Wednesday, 27 December 2017

Foreigners invested EGP 7.4 bn in the EGX in 2017


What We’re Tracking Today

The countdown for the New Year has officially started. With only a handful of days left in 2017, we’re running shorter issues this week and returning to our regularly scheduled programing on Tuesday, 2 January.

Until then, we can expect to see more military and police presence on the streets, especially around houses of worship and other areas where crowds are known to gather during the holiday season. Security sources tell Al Shorouk that the Interior Ministry and Armed Forces have deployed additional personnel to hundreds of locations around the country, including churches, mosques, and touristic resorts to make sure New Year’s eve festivities run as smooth as possible.

Some good news ahead of the New Year: The government is supposed to have settled on 4-5 joint lead managers for the USD 3-4 bn USD-denominated eurobond issuance set to take place in around a month. 22 international banks, including “all the big names,” had thrown their hats in the ring, Finance Minister Amr El Garhy told Reuters’ Arabic service. El Garhy had previously said that Egypt would announce the joint lead managers and legal counsels of the issuance in two weeks’ time.

…. And some more good news: We’re hearing that Prime Minister Sherif Ismail could be returning to work in a few days’ time. A government source tells Ahram Gate that Ismail, who was on leave for a medical trip to Germany, will be on duty just a few hours a day and gradually increase the length of his work day as his health continues to improve.

In other news from the government, Investment and International Cooperation Minister Sahar Nasr is expected to sign today an agreement with the European Bank for Reconstruction and Development, Youm7 says, providing no further details on the agreement.

Perhaps a symptom of all the festive holiday cheer, Saudi authorities will be releasing a number of princes and officials that had been arrested in the Kingdom’s anti-corruption crackdown, the Financial Times reports. The Saudi government has reached financial settlements with names including former finance minister Ibrahim al-Assaf and former chief executive of Saudi Telecom Company Saud al-Dawash. It remains unclear how much each of them paid to secure their freedom.

Meanwhile, “dozens of businessmen and royals, including bn’aire Prince Alwaleed bin Talal, remain detained at the Ritz-Carlton hotel in Riyadh. He has been asked to pay between USD 6 bn-7 bn to be released,” according to sources close to the matter. As we noted last week, KSA is hoping to recover as much as USD 100 bn from settlement payments with detainees.

What We’re Tracking This Week

The Central Bank of Egypt’s Monetary Policy Committee will meet tomorrow to review key interest rates. The emerging consensus seems to be that the meeting won’t see interest rates cut after a surprise m-o-m surge in inflation in November.

Enterprise+: Last Night’s Talk Shows

We’re scaling our talk shows coverage back this week and coming back into full swing once it’s officially 2018.

We couldn’t hold ourselves back from this one though, as Kol Youm’s Amr Adib was, for once, the voice of sanity, preaching last night against overblown conspiracy theories, which he urged Egyptians to ditch when looking into Sudan’s decision to temporarily grant Turkey a part of the Red Sea island of Suakin to develop an Ottoman city there into a touristic site.

Adib said Sudan is fully within its rights as a sovereign nation, stressing that while we can’t pass judgment on our southern neighbor’s decisions, we do need to carefully consider what our next move should be, likening the situation to a strategic chess game (watch, runtime 4:12).

Speed Round

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Foreigners invested a net amount of EGP 7.4 bn (USD 414 mn) in the Egyptian stock market in 2017, according to Reuters. Since the EGP float in November 2016, foreigners have injected EGP 13 bn into the EGX. The EGX30 has increased 19% this year and “annual trading has exceeded EGP 292 bn,” EGX Chairman Mohamed Farid told reporters yesterday, according to the Associated Press. “Farid says the index has been the driving force behind making the Egyptian Exchange the top market in the Arab world.”

IPO WATCH- Some 14 real estate and tourism companies are preparing to offer shares on the bourse next year, EGX Chairman Mohamed Farid told the press yesterday, Al Borsa reports. The 14 IPO contenders are subsidiaries of eight larger companies, according to Farid, who added that another six companies in the financial and petrochemicals industries are still in the early phases of their respective IPO plans and currently looking into the requirements and conditions. As we noted yesterday, EFG Hermes expects to hold three IPOs next year, including Unionaire Group and Oriental Petrochemicals Company. Meanwhile, the long-awaited IPO of Banque du Caire is expected sometime during 4Q2018, according to EFG Hermes’ Co-Head of Investment Banking Mostafa Gad.

IPO WATCH- The state-owned Al Ahram is planning to list 25% of its shares on the EGX as part of its restructuring plan, Chairman Abdel Mohsen Salama said yesterday, Al Mal reports. The initial public offering, the timeline for which Salama doesn’t provide, is expected to generate around EGP 25 bn in proceeds, as the organization is currently valued at EGP 100 bn, he said. He also said that Al Ahram has accumulated some EGP 1.6 bn in debts and proceeds will be used to reduce the organization’s deficit by 80% by 2020.

A subsidiary of El Sewedy Electric signed an EGP 477 mn contract with the New Urban Communities Authority to construct the Badr City power transformers station, according to a bourse disclosure. The project will be developed over 12 months.

INVESTMENT WATCH- Longreen Capital Advisors is planning to invest EGP 300-400 mn in Egypt over the next two years, Founding Partner Ahmed Farouk tells Al Borsa. Longreen plans to close two or three agreements within that time period in the food and beverage, retail, export, and production sectors, according to Farouk. The firm had announced earlier this month its acquisition of Egyptian International Restaurants Company, operator of the El Omda restaurant chain. Longreen plans to increase the company’s branches to 30, up from 12 currently, within three to five years.

Saudi Arabia temporarily bans imports of Egyptian guavas: Saudi Arabia issued yesterday a temporary ban on imports of fresh Egyptian guavas over concerns of high levels of residual pesticides, according to the Saudi Press Agency. The ban was issued after test results proved that shipments of Egyptian guavas contained “pesticide residues at a rate higher than the internationally recognized permitted limit.” It remains unclear when the ban will come into effect. Saudi Arabia had banned Egyptian peppers last December — prompting the UAE and Kuwait to follow suit — and then slapped a separate ban on Egyptian strawberries in July, after both products were found to contain high levels of residual pesticides. The Agriculture Ministry had previously moved to impose stricter regulations on exports to the GCC after the successive bans, and said in July that Egyptian guava exports would be subjected to Global Good Agricultural Practices standards as of this season.

North America-Far East shipping lines granted 50% discount on fees at Suez Canal ports: Suez Canal Authority (SCA) Chairman Mohab Mamish issued a decision yesterday slashing port fees by 50% for ships traveling from North America to the Far East via Egypt, an unidentified source tells Al Mal. The discounts are applicable to long-haul cargo ships that stop at the East Port Said or Ain Sokhna ports for transit services or commercial operations. Officials had announced in August that the government would be granting breaks as high as 50% on Suez Canal port fees, with the discounts being proportionate to the volume of cargo being shipped. The Transport Ministry had started implementing unified port fees nationwide in October, after Minister Hisham Arafat and Mamish agreed on the measure back in June. A number of major shipping firms had decided to quit the East Port Said port to protest Egypt’s move to hike port fees.

LEGISLATION WATCH- The House of Representatives’ Economics Committee is expected to finalize its review of the amended Capital Markets Act “soon” and pass it along for a plenary session vote, Investment and International Cooperation Minister Sahar Nasr said yesterday, according to Al Mal. The amended act is expected to bring a basket of new financial instruments to the market, including futures trading and a commodities exchange, in addition to introducing penalties for financial crimes and new rules governing taxes for the sector.

Also yesterday, the House Economics and Industry committees agreed on extending the deadline for importers to comply with amendments to the Importers Registry Act until the end of June 2018, Al Borsa reports. The deadline had been set for end of December this year. The General Authority for Export and Import Control had agreed in November to grant importers temporary licenses until they were able to fulfill the new requirements, which increase the minimum required capital for importers.

Elsewhere in the House, the Tourism Committee gave a preliminary nod yesterday to amendments to the Civil Aviation Law, while the general assembly signed off on a EUR 225 mn loan agreement with German development bank KfW that Egypt had signed last October. The facility is meant to support economic and social reforms and will be repaid over nine years at an annual interest rate of 2.88%, according to deputy head of the House Planning and Budgeting Committee, Yasser Omar.

Also on the agenda, MPs at the Housing Committee are planning to begin deliberating on a new Social Housing Act “within days,” according to Al Masry Al Youm.

World Bank to join GERD talks as a neutral fourth party mediator? Egypt, Ethiopia, and Sudan could call on the World Bank to help mediate talks over the Grand Ethiopian Renaissance Dam (GERD), Foreign Minister Sameh Shoukry suggested during a visit to Addis Ababa yesterday. Discussions between the three countries recently reached an impasse after Ethiopia and Sudan refused to acknowledge the results of environmental impact studies proving the dam would negatively impact Egypt’s Nile Water Supply. Shoukry said that the World Bank would act in a purely technical capacity as an objective fourth party mediator to help end the stalemate, according to a Foreign Ministry statement.

Ethiopian Foreign Minister Workneh Gebeyehu “did not comment on the Egyptian proposal” at the press conference that followed his meeting with Shoukry yesterday, Reuters reports. Shoukry, however, stressed yesterday that the trilateral Declaration of Principles signed in 2015 requires consensus over the results of the studies before Ethiopia can fill up the dam’s reservoirs.

The minister further discussed the issue with Ethiopian Prime Minister Hailemariam Desalegn in a separate meeting.

Veg oil reserves are enough to meet consumption for three months, sugar for five: Egypt’s strategic vegetable oil reserves are enough to meet consumption needs for more than three months and those of sugar are equivalent to five months of consumption, the Supply Ministry announced yesterday, according to Reuters. “Egypt also has enough locally produced rice to feed demand for the next 12 months, Supply Ministry spokesman Mamdouh Ramadan added.

MOVES- Al-Ahram journalist Ezzat Ibrahim has been appointed as Ahram Online’s new editor-in-chief, the paper reports. Ibrahim is the current editor-in-chief of Al-Ahram’s print publication Ahram Weekly.

Correction- Our friends at EFG Hermes got in touch to tell us they are targeting the production of 1,000 MW from renewable energy sources in Egypt by 2020, not 2,000 MW. The entry has been corrected on our website.


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Image of the Day

A quick lesson on the history of Egypt’s cigarette production: Kyriazi Frères was among the first cigarette manufacturing companies to be established in Egypt, according to Al Masry Al Youm. The company, founded by Greek brothers Ioannis, Efstathios, and Epaminondas Kyriazi back in 1873, expanded significantly over the years and began exporting to the Middle East and Europe years before other cigarette manufacturers set up shop in the country. It wasn’t until 1961 that Cleopatra cigarettes — now a favorite of the average Egyptian — came into being.

As legend has it, Armenian-born Joseph Matossian created Cleopatra after then-President Gamal Abdel Nasser told him he would be his best client if he were to successfully manufacture a product similar in quality to Kent cigarettes, which were illegal in Egypt at the time despite being the socialist leader’s favorite brand.

Egypt in the News

Topping coverage of Egypt in the international press this morning is 33-year-old British tourist Laura Plummer’s three-year prison sentence for smuggling illegal meds into the country. The court also fined Plummer EGP 100k. Plummer’s defense team said she would “appeal to have overturned or commuted,” Reuters reports. Britain’s Foreign and Commonwealth Office “will continue to provide assistance to Laura and her family … and our embassy is in regular contact with the Egyptian authorities,” a spokesman said. The British citizen apparently “misunderstood questions and admitted importing the drugs” when questioned by the judge, Plummer’s lawyer tells The Telegraph.

Plummer and her defense team maintain that she was unaware the meds are illegal in Egypt, explaining she had been bringing them in for her Egyptian husband’s chronic back pain. Plummer’s family claim “she’s already having a nervous breakdown and is being kicked and punched in the holding prison,” according to Daily Mail. British tabloid newspaper The Sun also has a series of photographs showing the “squalid” conditions of Plummer’s detention at the Qena prison where she will be held. The story is getting widespread coverage, with pickups in the Associated Press, BBC, The Guardian, Newsweek, Xinhua, The Independent, and BuzzFeed.

Coming in at a very close second is the hanging of 15 men convicted of a 2013 attack on a military checkpoint in Sinai, in what appears to be the biggest number of executions carried out under President Abdel Fattah El Sisi’s rule. Their charges include “joining militant groups and taking part in carrying out, planning and assisting in killing a number of army and police personnel in Sinai,” Reuters reports, citing security sources. The executions were carried out at the Borg El Arab and Wadi El Natroun prisons, an unnamed security source tells Anadolu Agency.

“The executions of so many on a single day appears to be a reflection of the government’s recently declared resolve to crush the [militant] insurgency” following the Rawda mosque attack last month, the Associated Press says. Some, including rights activists and Islamists, believe the executions could “drive more young Egyptians into the arms of [Daesh],” according to The New York Times’ Nour Youssef. Others have slammed the trials as “a flagrant breach of international law.”

Khaled Ali could be seen as Egypt’s “unlikeliest challenger” to President Abdel Fattah El Sisi, Ruth Michaelson writes for The Guardian. “Ali’s platform, a mix of welfare proposals including expanded health insurance and a minimum wage, is reminiscent of socialists who’ve broken into mainstream politics elsewhere, such as Bernie Sanders or even Jeremy Corbyn… Ali’s platform is less a criticism of Sisi’s style of government and more a challenge to the entire system that he represents… If is is able to run, Ali believes he can tempt younger voters back to the ballot box.”

In related news, Ali said he is planning to propose a new electoral law to guarantee fair elections, The Associated Press says.

Russia has no plans for any “permanent relocations” of troops to Egypt from the Hmeymim base in Syria, Russian Foreign Minister Sergei Lavrov said, according to Pravda. The recently-signed aerospace agreement between Egypt and Russia “reflects the partnership nature of our relationship – these are reciprocal military measures of most favored treatment,” Lavrov explained. “Our military-technical cooperation in the form of supplies of necessary equipment and weapons for the anti-terrorist operation has been developing very actively, we have close ties between the military, we conduct joint military exercises, and this helps us exchange experiences, taking into account the experience in the fight against terrorism that we have gained in Syria,” he added.

The New York Times put together a photo essay on romantic relationships in Egypt that were disrupted by the 2014 protests against President Abdel Fattah El Sisi’s rise to power. Egyptian photographer Hadeer Mahmoud “captured the moments of longing and loss through the stories of three young women whose sweethearts had been arrested in the wake of riots,” Remy Tumin writes.

Egyptian flight attendants decry comments on their weight and appearance: The union of Egyptian flight attendants responded angrily to comments made by House Representative regarding the weight and appearance of EgyptAir flight attendants, The Associated Press reports. The union says the chief job requirement for flight attendants is medical fitness.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.7721 | Sell 17.8721
EGP / USD at CIB: Buy 17.79 | Sell 17.89
EGP / USD at NBE: Buy 17.69 | Sell 17.79

EGX30 (Tuesday): 14,923 (+0.5%)
Turnover: EGP 620 mn
EGX 30 year-to-date: +20.9%

THE MARKET ON TUESDAY: The EGX30 ended Tuesday’s session up 0.5%. CIB, the index heaviest constituent ended up 1.7%. EGX30’s top performing constituents were Ezz Steel up 3.0%, Eastern Co. up 2.1%, and CIB up 1.7%. Yesterday’s worst performing stocks were Amer Group down 2.9%, TMG Holding down 1.6%, and Kima down 1.6%. The market turnover was EGP 620 mn, and local investors were the sole net sellers.

Foreigners: Net Long | EGP +32.2 mn
Regional: Net Long | EGP +2.8 mn
Domestic: Net Short | EGP -34.9 mn

Retail: 59.9% of total trades | 63.4% of buyers | 56.4% of sellers
Institutions: 40.1% of total trades | 36.6% of buyers | 43.6% of sellers

Foreign: 8.1% of total | 10.3% of buyers | 6.0% of sellers
Regional: 8.4% of total | 8.6% of buyers | 8.2% of sellers
Domestic: 83.5% of total | 81.2% of buyers | 85.8% of sellers

WTI: USD 59.89 (+2.43%)
Brent: USD 66.92 (+2.56%)

Natural Gas (Nymex, futures prices) USD 2.64 MMBtu, (-0.90%, January 2018 contract)
Gold: USD 1,287.40 / troy ounce (+0.67%)

TASI: 7,177.55 (+0.44%) (YTD: -0.46%)
ADX: 4,319.81 (-0.43%) (YTD: -4.98%)
DFM: 3,332.21 (-0.68%) (YTD: -5.63%)
KSE Weighted Index: 399.59 (+0.07%) (YTD: +5.13%)
QE: 8,501.03 (-0.80%) (YTD: -18.55%)
MSM: 5,006.69 (-0.33%) (YTD: -13.42%)
BB: 1,285.34 (-0.61%) (YTD: +5.32%)

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

29-30 January (Monday-Tuesday): Seamless North Africa, The Nile Ritz-Carlton, Cairo

12-14 February 2018 (Monday-Wednesday): Egypt Petroleum Show 2018 (EGYPS), New Cairo Exhibition Center.

19-20 February 2018 (Monday-Tuesday): The Banking Tech North Africa, The Nile Ritz-Carlton, Cairo

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

28-31 March 2018 (Thursday-Sunday): Cityscape Egypt, Cairo International Convention Centre, Cairo

4-6 May 2018 (Friday-Sunday): International Conference on Network Technology (ICNT 2018), venue TBD, Cairo

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