EGX boss Farid expects FDI and IPO booms starting in 2018

The House Economic Committee will continue its discussions of the Consumer Protection Act today, Ahram Gate reports. Committee head Amr Ghallab had said earlier this month that the committee would complete its review of the bill within two weeks, after which it would be discussed by the House’s general assembly. Elsewhere in parliament, the Education, Higher Education, and Scientific Research Committee will discuss the bill that would form an Egyptian space agency.

Meanwhile, the Media, Culture, and Antiquities Committee is set to discuss part two of the Press and Media Act on Tuesday. The legislation was divided last year into two bills: One to set up three regulators to police the media (part one) and one to establish regulations and guidelines for those working in the media (part two). Folks with an interest in a free press should keep a close eye on this one.

Defense Minister Sedki Sobhi is in India today for bilateral talks with his counterpart there, Ahram Gate reports.

The central bank’s Monetary Policy Committee convenes on Thursday to review interest rates in light of urban consumer price inflation dropping to 30.8% in October from 31.6% in September — the third straight month of declining inflation.

On a night completely devoid of business and econ stories of note on the airwaves, the nation’s talking heads were still largely concerned with regional politics.

Foreign Affairs Ministry spokesperson Ahmed Abu Zeid told Hona Al Asema’s Lamees Al Hadidi that Foreign Minister Sameh Shoukry’s regional tour is aimed at relaying President Abdel Fattah El Sisi message that Egypt isn’t down with a new war. Shoukry’s discussions with Arab leaders will focus on recent developments including the missiles reportedly launched by Houthi rebels in Yemen and an explosion at a Bahraini oil pipeline. Both countries have blamed Iran for the events (watch, runtime: 4:42).

Lebanon’s former Prime Minister Saad Al Hariri will only be able to dispel rumors thatRiyadh forced him to resign once he returns to Beirut, Cairo University political science professor Moataz Abdel Fattah told Lamees. Abdel Fattah said he doesn’t see any reason why Al Hariri would have made his resignation announcement from Saudi Arabia unless he was coerced (watch, runtime: 6:00).

Over on Kol Youm, Lamees’ lesser half spoke to Riyadh’s ambassador to Cairo, Ahmed Qattan. The Saudi envoy vehemently denied that Al Hariri is under arrest and said the former PM visited the UAE a few days ago and will be back in Lebanon “within days” (watch, runtime: 1:40).

With the approach of winter, state reassuring consumers on availability of LPG cylinders:Meanwhile on the domestic front, Petrogas Chairman Adel Al Shuwaikh told Al Hayah Al Youm host Tamer Amin that the oil ministry has upgraded port infrastructure to increase their maximum capacity for receiving butane shipments to 45,000 tonnes per day. Al Shuwaikh also said that the Oil Ministry will supply 1.2 mn liquefied petroleum gas cylinders during the winter season, and that the combined production capacity of state-owned and private-sector factories is approximately 1.5 mn cylinders (watch, runtime: 4:30).

Masaa DMC’s Eman El Hosary covered reports that citizens in Sharqiya’s Minya El Qamh are looking to oust their elected representatives from Parliament through a vote of no confidence. Minya El Qamh Rep. Mohamed Salah Abdel Badie counters that he does, indeed, attend sessions (watch, runtime: 5:11). Mechanism to allow this to happen or not: God bless the citizens of Minya El Qamh.

Pardons coming for some with protest convictions? Meanwhile on Yahduth fi Masr, MP and presidential pardons committee member Tarek El Khouly told Sherif that the committee is currently drafting a list of detainees who were convicted on charges of illegal protest, but noted that individuals who are still in pretrial detention are not eligible for the pardon.

Farid tells London fund managers to look for non-oil FDI boom: EGX Chairman Mohamed Farid met in London on Sunday with fund managers from 10 UK and US-based real-money investment funds including Fidelity, Metlife, and Aberdeen Standard, with an aggregate AUM of USD 3.9 tn for a roundtable debate organized by BNP Paribas.

The IPO pipeline for 2018 is looking “very strong” with planned IPOs from the pharma, chemicals, and real estate sectors, the bourse chief told participants. Farid told the investors that Egypt’s reform program “should be viewed as a transformation rather than stabilization story,” particularly when it comes to reforms in utilities such as electricity and fuel and state-controlled commodity markets such as that for wheat. He also said that “economic reform has reaped quick wins from portfolio investors on Egypt’s debt and equity markets, but the next phase should see the return of non-oil FDI investors who normally take longer to digest and embrace the new economic landscape.” The next phase for the country’s growth should center on structural changes aimed at prolonging the economic cycle to make “high GDP growth sustainable beyond a five-year cycle.”

Amendments to CBE and Banking Act could impose mid-term confidence votes on bank board of directors: It’s not just managing directors of banks who should be watching amendments to the CBE and Banking Act with a wary eye, but board members as well. The amendments will include provisions that impose mid-term confidence votes on banking sector board members, a source from the CBE committee drafting the amendments tells Al Borsa. The standard argument of “good governance” and “renewing new blood” is apparently the rationale.

Could there be changes made to articles governing term limits? The source implied that controversial articles which set a term limit to banking sector managing directors are being reviewed “to account for the needs of the banking sector.” While no specifics were given on what that means, the source suggested that governance provisions are being constantly reviewed in light of talks with the banking sector and the IMF. The resulting changes being made means that the bill will not be ready by December as originally planned, and the ball will probably get rolling sometime early next year, the source added.

The draft bill will also introduce regulations on electronic payments, said the source. Drafting these regulations is being conducted in collaboration with the ministries of finance and ICT and the CBE’s payments committee.

No word on: An industry development tax, a measure that is strenuously opposed by both non-government banks as well as folks who understand that an additional tax would chill investment across a range of sectors.

Emerging markets private equity giant the Abraaj Group is eyeing new investments in Egypt’s education sector, Managing Partner and Global Head of Private Equity Mustafa Abdel-Wadood tells Al Borsa. Abdel-Wadood suggested the vehicles for follow-on investment will be education provider Tiba, which owns Thebes Language Schools, and Cairo For Investment & Real Estate Development. Abraaj had acquired a stake in Tiba back in 2015. Abraaj is also looking at opportunities in the Egyptian healthcare market through Cleopatra Hospitals Group, he added. Cleopatra Hospital had announced in September that it is planning to invest up to EGP 1 bn to bring its total capacity up to 1,000 beds.

The Universal Healthcare Act will cost EGP 600 bn to fully implement, said Vice Minister of Finance Mohamed Maait in an interview with Al Ahram on the new bill. The state will cover healthcare of citizens who will be unable to pay premiums into the system to the tune of EGP 200 bn, he added. The state will essentially pay the equivalent of 5% of the standard minimum wage to cover healthcare for each person who cannot afford to pay a premium into the system. This value will increase 7% annually, he added. The bill will set premiums for employers of 4% of each employee’s monthly salary. Employees will pay premiums of only 1% of their salary into the system. The state will deduct 3% of the cost of covering a breadwinner’s spouse and 1% for each child, Maait said. The state will also partially fund the system by allocating 10% of the sin tax on tobacco, Maait said, according to Al Borsa. The House of Representatives’ Healthcare Committee began a contentious debate on the act yesterday.

The UK reportedly plans on lifting its travel ban on Sharm El Sheikh as of February 2018, British tour operators told their Egyptian counterparts, unnamed industry sources tell Al Shorouk. According to the sources, 40 members of the House of Lords — the upper house of British parliament — have been lobbying the British government to lift the ban, saying that Egypt has carried through all the necessary security upgrades at the Sharm El Sheikh airport. The British companies also reportedly said they will be organizing more trips in the coming period to Egypt’s alternative destinations, including Hurghada, Luxor, and Marsa Alam, until the flight ban on Sharm El Sheikh is lifted.

EARNINGS WATCH- Edita Food Industries reported strong bottom-line growth during 3Q2017, with net profit growing 47.4% y-o-y to EGP 66.7 mn. Net revenue for the quarter was up 35.8% y-o-y to EGP 832.2 mn on the back of the macroeconomic turnaround which has seen consumers adjust to recent inflationary pressures, the company said in a statement (pdf). “We were particularly successful in absorbing inflationary shocks arising from the reform program and delivering consistent top-line growth while defending our market share,” Edita Chairman Hani Berzi said. Regional expansions and a 101.9% y-o-y increase in exports contributed to the bottom-line growth. Berzi believes the Egyptian consumer foods industry is at a turning point, saying that, “With the economy and consumer sentiment now turning the corner, we believe the worst is behind us. Our primary focus in the coming period will be to accelerate the recovery momentum and continue driving volumes and sales upward.” Also, the company launched in October its TODO Donut off the second line at its newly commissioned E08 plant; the product is the first mass-produced and packaged donut in Egypt. Tap or click here to read Edita’s full earnings release (pdf).

Beltone Financial recorded a net loss of EGP 22.9 mn in 3Q2017 against a net loss of EGP 1.8 mn a year earlier. Group revenues rose to EGP 132.8 mn compared to EGP 34.7 mn a year earlier, according to the company’s financial statements.

CI Capital has entered into an agreement with Al Rajhi Capital (ARC) that “provides access to the Saudi equity capital market to CI Capital’s client base. The new partnership will leverage both firms’ growing reach and the breadth of their offerings in both the Saudi & Egyptian equity markets.” The agreement is part of CI Capital’s plan to “conclude bilateral agreements with key financial institutions that will help create a solid regional platform.”

MOVES- The African Development Bank appointed Malinne Blomberg as the bank’s new Egypt Country Manager, Al Ahram reports. Blomberg, who replaces Leila Mokaddem, previously oversaw the bank’s irrigation and wastewater projects in west and central Africa, according to the newspaper.

Industry rejoices as Parliament looks to reprice gas, cut real estate taxes for factories: The House of Representatives’ Industry Committee is reportedly looking into reviewing gas prices for industries and canceling real estate taxes imposed on factories, following requests and complaints from industry figures, Al Shorouk reports. Egypt’s manufacturing sector has been pushing for years to lower prices the government sells them. After receiving promises from the government to so, no such pledge had been fulfilled, with EGAS officials saying in August that the Ismail cabinet will unlikely follow through on the promise. As for cutting real estate taxes, the Federation of Egyptian Industries (FEI) had previously discussed the proposal with the Finance Ministry, and had received Trade and Industry Minister Tarek Kabil’s blessing, according to FEI head MP Mohamed Elsewedy. Other business figures lauded the proposed moves, saying they would be a “lifeline” for factories that are only operating at half of their production capacity due to the burden of production costs and fees.

So much for the Saudi purge not impacting business in Egypt: Egypt’s banks have reportedly begun freezing transactions on accounts held by Saudi Arabian princes and officials arrested as part of an anti-corruption probe launched by Saudi Crown Prince Mohammed Bin Salman. As it stands, banks have frozen EGP 2.5 bn in loans for projects in Egypt extended to companies beneficially owned by these individuals. A consortium of banks have frozen a EGP 1.6 bn loan to Al Tayyar Group, whose primary shareholder Nasser Al Tayyar was caught up in the probe, Al Shorouk reports. A consortium led by Banque Misr froze a EGP 900 mn loan to Marasem International For Urban Development, a subsidiary of the Bin Laden Group. The move is part of a region-wide asset seizure and repatriation for the officials caught up in the Saudi investigation, Reuters reports. The UAE had asked its banks to provide account information on 19 people on the list. As we noted last week, a number of government and business officials had said the purge would not impact Saudi investments in Egypt.

Meanwhile, former (and to some still the incumbent) Prime Minister of Lebanon Saad Al Hariri declared that he was not being held in KSA against his will in a televised interview with Lebanon’s Al Mustaqbal TV (watch, runtime: 1:14:33, and pause at 48:10 for an awkward side-glance at an off-camera presence). He reopened the possibility that he may not formally resign when he returns to Lebanon in the next few days, saying that he announced the resignation to “shock” Lebanese politics into recognizing the dangers of Hezbollah. His interview comes as Saudi Arabia called for an urgent meeting of the Arab League in Cairo next week to discuss Iranian interference in the region, an official league source told MENA.

Foreign Affairs Minister Sameh Shoukry is currently conducting a regional tour to discuss the Lebanon problem among other issues. He met with Bahraini King Hamad Al Khalifa yesterday on the second leg of his tour where Yemen, Syria and Qatar were also discussed, according to a statement. Shoukry had earlier been to Jordan where discussions primarily focused on the Palestinian reconciliation agreement and the resumption of peace talks with Israel, Jordan’s Petra News Agency reports.

Mainstay General Electric is in danger of being booted from the Dow Jones Industrial Average as its share price continues to drop, according to Reuters. The company’s fate on the elite index could also be shaped by reductions to the company’s size as it sells off pieces of its business. GE’s removal from the Dow Jones “may not spark much immediate selling of the stock,” the newswire says, noting that the company retains a market value of USD 175 bn and may be kept on the index simply for its historic place.

The Swiss group RBR Capital Advisors is making global headlines with a bid to break up multinational financial services conglomerate Credit Suisse, which RBR says has been on a persistent downtrend for almost a decade — and where CEO Tidjane Thiam has made slow progress with a turnaround bid that sees Credit Suisse’s share price at barely half what it was when he took the reins in 2015. RBR has a plan they believe can turn things around.
The plan, which RBR has dubbed Parade 2.0, essentially involves spinning three distinct entities off Credit Suisse that are more focused in what they do, and ultimately, more profitable: Its investment banking arm, a reborn First Boston, would become leading investment bank based out of London or New York and focused mainly on profitable niches; SKA 2.0, which would provide global wealth management and business banking services; and Suisse Asset Management, which has potential to grow and compete with other international fund and wealth managers. (The outfit’s transaction-specific website breaks it all down here.)
As activist investors with no more than a 0.2% stake in the bank, it’s hard work convincing stakeholders that the plan warrants breaking up a storied member of the bulge bracket, but RBR says it is confident and is raising capital for the play out of the Middle East, the US, and Europe.
The Middle East angle may be critical: The Financial Times reports this morning that Bohli met with top Credit Suisse leaders and may have “toned down its demands for a break-up of the bank,” pushing for a more aggressive cost-cutting program,” possibly funded by a sovereign wealth fund waiting in the wings.
We recently had a chat with RBR Advisors founder and CEO Rudolf Bohli, who will be in Cairo between in early 2018 for an investor roadshow, to understand more about how they think their plan can generate 100% upside for Credit Suisse shareholders. Tap or click here to read the full interview.

Swiss photographer Fred Boissonnas was tasked with commissioning a book of photographs of Egypt by King Fuad I in 1929, after the end of the British protectorate, Fleur MacDonald writes for 1843. The aim was “to show the country in its best light and remind people that British rule was merely a blip in thousands of years of civilisation.” Boissonnas work, “L’Egypte,” was published in 1932 and currently a selection of the photos he took for the book and from a subsequent trip to Sinai, are on display in an exhibition at the Royal Geographic Society in London. “This was soft power at its most sophisticated,” MacDonald writes.

It was an extremely slow news night for Egypt in the foreign press this morning with no particular topic leading the conversation.

The continued imposition of a state of emergency may hamper Egypt’s economic recovery, particularly as the measure’s effectiveness in thwarting terrorist attacks “is in question,” Frontera’s Friederike Andres says.

Egypt has “systematically failed to counter the deadly insurgency” of terrorist organizations throughout the country, and its “lack of preparedness” was particularly evident in last month’s Wahat attack, Maged Mandour writes for OpenDemocracy.

Jihadists would be “playing with fire” if they retaliate over the destruction of tunnel between Gaza and Sinai, Israel warned, according to The Telegraph. Destroying the tunnel reportedly killed 14 jihadists.

Art D’Egypte organized an exhibition of work from 16 of Egypt’s foremost contemporary artists within the atrium of the Egyptian Museum on the night of 28 October, Harper’s Bazaar Arabia reports. The initiative, named Eternal Light: Something Old, Something New, “was aimed at underlining the deep cultural and historical roots at the heart of Egyptian culture as well as charting the influence of the country’s visual language from pre-historic times until the present day.”

Women haven’t reaped many benefits from Egypt’s “Year of Women," Sabry Ghoneim pointedly says in a column penned for Al Masry Al Youm. The government has focused on some “obvious” areas such as giving women more seats in parliament and access to certain official positions, which are important, but do not address the deep-rooted issues of social and cultural oppression that women face, Ghoneim says. He points to concerns over women’s safety in the street and the outdated laws that govern women’s rights as just two areas that have not been given any attention.

Egypt’s Ali Abdo has broken the Guinness world record for the longest distance covered by a rider on a motocross bike in one day. Abdo lapped the track in El Gouna on his Honda Tornado a total of 510 times to cover a distance of 613.6 km. This isn’t the first time the motorcycle aficionado has attempted a difficult feat on two wheels, as he toured the country on his bike in the span of seven days back in 2016 (watch, runtime 3:55).

Sudan and Ethiopia have reportedly refused to ratify the environmental impact studies on the Grand Ethiopian Renaissance Dam (GERD), Egyptian Irrigation Minister Mohamed Abdel Aati said yesterday, Al Shorouk reports. Egypt was the only country out of the three to approve the studies, according to Abdel Aati, while Ethiopia and Sudan reportedly requested to amend “critical areas” of the report. Abdel Aati said Ethiopia and Sudan’s position is cause for concern over the future of the tripartite cooperation and agreement over the dam. The three countries’ ministers had gathered in Cairo yesterday and on Saturday to discuss the studies, which French consultancy firms had conducted to assess the impact of the dam on downstream nations, particularly Egypt.

US President Donald Trump and State Secretary Rex Tillerson are “decimating” the State Department as high-ranking Foreign Service officers have been pushed into retirement, Bloomberg’s editorial board writes. “Only nine out of 28 undersecretaries or assistant secretaries of state have been nominated or confirmed. Among the dozens of ambassadorships without even a nominee are those for vital partners such as Egypt, Australia Jordan, Saudi Arabia, South Africa, South Korea and Turkey.”

Egypt and Tunisia signed 10 cooperation agreements yesterday on maritime transport, veterinary services, international markets and fairs, investment and international cooperation, new and renewable energy, pharma, and sports, according to a Cabinet statement. The agreements were signed during a meeting of the Egyptian-Tunisian Joint Committee in Cairo, led by Prime Minister Sherif Ismail and his Tunisian counterpart Youssef El Chahed, who was accompanied by the Tunisian trade and transportation ministers and other senior officials.

Economic cooperation between Egypt and Tunisia remains weak “considering what can be achieved,” but the downturn is understandable considering the two countries’ recent economic hardships, El Chahed told Ahram Online. El Chahed also met with President Abdel Fattah El Sisi to discuss issues including the situation in Libya, Ittihadiya said in a statement.

Chinese, Indian, Taiwanese companies are expected to invest as much as USD 450 mn in Egypt’s textiles sector in 2018, interim president of the Readymade Garments Export Council Fadel Marzouk tells Al Masry Al Youm. The companies, which Marzouk did not name, have begun the procedures to establish their projects. His statements came as the Council signed a cooperation agreement with the Union des Industries Textiles de France on Sunday at the Destination Africa textile exhibition, according to Youm7.

Egypt and Zambia are set to sign five agreements during Zambian President Edgar Lungu’s visit to Cairo this week, according to ZNBC. The agreements will cover health, agriculture, irrigation, and industry. Lungu, who arrives in Cairo tomorrow for a three-day visit, is scheduled to meet President Abdel Fattah El Sisi to discuss cooperation and suggested reforms to the UN Security Council.

50 Indian machine tools and technology firms will participate in an trade fair organized by the Engineering Export Promotion Council on Thursday, according to Money Control.

The Egyptian Electricity Transmission Company (EETC) expects its feed-in tariff payments for the solar power projects in Benban, Aswan to reach EGP 3.3 bn per year, according to Al Borsa.

Sesco Trans Egypt is in talks with local banks for a loan to fund its EGP 3 bn dry dock project in Alexandria, Managing Director Ahmed Gharib told Al Shorouk. The project is currently being reviewed by the State Council after being signed off by the Transport Ministry and should be implemented within 24 months. The dry dock will focus mainly on coal shipments.

Capital Group Properties (CGP) is planning to award contracts worth EGP 2-3 bn next year with to complete the first phase of its EGP 50 bn Al Burouj project, head of the company’s head of development Ahmed Fathy tells Al Shorouk. The company had previously announced its plans to sign EGP 500 mn worth of contracts by the end of this year for the project, which is set to be completed over four years in 10 years. CGP is currently preparing the designs for the project’s second phase, and it plans to begin construction work around the end of 2018.

A consortium made up of unnamed US and Saudi companies is apparently investing USD 3 bn in an amusement park complex in Matrouh, Governor Alaa Abu Zeid announced in a press conference on Sunday,according to AMAY. Despite the size and scope of the project, Abu Zaid made no mention of what the project entails and who might be investing in it, leading us to take it with a grain of salt. The alleged US-Saudi project could be part of the West Egypt Development Project that was opened up to investors back in August which included plans for an amusement park complex. Other projects announced as part of the West Egypt development plan include an investment zone, a resort complex in addition to urban development projects.

The National Authority for Tunnels (NAT) has begun the process to redevelop Cairo Metro Line 1, Al Mal reports. NAT says the process will take three years and include introducing new trains to the service, refurbishing the existing fleet, and improving the central control system, among others.

China’s Ankai won a contract to supply 15 electric buses to Alexandria, Al Mal reports. Ankai was awarded the contract after presenting the winning bid out of five. The value of the contract was not disclosed.

Banque Misr will sign tomorrow a USD 125 mn loan agreement with the European Bank for Reconstruction and Development (EBRD), Banque Misr Chairman Akef El Maghraby tells Al Borsa. The facility includes a “senior loan of up to USD 75 mn for on-lending to private small and medium-sized enterprises [and] a trade finance limit of up to USD 50 mn for guarantees and cash advances,” according to an EBRD statement.

The Court of Cassation has rejected an appeal by Hussein Salem’s East Mediterranean Gas Company against a 2016 ruling obliging the company to repay a USD 174 mn loan to the National Bank of Egypt which it had defaulted on, Ahram Online reports. An Economic Appeals Court had upheld in March NBE’s decision to freeze EGP 3 bn of Misr Insurance’s liquid assets as it had failed to guarantee the loan. The Court of Cassation’s ruling against East Med is final and cannot be appealed, according to the newspaper.

The government has raised its projections for the FY2017-18 budget deficit to 9.5% or 9.6% of GDP, up from an initial estimate of 9.1%, according to statements by Prime Minister Sherif Ismail on Sunday picked up by Al Borsa. No explanation was given to the change in projections.

Joseph Malak, a lawyer for UN High Commission of Minority Affairs sent a warning to the government to reopen churches that have been shuttered in Minya,according to AMAY. Malak called on the government to explain its ambiguous laws concerning the licensing of churches. The Minya diocese of the Coptic Church had condemned last month the repeated closing of churches in Minya.

An obscure Al Qaeda affiliate in the Sinai, Jund al Islam, has vowed to eliminate Daesh forces operating in the peninsula, according to Egypt Independent. The group declared it opposes Daesh due to the excessive targeting of civilians which differs from their dogma of attacking strictly military targets.

Mohamed Salah made it on the five-player shortlist for the BBC African Footballer of the Year award. Pierre-Emerick Aubameyang, Naby Keita, Sadio Mane, and Victor Moses are the other players on the list. The award’s winner will be announced on 11 December.

ON THIS DAY- Saad Zaghloul founded the Al Wafd Al Masry party on this day in 1918, which became instrumental in Egypt’s independence movement from Britain. On this in 1935, nationalists and students started protesting against the government in Egypt after an announcement that the 1923 constitution was deemed “inapplicable,” invoking the 1930 constitution, which gave the King the authority to appoint and remove governments. “The demonstrations continued for over the coming days and the government announced that it would close the university several times,” Middle East Monitor recounts. Spacecraft Voyager 1 sent back its first close-up pictures of Saturn on this day in 1980 and Mariner 9 became the first spacecraft to orbit another planet when it probed Mars in 1971. St. Augustine was born on this day in 354 in Algeria. Also on this day, in 2015, terrorists staged coordinated attacks in Paris and its environs, the deadliest occurring at the Bataclan theatre and concert hall; in all, at least 130 people were killed and more than 350 were wounded. We were reporting on the IMF’s approval of the financing package this time last year and, in 2014, we were taking note of the student who was arrested for having a copy of George Orwell’s 1984.