Thursday, 11 January 2018

The taming of inflation?

TL;DR

What We’re Tracking Today

A fairly slow news day abroad is balanced by a very busy one here in Egypt, so we’re keeping the miscellany to a minimum this morning.

Among the (very small) handful of international stories worth your time this morning:

And, finally, the New York Times is out with its list of 52 places to go in 2018.

On The Horizon

The first investor conferences of 2018 get underway next week. EFG Hermes host their annual Egypt Day next Monday at the Four Seasons Nile Plaza. This year’s event will begin with the firm’s annual CEO dinner.

Arqaam Capital will then hold its Egypt Investors Conference 2018 on 22 January. The conference will host senior C-Suite executives from some 20 listed Egyptian companies for one-on-one meetings at the Vineyard Hotel, Cape Town, South Africa.

CI Capital is holding its MENA Investor Conference on 30 January. The conference offers 75 listed corporates from 6 countries across MENA the opportunity to meet face to face with 75 global buy-side asset managers.

Enterprise+: Last Night’s Talk Shows

Despite Hona Al Assema’s Lamees Al Hadidi being off last night, the airwaves had plenty on offer to keep us busy, including some new economic metrics and more on subsidy reform from Finance Minister Amr El Garhy.

The government is committed to pursuing further economic reforms, but has no immediate plans to raise subsidized bread prices, El Garhy told TEN TV’s Amr Abdel Hameed. El Garhy noted that although each loaf costs EGP 0.55 to produce and is sold for EGP 0.05, the subsidy will remain in place for the time being, particularly as the government keeps an eye on the social safety net throughout ongoing reforms. He stressed that the program is partially geared towards undoing several years of damage, including the widening of the state budget deficit in the years following 2011 that led to inflation and exchange rates skyrocketing.

El Garhy also told Abdel Hameed that Egypt’s external debt levels have reached USD 81 bn but the government has a debt strategy in place for the coming fiscal year. He noted that gas discoveries coming online will help to curb the price of petroleum products (watch, runtime: 2:12:13).

Railway ticket prices will almost certainly be raised within two weeks’ time, Transport Minister Hisham Arafat told Kol Youm’s Amr Adib. Arafat said that holding off on the increases any longer is simply not feasible as the Egyptian National Railways (ENR) continues to incur significant losses, including EGP 200 mn since the last hike in oil prices back in July. Much to Adib’s astonishment, Arafat said that the ENR is indeed required to pay the Oil Ministry for its fuel consumption, but noted that the ENR has been unable to make these payments due to its financing gap (watch, runtime: 3:40).

Metro tickets will also see an increase in May, at which point tickets will range between EGP 3 and 6 depending on the distance traveled (we have more on the proposed pricing schemes in the Speed Round) (watch, runtime: 1:26). Arafat also said that the metro is in dire need of maintenance works, particularly Line 1, which is susceptible to breaking down at any moment (watch, runtime: 2:12).

The Supply Ministry’s purge of the subsidy system’s database found over 3 mn Kramers are alive and mooching well, assistant minister Amr Abdel Moneim told Ala Mas’ouleety’s Ahmed Moussa. The ministry’s purge also unveiled corruption from subsidized commodities vendors, who manipulated the system by using smartcards that never made it to the intended beneficiaries (watch, runtime: 2:01).

Over on Al Hayah Al Youm, Tourism Minister Yehia Rashed told host Tamer Amin that one of the sector’s biggest achievement over the past few years was its focus on developing religious tourism, which should see a further boom once the Holy Family trail is opened to visitors. The ministry is still working to bring tourist arrivals back to pre-2011 levels, and will launch campaign to highlight the positive developments Egypt has undergone in recent years to lure back tourists. Rashed also attributed last year’s improving tourism numbers to his ministry’s international campaigns (watch, runtime: 42:49).

Speed Round

Speed Round is presented in association with

Monthly inflation fell in December for the first time in two years, coming in at -0.2%, CAPMAS announced. The rate is the lowest since November 2015. Annual Inflation also dropped to 21.9% from 26% a month before. Annual core inflation reached 19.86% during December, down from 25.54% in November. On a monthly basis, core inflation declined by 0.37% last month, compared to an increase of 1.31% the month before, according to central bank data.

The monthly decline was driven by a decrease in the prices of various food staples, including red meat, poultry, vegetables, and lentils, EFG Hermes says. Radwa El-Swaify, head of research at Pharos Holding, thinks holiday promotions and discounts might have helped push food prices down, Bloomberg reports. “The stability of prices on a monthly basis makes sense: any further increases would affect demand,” El-Swaify says.

Finance Minister Amr El Garhy expects the annual inflation rate to drop below 20% next month and to hit 10-12% during the year, according to Reuters. In 2019, he sees inflation falling to single digits and believes the reading for last month is “a better than good indication and puts us on a good path.” In the nearer term, EFG Hermes’ Mohamed Abu Basha expects inflation rates to slow down to 17-18% in January and 15-16% in February and to stabilize around 13-14% by mid-year.

Can we now have lower interest rates, please? With the drop in inflation, speculation over when and by how much interest rates should drop has begun. Easing may begin in the first quarter, according to CI Capital Holding economist Hany Farahat. Even so, an exodus of foreign investors is unlikely because longer-term securities will remain attractive, he told Bloomberg in its roundup on what to expect from MENA central banks. The benchmark interest rate may drop to 13.25% from 18.75% by year-end, according to London-based Capital Economics. The CBE Monetary Policy Committee will hold its next meeting on 15 February.

Separately, sources from the CBE say that Egypt has repaid USD 30 bn in 2017 to foreign lenders including the Paris Club and international oil companies, according to Al Borsa. Egypt borrowed USD 18.8 bn last year, the source added.

Budget deficit continued to narrow in 1H2017-18: Egypt’s budget deficit declined to 4.4% of GDP in 1H2017-18, down from 5% during the same period last year, Finance Minister Amr El Garhy said at a meeting with President Abdel Fattah El Sisi. The primary budget deficit also fell to 0.3% of GDP for the first six months of FY2017-18, down from 1.1% last year and the lowest primary budget deficit recorded in the past 10 years, El Garhy added, according to a statement from Ittihadiya. This largely came on the back of 38% y-o-y growth in state revenues in 1H2017-18 from a sharp 61% uptick in tax revenues. On the flipside, expenditure on food subsidies had risen as well to EGP 23.3 bn during the first half, a 65% y-o-y jump over 1H2016-17. Spending on the Takaful and Karama social welfare program had risen 141% y-o-y in 1H2017-18 to EGP 9 bn, according to the statement.

Our friends at EFG Hermes closed 2017 atop Thomson Reuters’ Middle Eastern investment banking league table with a number-one place in terms of both fees generated from Middle Eastern equity capital market (ECM) transactions and as the region’s top ECM bookrunner. In the tables released yesterday, TR gave EFG Hermes a total 19.1% market share of all fees from ECM transactions in 2017, putting it ahead of other finishers including Emirates NBD, Citi, First Abu Dhabi Bank, Bank of America Merrill Lynch, and Goldman Sachs. EFG’s number-one placing compares against a fourth-place finish last year.

EFG Hermes was recognized as having raised USD 455.3 mn as bookrunner on six ECM transactions, more transactions than any other investment bank operating in the region. That puts it ahead of Merrill Lynch, First Abu Dhabi, Goldman and Emirates NBD. (If you have the table, to which we cannot link for copyright reasons, you’ll see EFG is ranked #6 and #9 in a tight competition via listings as both EFG Hermes and EFG Hermes UAE, the latter being the group’s arm in the Emirates. We’re combining the two rankings for the sake of clarity, which gives it the number-one finish as ECM bookrunner ahead of a three-way tie for the number-two slot.)

Overall, what was dealmaking activity like last year?

  • Total investment banking fees generated in the region stood at USD 912.4 mn, or about 0.1% below 2016. Syndicated lending fees accounted for 42% of the Middle East fee wallet last year, while DCM fees accounted for 28%, its highest full-year share since 2001, Thomson Reuters notes.
  • The total value of ECM transactions fell 36% from 2016 to USD 3.5 bn last year, the second-lowest year for equity raisings since 2009
  • M&A with any Middle East involvement came in at USD 43.8 bn in 2017, 14% below the previous year’s level.
  • Domestic M&A and transactions between Mideast counterparties rang in at USD 8.7 bn, a decline of 63% y-o-y, and outbound activity fell 35% to USD 10.8 bn.
  • Middle East debt issuance spiked to USD 103.7 bn, 33% more than in 2016.

Fund managers are now looking at Egypt and coming back to the market, our friend Ahmed Badr, MENA CEO at Renaissance Capital, told Bloomberg TV. Badr believes that reforms are buoying the Egyptian market and that it is gaining more depth with a healthy IPO pipeline. Badr also does not see the rising oil prices having a huge effect on Egypt as “reforms counter any impact of rising prices.” He is also positive on the prospects of the EGP during the year. Separately, Badr says he is now bullish on Saudi Arabia on the back of the “reform story” going on at the moment as well as a revitalised consumer spending behaviour and sees the potential for high returns to be made there. Definitely worth a watch this morning, starting from 32:45.

FT makes a case for East Med to export gas to Europe via Egypt: Not recognizing that Egypt is the most obvious (and economical) path for East Mediterranean countries to export gas from the Levantine Deep Marine Basin to Europe would be a waste of opportunity, according to the Financial Times’ editorial board. Egypt is ahead of the curve with its infrastructure, and the swift progress on the development of Zohr makes it the most convenient country to export gas to the EU. “The development of the Israeli, Lebanese and Cypriot fields is more fraught. With limited domestic markets all three will need to find external buyers at a time when world gas markets are close to saturated. The most pragmatic and practical near term path to outside markets would be to build a network of short pipelines and tap into Egypt’s [largely idle] LNG plants.”

The FT also criticised the EU’s preferred method for importing the gas — via a 2,000 km long and 3 km deep pipeline from the eastern Mediterranean to Italy. While being questionable commercially due to the how cumbersome and slow paced the development of such a project would take, the move could also see the EU squander an opportunity for regional integration, says the salmon-colored paper.

In other gas related news, the US has beat Egypt to the punch and become a net exporter of gas for the first time since 1957, Bloomberg reports. Net exports averaged about 0.4 bcf/d last year, flipping from net inflows of 1.8 bcf/d in 2016, according to Victoria Zaretskaya, a Washington-based analyst for the US Energy Information Administration.

The EGX is now allowing for subscription rights in capital increases for unlisted companies to be traded over-the-counter, bourse chairman Mohamed Farid said, according to Al Mal. This would allow unlisted companies to finance expansion without having to list on the market and expand their investor base. One very smart lawyer tells us the regulatory change would allow for the right to subscribe to the capital increase of an unlisted company to be traded separately. He says the change would make it possible to add new investors to recently incorporated companies that have not yet issued two sets of financial statements by allowing the founders to sell their right to subscribe to the capital increase to new investors.

It’s official: the Ruskies are coming back. Moscow’s Domodedovo and Sheremetyevo airports have added Cairo to their February timetable, according to news agency Interfax. Starting 1 February, EgyptAir will be operating three weekly flights to and from both airports on Sundays, Tuesdays, and Thursdays. Russian President Vladimir Putin authorized the resumption of air travel between Moscow and Cairo earlier this week after a more than two-year hiatus following the October 2015 Metrojet flight crash in Sinai. Putin’s nod followed the signing of a civil aviation security protocol between both countries, which came after Egypt implemented a series of security upgrades to its airports at Moscow’s request. Russian Transport Minister Maxim Sokolov said additional security measures would be needed before flights are restored between Russia and other Egyptian airports, such as Sharm El Sheikh and Hurghada. The status of charter flights will be discussed at an April 2018 meeting. The Tourism Ministry said this week that it expects some 2 mn Russian visitors in Egypt in 2018.

As for that totally unrelated power plant: Russia’s Rosatom has reportedly begun the procedures to obtain a license to build and operate the Dabaa nuclear power plant, sources from the Egyptian Atomic Energy Authority (EAEA) tell Daily News Egypt. As we noted last month, the extent of the red tape involved could delay breaking ground on the project. Beyond receiving approval from the EAEA, the project will also need a sign-off from the Environment Ministry before construction can begin.

Emaar signs EGP 2 bn Marassi Marina contracts with OCI, ACC: Emaar Misr signed construction contracts with Arabian Construction Company (ACC) and Orascom Construction Industries (OCI) valued at EGP 2 bn for the first phase of its Marassi Marina project on the North Coast, according to a regulatory filing (pdf). Emaar signed a EGP 800 mn contract with OCI for the construction of the marina basin, which will berth 300 boats. Emaar’s contract with ACC, worth EGP 1.2 bn, includes the construction of 826 fully finished apartments and 4,500 sqm of entertainment and commercial space. Both contracts are scheduled for delivery in 2020. The Marina project will also include a collection of award winning hotels from Emaar Hospitality Group, said Emaar Properties Chairman Mohamed Alabbar. “Our unwavering confidence in the promising Egyptian market and the investor friendly policies of the government drive us to develop unique world class projects in Egypt that compete internationally,” he added.

Dubai’s Union Properties acquired a 5.68% stake in Palm Hills Development (PHD) through its subsidiary UPP Capital Investment in an EGP 64.01 mn transaction, PHD announced in a regulatory filing (pdf) yesterday. UPP acquired the stake an average price of EGP 4.00 per share. Arab African International Securities managed the transaction.

Demystifying what’s going on with Orange Egypt’s EGX listing: To the confusion of many in the market (ourselves among them, if we’re to be frank), there are two things happening at Orange Egypt. A statement to the EGX yesterday (pdf) clears things up. First, Orange is in the implementation phase of an EGP 15.4 bn rights issue at par, the subscription period for which will close on 28 January. The issue of the company raising its free float to a minimum of 5% — against a current float of about 1% — is entirely unrelated, the company said. On that separate front, Orange Egypt says it’s “examining all options and appropriate timings” to increase its free float to at least the minimum. Doing so, it says, is highly dependent on market conditions — and the appetite of potential investors. Orange Egypt could face mandatory delisting if it doesn’t meet the minimum float requirement. Any offering or mandatory delisting would see shares priced on the basis of a fair value study that the company expects would result in something “not be materially different” from the EGP 10.91 per share price posted on EGX screens on 20 December.

MOVES- Vodafone Egypt appointed Rasha Al Azhary as its new chief financial officer yesterday, according to Al Mal. Al Azhary previously served as development director at Vodafone Qatar, where she was spearheaded the launch of fiber and LTE services. An AUC grad, she first joined Vodafone Egypt in 2003 after five years in investment banking.

Our friend Ashraf Mahmoud, group chairman and CEO at Al Nouran, believes he can turn Egypt into an exporter of sugar instead of a net importer. Egypt has a number of advantages to help it become a sugar exporter, particularly if the country manages to cultivate more beets and apply new technologies that allow it to increase productivity per feddan, Mahmoud tells CNN Marketplace Africa (watch, runtime 4:44).

Al Nouran’s current strategy is focused on “using the Egyptian market as a platform to start addressing export markets,” he explains. As an integrated manufacturer with a new production facility in the works, “the sky’s the limit,” Mahmoud says, explaining that the first phase of Al Nouran’s new sugar refinery will house four production lines, each with the capacity to produce and refine 300k tonnes of sugar from beets. Once all four are online, the facility will become “one of the largest sugar production units in Africa,” he adds, noting that he believes Al Nouran can make up to EGP 4-5 bn a year vs. a current average of EGP 1.5 bn.

As a trader who traveled far up the value chain to become a manufacturer and grower of his main raw material, Mahmoud is a firm believer in gradual integration. Once Al Nouran’s new sugar production units are up and running, “we can look at other integrated industries like molasses, alcohol, biofuel, yeast, and fertilizer. There are a lot of opportunities in expanding.”

The World Bank’s Multilateral Investment Guarantee Agency (MIGA) is providing USD 102.6 mn in guarantees for six solar plants in Egypt with a combined production capacity of 250 MW, Renewables Now reports. The funding acts as security “against the risks of expropriation, transfer restriction and inconvertibility, breach of contract and war and civil disturbance.” Around USD 5 mn will be used to cover IB Vogt’s investment for a 15-year period, while another USD 97.6 mn will be provided to the Industrial and Commercial Bank of China for up to 20 years. Three of the plants covered by MIGA’s financing will be constructed by ACWA Power.

The Ismail Cabinet approved establishing a company to supervise and manage the development of public freezones and investment complexes, Al Masry Al Youm reports. The company will have a capital of EGP 300 mn and will be responsible for the infrastructure of new freezones and addressing the needs of existing zones, Investment and International Cooperation Minister Sahar Nasr told the press, according to Al Mal. Ministers also approved amendments to the Unified Building Code focused on insurance against potential damages and injuries during the construction process of new buildings. Also approved yesterday:

  • The Housing Ministry’s request to make the New Urban Communities Authority responsible for covering increased costs of social housing projects incurred by the Contractors Compensation Act. These extra costs currently stand at between EGP 5 and 7 bn, according to Mortgage Finance Fund Chairman May Abdel Hamid told the press yesterday;
  • Procedures for the Transport Ministry’s tenders for the New Capital-Cairo monorail, the Giza-6 October monorail, and a rail line connecting the new capital with Ain Sokhna, 6 October City, and Alamein;
  • The construction of EGP 350 mn worth of wastewater and water treatment plants in Matrouh, to be funded through the governorate’s housing fund;
  • Establishing the National Council for Disabled Persons, which will replace the National Council for Disability Affairs and will be mandated with protecting disabled citizens’ constitutional rights;
  • Amendments to the Education Law to prioritize qualified and experienced teachers in the hiring process for teaching positions;
  • Amendments to the Universities Organization Law to establish new colleges in the Luxor and West Valley universities.
  • Contracting state-owned Egyptian Pharma Trading Company to supply EGP 30 mn worth of medications that are currently in short supply;

Railway ticket prices to rise in multiple jumps: The planned increase in railway ticket prices will be implemented in multiple phases, Assistant Transport Minister Amr Shaat tells Al Shorouk. The first price hike will be announced once the ministry completes its study on the issue with the Administrative Control Authority (ACA), and the ministry will set a timeline for further increases necessary to plug the National Railways Authority’s financing gap. According to Shaat, the increase will only come into effect once the rate is approved by the Ismail cabinet and the ACA. Transport Minister Hisham Arafat had said earlier this week that ticket prices will climb 20-25%.

Transport Ministry mulls several proposals for Cairo Metro ticket prices: Meanwhile, the Egyptian Company for Metro Management and Operation presented the Transport Ministry yesterday with two proposals for the planned increase of metro ticket prices, unidentified sources tell Al Masry Al Youm. Both scenarios rely on a tier system for pricing. The first scenario would set a base rate of EGP 2 for eight stations and a maximum rate of EGP 5 for a ticket that would cover all 35 metro stations. The scenario also includes two other tiers, both priced at EGP 3, for an undisclosed number of stops. The second scenario would set a base rate of EGP 3 for nine stations, a second tier at EGP 4, and the maximum tier at EGP 5. The latter scenario is more likely to win approval, according to the sources.

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Image of the Day

A stone found in our end of the Sahara in 1992 is being reexamined and may turn out not only to be older than the solar system, but to have interstellar origins, according to ZME Science. Dubbed “The Hypatia Stone,” previous analysis had identified the stone as unique in its composition. Now, new studies are showing that the tiny stone’s core may be made up of space dust that predates the existence of our solar system — and potentially even our sun. Hypatia’s composition and age may also challenge generally accepted views that the nebulous material the entire solar system is made up of was homogenous — potentially changing theories of how our solar system was born. Hypatia comes from the central core of a comet and other parts of its composition were picked up here on Earth.

Egypt in the News

Reports of persecution of Egypt’s Coptic Christian minority topped coverage of Egypt in the foreign press this morning. A report by the Open Doors charity organization claims that Coptic Christians are suffering from unprecedented levels of persecution, particularly with the recent wave of attacks on churches that has prevented worshippers from being able to gather normally. The report says 128 Christians were killed in Egypt for their faith and more than 200 were driven out of their homes in 2017, attributing the rise in persecution to “the overspill of Islamic terrorists driven out of Iraq and Syria”. The report is being widely covered, most notably by the Guardian.

Some Al-Azhar officials seem to “either have an ambivalent attitude or a two-faced” attitude regarding tolerance towards Christians in Egypt, AZ Mohamed writes for Gatestone Institute, citing a MEMRI report. Mohamed says the clerics are not following direction from Ittihadiya on pushing a more tolerant view because of the influence of extremist ideology and their uncertainty regarding both their public image and their popularity if they yield to President Abdel Fattah El Sisi’s demands. “These reservations seem especially charged in the context of rivalries for religious leadership in Egypt, and signs of support for Al Azhar from the parliament, the media and the public. Possibly even more persuasive is the fear of gradually losing all power.”

Egypt is hoping that Russia’s resumption of flights to Cairo will encourage the UK to lift its ban on flights to Sharm El Sheikh, TTG says. The UK’s insistence on keeping its ban on the Sharm El Sheikh airport is “extremely frustrating,” especially since the FCO does not have any security warnings in place for the town itself, UK and Ireland director at the Egyptian Tourism Authority Amr El Ezaby tells TTG. According to El Ezaby, “authorities had made GBP 20 mn worth of investments in airport security as well as improving infrastructure in the wider resort.” Persistent demand from the British market for vacations in Sharm El Sheikh throughout last year should also spur the British government to action, El Ezaby says.

Worth skimming in brief this morning:

On Deadline

With the presidential elections on the horizon, columnists are shaking their heads at the expected lack of pluralism and democratic competition. This year’s elections are already looking painfully similar to those held prior to the 2011 revolution, with no proper presidential platforms being presented and people rushing to support the incumbent just to save their own skin, Ashraf El Barbary writes for Al Shorouk. Mohamed Amin also takes to the pages of Al Masry Al Youm to criticize parliamentarians’ blind rush to endorse President Abdel Fattah El Sisi, saying that this will only serve to undermine the president’s legitimacy once he wins a second term in office with no competition.

Worth Watching

Snow has fallen on the Sahara desert in Algeria for the third time in 40 years, according to The Independent. The snow fell in the town of Ain Sefra on Sunday and covered the sand dunes with 40 cm of the gorgeous white stuff in some places. This marks the third year in a row that snow has fallen on the area, but prior to that it hadn’t since 1979. While the juxtaposition of snow and sand is very cool to observe, it isn’t a total shocker since the region is known for temperatures as low as -10°C. (Watch, runtime 0:41)

Diplomacy + Foreign Trade

Egypt and Tanzania signed three cooperation agreements yesterday in tourism, agriculture, and diplomatic training, according to a Foreign Ministry statement. The MoUs were signed after a joint Egyptian-Tanzanian committee meeting, focused on bilateral relations, and a meeting between minister Sameh Shoukry and his Tanzanian counterpart, where discussions centered around boosting trade and economic relations, especially in the fields of energy, agriculture, and petrochemicals.

The Grand Ethiopian Renaissance Dam cast a long shadow over the talks, which come as part of Egypt building ties to East Africa amid tensions with Ethiopia and Sudan. Egypt appeared to be lobbying for Tanzania’s support, with Tanzanian Foreign Minister Augustine Mahiga saying during a joint press conference with Shoukry that his country understands that “the Nile is the lifeblood of Egypt,” according to Ahram Online.

In other regional news, the East African Community (EAC) will reportedly sign off on a decision that will merge it with trade blocs COMESA and SADC in 1Q2018, according to Al Borsa. President Abdel Fattah El Sisi has been pushing for the merger, which would allow for the establishment of an African freetrade zone that would see duties between member states reduced by more than 90% over a five-year period.

A delegation of Egyptian firms will visit Baghdad “soon” to assess their potential contribution to reconstruction efforts in Iraq, Foreign Minister Sameh Shoukry, according to Al Mal. Egypt’s participation in reconstruction efforts in a number of regional countries mired by conflict, particularly in Syria and Libya, is becoming one of the country’s most important foreign policy initiatives.

Energy

DEA looks to expand Egypt investment with new projects in Gulf of Suez, Dissouq

German oil and gas outfit DEA is looking to expand its investments in Egypt, CEO Maria Hanssen told Oil Minister Tarek El Molla during a meeting in Cairo yesterday, Youm7 reports. The company is primarily interested in pumping new investments in Dissouq and the Gulf of Suez, particularly after its upcoming merger with Germany’s Wintershall.

Basic Materials + Commodities

GASC manages to hold wheat tender after clearing fee issues with suppliers

State grain buyer the General Authority for Supply Commodities (GASC) received seven bid in its first wheat tender of the year following additional negotiations that contractual issues will be amended, the head of the Institute for Agricultural Market Studies (IKAR), Dmitry Rylko, told Interfax. “The difficulty arose from Egypt’s attempt to begin enforcing a little-used rule. ‘Recently GASC found in its documents a rule under which it has the right to charge supplying companies demurrage fees,’ Rylko said. ‘The suppliers were informed of this two days ago,’ he said, adding that the rule was to be applied to all demurrage instances retroactively to the beginning of the current agricultural year, that is, July 2017. ‘There were quite a lot of them,’ he said.” Initial media reports suggested that no bids were received, but after resolving the issues, seven companies presented bids, Rylko says.

Centamin produced 544.7k oz of gold from Sukari in 2017, expects 580k oz in 2018

Centamin announced that its 2017 full year production from the Sukari gold mine was 544.7k ounces, higher than the guidance of 540k, according to a company statement. The company expects 580k ounces of gold to be produced from Sukari in 2018, with the mine plan forecasting a relatively balanced quarterly production profile over the year. “We look forward to delivering solid growth in 2018 with gold production guidance of 580k ounce at a cash cost of USD 555/oz and an all-in sustaining cost of USD 770/oz resulting in significant free cash flow for our shareholders,” CEO Andrew Pardey commented.

Manufacturing

El Sisi meets with Caterpillar CEO to discuss participation in national projects

President Abdel Fattah El Sisi met yesterday with the Caterpillar CEO Jim Umpleby to discuss the company’s potential participation in national projects, Ittihadiya said in a statement (pdf). “The meeting touched on prospects for cooperation with Caterpillar Inc. in multiple fields, in addition to the company’s future investment plans in the country,” the statement says. The two discussed the possibility of Caterpillar participating in developing the national rail system and construction projects.

Health + Education

Higher Education and Military Production to establish medical equipment company

The Higher Education and Military Production Ministries are establishing a company that will manufacture medical equipment and prosthetics, according to Al Mal. The company is part of a broader strategy to bring scientific research and know-how to industry.

Tourism

TUI to add a weekly flight from Birmingham to Hurghada May 2018

Travel industry giant TUI is adding a weekly flight to Hurghada from Birmingham for the summer months starting in May, according to The Birmingham Mail. The airline already has the route flying every Monday but the addition of the new line every Friday will allow 10-night vacation packages to the destination. Demand out of the Midlands has been strong for the Red Sea with Thomas Cook resuming flights from Birmingham to Marsa Alam back in October.

Automotive + Transportation

Several MPs continue to voice objections to AFD’s Alex tram loan

Several MPs are still voicing their objections to the French Development Agency’s EUR 100 mn loan to finance the Alexandria tram project, Al Mal reports. MP Haitham El Hariri claims that the project was not studied thoroughly enough, and that repaying the loan will be burdensome for state coffers. The House of Representatives already signed off on the loan agreement in November.

Deadline for monorail project prequalification offers extended to 29 January

The transport and housing ministries extended the bidding window for its monorail projects until 29 January from 15 January, Housing Minister Mostafa Madbouly announced yesterday, according to Al Masry Al Youm. Companies originally had until 15 January to submit their prequalification documents for the design, finance, supply, operation, and maintenance of the 35 km 6 October-Giza and 52 km Nasr City-New Capital monorails. Madbouli said that a number of major European and Chinese firms have expressed interest.

Other Business News of Note

SCZone may convert part of Port Said area to a freezone

The Suez Canal Economic Zone (SCZone) will convert an area of 35 sq km in East Port Said into a freezone in the next few days, government sources told Al Borsa. The General Authority for Investments (GAFI) will present the case for converting the area into a freezone to the SCZone within the next few days.

Egypt Politics + Economics

Al Sadat to announce whether he plans run for president next Monday as MPs rush to back El Sisi

Former MP Mohamed Anwar Al Sadat is considering joining the 2018 presidential race, according to Al Masry Al Youm. Sadat has been meeting with MPs to collect the 20 signatures needed to file his nomination papers and has already submitted his letter of intent to House Speaker Ali Abdel Aal. Sadat said he would announce his final decision on Monday. Human rights lawyer Khaled Ali will also announce whether he will officially apply to run for president on Monday. While that went on, some 516 other MPs “raced” to the House to sign a form supporting President Abdel Fattah El Sisi’s re-election, including Abdel Aal himself, Al Shorouk reports. El Sisi has yet to formally declare his intention to run. This comes days after the National Elections Commission announced the detailed timeline for the 2018 elections, which will see Egyptians head to the polls to elect a president on 26-28 March, with runoffs set to take place between 24-26 April, and results scheduled for a 1 May announcement.

SCA offers discounts ranging from 45-75% on ships traveling the US-Asia route

Crude oil carriers traveling between Asian ports and the US Gulf, South America, and the Caribbean islands via Suez Canal will be granted discounts of 45-75% on port fees, the Suez Canal Authority (SCA) announced yesterday in a statement carried by Al Shorouk. Oil freighters traveling from the Colombian San Andrés port to ports located between Karachi in Pakistan and Cochin in India will receive a 65% discount, while those traveling further east of Cochin will receive a 75% discount, and those traveling back from ports located between Karachi and Cochin will receive a 45% discount on port fees. Sources had said last month that the SCA was planning to slash port fees by as much as 50% for the America-Far East shipping line in a bid to attract more traffic to the Suez Canal.

EGP 15 bn in tax disputes settled

Egypt settled EGP 15 bn in tax disputes out of the EGP 24 bn in applications submitted ahead of the Tax Dispute Resolution Act expiring in September, Deputy Finance Minister Amr Al Munir told Al Borsa. Cabinet subsequently approved its extension for another two years this past November.

On Your Way Out

President Abdel Fattah El Sisi will once again take questions from citizens through the “Ask Your President” initiative which starts on Wednesday, according to Ittihadiya. The initiative was first launched in April 2017. The President will respond to the questions on 15 January, sources tell AMAY.

The Market Yesterday

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EGP / USD at CIB: Buy 17.63 | Sell 17.73
EGP / USD at NBE: Buy 17.65 | Sell 17.75

EGX30 (Wednesday): 15,193 (+0.2%)
Turnover: EGP 1.1 bn (1% above the 90-day average)
EGX 30 year-to-date: +1.2%

THE MARKET ON WEDNESDAY: The EGX30 ended Wednesday’s session up 0.2%. CIB, the index heaviest constituent closed down 0.4%. EGX30’s top performing constituents were Sidi Kerir Petrochemicals up 4.3%; Egyptian Financial & Industrial up 3.6%; and Egyptian Iron & Steel up 2.5%. Yesterday’s worst performing stocks were SODIC down 1.6%; Elsewedy Electric down 0.8%; and TMG Holding down 0.6%. The market turnover was EGP 1.1 bn, and local investors were the sole net sellers.

Foreigners: Net Long | EGP +63.6 mn
Regional: Net Long | EGP +9.2 mn
Domestic: Net Short | EGP -72.9 mn

Retail: 65.1% of total trades | 59.3% of buyers | 70.9% of sellers
Institutions: 34.9% of total trades | 40.7% of buyers | 29.1% of sellers

Foreign: 14.9% of total | 17.7% of buyers | 12.0% of sellers
Regional: 11.4% of total | 11.9% of buyers | 11.0% of sellers
Domestic: 73.7% of total | 70.4% of buyers | 76.9% of sellers

WTI: USD 63.35 (+0.62%)
Brent: USD 69.03 (+0.31%)
Natural Gas (Nymex, futures prices) USD 2.91 MMBtu, (-0.55%, February 2018 contract)
Gold: USD 1,319.3 / troy ounce (+0.43%)

TASI: 7,300.37 (+0.13%) (YTD: +1.02%)
ADX: 4,579.74 (-0.29%) (YTD: +4.12%)
DFM: 3,499.36 (-0.12%) (YTD: +3.84%)
KSE Weighted Index: 414.15 (+0.44%) (YTD: +3.17%)
QE: 9,048.17 (+0.51%) (YTD: +6.16%)
MSM: 5,099.53 (-0.13%) (YTD: 0.00%)
BB: 1,317.81 (+0.2%) (YTD: -1.04%)

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Calendar

15-17 January (Monday – Wednesday): EFG Hermes Annual Egypt Day Conference, Four Seasons Nile Plaza, Cairo

15 January (Monday): EFG Hermes Annual Egypt CEOs Dinner, Four Seasons Nile Plaza, Cairo

22-23 January (Monday-Tuesday): Arqaam Capital Egypt Investors Conference 2018, The Vineyard Hotel, Cape Town, South Africa.

25 January (Thursday): 25 January revolution / Police Day, national holiday.

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

30 January-01 February (Tuesday-Thursday): CI Capital’s MENA Investor Conference, Four Seasons Nile Plaza, Cairo.

05 February (Monday): Egypt’s Emirates NBI PMI reading for January announced.

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

08 April (Sunday): Easter Sunday, national holiday.

09 April (Monday): Sham El Nessim, national holiday.

24-25 April (Tuesday-Wednesday): Renaissance Capital’s 3rd Annual Egypt Investor Conference, Cape Town, South Africa.

25 April (Wednesday): Sinai Liberation Day, national holiday.

01 May (Tuesday): Labour Day, national holiday.

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

15 May (Tuesday): Expected date for the start of Ramadan begins (TBC).

15-17 June (Friday-Sunday): Eid Al Fitr (TBC), national holiday. (Look for possible Monday off given the first day falls on a Friday.)

21-25 August (Tuesday-Saturday): Eid Al Adha (TBC), national holiday

11 September (Tuesday): Islamic New Year (TBC), national holiday.

06 October (Saturday): Armed Forces Day, national holiday.

20 November (Tuesday): Prophet’s Birthday (TBC), national holiday.

22 November (Thursday): US Thanksgiving.

25 December (Tuesday): Western Christmas.

01 January 2019 (Tuesday): New Year’s Day, national holiday.

07 January 2019 (Monday): Coptic Christmas

25 January 2019 (Friday): Police Day, national holiday.

25 April 2019 (Thursday): Sinai Liberation day, national holiday.

29 April 2019 (Monday): Easter Monday, national holiday.

01 May 2019 (Wednesday): Labor Day, national holiday.

06 May 2019 (Monday): First day of Ramadan (TBC)

05-06 June 2019 (Wednesday-Thursday): Eid El Fitr (TBC)

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.