Three foreign bourses are reportedly vying for a piece of the Enppi IPO.
Plus: The trailer for Westworld’s second season is out

We’re meeting our largest trade and investment partner today: Foreign Minister Sameh Shoukry arrived in Brussels yesterday for EU-Egypt Association Council meetings, where talks with the EU’s High Representative for Foreign Affairs and Security Policy Federica Mogherini will focus on the full basket of bilateral issues. (You can view the full agenda here). Mogherini, who was recently in Kuwait for talks, will also bring up the ongoing boycott of Qatar, AMAY suggests, citing Foreign Ministry spokesperson Ahmed Abu Zaid. Shoukry will head to Paris today for meetings with senior government officials. In connection with the visit, Amnesty International said the EU needs to take into consideration Egypt’s human rights record as it looks at the state of relations between the two sides.

We’re still chasing Russian tourists: Russian air security officials are due in Cairo today to examine security measures undertaken in Cairo Airport’s terminal 2, Sputnik says. The inspection is set to go on for several days. Government sources tell Al Masry Al Youm this is a positive development as it follows a three-month freeze in negotiations with the Russian side on resuming flights to Egypt. The inspections will also include the Sharm El Sheikh and Hurghada airports.

We’re not backing down on the Qatar blockade, President Abdel Fattah El Sisi said at the latest of his youth conferences. "Egypt will stand by its decision and will not backtrack on this matter. Our persistence on its own, our stance, and this block, is pressure in itself,” Reuters quotes the president as having said. See today’s Speed Round for more on policy statements coming out of the conference.

Someone out there thinks US markets are looking at a very volatile fall — and has put their money where their mouth is in a big way, taking a position that could pay out USD 265 mn if the VIX rises to 25 by October. That would effectively mean the so-called “investor fear index” doubling between now and then, the Wall Street Journal reports.

The clash between traditional internationalists and the “America First” camp in the Trump administration is wearing down diplomats and spooks, Reuters reports in a piece worth reading for foreign policy geeks this morning.

We’re going to roast: Start packing your bags for Sahel because Cairo is facing a heat wave, the official mercury gauge rising above 40°C by Thursday.

Start planning your Eid Al Adha vacation. It’s official: The waqfat Arafat will be on Thursday, 31 August, and the first day of Eid will be on Friday, 1 September, the Astronomical and Geophysics Institute announced, Ahram Online reports. We’re imagining first day back to work after the break will be Tuesday, 5 September.

A law that sets a framework for reclaiming land seized under the government’s campaign to clear unlicensed developments and illegal occupation of state land is expected to come into effect this week, according to statements by Prime Minister Sherif Ismail last week.

The House Economics Committee will discuss the executive regulations of the new Investment Act this coming Sunday, the committee’s deputy chair Amr El Gohary tells Al Borsa. The committee got a special dispensation to hold the meeting from House Speaker Ali Abdel Aal, he added. We remind readers that the House’s input on the executive regulations is — to put it politely — not required.

Further down the road, the House Legislative Committee will start discussion of the long-awaited Bankruptcy Act in September, Deputy Chair Nabil El Gamal said. The bill would effectively decriminalize bankruptcy and could make it possible for companies to request time to re-structure under US “chapter 11” style bankruptcy protection.

Our hiatus from talk shows is doing wonders for our blood pressure. Sadly, all good things must come to an end and we’ll resume coverage on Sunday, 30 July.

IPO WATCH- The government is still deciding which foreign stock exchange will land a piece of its planned IPO of petroleum services outfit Enppi, a source tells Al Borsa. The LSE, Nasdaq Dubai and Euronext Amsterdam are all in the running, it seems. NI Capital, the government’s investment bank and shot-caller on the transaction, says the three markets offer ample access to liquidity and are familiar with Egyptian listings. While Enppi will be primarily an EGX listing, NI Capital is said to be mulling either a dual listing on one of those exchanges or a GDR offering as part of the transaction. The ultimate transaction size and structure won’t be made until “a month or two before Enppi begins trading on the EGX,” the source adds. Enppi is set to be the first company to list on the EGX under the Egyptian government’s IPO program; the state is reportedly looking to raise USD 213-267 mn from the sale of a 24% stake. CI Capital, Jefferies and Emirates NBD Capital will be serving as lead managers and bookrunners, while Baker McKenzie are legal advisors (though it’s not yet clear whether they’re advising the issuer or the lead managers).

Kuwait Finance House is looking to expand into Egypt and China, according toThe National. KFH, the tenth largest lender in the Gulf, is considering an acquisition of an existing operation Egypt rather than chasing a new license. The bank is looking outside of its traditional territory, which it views as saturated, so a less mature banking market like Egypt looks attractive. Gulf banks have traditionally found their bread and butter in the form of government spending, which has taken a dip in the continuing period of lower oil prices.

The IMF World Economic Outlook update for July sees emerging markets GDP growing to 4.6% in 2017 (up from 4.3% in 2016) and then to 4.8% in 2018. Growth in the MENA region is expected to slow given the outlook on oil and other commodities — a factor which plays more to the GCC economy than ours. While 2017 and 2018 regional forecasts remain the same, 2016 came in stronger than expected on the back of growth in Iran. Global outlook remains unchanged at 3.5% for 2017 and 3.6% for 2018 after revisions to the downside in developed markets like the US balanced out with revisions to the upside in China and Japan.

President Abdel Fattah El Sisi discussed a slew of political, economic, and foreign affairs issues during the latest youth conference, which kicked off yesterday in Alexandria. The president named terrorism and the ballooning population as two of the country’s biggest hurdles. He said it will be crucial for Egypt to stick to his administration’s economic reform agenda if the country wants to overcome its “development challenges,” something Prime Minister Sherif Ismail also stressed at the conference. El Sisi stressed that the reform program has already translated into an improvement in FX reserves, which are fast approaching pre-2011 levels, Ahram Gate reports

Education as a national priority: One of the key takeaways from the conference is the signalling that education will be a bigger priority for the government moving forward. The president said Egypt’s education system needs funding to the tune of EGP 180 bn per annum if quality is to improve, making the current budget allocation of EGP 60 bn insufficient, Al Borsa reports.

On foreign policy, El Sisi stressed that Egypt is not backing down from the Qatar blockade. The President also called on the Israeli leadership and people to avoid taking measures which would provoke Muslim sentiments when it comes to the Al Aqsa mosque crisis. His plea (runtime: 2:38) comes as Egypt and other regional and international power look to calm the flare up resulting from closing the mosque to worshippers, which led to the death of at least eight Palestinians. Local political forces are looking to grandstand on the issue: A number of political parties looking to hold demonstrations in the Arab League, said Medhat El Zahid, acting head of the Popular Socialist Coalition.

Other takeaways from the conference:

• The Universal Healthcare Act is in its final stages, and will be presented to Prime Minister Sherif Ismail in two weeks’ time, according to Al Mal.
• The Education Ministry plans to build 100K classrooms within two years, of which 60,000 will be funded by the state, while the private sector will develop the remaining 40,000.
• Egypt’s agricultural exports to Europe, the Arab world, and Russia are on the rise, with exports of potatoes jumping around 33% to reach a total of 800K tonnes, Agriculture Minister Abdel Moneim El Banna said, according to Al Borsa.

You can watch the conference in full here (runtime 2:35:25).

President Abdel Fattah El Sisi approved yesterday the creation of the Golden Triangle Special Economic Zone, Al Masry Al Youm reports. The zone will grant special concessions and investment benefits akin to the Suez Canal Economic Zone to a 2.2 mn feddan area encompassing parts of Al Quseir, Safaga, and Qena. The Golden Triangle first got media attention in a 2015 presentation (pdf) by then-Oil Minister Sherif Ismail at the Egypt Economic Development Conference

El Sisi also signed off on amendments to the Personal Status Act that will see individuals missing for 30 days declared dead. Amendments to legislation regulating organ transplant procedures, which will see harsher penalties for those who violate the law, are also now in effect after having been published in the Official Gazette.

Nine banks will need to make capital adjustments to comply with CBE, Banking laws: There are nine banks in Egypt which must make adjustments to meet the minimum cap requirement of EGP 1.5 bn laid out in leaked draft amendments to the Central Bank and Banking acts, by Al Mal’s count. The list includes the Industrial Development and Workers Bank of Egypt (IDWB), Misr Iran Development Bank, Attijariwafa Bank Egypt, Crédit Agricole, ABC Bank, the Arab Investment Bank, and the Housing and Development Bank. IDWB would have the hardest time meeting these adjustments as its capital amounts to EGP 500 mn.

You’re set to pay more for your ADSL package now that service providers will themselves be required to pay the 14% value-added tax, according to a report from the Cabinet Information and Decision Support Center picked up by AMAY. Data packages across the board will cost more for the ISPs to provide starting in September when the VAT for telecom services will come into effect (the IDSC had initially said it would be applied in July). Internet service providers have failed to convince the ICT Ministry to give them another year without having to pay the VAT and have thus been pushing the National Telecommunications Regulatory Authority to give authorize a 15% increase in service prices to offset the impact of the VAT. The CIT ministry had previously said it believes ADSL providers could be allowed to raise prices by as much as 4% to offset the impact of the VAT.

Supply Ministry denies lowering subsidized bread allocations: The Supply Ministry has denied it will lower daily subsidized bread allocations, stressing that it is still studying the issue, Ahram Gate reports. The ministry had issued a report indicating that smart card holders consume an average of 2.5-3.8 loaves of bread out of their daily ration of five loaves. The ministry used that to suggest cutting the daily ration to four loaves in exchange for doubling the number of subsidy points card holders receive for every loaf of bread they do not buy from their rations to EGP 0.20, from EGP 0.10. The points on the card are then tallied and allow the cardholder to buy other commodities using the accumulated balance. Al Shorouk has more on the controversy, which has the head of the grocers’ union cheering the Supply Ministry’s trial balloon and the head of the bakers’ union booing it — a shocking breakdown of interests, we know.

MOVES– Hashem El Sayed and Khaled Abu Heif were elected yesterday to fill the two listed companies’ seats on the EGX’s board of directors, while Ahmed Bahaa was elected to fill the small and medium enterprises’ seat, Al Mal reports. El Sayed is the chairman and managing director of the Egyptians for Housing and Development Company, Abu Heif is the CEO and managing director of Arab Moltaqa Investments Company, and Bahaa is the managing director of MP Engineering.

EARNINGS WATCH-

• Orange Egypt reported an increase in net loss after tax to EGP 1.10 bn in 1H2017 from EGP 33.4 mn in the same period last year. Revenues rose 6.33% y-o-y to EGP 6.12 bn in 2Q2017. Orange Egypt blamed loss on the impact of the float on equipment imports, the CBE’s interest rate hikes and rising fuel and energy prices.
• Service revenues from Vodafone Group’s Egyptian operations increased by 24.6% y-o-y in 2Q2017, “with successful segmented campaigns and rising data penetration supporting average revenue per user growth, together with the increased value of international traffic post currency devaluation,” according to a company release. Vodafone Group as a whole reported a 3.3% y-o-y drop in overall revenues to EUR 11.5 bn in 2Q2017, compared to EUR 11.9 bn in 2Q2016.
• The National Company for Maize Products (NCMP) reported a more than 4x rise innet profit after tax in 1H2017 to 128.8 mn, according to a an EGX filing. Revenues rose nearly 79% to 738.8 mn. The company remains the subject of an intense bidding war.

Cairo has the second largest number of HNWIs in Africa, Alexandria ranks 13th: Wondering where the rich live in Africa? Cairo comes in second place on the list of African cities with the largest number of high net worth individuals (HNWIs), according to AfrAsia Bank’s Africa Wealth Report 2017. The report suggests that the number of HNWIs in Egypt decreased by 18% between 2006 to 2016 and expects their number to be stable until 2026. The report says Cairo is home to 8.900 HNWIs, of which 480 are multi-mn’aires, while Alexandria, coming in at 13th on the list, is home to 110 multi-mn’aires and 1,800 HNWIs. Johannesburg is home to the largest number of HNWIs with 18,200 individuals meeting the definition, including 970 multi-mn’aires. Egypt’s luxury market is ranked fifth continentally in terms of 2016 revenue with approximately USD 200 mn. The report also lists the top spending habits of the continent’s HNWIs from watches to private jets. AfrAsia Bank’s report is available in full here (in PDF).

Ryanair became the latest airline to bid for failing Alitalia on Monday, says a piece in the Financial Times. Ryanair’s CFO refused to give and details on the bid, but made clear how important the Italian market is to the airline. Other high profile contenders include Etihad, who already own a significant stake in Alitalia, and easyJet. The bidding is still early stage but the tender should be produced in the next few weeks. The three bids are non-binding, but expect the auction to heat up as it gets to the later stages toward October.

The rapid growth of a BlackRock exchange-traded fund that tracks emerging markets debt is causing fear of a bubble-like effect, Natasha Doff writes for Bloomberg Markets. The iShares JP Morgan EM Local Government Bond ETF doubled in size this year, with over USD 3 bn inflows. “The risk is that if the carry trade unwinds, as tends to happen eventually, investors could race for the exit all at once and send the fund tumbling,” writes Doff.

The concern is particularly fraught given what the author sees as “volatile conditions” in emerging markets. “Such a selloff could be triggered by higher developed-world yields as central banks wind down easy monetary policy, like in 2013’s Taper Tantrum. That would dim the appeal for carry traders of borrowing [USD] to buy assets in higher-yielding developing world currencies,” writes Doff. A BlackRock spokesperson downplayed the concern, saying ETF holdings represent less than 2 percent of emerging market debt, which means it cannot be a driver for the market. But Bloomberg’s own numbers say ETFs account for about 12% of the USD 400 bn invested in emerging market bond funds.

Topping coverage of Egypt in the foreign press this morning is the “clean sweep” Egypt players achieved at the World Junior Squash Championships — winning both the individuals’ women’s and men’s finals for the first time since 2013, NZ Herald reports. The women’s final was an all Egyptian affair, with Rowan El Araby beating Hania El Hammamy in straight sets. Marwan Tarek clinched the men’s title by beating France’s Victor Crouin in the final. The official World Squash Federation Juniors’ coverage is here.

The impact on education of Egypt’s population boom may be one of the biggest factors at play when it comes to social stability, Juan Cole, a commenter on the Middle East and a historian at the University Michigan, says in an interview with KGOU’s World View program. The government has been strained to provide schooling for a population which has doubled since 1980, which driving unemployment and stirring social tensions. Class divisions play a role in that, as quality education remains the purview of the elite who can afford to send their children to education centers that teach analytical skills, and not rote learning as is taught in Egypt’s state universities, he added.

Also worth noting in brief today:

• Frontera News has a four-part primer on the investment environment in Egypt and its relationship to monetary policy titled Egypt: Appetizing or Antagonizing?
• President Abdel Fattah El Sisi is capitalizing on the popularity of artists to promote policy and ideas following the footsteps of former President Gamal Abdel Nasser, George Mikhail writes for Al-Monitor.
• Multiple travel warnings to Egypt have impacted tourism in the country severely, according to a report by The North Africa Post.
• Egypt got some love from Abu Dhabi’s Crown Prince Sheikh Muhammad Bin Zayed, who “hailed the important and effective role played by the Egyptian Armed Forces” on both the home and regional fronts, says Standard Republic.
• Egyptians will have to forge a “legitimate democracy” themselves, as there are no established political factions that currently offer it, Mohanad El Sangary writes for Open Democracy.
• Six Kazakh nationals studying in Egypt have reportedly gone missing, and a search is currently underway after their families stopped hearing from them several days ago, KazInform reports.
• Once known as the heaviest woman on earth, Egyptian Eman Abd El Aty is now completing her rehab program at Abu Dhabi’s Burjeel Hospital, where doctors are hoping to help her lose another 100 kilograms, according to The National’s Nick Webster.

The Supply Ministry’s suggestion of reducing daily allocations of subsidized bread wouldbe catastrophic if implemented in light of the current economic hardships, Hamdy Rizk writes in Al Masry Al Youm. Although the ministry’s report on subsidized bread consumption shows that some citizens do not use up their daily bread rations, relying on the average figure is dangerous. The figures not accurately reflect the many citizens who do consume their full ration and sometimes even resort to buying more bread at market prices, Rizk says. He points out that there are plenty of citizens whose diets are comprised almost entirely of the subsidized bread, and urges the ministry to maintain the age-old government policy of keeping bread subsidies as an untouchable good.

Westworld Season 2 was officially announced at Comic-Con earlier this week, and from the trailer (runtime: 1:49) we can barely keep it together. For those unacquainted with this Wild West sci-fi, we beg you to set aside your prejudices and catch season one (watch trailer, runtime: 2:10). It’s a deep journey into sentience by abused amusement park robots (the description does it no justice). For those who have seen it, the robot revolution is in full swing, and looks to be a violent delight. Believe us, you’ll thank us when Game of Thrones is done.

An Italian trade delegation will be visiting Egypt towards the end of the year to explore potential partnership and investment opportunities in fields such as leather, glass, plastic, marble, and printing, Al Borsa reported on Monday. An Egyptian business delegation will also be headed to Rome in November to meet with Italian investors.

The Arab Quartet added nine organizations and nine individuals to the terrorist watchlist they had handed Qatar. The Egyptian cabinet’s Information and Decision Support Center (IDSC) also announced that Egypt has requested FIFA pull the World Cup 2022 event from Qatar, according to Al Mal.

The Supply Ministry has issued new regulations requiring farmers and companies to store their rice stocks at public and registered private rice mills, government sources tell Al Borsa. The new regulations, which will come into effect at the start of the harvest season next month, aim to allow the ministry to keep tabs on where rice is being stored.

4.02 mn feddans were used to cultivate summer crops including corn, rice, and nuts nationwide, according to an Agriculture Ministry report picked up by Ahram Gate. Yellow and white corn are the most widely grown crops, occupying around 2.18 mn feddans, followed by rice occupies some 1.22 mn feddans.

The General Authority for Supply Commodities (GASC) issued a global tender yesterday for an unspecified amount of soft and milling wheat to be delivered between 1 and 10 September, Reuters reports.

Lafarge appears to be looking to offload one of its bag-making subsidiaries, sources tell Al Borsa. Lafarge owns majority stake in two bagging companies, EGY SAK and the National Bag Company, and has recently courted Mondi as a potential buyer for one of its bag units. Last week, Mondi made the news by bidding for Suez Bags, a subsidiary of Suez Cement. The newspaper is claiming that the company is in talks with some unnamed Libyan investor to sell one of the companies. Plans for the sale come as the firm looks to shed rising costs and low margins from the business unit, while focusing on its cement and alternative energy lines of business.

Heliopolis Company for Housing & Development targets building 1,036 houses in FY2017-18 and generating sales of EGP 1.2 bn, according to an EGX filing. The company will also be offering 193 feddans in the new administrative capital for commercial and residential development projects on a partnership basis. We noted in yesterday’s issue Heliopolis Housing is launching a new USD 2 bn housing project in New Heliopolis.

Real estate firm Al Bustan has started delivering units in its EGP 150 mn project on the North Coast, Al Mal reports. The first phase of the project, which includes nine residential buildings, will be delivered this year. The second and third will be delivered 2018 and 2020, respectively. The company has already completed a compound project in Alexandria in collaboration with Quartz Real Estate worth EGP 86 mn.

Abraj Misr has launched the latest EGP 200 mn phase in its EGP 2 bn “The Shore” development in the North Coast project, Al Borsa reports. The new phase is made up of 120 homes.

Auto imports dropped 30% in 1H17, Customs Authority head Magdi Abdel Aziz tells Al Mal. Auto importers have significantly reduced volumes on the back of weak demand and soaring prices. Despite the drop the Customs Authority hopes to increase its take from car imports to EGP 8 bn in FY2017-18, from EGP 6 bn in FY2016-17.

The CBE provided repayment for United Airlines, Air Canada, Turkey’s Pegasus, Gulf Air, Jazeera Airways, and India’s Jet Airways, travel agency Imperial Travel Centre GM for sales Mahmoud Hammam tells Al Mal. Hammam did not provide a total figure, but said airlines that were owed amounts between USD 3-5 mn received them in one go, while those owed more are getting repaid “over installments.” He also noted United, Air Canada, and Pegasus are still not selling tickets in Egypt due to current financial conditions.

The US Trade and Development Agency is contracting Intratech Inc for almost USD 83k “to help it decide whether the agency should fund certain pilot projects, technical assistance or other activities in Egypt,” according to The Hill.

The Social Solidarity Ministry committee tasked with fine-tuning the welfare system has finished outlining new criteria and guidelines for pension beneficiaries, unnamed government officials tell Al Borsa. The guidelines, which would see whole families instead of only bread earners listed on the system, will come into effect in August now that the committee has also finished purging the welfare rolls (including the Takaful and Karama cash subsidy programs) from moochers, the official adds. The Social Solidarity Ministry is currently waiting to receive the USD 60 mn tranche of a USD 400 mn funding facility from the World Bank meant to support its cash subsidy programs, especially as they expand to cover more family members and infants.

Council of State Judge Yehia El Dakroury filed a formal petition to President Abdel Fattah El Sisi on Monday objecting to the fact that he had been bypassed as a nominee for the judicial body’s top post, Al Shorouk reports. El Sisi appointed Ahmed Aboul Azm as the head of Maglis Al Dawla (Council of State) last week instead of El Dakroury, after judges attempted in May to protest controversial amendments to the Judicial Authorities Act by submitting only one instead of three nominees for the job. El Dakroury said last week that he was planning to take legal action to overturn El Sisi’s decision.

The government has officially denied that the El Warraq neighborhood was being cleared to make way for a tourism development project, according to a report by the Egyptian cabinet’s Information and Decision Support Center (IDSC) on Monday picked up by Ahram Online. The IDSC laid the official line the move was part of the campaign to seize unlawfully occupied state lands.

Egyptian Authorities have reportedly blocked 127 news websites so far, according to the latest tally from the Association of Freedom of Thought and Expression.

Seven civilians, including two women and two children, were killed in an explosion near a military checkpoint in North Sinai’s Al Arish yesterday, Ahram Online reports.

Egypt is among the 22 countries set to participate in the annual army games,according to Sputnik.

Two Egyptians and a Palestinian have won National Geographic Abu Dhabi’s photography competition, Arab News reports. Mohamed Mahdy of Egypt won the Adult Single Image Category, Barakat Khaled of Egypt the Youth Category and Fatima Shbair of Palestine the Photo Documentary Category. They beat out 19k entries across their categories in the 7th iteration of the annual competition themed “Celebration in the Arab World.”

The Egyptian Coast Guard rescued 39 passengers from a fire on a diving boat in Northern Hurghada on Sunday, Standard Republic reports. The group, which reportedly included 29 foreigners, was unscathed. The Coast Guard is a division of the Egyptian Navy.