Wednesday, 9 August 2017

Some Kardashian or another is in Egypt.
And in real news: We have new food subsidy eligibility criteria and earnings season is in full swing

TL;DR

What We’re Tracking Today

Egypt’s budget deficit fell to 10.9% in FY2016-17, down from 12.5% the previous year, according to an Ittihadiya statement on Tuesday picked up by Reuters. This is only negligibly higher than expected results of 10.8% reported by the Finance Ministry last month. The country’s GDP growth for the year came in at 4.1%, slightly ahead of the 4.0% expected by the Planning Ministry. GDP growth for 4Q2016-17 stood at 4.9%. Bloomberg also has the story, where it’s getting heavy play on the business information service’s Mideast front page.

The Ismail cabinet is expected to give its final seal of approval today to the executive regulations of the Investment Act. The Cabinet economic group unanimously approved the regs on Monday, Investment Minister Sahar Nasr said yesterday. What’s purportedly the most recent draft of the document is here. There’s no word yet on whether the accompanying investment map is ready.

Cabinet’s agenda for today will likely also include the Leasing and Factoring Act, according to statements on Monday by Nasr.

Trump threatens North Korea with “fire and fury like the world has never seen,” Pyongyang says it is mulling an attack on Guam: Things heated up in Asia overnight as US President Donald Trump threatened strikes against North Korea in what the US press is calling “the most serious foreign policy challenge yet of his administration.” Exuding calm, Pyongyang accused the US of preparing to wage “preventive war” and promised it would wage “all-out war wiping out all the strongholds of enemies, including the U.S. mainland.” The New York Times and Reuters have more on the story, which was still evolving at dispatch time.

Israel is starting to prepare for a post-Netanyahu world, the New York Times’ Isabel Kershner writes: “Now, with one of Mr. Netanyahu’s closest former aides having turned state’s witness in two cases involving suspicions of bribery, fraud and breach of trust, Israelis across the political spectrum are trying on the idea of the curtain coming down on Mr. Netanyahu’s durable political career.” It’s a transition in our eastern neighbor we should be watching carefully. Eight years ago, at the start of the “Netanyahu era,” could you have imagined ties warming to the point that a top Israeli diplomat would write in retirement a piece for Newsweek headlined “A strong Egypt, as Trump knows, is a strong Middle East,” as Ron Prosor did yesterday?

The case for unlimited screen time: If you, like us, struggle daily with the kids over how much screen time is too much, the former head of the UK’s electronic spying agency has a message for you: “If you appear to be spending your holiday unsuccessfully attempting to separate your children from Wi-Fi or their digital devices, do not despair. Your poor parenting may be helping them and saving the country,” writes former chief codebreaker Robert Hannigan for the Telegraph. “We need young people to explore this digital world just as they explore the physical world.” Read: “Don’t pull your kids away from screens. I ran GCHQ and know that Britain is desperate for digitally curious minds.

When you’re done, go visit Common Sense Media, a great resource for parents and kids alike that runs down what people on both sides of the age gap think of recent movies, video games, books, TV shows and other media streaming through that screen. We’ve found it a great resource whenever we’re asked by the resident 10-year-old, “Can I download [fill in the blank]?”

Some Kardashian or another is in Egypt. We’re filled with self-loathing for even taking note of the ‘story,’ but it’s all anyone seemed capable of discussing overnight. The international press is going bonkers (see the Daily Mail, People, Us Weekly, E, etc). Even Al Mal is getting in on the act, picking up a statement from the Antiquities Ministry confirming the reality TV personality made a visit to the Pyramids earlier this week. The worst part: She’s apparently in Hacienda, reportedly staying at the home of a member of our community. It’s free publicity for Egypt, of course, but, “Is Kourtney Kardashian the new Cleopatra?” Really? [Redacted].

Enterprise+: Last Night’s Talk Shows

Egypt’s falling budget deficit and new eligibility criteria for subsidy beneficiaries were front and center on the airwaves last night.

The budget deficit narrowed to 10.9% in FY2016-17 from 12.5% a year before “without any help from Arab neighbors,” Finance Minister Amr El Garhy told Masaa DMC’s Osama Kamal in an interview. The primary deficit also dropped to 1.8% from 3.6%, El Garhy said, thanks to a 28.7% y-o-y rise in state income, driven largely by revenues from taxes, the Suez Canal, and state-run companies. Expenditures climbed a fairly modest 22% y-o-y, the minister added (watch, runtime 6:13).

The government will continue to focus on strengthening the social safety net in the FY2017-18 budget, El Garhy told Kamal, explaining that the state is spending EGP 85 bn on food subsidies this year, compared to EGP 47-48 bn in FY2016-17 (watch, runtime 2:55). Other measures include recent income tax cuts for both public- and private-sector employees, which will cost state coffers some EGP 7-8 bn (watch, runtime 5:51).

El Garhy hopes to see tax revenues rise as a percentage of GDP to 17% from a current 13% over the next four years, promising people a gradual shift “to a completely different country in three-to-five years’ time” (watch, runtime 7:31).

Over on Yahduth fi Misr, tightened regulations for food subsidy eligibility took centerstage. Supply Ministry spokesperson Mohamed Sewed implied to host Sherif Amer that Tuesday’s decision might somehow be temporary. He explained that setting the monthly income threshold for eligibility for new ration cards at EGP 1,500 is not meant to exclude anyone from subsidy rolls but rather to help the ministry address needs that are presently more pressing.

Another Supply Ministry spokesperson, Mamdouh Ramadan, told Hona Al Asema’s Dina Zahra (sitting in for Lamees El Hadidy) that the ministry will form a social justice committee that will reassess eligibility criteria at the end of the fiscal year. He also said that new beneficiaries can begin applying to the rolls as of today under the newly-set conditions (watch, runtime: 36:28).

Speed Round

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Gov’t tightens eligibility for food subsidies: New food subsidy ration card holders are facing tighter eligibility requirements, according to a decree issued on Tuesday and published on the Official Gazette. The new rule caps the number of family members eligible per card to four and introduces an EGP 1,500 monthly income threshold for eligibility for full-time workers; pensioners will qualify provided they earn no more than EGP 1,200 a month. The new rules do not apply to the existing 20.8 mn ration card holders and have no impact on their eligibility or rations.

The decree also clearly defines who, exactly, would be eligible for a ration card. Among those qualifying: orphans, widows, divorced women, single mothers, those with disabilities or special needs, minors, seasonal workers, and those eligible for social welfare benefits under the Takaful and Karama program. The unemployed who have higher education degrees will also be receiving new ration cards. A cabinet committee made up of the ministers of finance, supply, social solidarity, and planning will be meeting to determine when infants above the age of two will be eligible for ration cards, Supply Ministry spokesperson Mohamed Sewed said, according to Al Masry Al Youm.

Is the Supply Ministry looking to liberalize wheat bran in a similar manner to flour? After lifting subsidies from flour last month, the Supply Ministry appears to be attempting a similar move with wheat bran extracted from the production of subsidized bread, albeit in a more tempered manner. It issued regulations on Tuesday which would include forming a committee to determine the price of the wheat bran on a monthly basis. August’s prices are currently being looked at and will be announced next week, a spokesperson said. To sweeten the transition, a 10% commission per tonne will be offered to millers in exchange for storing and marketing the bran. The new codes also come with a string of harsher penalties of up to five years in prison for any violations of the rules regulating commodities tied to the state’s subsidy system.

Approving the law deregulating the natural gas market “effectively relieves the government from the burden of providing for the rapidly growing natural-gas consumption and turns it into a regulator … It’s all part of the same direction of having freer markets in Egypt,” Pharos Holding head of research Radwa El Swaify told Bloomberg. President Abdel Fattah El Sisi approved the natural gas act on Monday. The new law “sets up a natural gas regulatory authority charged with licensing and devising a plan to open the gas market to competition. It also allows for the eventual import of natural gas by private companies.” Our friend Haitham Abdel Moneim, who runs IR for EK Holding, which owns distributor NatGas, believes the move will bring in greater transparency and flexibility to the market and says it would give “more options for sources of gas and maybe better prices.”

The new act is also good news for Israel: The deregulation of Egypt’s natural gas sector could mean that the country is “on its way to becoming a major market for Israeli natural gas exports,”notes Eran Azran in Haaretz. The act is expected to allow projects that had been stalled due to regulatory and legal binds, such as the Tamar and Leviathan field partners’ agreements with Egypt’s Dolphinus Holdings, to finally move forward, the article adds. Just don’t forget about the small matter of a USD 2 bn arbitration award against Egypt won by Israel Electricthat has effectively blocked plans to reverse the Arish-Ashkelon pipeline to allow us to import gas from the fields.

Egypt’s agri export revenues decline as bans plague export season: Exports of Egyptian agricultural products are expected to decline to about USD 2.1 bn from USD 2.2 bn during the export season starting in September, Agriculture Export Council head Abdel Hamid El Demerdash tells Reuters. The declines come on the back of wave of bans on agricultural goods that have hit Egypt this season, dampening what was expected to be a successful export season following the EGP float. Saudi Arabia and the UAE have temporarily banned crops including strawberries and peppers due to concerns over pesticides, while Sudan introduced a blanket ban in May. Arab countries have requested that Egypt establish a "whitelist" of approved exporters who can guarantee the safety of their products, said El Demerdash. Egypt is working to reverse the bans.

Naeem subsidiary Reacap will merge with Wadi Degla Development to create an entity worth EGP 3.5 bn, according to Reuters. The agreement will see Degla constituting 74% of the new entity and Reacap the rest. Reacap will run a capital increase of 300 mn shares at EGP 11 a share to execute the merger, which should be done by the end of the year. The real estate portfolio of the new entity will stand at around 6 mn sqm, of which 4 mn sqm will be under development and 2 mn sqm undeveloped.

Pharos Securities Brokerage was landed a licence to trade in foreign markets. The licence from EFSA allows the firm to serve its international clients globally and Pharos’ research team is no looking to expanding its geographical coverage. “The license … will solidify our continued record of success and strengthen our position within the market … As part of our overarching strategy, we can now provide our foreign clients with a fully integrated brokerage service … With the new license, we have a better opportunity to achieve international outreach through partnerships across the world,” CEO Elwy Taymour says. The new licence “complements our transformation and underpins, positively, the services which Pharos can and will supply to our broadening client base,” COO Angus Blair added.

EARNINGS WATCH- Leading automotive assembler GB Auto reported a consolidated net loss of EGP 150.9 mn in 2Q2017, compared to profit EGP 124.4 mn in the comparable period last year, according to the company’s earnings release (pdf). This came despite a 6.3% y-o-y rise in total Group revenues to EGP 4.2 bn during the quarter, driven largely by growth in the company’s motorcycle business and financing arm and other ancillary businesses, which balanced out the drop in the passenger car segment. “The Group recorded revenue gains for both the three and six-month periods even as the core automotive business continues to operate in a challenging environment,” the release said. “Bottom-line profitability was muted by high interest expenses following the CBE’s successive rate hikes since the float.”

GB Auto is also sending a message that it sees its shares are undervalued, noting in its earnings release that it is now separately reporting “the core automotive and high-margin Financing Businesses. The two businesses are sharply different in terms of financing and capital structure as well as underlying risks.” The new disclosure structure, it says, “will provide a true reflection of the business’s net debt, facilitate more accurate valuations and reveal hidden value in the company’s share.”

GB Auto will be holding its 2Q2017 results conference call on Monday, 14 August at 4:00 pm CLT.

EARNINGS WATCH- Madinet Nasr Housing & Development (MNHD) reported a 246% y-o-y increase in consolidated net profits to EGP 509.6 mn for the first half of the year, according to the company’s earnings release (pdf). Consolidated revenues grew 131% y-o-y in 1H2017 to EGP 1.16 bn. “With almost EGP 2.5 bn in contracted sales during the first six months of 2017, MNHD is on a steady course to meeting its full-year targets,” said MNHD CEO Ahmed El Hitamy. The company will continue to push forward with efforts to launch new phases at its Taj City development and is expected to announce the second phase of its T-Zone development soon. The company is guiding for continued strong sales in the second half, with El Hitamy noting, “Heading into the second half of the year, we’re gearing up for yet another round of launches that will drive sales growth and capture pent-up demand for our benchmark properties.”

MNHD will be holding its 2Q2017 results conference call today at 3.30 pm Cairo time, with El Hitamy, CFO Mohamed Abdel Salam, and Director of Investor Relations Salah Katamish.

EARNINGS WATCH- LSE-listed oil and gas services firm ADES International Holding is giving strong guidance ahead of the release of its 1H2017 results, saying it expects revenue to grow 45.6% y-o-y to north of USD 87.85 mn, according to a pre-close regulatory filing. The company reports a strong, liquid balance sheet as of 30 June 2017 with stable debt levels and a reduction in the cost of its debt. The company has also reported key contract renewals and new awards and confirmed its full-year revenue guidance.

The newly listed outfit noted that “Funds generated from the successful IPO in the period have provided us with the balance sheet strength and cash position to pursue our growing pipeline as well as other opportunities.” ADES’ Managing Director Mohamed Farouk said, “While ADES’ Board recognise the ongoing tough market conditions for the industry, our proposition of low-cost, non-harsh environment drilling services in jurisdictions particularly resilient to commodity price weaknesses leaves us well placed to execute our growth strategy through the second half of the year and beyond. We have been able to achieve continued excellent utilisation rates and deliver strong EBITDA performance consistently through the downturn and are still seeing strong bidding activity.” Read the full pre-close trading statement here.

M&A WATCH- Take this with a heaping tablespoonful of salt: A confused Daily News Egypt suggests that both Al Hokair and Edita have backed away from bids for bakery chain TBS, but then claims a few paragraphs later that it “learnt from sources” that an EGP 130-150 mn transaction is still in the works — with who, exactly, is left unclear — and “the acquisition will be partial and may end up being a controlling stake.” Read the story here, or just do as we are and keep your ear to the ground.

DiDi Chuxing’s war with Uber took a new turn as the Chinese outfit invested in regional rival Careem. The China-based ride-sharing company announced on Tuesday it would be investing in Careem, but both companies are being tight-lipped about the details of the transaction. DiDi has been stepping up its investments with Uber’s rivals, including an agreement with Estonia-based taxi aggregator Taxify earlier this month. Similar agreements were signed in the US with Uber’s main competitor there Lyft, according to Reuters.

Dana Gas sees debt restructuring court case playing out in its favor: Sharjah-based gas producer Dana Gas — which has significant exposure to Egypt — decided this week to retract its June decision to restructure USD 700 mn in sukuks it borrowed from investors, preferring its odds pursuing the case in court, sources familiar with the matter tell The National. The company believes that through the court, it may have to return only 10% of the debt. “In a second scenario, it believes creditors may have to pay it as much as USD 150 mn,” the source adds. Dana Gas had decided in May to restructure the sukuks after they were deemed unlawful under UAE regulations. A ruling in Dana’s favor may “do significant damage to the Islamic capital markets,” according to Arqaam Capital’s Abdul Kadir Hussain.

In other company news, Dana Gas plans to begin drilling activities in its Egyptian Mediterranean offshore and onshore concessions before the end of 2017, an unnamed EGAS official tells Al Shorouk. Dana risks losing the plots it was assigned for natural gas exploration if it fails to begin its work before the set deadline, the source explains.

Kuwait is trying to launch a new initiative to mediate between Egypt, the GCC countries and Qatar through focusing on “specific measures that would ‘facilitate the start of an open dialogue,’” Gulf News reports. “Kuwait is very keen to resolve the dispute within the framework of the Gulf, especially that all parties have stressed on more than one occasion that Kuwait’s mediation is the only one that is internationally recognized and that can achieve the desired results and lead to direct dialogue between the states involved in the crisis,” sources said. US envoys are also trying to resolve the dispute and are looking to shift the focus away from the 13 conditions demanded by the Saudi-led alliance, a source told Bloomberg. The US will instead try to focus on the six broad principles that include combating terrorism. Kuwait’s Arab Times also has the story.

Kenya’s opposing bloc is dismissing early results from its presidential election showing President Uhuru Kenyatta leading the race as “fake,” Reuters reports. The heated election is a rematch of sorts pitting Kenyatta, a wealthy businessman, against self-proclaimed leftist and former political prisoner Raila Odinga. The last ballot battle between the pair sparked waves of violence and unrest.

Meanwhile, South African President Jacob Zuma appears to have survived a no-confidence motion that went to secret ballot, according to Bloomberg, which notes that the vote might end up being the harbinger of the end for the African National Congress’s political reign.

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Image of the Day

A look inside the compounds of Saudi Arabia: Bloomberg turned the spotlight on the contradictions and cultural schizophrenia that is life in Aramco’s compound in Saudi Arabia, where unlike the rest of the country women drive, concerts are allowed and men and women are allowed to mingle. Photographer Ayesha Malik captures these contradictions perfectly, giving us a glimpse into attempts to clone small town America in KSA.

Egypt in the News

The death of a policeman in Qena during clashes with an alleged Daesh-affiliated militant is topping headlines on Egypt in the foreign press this morning. “Police had raided mountainous areas after receiving information that militants loyal to [Daesh] were hiding there,” security sources tell Reuters.

Entrepreneur Ahmed Saeed El Feki set a small shop in a village near Cairo to create the first Egyptian-made minicar, Ahmed Hatem writes for the Associated Press. El Feki is calling his vehicle the “minicar Egypt” and he sees it as a replacement for tuktuks “The minicar’s engine power is 300cc, while the Tuk Tuk’s is 175cc. The body thickness is 4mm while the Tuk Tuk is only 0.75mm. The minicar is also much safer because it is a 4-wheel car while the Tuk Tuk is only 3-wheeled. The minicar saves more fuel than the Tuk Tuk,” Hatem writes. El Feki said he received a number of purchase orders locally as well as from African countries for his EGP 34,000 vehicle. He says he was producing 30-40 minicars a month, but is planning a major expansion after reaching an agreement to have the car parts manufactured in army-run plants.

Morocco is postponing a decision to float its currency after concerns arose following Egypt’s currency flotation, Ahmed Namatalla and Ahmed Feteha write for Bloomberg. “The move to a more flexible exchange rate regime, not a float, is still in the cards but the rollout will take place at the appropriate time,” government spokesman Mustapha El Khalfi told reporters on July 6. Analysts believe the comparison with Egypt is not entirely accurate as the Moroccan economy is still expected to continue being the best performing Arab economy and the country has an “investment-grade credit rating and an expanding private sector.” However, Arqaam Capital senior economist Reham El Desoki believes postponing the float was an easy decision for Morocco as it “unlike Egypt, isn’t facing a currency crisis that requires immediate action.”

Her Majesty Queen Elizabeth’s government has denied it provides assistance to the British University in Egypt after the chairman — Oriental Weavers founder Mohammed Farid Khamis — was allegedly found punting The Protocols of the Elders of Zion, claims The Algemeiner. The British government had to clarify its position on the matter after an anti-Semitism watchdog caught the statements and asked if the school was associated with the UK.

Other headlines worth a brief glimpse this morning include:

  • “Reducing Egypt’s debts to foreign oil companies is part of petroleum minister Molla’s strategy to attract further energy investment,” says Petroleum Economist (paywall).
  • The City Always Wins is receiving yet another glowing write-up, this time on the salmon-colored pages of the Financial Times.
  • Two years since the opening of the USD 8.2 bn New Suez Canal, the debate on its actual economic benefits continues to be waged, writes Shounaz Mekky for Arab News.
  • Amnesty International is saying that Egypt’s security forces “forcibly disappeared” a school teacher back in April, something the Interior Ministry had previously denied.
  • Take a look if you must at HuffPost’s latest attempt to attack the supposed “despotic” nature of Arab rulers. It veers from Orientalism to outright racism.

On Deadline

Finally, an opinion piece that said it: We need to stop going all Karl Marx whenever we hit an economic bump in the road, writes economist Medhat Nafie for Al Shorouk. Reading past his insanely long econ lesson and love note to capitalism, Nafie makes the point that Egyptians need to stop calling for restrictive and non-free-market policies such as price controls and direct government interference in the economy. This scares of investors at a time when the country needs them the most. We can’t have it both ways.

Diplomacy + Foreign Trade

Who needs an embassy anyway? Israel’s Prime Minister Benjamin Netanyahu is content with just having security ties with Egypt and not full civilian and diplomatic relations through an embassy, despite concerns from some officials, Times of Israel reports. “Israel pulled out Ambassador David Govrin and all of the embassy staff at the end of last year amid security concerns.” Sources said that Foreign Ministry representatives had complained that, without an active embassy in Cairo, “contacts between the two countries were reduced to talks with the Egyptian ambassador in Tel Aviv, making the upkeep of relations difficult. The result was a significant drop in relations impacting economic, civilian, and political ties.” Besides it not being a primary concern for Netanyahu, sources said the view is that “Egyptian army and security mechanisms manage most of Egypt’s foreign affairs anyway… So reopening the embassy is important, but the relations with the Egyptian army are more important.” Others reportedly said not having an Israeli embassy in Cairo is in line with Egyptian public opinion anyway. Sources told Haaretz part of the reason why the embassy has not been reopened is because of “foot-dragging” on some security measures requested by Israel.

West Bank faction Fatah denied that President Abdel Fattah El Sisi brokered a Palestinian unity agreement between it and Gaza rivals Hamas, Arutz Sheva reports. Nothing new came out of meetings between Fatah leader and Palestinian Authority President Mahmoud Abbas and El Sisi, according to Fatah Central Committee member Azzam Al Ahmad, who had been present. We had noted that the supposed agreement included dissolving the Hamas-run government committee in Gaza and Abbas alleviating punitive measures, such as slashing power supply to Gaza, in return. Hamas, officials, who had reportedly accepted El Sisi’s proposal, were the sole front to confirm the agreement’s existence.

President Abdel Fattah El Sisi talked cooperation with Cypriot president Nicos Anastasiades on the phone yesterday,according to Al Masry Al Youm.

Energy

More details on ACWA project in the south

The three solar power plants that Saudi’s ACWA Power will build in Aswan will cost around USD 190 mn, reports The National. ACWA signed power purchase agreements for the project with the Egyptian Electricity Transmission Company on Monday under phase two of the feed-in tariff program. The European Bank for Reconstruction and Development will supply half the amount, with the balance split between the International and Commercial Bank of China (ICBC) and the Multilateral Investment Guarantee Agency (Miga). ACWA will work on the projects with local development partners Tawakol and Hassan Allam. The company is reportedly also interested in opportunities to invest in desalination projects, in addition to renewable energy, Executive Chairman Mohammad Abunayyan told Oil Minister Tarek El Molla on Tuesday, according to Al Ahram.

SkyPower to invest USD 500 mn in solar power projects

Canada’s SkyPower will receive 14 square km of land to build USD 500 mn worth of solar power projects producing 600 MW, New and Renewable Energy Authority (NREA) head Mohamed El Khayat tells Al Borsa. The Egyptian Electricity Transmission Company will sign a power purchase agreement with SkyPower once the company reaches financial close on the agreement and has completed its feasibility study on the project. It is unclear as of yet if this is part of the whopping USD 5 bn investment pledge by the company to develop 3 GW of solar power capacity, or whether the company has reduced its investments. The USD 5 bn project was originally signed during the March 2015 Egypt Economic Development Conference and resurrected earlier this year.

EGP float drives fuel subsidy spending up 135.3% y-o-y

The EGP float has driven fuel subsidy costs up by 135.3% y-o-y, Oil Minister Tarek El Molla tells Reuters. Fuel subsidy costs increased to EGP 120 bn in FY 2016-17 from the EGP 51 bn spent in FY 2015-16. The government is projecting that spending on fuel subsidies will record EGP 110 bn in FY 2017-18.

Infrastructure

Irrigation Ministry working on investment map for 2037 water strategy

The Irrigation Ministry has begun preparing a list of potential investment projects for its national water resources strategy for 2037, a ministry source tells Al Borsa. The strategy, which was developed in collaboration and with funding from the EU, seeks to more efficiently utilize Egypt’s water resources in order to prevent a future shortage.

Manufacturing

Sheet metal manufacturers are unable to supply enough for appliances factories

Local sheet metal manufacturers are unable to meet the needs electrical appliance factories, says Bahaa Dimitri, a member of the Federation of Egyptian Industries’ engineering industries division, according to Ahram Gate. Sheet metal factories have not made deliveries in five months, which is hurting industry, since their product makes up 80% of the input needed to manufacture electrical and home appliances, he adds.

Health + Education

British Council presents funding opportunities under Newton-Mosharafa Fund

There are new funding opportunities for researchers in Egypt under the Newton-Mosharafa Fund. The British Council announced opening a new call for applications under the Newton Institutional Links program, offering grants of up to GBP 50-300k. The program — which “is designed to establish links beyond the level of the individual researcher and innovation practitioner, opening up opportunities for more sustainable, solution-oriented collaborations between academic groups as well as with the private sector” — prioritizes the areas of “affordable and inclusive health care, renewable energy, sustainable food production, and sustainable water management.”

Telecoms + ICT

Xiaomi unveils two phones for the Egyptian market

Chinese electronics firm Xiaomi has partnered up with the Egypt’s Al Safy to distribute its newest line of smartphones in the local Market, according to Trade Arabia. The phones range from EGP 4,999 to EGP 7,999.

Egypt Politics + Economics

Egypt’s reforms will prove decisive for sovereign credit rating profile

“Egypt’s efforts to improve the nation’s business environment and enhance the credibility of its economic policy will prove decisive for its sovereign credit profile,” says Ali Janoudi, a regional head at UBS Wealth Management, according to Trade Arabia. Michael Bolliger, head of Emerging Market Asset Allocation at UBS Wealth Management’s Chief Investment Office adds that “more work needs to be done to unleash the country’s full potential.” UBS believes Egypt has a stable credit outlook and sees that the expected population increase could have a positive impact on economic growth “if the right conditions are met.” An industry expert believes Egypt’s economy can be growing sustainably at 5-6% y-o-y.

Importers want grace period to comply with Import Registry Act extended

The importers division of the Federation of Egyptian Industries is requesting that the government extend the grace period to comply with amendments to the Importers Registry Act, which tightens controls on importers, Al Mal reports. Importers want the six-month grace period, which expires in September, to be extended until December, saying that they are finding it difficult to comply with the order. The changes to the law, which came in March, include increasing the minimum capital for individuals to be registered to EGP 500k from EGP 10k, for limited liability companies to EGP 2 mn from EGP 15k, and for joint-stock companies to EGP 5 mn. The law also imposes stricter penalties for violation of import regulations.

Is parliament’s majority bloc cooking up a cabinet reshuffle?

Egypt’s parliamentary majority, the Support Egypt Coalition, might be cooking up a proposal for a cabinet reshuffle once the House’s new term begins in September, an unnamed MP tells Al Borsa. Coalition members apparently believe that certain ministers have not been up to the task lately and failed to regulate market prices and inflation levels, they said, without naming names. MPs said that the government’s performance review that the coalition expects to conclude this month should determine whether or not a cabinet reshuffle is in order.

Tahya Misr Fund to begin implementing a EGP 320 mn plan to develop Aswan

The Tahya Misr Fund will begin implementing a EGP 320 mn plan to develop Aswan, according to an Investment and International Cooperation Ministry statement. The plan includes water, sanitation, and housing projects in Nasr El Nouba and Karkar Valley worth EGP 170 mn and set for completion before the end of June 2018. The Fund will also finance a EGP 250 mn project to support women in collaboration with Nasser Social Bank. Tahya Misr also signed a cooperation agreement with the Immigration Ministry to ease the transfer of donations from Egyptian expats.

National Security

At least three policemen dead in two separate incidents yesterday

A police officer was killed in the southern governorate of Qena on Tuesday while in pursuit of wanted criminals, according to Ahram Gate. Two policemen were also killed yesterday, and three others were injured during a similar standoff in the Monofeya province, north of Cairo, Al Masry Al Youm reports.

Egyptian army team wins second place in Russian military rally contest

An army team from Egypt came in second place at the 2017 International Army Games’ Military Rally contest in Russia, TASS reports. The Egyptian team was the sole foreign participant in the contest. “Both the Russian and Egyptian military drivers successfully coped with the difficult conditions of the cross country terrain on a 1,700 km track amid temperatures of 40 degrees Celsius and a complex special section on the 280km Elista-Volgograd route,” Russia’s deputy defence minister said.

Egypt receives new German submarine yesterday

Egypt officially received its second Type 209/1400 submarine from ThyssenKrupp Marine Systems in Germany yesterday at a military and flag raising ceremony in the port city of Kiel. The submarine, known as the S42, is the second of a four-part order. The remaining two submarines are expected to be delivered by 2021. Naval Today says the new vessels are to replace the older Romeo-class submarines. As mentioned earlier in the week, the submarine is now expected to make the 22-day journey to Egypt.

On Your Way Out

Egypt fourth safest country in the Arab world? Egypt ranked fourthin the Arab world and 47th globally in a Gallup poll gauging how safe people feel.Algeria ranked first in the Arab world and Mauritania last. The poll was based on degree of confidence in police forces, how safe people felt walking alone at night, and whether they’ve been through a mugging or robbery in the past 12 months. Globally, Singapore came first and Venezuela last.

The World Bank is leading a new effort to incorporate social accountability in public service projects by applying the Sustainable Rural Sanitation Services Program, which integrates the accountability tool Citizen Report Card. Amal Faltas writes in the World Bank’s MENA blog: “The fact that the instrument is new for the Government of Egypt makes the buy-in and the ownership by both government and citizens an indispensable prerequisite for its successful application. The process has been strongly supported by senior officials of the [Housing Ministry]. They have showed openness to improving the monitoring and evaluating of the performance of the [water and sanitation companies] by giving citizens a say in assessing the quality of service.”

The Market Yesterday

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EGP / USD CBE market average: Buy 17.74 | Sell 17.84
EGP / USD at CIB: Buy 17.75 | Sell 17.85
EGP / USD at NBE: Buy 17.75 | Sell 17.85

EGX30 (Tuesday): 13,638 (-0.2%)
Turnover: EGP 732 mn (21% below the 90-day average)
EGX 30 year-to-date: +10.5%

THE MARKET ON TUESDAY: The EGX 30 closed down 0.2% yesterday. CIB, the index’s heaviest constituent closed up 0.2%. EGX30’s top performing constituents were: Porto Group up 5.1%; Oriental Weavers up 0.9%; and Abu Dhabi Islamic Bank up 0.7%. Today’s worst performing stocks were: Orascom Telecom Media and Technology down 2.8%; EFG Hermes down 2.1%; and Arab Cotton Ginning down 1.4%. The market turnover was EGP 732 mn, and foreign investors were the sole net sellers.

Foreigners: Net Short | EGP – 15.8 mn
Regional: Net Long | EGP + 8.8 mn
Domestic: Net Long | EGP + 7 mn

Retail: 72% of total trades | 71.2% of buyers | 72.9% of sellers
Institutions: 28% of total trades | 28.8% of buyers | 27.1% of sellers

Foreign: 14.9% of total | 13.9% of buyers | 16% of sellers
Regional: 5.8% of total | 6.4% of buyers | 5.2% of sellers
Domestic: 79.3% of total | 79.7% of buyers | 78.8% of sellers

WTI: USD 49.09 (-0.16%)
Brent: USD 52.00 (-0.71%)
Natural Gas (Nymex, futures prices) USD 2.81 MMBtu, (-0.32%, SEPT 2017 contract)
Gold: USD 1,267.8 / troy ounce (+0.41%)

TASI: 7,145.54 (+0.45%) (YTD: -0.9%)
ADX: 4,588.06 (-0.08%) (YTD: +0.92%)
DFM: 3,647.87 (-0.28%) (YTD: +3.31%)
KSE Weighted Index: 418.44 (+0.72%) (YTD: +10.09%)
QE: 9,373.49 (-0.33%) (YTD: -10.19%)
MSM: 5,005.73 (-0.73%) (YTD: -13.44%)
BB: 1,323.74 (-0.05%) (YTD: +8.46%)

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Calendar

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

31 August-04 September (Thursday-Monday): Eid Al-Adha, national holiday (TBC) as specified by the Astronomical and Geophysics Institute. The Thursday is the waqfat Arafat, with the first day of the Eid on Friday, 1 September.

September — The House of Representatives is due to begin discussion of the proposed bankruptcy bill.

06 September (Wednesday): The Emirates NBD Egypt PMI report for August released.

06-09 September (Wednesday-Saturday): 2017 China-Arab States Expo (Egypt is the Guest of Honor), Ningxia, China.

13 September (Wednesday): EIB MED Conference: Boosting investments in the Mediterranean Region, Cairo.

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

19 September (Tuesday): Deadline for applications for funding under the Newton Institutional Links programme.

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).

22-24 September (Friday-Sunday): CairoComix Festival, AUC Tahrir Campus, Cairo.

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

23-25 September (Saturday-Monday): Invest In Africa Conference and Exhibitors Summit, Gala Theater Complex, 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.

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.

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

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

23-27 October (Monday-Friday): 29th Business and Professional Women International Congress themed “Making a Difference through Leadership and Action,” Mena House Hotel, Cairo. Register here.

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

26-29 November (Sunday-Wednesday): 21st Cairo ICT, Cairo International Convention Center, Nasr City, Cairo.

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.

07-09 December (Thursday-Saturday): The Africa 2017 forum: “Business for Africa, Egypt and the World” Conference, Sharm El Sheikh.

08-10 December (Friday-Sunday): RiseUp Summit, Downtown Cairo.

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

17-21 February 2018 (Wednesday-Saturday): Women For Success – Women SME’s "World of Possibilities" Conference, Cairo/Luxor.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.