, two closely related issues on which we’ll be keeping a close eye.

The visit comes three weeks after the latest of many reports that Cairo and Moscow have basically concluded negotiations on the plant. Russia’s semiofficial Sputnik re-upped the story yesterday, but El Dostor suggests that the next round of nuke talks will be sometime in mid-June when the Electricity Ministry sends a delegation over to Moscow to meet with Rosatom, which will build the USD 30 bn plant. The long and the short of it: Don’t expect today’s visit to result in the resumption of flights. That awaits resolution of the contracts for the nuke plants.

Stop us if you think you’ve heard this one before: The government will begin implementing the fuel subsidy smart card system “very soon,” sources told Al Masry Al Youm. For the stragglers who have not gotten their cards yet, you can ask for them to be delivered through this link.

Call ahead if you’re due to travel through Heathrow — more than a third of British Airways’ flights were canceled yesterday as the airline struggled to resume operations following a catastrophic failure of IT systems on Saturday. “Air industry experts have warned that it could take days for services to fully return to normal and clear the backlog,” NBC News reports. Passengers hit by cancellation can claim up to GBP 200 a day for a room and GBP 25 per person for meals, plus the cost of a cab to a hotel, BBC notes.

We’ve heard it before, but… The US is once again considering the idea of banning in-cabin use of electronic devices larger than a mobile phone, according to remarks made on a weekend talk show by the US secretary of homeland security. Bloomberg and Reuters have the news.

If you read only one non-Egypt story today, make it “Is China’s economy turning Japanese?in the Financial Times. “There are few things studied as closely by the Chinese Communist party as how to avoid the fate of its Soviet counterpart. In an internal meeting after he assumed power in 2012, President Xi Jinping said no one in the Soviet Union had been ‘man enough’ to stand up to Mikhail Gorbachev and glasnost. But for Mr Xi another historical event from the same era may warrant more immediate attention. It is just over 30 years since Japan began inflating a property and stock market bubble whose implosion ravaged public confidence, cowed corporations and scarred an economy for decades. China’s priority today is to avoid that fate.

And while you’re on the FT’s site, remember that Daesh hates music — so go spin a record. So suggests the Financial Times’ pop culture critic, who writes, “All types of music, from nasheeds to the songs of Ariana Grande, whose concert was targeted a week ago, share a single characteristic. They are a physiological experience, capable of doing powerful and unbidden things to minds and bodies. Music triggers emotions and memories. It is invisible, heard as acoustic signals, but we also feel it at a bodily level, through vibrations. The science writer Philip Ball describes it in his book The Music Instinct as ‘the most remarkable blend of art and science, logic and emotion, physics and psychology, known to us.’”

With that in mind, this morning’s edition of Enterprise is brought to you by Apple Music’s Best of ‘70s Metal with a homegrown playlist of late ‘80s Seattle stuff thrown in for good measure. Also fueling Enterprise this morning: Our custom brew of Starbucks’ Ethiopian blend, guzzled for sohour. Yes, Ethiopian — the GERD gives us GERD, but this is the finest mass-market coffee out there. Previously secret directions for making coffee the Enterprise way:

  • Buy your Ethiopian blend ground for French press — that’s nice, big, fat grinds. Story it in the freezer between pots;
  • Boil water;
  • Put six level 2T scoops (that’s 12 tbsp) of coffee in an 8-cup Bodum or some other French press;
  • Let water cool 30 seconds after it comes to a boil;
  • Pour water over the coffee grinds in the Bodum, filling it as close to the top as you can;
  • Stir the mixture 25 times with a large spoon to aerate the grinds and make sure they’re sodden all the way through;
  • Let sit 1 minute — no more, no matter what the interwebs tells you;
  • Press and decant into a coffee flask to keep it warm — never leave the coffee to sit with the grinds unless you want to drink bitter, vaguely gritty sludge.

It’s literally that simple, but we (immodestly) think the results are just perfect: A clear, crisp coffee with great afternotes and no sludge. Drink it black, ba’a.

PSA- Your decision to burn the midnight oil may get your boss that presentation she wanted by morning, but it could well burn out your brain, too, increasing your odds of developing dementia later in life. The New Scientist looks at how “the brain starts to eat itself after chronic sleep deprivation.”

Oh, and give your US counterparty a break if they’re not quick to answer the phone or email today. It’s a long weekend for Memorial Day in the United States, marking the start of summer over there. ‘Murica returns to work tomorrow.

So, when do we eat? Maghrib prayers are at 18:50 CLT in Cairo, and the cutoff time for sohour is 3:12am.

What We’re Tracking This Week

House wants to know the impact of CBE’s rate hike on debt, deficit: The House of Representatives’ Budget and Planning Committee is meeting with Finance Minister Amr El Garhy to discuss the effect of the CBE’s decision to hike interest rates on national debt and the budget deficit, Al Borsa reports. The House’s committees are expected to submit reports about the budget next week, says a budget committee member.

The House Manpower Committee will discuss amendments to the Labor Act throughout the week, while the establishment of an executive agency to oversee nuclear power projects is on the Environment Committee’s agenda.

Authorities to set legal framework for reclaiming disputed land: The House Agriculture Committee will meet this week with the state’s land reclamation committee as well as officials from the ministries of agriculture and local development to discuss the legal framework for individuals wanting to repossess disputed land, Al Borsa reports. The state launched a nationwide campaign to regain control of illegally acquired land at the order of President Abdel Fattah El Sisi.

On The Horizon

The Investment and International Cooperation Ministry will launch a promotionalcampaign for the new Investment Act once the executive regulations governing it have been approved, ministry officials tell AMAY. The campaign will introduce the law to citizens and investors through a series of television and radio ads designed to build domestic support for the act and its measures. Tarek Nour Communications will produce the spots, the story suggests. Also look for an international investment promotion campaign to kick off in the last quarter of this year, possibly accompanied by a major investor conference, the story suggests. The Ismail government has a three-month window — that opened on 7 May — to deliver the regulations, but business and industry associations said they were expecting them within weeks.

Enterprise+: Last Night’s Talk Shows

Even on semi-hiatus, Lamees Al Hadidy is still on form with an interview with Finance Minister Amr El Garhy on last week’s successful USD 3 bn eurobond sale. Lamees is currently anchoring two nights a week on CBC Extra News during Ramadan while her show is on break. Her lesser half will continue to grace our sets for the holy month at 11 pm.

El Garhy said total demand raised for the combined USD 7 bn offered via the issuances in January and again last week stood at USD 24.5 bn. Proceeds from last week’s sale should hit state coffers by 31 May.El Garhy also told Lamees that strong demand for Egypt’s eurobond offering reflects the international community’s confidence in the country’s economy.

El Garhy breaks down demand: 46% of subscriptions were for 30-year bonds, 34% were for 10-year bonds, and 20% were for year five-year maturities. He suggested that Egypt’s eurobonds are due for a rating upgrade: The volume of trading in the bonds is more in line with that expected of bonds that hold a ‘B+’ rating, and not ‘B-’ as is the case with Egypt.

Proceeds from the issuance will be used to bolster foreign reserves and repay debt due in the near-term. Coupled with the next tranches from the USD 12 bn IMF extended fund facility and a separate USD 3 bn World Bank loan, as well as treasury bonds, should help Egypt bridge its budget deficit in FY2017-18. Watch the full interview (runtime: 9:08).

Lamees also spoke to the head of the Education Ministry’s private education division, Abeer Ibrahim, about the ministry’s decision last week to cap tuition fee increases for private schools (watch, runtime 3:41).

Meanwhile, Kol Youm’s Amr Adib spent last night talking about Qatar’s media war on Egypt, which seen newspapers and media outlets in the Gulf (particularly in KSA) criticizing Doha (watch, runtime 2:20).

Speed Round

Speed Round is presented in association with

USD 1 bn in foreign inflows in two days following interest rate hike: Nearly USD 1 bn in “foreign investment” (read this as “the carry trade,” we’d say) flowed into Egypt within two days of the central bank’s Monetary Policy Committee hiking interest rates by 200 bps, CBE Governor Tarek Amer said on Sunday. Defending last week’s surprise decision, Amer said the level of investment inflows that followed the hike “has not happened in the history of Egypt” and “reflected the success and soundness of the monetary policy,” according to statements made to MENA news agency picked up by Reuters.

Last week’s decision to raise interest rates was widely criticized by many in the Egyptian business community, who believe that the move will stifle domestic investment and do little to curb inflation in a nation that remains largely unbanked. Amer, meanwhile, has countered that the CBE hiked rates independent of any pressure from the IMF, noting that while higher interest rates eat into corporate profits, inflation eats at invested capital.

Foreign investment in Egyptian treasuries have apparently reached USD 7 bn since the EGP float in November, Al Borsa reports, citing a source from the CBE.

Amer also announced that the banking sector had collectively drawn in USD 25 bn since the EGP float last November. He also repeated promises that Egypt will make good on USD 750 mn in arrears owed to international oil companies in June, Al Shorouk reports.

House Healthcare Committee digs in on reclassification of EGP 9.4 bn in FY2017-18 budget as debate budget debate grinds on: The House of Representatives’ Health Committee will hold its ground to ensure that funds for wastewater projects now falling under the healthcare line item are reclassified as spending on infrastructure and housing, said committee member Magdy Morshed, in a sign that the dispute over how to classify water infrastructure looks set to continue. He claims that the government has lumped EGP 9.4 bn earmarked for wastewater infrastructure development under allocations for healthcare spending to reach the minimum constitutional requirement, Al Borsa reports. The state has set healthcare spending in FY2017-18 at EGP 105.217 bn, which is equivalent to the constitutionally mandated 3% of the national GDP.

An unnamed government source tells the newspaper that the classification is in line with guidelines from international bodies such as the World Health Organization, which consider the provision of water and wastewater services as indicators of overall public health.

But somehow the House can play around with constitutional mandates all it wants. The Planning and Budget Committee seems to think so, as it is reportedly looking into increasing the education budget by an additional EGP 23 bn in the upcoming fiscal year. The existing allocation already meets the constitutional spending requirement, Al Mal reports.

Meanwhile, House Economics Committee member Ashraf Al Araby is also questioning the government’s GDP projections for the coming fiscal year, claiming that its estimate of 4.6% GDP growth is overly ambitious, Al Mal says. According to Al Araby, Finance Minister Amr El Garhy did not clarify how the state expects to reach its GDP growth target in light of the overall economic slowdown.

Talks on the floor of Parliament this week: The budget, which MPs expect to ratify before their summer recess begins on 30 June, will also be discussed in general assembly sessions throughout the week.

Security forces are questioning “a large number” of alleged terrorists suspected of involvement in Friday’s attack in Minya, which left 29 dead, Al Ahram reports. Security sources tell the newspaper that 12-15 individuals were involved in the attack. The Interior Ministry launched a manhunt in four governorates to track down the perpetrators, according to Al Shorouk. Meanwhile, Foreign Minister Sameh Shoukry told RT that Egypt will not allow terrorists in Libya to feel safe as the government there fails to maintain control of its territory. Shoukry also reiterated that the airstrikes Egypt launched in Derna on Friday were “legitimate self-defense” and were based on “irrefutable proof” connecting the targets in Libya and the perpetrators of the Minya attack. Libya’s military spokesman announced yesterday that Egypt and Libya will continue their military cooperation to wipe out terrorist groups, according to Youm7.

This comes as Al-Qaeda affiliate Ansar Al Sharia, which operated in Derna and Benghazi, announced on Saturday it is disbanding as a result of “heavy losses that have wiped out its leadership and decimated its fighters,” Reuters reports.

Could Sudan be next? Egyptian security officials have reportedly said that airstrikes against suspected terrorist training camps in Sudan cannot not be ruled out, according to the Associated Press. The military is closely monitoring the remote desert triangle where the borders of Egypt, Libya and Sudan meet in Egypt’s remote southwest corner, the newswire says, again citing government officials. It suggests that in light of current tensions between Egypt and Sudan, there may be little impetus to hold out on a strike against training camps.

Videos of survivors from Friday’s shooting attack in Minya recounting the incident have begun to circulate on social media, including one young boy who said that, after confirming the bus passengers were Christians, the assailants ordered them to hand over any gold in their possession before opening fire. The gunmen killed all the men on board, as well as some women and children, the boy told an interviewer (watch, runtime 1:25). In another heartbreaking video, a woman says the attackers, who wore masks and military-style uniforms, killed her husband, 4-year-old daughter, brother, sister, and brother-in-law (watch, runtime 1:39).

Websites of business news outlets Al Borsa and DNE blocked: Authorities blocked access to the websites of Daily News Egypt (DNE) and Al Borsa yesterday, the two newspapers announced in a statement. DNE and Al Borsa management claimed to have not been given notice of probable cause ahead of the move, which they described as the “latest in a series of ongoing violations” against them. In December, the judicial committee tasked with freezing the Ikhwan’s assets had seized funds and frozen the assets of Business News, which owns and operates both newspapers. The assets of company chairman Moustafa Sakr were also frozen at the time.

The Ismail government blocked access to 21 news websites last week on grounds that they published fake news and / or pro-terror content. The Press Syndicate held a meeting yesterday to discuss the ban, which affects dozens of syndicate members, Al Mal says.

While DNE’s website was down at press time, Al Borsa has failed over to a new domainname — elborsanews.com.

Reuters has the story, which is getting fairly wide pickup in the international press.

The Bank of Alexandria and Tanmiya Capital Ventures (TCV) have inked a cooperationprotocol that will effectively see Bank of Alexandria feed private equity outfit TCV potential investment candidates, while TCV will steer portfolio companies seeking bank financing to Alexbank. TCV typically looks at investments with an EGP 35-100 mn ticket size. TCV announced in March that it had reached first close on its first fund, saying at the time that it intends to invest EGP 250-300 mn this year.

MOVES- Mostafa El Feki has been named the new director of Bibliotheca Alexandrina yesterday. El Feki succeeds Ismail Serageldin, who stepped down after a 15-year run and was named Librarian Emeritus and appointed to the Bibliotheca’s board of trustees.

Delek and Noble face first major challenge in Israel’s gas market: Greece’s Energean Oil & Gas Group signed contracts to supply to Dalia Power Energies and Or Power Energies with natural gas from the Karish and Tanin fields offshore Israel, in what Bloomberg calls the first agreement to rival dominant Israeli suppliers Delek and Noble Energy. Energean will supply 23 bcf of gas at a cost linked to the Israeli electricity market and underpinned by a floor price, which the company says will be less than what Israel Electric Corp pays to Tamar field partners Delek and Noble.

Image of the Day

UAE, Israeli landmarks light up in solidarity with Egypt: Landmarks across the UAE, including the Burj Khalifa, the Abu Dhabi Global Market, ADNOC’s headquarters, the Emirates Palace, and the Capital Gate building lit up in the colors of the Egyptian flag over the weekend in a show of solidarity after the Friday Minya attack. The gesture made history in Israel when it displayed the Egyptian flag at the Tel Aviv municipal building, marking the first time for the building to project the flag of an Arab country.

Egypt in the News

Reactions to Friday’s terror attack on the nation’s Christian community continue to dominate international news coverage of Egypt. Leading the coverage are pickups of wire stories of the social media testimony of the survivors. Pope Francis expressing his solidarity with Coptic Christians also received widespread coverage. He called the victims of the attacks martyrs. Speaking from his studio window over St. Peter’s Square, Francis said: “May the Lord welcome these courageous witnesses, these martyrs, in his peace and convert the hearts of the violent ones,” according to the Associated Press.

Domestically, “Egypt’s Coptic Christians have accused the government of failing toprotect them,” Ruth Michaelson writes in The Guardian. A friend of one of the victims says “even this state of emergency: they announced it to calm public opinion, but it’s not really helping. Even the priests, bishops and parliament members don’t have the same respect from people any more — now no one takes their ‘soothing’ words seriously. We’re fed up.”

The AP’s Rami Musa and Hamza Hendawi write after Egypt’s air strikes on Libya thatour neighbor to the west is now seen as a haven for militants. They say militants are located in four main areas: Derna, Benghazi, Sirte, and Sebratha. The Libya Observer is reporting that the town of Hun has also been a target for air raids. The Tobruk-based parliament of Libya says it fully supports Egypt’s decision to carry out airstrikes against terrorists within Libya’s borders. “For sure, we support these airstrikes and it is not for the first time. They are carried out in coordination with the Libyan armed forces and it is known that the town of Derna [where airstrikes took place] has been under siege of the Libyan armed forces for two years,” Abdallah Bilhaq, the spokesman of the Libyan parliament, told Sputnik. Bilhaq says he does not expect from Egypt any ground operations in Libya, however.

From the GCC with love: Egypt has been shown much love in the (non-Qatari) GCC press. Beyond statements of support, the Saudi Gazette linked the terror attack in Manchester last week to the Minya massacre, arguing that attacks signify a new terrorist strategy in the wake of setbacks in Iraq and Syria. Meanwhile, Bahrain’s Al Wasat is noting the extent of which religious minorities in general, and Coptic Christians specifically, have long been prime targets for terrorists.

Right-wing media, including Breitbart, is of course playing up the clash of civilizationsangle, and focusing on Christians being slaughtered for refusing to convert.

An international coalition to fight terrorism will not work to counter Daesh in Egypt, writes Zvi Bar’el for Haaretz (paywall). Daesh does not control territory in Egypt, so it cannot be countered using conventional tactics, argues Bar’el. He adds that the organization wants to stir a civil war by shifting from targeting security in Sinai to attacking Christians.

On Deadline

The airstrikes Egypt launched in Libya mark a “new page” in its fight against terrorism. The strikes have upended the prevailing order in the region and sent a strong message to terrorists and the states that sponsor them, Karim Abdel Salam writes for Youm7. On the other side of the fence, Al Masry Al Youm’s Abdel Nasser Salama says our airstrikes in Derna could not have targeted Daesh members, since they were pushed out from the Libyan city in June 2015. This means that Egypt’s military either did not have accurate intelligence (which would be a disaster), or that the airstrike was not directly related to the Minya shooting, Salama says.

Worth Reading

“The issues Egypt faces are not, as some observers claim, outcomes of its uprising in 2011, but rather symptoms of the longstanding problems and challenges that caused it and have remained unaddressed,” The Tahrir Institute for Middle East Policy’s (TIMEP) report on Egypt in the six years after the revolution, “A Fragile Egypt in a Changing World,” says. The report “examines all aspects of governance in Egypt: political engagement, rule of law, rights and freedoms, minority rights, gender equality, security, and economic stability to explain how it arrived at its current state and provides recommendations for how to move toward fulfillment of the revolution’s aspirations in the current political context.” The report’s section on the economy notes that “Egypt is now entering the eye of its reform storm, and the only way out is forward. The government’s reform plan shows no sign of abatement, and it cannot. As the government seeks to obtain the rest of the IMF loan, it will have to push ahead with reforms. While this is good news for local and international investors, and perhaps for the country in the long run, it will also entail additional hardship for the economically vulnerable.” The landing page for the report is here.

Worth Watching

Taking augmented reality to the next level. How far can a sci-fi project that allows you to play with your very own virtual pet go? Strange Beasts is a new game that allows you to customize your own pet. And don’t think “golden retriever,” but creatures that would be more at home in Fantastic Beasts and Where to Find Them.

Strange Beasts differentiates itself from typical augmented reality by using contact lens nanotechnology rather than goggles or headsets. These work by superimposing computer-generated imagery over real world objects by projecting a digital light field directly over your eye.

Like the video, we’ll give you the plot twist at the end: Strange Beasts is actually a short project by writer-director Magali Barbé. The lenses don’t yet exist, and the whole thing exists to prompt questions: What happens when artificial intelligence can mimic the emotions of real living creatures. How attached can we become to what are, essentially, lines of code? Watch Strange Beasts (runtime: 1:42)

Diplomacy + Foreign Trade

Exports of readymade garments grew by 4% y-o-y to USD 413 mn in the first four months of the year, the Readymade Garments Export Council said, according to Al Masry Al Youm. The USA topped the list for export markets, taking in about half of the total exports, followed by the EU.

Trade and Industry Minister Tarek Kabil has approved the appointment of the members of the newly-established Egyptian-Cypriot Business Council for three-year terms, according to Al Masry Al Youm. The Egyptian section of the Council will be chaired by Nile Linen Group chairman Said Ahmed.

Energy

ABB to inject USD 20 mn into developing electrical transformers plant

ABB plans to invest USD 20 mn to expand its electrical transformers production plant in Tenth of Ramadan within two years, Managing Director for Egypt, North and Central Africa Naji Jreijiri tells Al Shorouk. ABB spent USD 15 mn to establish a new line to manufacture electrical substation, he added. The company is looking to grow its sales by 20% y-o-y in 2017.

Infrastructure

EBRD lends EUR 186 mn for Fayoum wastewater treatment project

The European Bank for Reconstruction and Development (EBRD) is lending the Fayoum Water and Wastewater Company EUR 186 mn to develop and expand its wastewater services. The loan is complemented with a EUR 172 mn loan from the European Investment Bank, with the EU Neighbourhood Investment Facility extending an investment grant of EUR 30 mn and over EUR 7 mn for technical assistance. EBRD says the funding will support the construction of eight new wastewater treatment plants, the expansion of nine units and the rehabilitation of 10 plants as well as the installation of 3,433 km of pipes and 139 pumping stations. In addition, 350 sewage removal trucks will be procured to serve remote rural communities. The project will increase the Fayoum Water and Wastewater Company output by almost 300k cubic metres per day and increase the number of Fayoum residents with access to sanitation to almost 90% from just over 30% currently. The project will also reduce pollution levels at Lake Qarun.

Basic Materials + Commodities

Cultivation season to grow fertilizer demand next month

Demand for fertilizers is expected to grow in the coming weeks, as cultivation season for rice, corn, cotton, and many vegetables and fruits begins, the head of the Agricultural Cooperative Federation tells Al Mal. During these peak months between end of May and late June, producers will need to pump at least 10k tonnes of fertilizer a day to into the market to cover demand, he adds.

Egypt purchases 2.9 mn tonnes of local wheat since harvest season began

Egypt has purchased a total 2.9 mn tonnes of wheat from local farmers since the start of harvest season in April, a Supply Ministry spokesperson said on Sunday, according to Reuters. The government is looking to buy a total 3.5-4 mn tonnes of wheat by the end of harvest season in July.

Health + Education

Egyptian women’s life expectancy at birth climbs to 73.3 years in 2016

Life expectancy at birth for Egyptian women climbed to 73.3 years in 2016 from 70.5 year in 2009, Ahram Online reports, citing a CAPMAS report. “The increase in the average age of women comes despite an increase in the female death rate, which increased from 5.6 in every 1,000 females annually in 2008 to 6.0 in every 1,000 in 2015.” The main cause of death for Egyptian women continues to be cardiovascular diseases.

Telecoms + ICT

ADSL customer numbers down 90k in February as mobile data subscribers grow in number

ADSL providers lost 90k subscribers in February, falling to 4.37 mn subscribers compared to January, according to the CIT Ministry’s indicators in brief report. We suspect TE Data’s near-monopoly status and poor service has a lot to do with that, given that more people are migrating to 3G data packages, demand for which grew by 2.1% m-o-m. ADSL subscribers remain concentrated in Greater Cairo, which had 42% of the total subscriptions, according to the report.

Vodafone Egypt to submit domestic roaming offer to Telecom Egypt

Vodafone Egypt is planning on submitting an offer to provide domestic roaming to Telecom Egypt (TE) next week, sources told Al Mal. Etisalat Misr and Orange Egypt have already reached agreements with TE. Sources add that Vodafone Egypt had already submitted two offers previously, but TE had asked for amendments in pricing and geographical scope. The MNOs say they have not received the 4G frequencies yet.

Automotive + Transportation

Cairo Metro Line 1 requires EUR 990 mn to complete development

Cairo Metro’s Line 1 needs EUR 990 mn in order to complete development plans, Transport Minister Hisham Arafat said, Al Shorouk reports. The sum includes EUR 360 mn for infrastructure costs and the rest for train cars. Arafat says the Ministry is currently assessing funding proposals from the European Investment Bank, the European Bank for Reconstruction and Development, and the French Development Agency. He added that the Ministry is also buying six air conditioned trains that will cost a total of EUR 100 mn for Line 2.

Transport Ministry to select between Italian and Hungarian bids for 700 train cars

Italian companies are offering to supply 700 train cars 30% cheaper than the nearest offer, Transport Minister Hisham Arafat says, according to Al Borsa. The Transport Ministry is deliberating two rival bids from Italy and Hungary to supply the 700 train cars to the National Railway Authority. Negotiations are expected to be completed before year-end, Al Borsa adds.

National Company for Roads to hand highway management over to NAT

The National Company for Roads (Watanya)will hand highway management over to the National Authority for Tunnels (NAT), which will also receive 50% of earnings from toll stations across the country, a top NAT official tells Al Borsa.

Banking + Finance

NBE will not raise interest rates on personal loans, only commercial loans

The National Bank of Egypt (NBE) will not be raising interest rates on personal loans taken out before the CBE’s decision to hike interest rates by 200 bps last week, the bank’s head of Retail and SME Banking tells Al Ahram. The interest rate hike, he adds, will only be applied to commercial loans. The NBE, CIB, Faisal Islamic Bank, and Al Ahli Bank of Kuwait have yet to announce a decision on whether they will raise interest rates on variable interest three-year savings deposit certificates, while eight banks, including Ahli United Bank and Bank of Alexandria changed their interest rates in response to the CBE’s decision, Al Borsa reports.

Egyptian Steel negotiating for EGP 4 bn facility with banking consortium

Ahmed Abou Hashima’s Egyptian Steel is in talks with a banking consortium to provide it with EGP 4 bn to finance the construction of its EGP 5.9 bn construction material complex in Sohag, Al Mal reports. The consortium reportedly includes the National Bank of Egypt, Banque Misr, CIB, and the Arab African International Bank, an unnamed source says. The funding facility is said to have a 10-year maturity and will come with a two-year grace period. The complex is slated for completion within two years.

Yields on three and nine-month T-bills rise on Sunday

Average yields on Egypt’s three and nine-month treasury bills rose at auction on Sunday. Three-year T-bill yields grew to 20.478% from 19.709% at the previous auction, while nine-month bills rose to 20.519% from 19.493%, according to data from the CBE.

Legislation + Policy

Civil Service Act exec regs out in official gazette

The executive regulations governing the Civil Service Act were published in the official gazette on Sunday, after the Ismail cabinet signed off on them on Thursday, Youm7 says.

Egypt Politics + Economics

Rights lawyer Khaled Ali trial begins today

The opening session in the trial of human rights lawyer and former presidential candidate Khaled Ali’s trial on charges of offending public morals with an “obscene hand gesture” will be held today, Al Mal reports.

On Your Way Out

Still searching for summer and early fall reads? It’s going to be a year for blockbusters, with summer and fall set to see new releases from:

Get the full list and a rundown on the business logic in the Wall Street Journal.

Health Minister Ahmed Rady presented yesterday a plan to reduce Egypt’s rising population to Prime Minister Sherif Ismail and other cabinet members, according to a Cabinet statement. Rady’s plan focuses on providing family planning and reproductive health services= and development projects that empower women.

OH NO. Please, God, do not grant Egyptians power over their genetics: Meanwhile, population control could turn us into Children of Men if this “gender selection” trend continues to flourish. Ahram Online is running a feature on the popularity of Egyptian couples using biotech to select the gender of their embryos. And because it is us, more times than plenty, the selection is usually male. If this piece of technology is not stripped from us soon, expect a dystopia in the near future where 93 mn men fight and kill each other in savage ways for the last five women left in Egypt. You’ve been warned.

The markets yesterday

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EGP / USD CBE market average: Buy 18.0276 | Sell 18.1306
EGP / USD at CIB: Buy 18.05 | Sell 18.15
EGP / USD at NBE: Buy 17.95 | Sell 18.05

EGX30 (Sunday): 13,205 (+0.9%)
Turnover: EGP 638 mn (40% below the 90-day average)
EGX 30 year-to-date: +7.0%

THE MARKET ON SUNDAY: The EGX30 ended Sunday’s session up 0.9%. CIB, the index heaviest constituent ended up 1.5%. EGX30’s top performing constituents were: Emaar Misr up 6.3%, Juhayna up 4.2%, and Domty up 2.1%. Yesterday’s worst performing stocks were: Amer Group down 3.0%, Cairo Oils & Soap down 1.9%, and Qalaa Holdings down 1.2%. The market turnover was EGP 638 mn, and regional investors were the sole net sellers.

Foreigners: Net Long | EGP +27.7 mn
Regional: Net Short | EGP -29.5 mn
Domestic: Net Long | EGP +1.8 mn

Retail: 68.9% of total trades | 65.0% of buyers | 72.9% of sellers
Institutions: 31.1% of total trades | 35.0% of buyers | 27.1% of sellers

Foreign: 12.0% of total | 14.2% of buyers | 9.9% of sellers
Regional: 10.6% of total | 8.3% of buyers | 12.9% of sellers
Domestic: 77.3% of total | 77.5% of buyers | 77.2% of sellers


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PHAROS VIEW

It should not come as a surprise if the Central Bank decides to hike interest rates again in the coming months, Pharos Research suggest in their latest report (pdf), which says that domestic demand must grow at a slower pace to remain consistent with domestic production growth and economic realities. Simply, the gap between resources and the demand for them is still too high, which isn’t helping inflation. “If our analysis proves to be right, consumption will come under pressure due to further fiscal and monetary tightening, in addition to a slower wage adjustment,” the note says. Interest rates would begin to slow again once inflation begins to deccelerate in 2QFY2017-18.

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WTI: USD 49.77 (-0.06%)
Brent: USD 52.15 (0.00%)
Natural Gas (Nymex, futures prices) USD 3.24 MMBtu, (2.08%, July 2017 contract)
Gold: USD 1,270.20 / troy ounce (-0.09%)

TASI: 6,783.39 (-1.29%) (YTD: -5.92%)
ADX: 4,496.38 (-0.45%) (YTD: -1.10%)
DFM: 3,293.60 (-1.01%) (YTD: -6.72%)
KSE Weighted Index: 401.00 (-0.30%) (YTD: +5.50%)
QE: 10,123.23 (+0.62%) (YTD: -3.00%)
MSM: 5,286.64 (-0.31%) (YTD: -6.85%)
BB: 1,317.40 (+0.24%) (YTD: +7.94%)

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Calendar

26 May-23 June (Friday-Friday): Window for firms to submit expressions of interest to the European Bank for Reconstruction and Development for consulting on Egypt’s oil and gas sector reform, London, UK.

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.

6 July (Thursday): Central Bank of Egypt’s Monetary Policy Committee to review policy rates.

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.

17 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee to review policy rates.

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.

28 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee to review policy rates.

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.

16 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee to review policy rates.

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.

28 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee to review policy rates.

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