Thursday, 28 December 2017

It’s a wrap. Happy New Year, folks.

TL;DR

What We’re Tracking Today

2017 is coming to a close. We’d like to wish our readers a very happy New Year. This will be our final issue of Enterprise for 2017.

The banking sector and EGX are officially off this coming Monday in observance of the first day of the New Year, state news agency MENA reports.We’ll be taking the day off as well and returning to you with our first full 2018 edition of Enterprise on Tuesday, 2 January.

It’s interest rate day: The central bank’s Monetary Policy Committee convenes today to review key interest rates, with the emerging consensus being that the meeting won’t see interest rates cut after a surprise m-o-m surge in inflation in November.

The Finance Ministry will announce today the names of five joint lead managers for the USD 3-4 bn USD-denominated eurobond issuance set to take place at the end of January or in early February, Minister Amr El Garhy tells Al Borsa. 22 international banks, including “all the big names,” had submitted offers, El Garhy previously said. Some of the names we’re hearing include BNP Paribas, JP Morgan, Goldman Sachs, and Morgan Stanley.

Egyptian banks funded USD 70.8 bn-worth of trade finance transactions since the EGP float last November and until 14 December this year, the central bank announced yesterday in a statement carried by Al Masry Al Youm.

Orascom Hotels and Development has received the bourse’s green light for its name change to Orascom Development Egypt. The amendment was reflected on the bourse’s database as of yesterday, according to Al Borsa

On The Horizon

Prime Minister Sherif Ismail is reportedly returning to work very soon now that he’s back from Germany, where he had been receiving medical treatment.

Enterprise+: Last Night’s Talk Shows

Our coverage of Last Night’s Talk Shows will be back in full swing next week in our first 2018 edition. Stay tuned.

Speed Round

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The European Bank for Reconstruction and Development (EBRD) is lending Egypt USD 200 mn to “finance the modernization of selected gas infrastructure facilities.” The EBRD loan “will be extended to the Egyptian Natural Gas Holding Company (EGAS) and its subsidiary Egyptian Natural Gas Company (GASCO) to fund the introduction of state-of-the-art technologies to recover waste heat from gas turbines used to drive gas compressors. The recovered heat will be used to produce additional energy, which will drive new electric compressors and replace fuels on-site. The introduction of new technology will lead to a reduction of over 250,000 tonnes of carbon-dioxide equivalent (CO2e) per year.” Oil Minister Tarek El Molla says “the EBRD will also provide technical assistance in addition to the USD 200 mn loan, which will contribute to the upgrading of gas metering systems throughout the Egyptian gas transmission network, a key step towards an efficient and cost conscious use of energy.”

IPO WATCH- Al Tawfik Leasing Co. (AT Lease) shares officially start trading on the EGX today, making it the single company of its kind to be listed on the Egyptian bourse. The final price was set at EGP 6.6 per share. AT Lease’s institutional offering, valued at EGP 95.04 mn for 14.4 mn shares, was 40.16x oversubscribed, sole coordinator and bookrunner Pharos Holding said in a press release (pdf), “with a total of EGP 3.8 bn orders received from Egyptian financial institutions, investment funds, and HNWI.” The retail tranche of 4.8 mn shares was covered 28x and valued at EGP 31.68 mn, with EGP 887 mn-worth of orders received. AT Lease listed 24% of its shares on the EGX in order to expand its shareholder base, “provide an orderly and fair mechanism of new shareholders’ exit and entry through the capital market, and diversify funding sources for the purpose of cost and risk reduction,” Deputy Chairman and Managing Director Tarek Fahmy said.

M&A WATCH- UAE-based hospital group NMC Healthcare is reportedly in talks to acquire Alameda Healthcare, sources told Al Mal. Fahad Khater’s Alameda owns shares in the Dar Al Fouad and As-Salam International Hospitals in Egypt. The transaction could be executed through share-swap through which NMC would take over Alameda and its shareholders would get shares in NMC. Zaki Hashem & Partners are reportedly the legal advisors to NMC, Al Mal reports, adding that no financial advisors are on board yet.

A subsidiary of El Sewedy Electric was awarded the tender to provide electricity transmission lines connecting Borg El Arab with Marsa Matrouh, according to a bourse disclosure. The lines will be 255 km long, El Sewedy added. The company said the project will be developed over six months.

The Agricultural Exports Council is looking to hire Spanish or Dutch inspectors to examine Egyptian cargo for residual pesticides before it’s shipped for export, council head Abdel Hamid El Demerdash tells Al Borsa. Negotiations are ongoing with labs from both countries that have already submitted offers and an agreement will be signed soon, he added, explaining that the newly-hired lab will work in conjunction with local inspectors to ensure the quality of exported Egyptian produce. A single sample will cost between EGP 1,400-1,500 to examine, he also said. The news comes one day after Saudi Arabia declared a temporary ban on imports of Egyptian guavas due to above-average levels of pesticide residues.

Egyptian quarantine authorities have not received official notice of Saudi’s guava ban, Agricultural Ministry spokesman Hamed Abdel Dayem said yesterday. 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. Since then, the Agriculture Ministry has been imposing more stringent quality assurance measures on exports to the GCC and had said in July that guava shipments would be subject Global Good Agricultural Practices standards as of this season. A fact-finding mission from Saudi is reportedly visiting the country soon to determine whether or not to lift the ban on strawberries and peppers.

The General Authority for Supply Commodities (GASC) purchased 180k tonnes of Russian wheat in an international tender yesterday. GASC refused to disclose additional detail on the transaction, but traders tell Reuters’ Arabic service that the authority purchased 120k tonnes at a total cost of USD 207.5 per tonne and another 60k tonnes at a total cost of USD 209.6 per tonne.

UAE Minister of Foreign Affairs Anwar Gargash suggested yesterday that Arab countries need to band together under the joint leadership of Cairo and Riyadh to fend off Turkey and Iran’s attempts to force their geopolitical ambitions on the region. On his Twitter feed yesterday, Gargash says that Arab nations refuse to be led by Tehran and Ankara, who are only looking to “expand their regional influence” and “fulfill sectarian and partisan goals” at Arab populations’ expense, calling for unity and coordination between Arab states and leaders. Bloomberg also has coverage.

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Feast your eyes on Ismailia’s annual International Camel Racing Festival: 13 Bedouin tribes will be coming together this coming March in the desert surrounding Ismailia’s Fayed City to host the annual International Camel Racing Festival, which brings some some 150 camels and riders, usually children averaging 11 years of age, together to race around 3-15 kilometer tracks. Winners earn prizes from an EGP 100k pot, according to Egypt Today. Organizers are hoping the festival will draw in a larger international crowd this year.

Egypt in the News

If Egypt, Sudan, and Ethiopia don’t reach an agreement over the Grand Ethiopian Renaissance Dam until the very last minute, “it may be poorly structured and difficult to implement,” Kevin Wheeler, of Water Balance Consulting, tells The Financial Times. “He warns that the countries need to start cooperating soon, because setting up systems to share information and develop protocols will take time. In an ideal situation, the operation of dams and reservoirs on the Nile would be coordinated between the three states, for example to ensure the water in Egypt’s Aswan High Dam lake was at the level needed to operate the turbines for electricity generation,” Heba Saleh and John Aglionby write.

In related news, Egypt is reportedly planning to build “100 integrated housing units” for residents of the disputed Halayeb area, Middle East Monitor says. The border area has been a thorn in Egyptian-Sudanese relations for years, but tensions recently flared after Sudan suggested Egypt sign a sovereignty handover agreement as it did with Saudi over the Red Sea islands of Tiran and Sanafir or face international arbitration. Both nations have been unrelenting in their claim over the territory.

“There are worrying precedents to Egypt’s plan for a new megacity,” the Financial Times suggests in an opinion piece. Giving priority to the new administrative capital project while Egypt grapples with a host of economic and social problems — such as the militant insurgency in northern Sinai and rising costs and inflation — “might look like an attempt to bury heads in the sand,” the piece suggests, noting that new capitals such as Canberra and Brasilia might be “well-established,” but “the question remains whether people want to live there.” Egypt would do well to learn from other countries that have walked the same path, including Australia, Turkey, Brazil, Kazakhstan, and Myanmar.

An Egyptian court yesterday acquitted Bibliotheca Alexandrina’s founding director Ismail Serageldin from graft charges brought against him by library staff, “overturning a three-and-a-half year sentence on charges of squandering public funds,” The Associated Press reports. Employees had accused Serageldin of “wasting EGP 20 mn (about USD 1.2 mn) by paying hefty salaries to top advisers and privately traveling abroad at the library’s expense.”

An Egyptian military court sentenced 10 people to death yesterday on terror charges, including an army officer, Al Arabiya reports. Only one of the defendants was present with the rest being tried in absentia, according to the Anadolu Agency. Officer Hisham El Ashmawy, the alleged leader of the group, is said to be on the run.

Mansoura native Abdulrahman Shalan is the world’s first sumo wrestler of Egyptian and African descent. Known in the ring as Osunaarashi, or Great Sandstorm, Shalan started out as a bodybuilder before he came to discover sumo. His journey was far from easy, as “to realize his dream, the young Egyptian [had to] clean the gym and the dishes for a long period of time,” before his “unyielding obedience and hard work” paid off and allowed him to enter a world that is mostly exclusively reserved to Japanese natives. Today he is an elite sumo competitor. Le Monde has the story.

Other stories worth a mention this morning:

  • Turkish politicians are looking forward to mending relations with Egypt, according to Daily Sabah.
  • Xinhua chats with Egypt’s national football team coach Hector Cuper about how this year’s lineup managed to qualify for the 2018 FIFA World Cup.
  • Big World Pictures acquired the rights to Egyptian film director Tamer El Said’s “In the Last Days of the City,” which was filmed in the days leading up to Egypt’s 2011 uprising and is currently banned from screening in the country, Variety says.
  • Egyptian actress Shereen Reda is on Al Arabiya’s radar this morning, where she’s featured in two pieces that highlight her “courage” for criticizing the voices of some muezzins during the call to prayer and portraying the role of a “sick old widow” in her newest film Photocopy.
  • “It’s caroling time in Coptic Cairo,” Fabiola Jacob writes for The Hindu, documenting her time exploring the old churches of the city.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.7713 | Sell 17.8713
EGP / USD at CIB: Buy 17.79 | Sell 17.89
EGP / USD at NBE: Buy 17.69 | Sell 17.79

EGX30 (Wednesday): 14,905 (-0.1%)
Turnover: EGP 781 mn
EGX 30 year-to-date: +20.7%

THE MARKET ON WEDNESDAY: The EGX30 ended Wednesday’s session down 0.1%. CIB, the index heaviest constituent ended down 0.1%. EGX30’s top performing constituents were Heliopolis Housing up 3.0%, Egyptian Financial & Industrial up 2.5%, and Sidi Kerir Petrochemicals up 2.1%. Yesterday’s worst performing stocks were Domty down 3.4%, Telecom Egypt down 2.7%, and Oriental Weavers down 1.9%. The market turnover was EGP 781 mn, domestic investors were the sole net sellers.

Foreigners: Net Long | EGP +36.6 mn
Regional: Net Long | EGP +21.1 mn
Domestic: Net Short | EGP -57.7 mn

Retail: 62.6% of total trades | 60.7% of buyers | 64.4% of sellers
Institutions: 37.4% of total trades | 39.3% of buyers | 35.6% of sellers

Foreign: 15.8% of total | 18.2% of buyers | 13.5% of sellers
Regional: 19.4% of total | 20.8% of buyers | 18.1% of sellers
Domestic: 64.7% of total | 61.0% of buyers | 68.4% of sellers

WTI: USD 59.61 (-0.60%)
Brent: USD 66.40 (-0.93%)

Natural Gas (Nymex, futures prices) USD 2.74 MMBtu (+3.59%, January 2018 contract)
Gold: USD 1,292.00 / troy ounce (+0.35%)

TASI: 7,201.21 (+0.33%) (YTD: -0.13%)
ADX: 4,369.40 (+1.15%) (YTD: -3.89%)
DFM: 3,345.66 (+0.40%) (YTD: -5.25%)
KSE Weighted Index: 400.70 (+0.28%) (YTD: +5.42%)
QE: 8,500.08 (-0.01%) (YTD: -18.56%)
MSM: 5,040.43 (+0.67%) (YTD: -12.84%)
BB: 1,295.01 (+0.75%) (YTD: +6.11%)

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Calendar

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.

05-07 March (Monday-Wednesday): EFG Hermes’ One on One Conference 2018, Atlantis, The Palm, Dubai, UAE.

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

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. © 2018 Enterprise Ventures LLC.