293 days until the end of the line for automotive assemblers?

Trade and Industry Minister Tarek Kabil is discussing local component requirements for the Automotive Directive with several auto manufacturers today, Al Mal reports. We have more on that in the Speed Round below.

First power plant of the Benban solar park to be inaugurated today: Infinity Solar is scheduled to inaugurate its 50 MW solar power plant in Benban, Aswan today, according to Al Ahram. As the first company to complete a solar power plant under the feed-in tariff program, the event today marks the beginning of the largest solar power park in the Middle East, which has drawn over USD 1.8 bn in investments over the last year. Electricity Minister Mohamed Shaker is expected to attend the inauguration.

Solomon to succeed Blankfein at Goldman Sachs? David Solomon became the heir apparent at Goldman Sachs after his main rival for the position, Harvey Schwartz, abruptly resigned, the Wall Street Journal reports. The surprise announcement came after Goldman’s board of directors last month anointed Solomon as the eventual successor to current CEO Lloyd Blankfein, according to people familiar with the matter. The move amounts to a wager that the coming decade will look little like the last one, as Goldman continues to evolve from a secretive trading powerhouse into a more entrepreneurial place. Solomon, who headed investment banking at the firm, had overseen a rise in net revenues at the unit to USD 7.4 bn, while the firm’s securities trading unit, from which Schwartz emerged, had been floundering, according to the FT. The New York Times also has the story, emphasizing in its headline that Solomon moonlights as a D.J., and CNBC also has a profile.

Want to please investors? Lower FOL. Easing of foreign ownership limitations at two of the Middle East’s biggest banks is being touted as a sound way for banks to diversify their investor base amid the ongoing impact of lower oil prices and regional politics. Qatar National Bank, which is feeling the burn from the Qatar boycott, is seeking shareholder approval to boost foreign ownership to 49% from 25%, while Emirates NBD wants to raise its limit to 20% from 5%, Bloomberg reports. Investors appear to have responded well to the move, with QNB shares jumping 10%, the most in more than 12 years, while Emirates NBD gained 4.5% after advancing 14% on Sunday. EFG Hermes Frontier CEO Ali Khalpey had told us in an exclusive interview last week in Dubai that foreign ownership limits were one of the biggest challenges facing frontier market investors.

Hedge funds are betting against the world’s largest advertising companies, with outfits including Marshall Wace, Lone Pine and Maverick Capital shorting Publicis, WPP and Omnicom. The shorts come as “the advertising industry has come under intense financial pressure as companies shift their marketing budgets to Facebook and Google, which have come to dominate online advertising. Traditional advertising groups have also suffered from sharp cutbacks in marketing spend at large consumer product companies like Procter & Gamble and Kraft Heinz,” the Financial Times writes.

In other business news from around the world worth a skim this morning:

• Donald Trump has blocked the acquisition of Qualcomm by Singapore’s Broadcom, citing national security grounds. (FT | Reuters)
• If no one owns the moon, can anyone make money up there? The New York Times looks at how “Ambiguities in the 50-year-old Outer Space Treaty may be getting in the way of entrepreneurs seeking opportunities elsewhere in our solar system.”
• Is time running out for the Swiss watch industry? (WSJ)

Cabinet is expected to discuss the executive regulations to the controversial NGO law “within days,” government sources tell Al Borsa. The government had consulted with a number of civil society organizations for input on the regs, according to the sources. Parliament had signed off on the bill — which forbids NGOs from participating in political activities and requires organizations to receive government approval prior to receiving foreign funding — back in 2016. The act has since come under fire several times, including from three Republican Senators and the US Congress’ human rights commission.

The Arts-Mart Gallery is bringing together visual and performing arts through its second ‘Orchestra In Art’ event, The Three Egyptian Tenors. The show features a full orchestra performing amidst a specially curated exhibition of Egyptian contemporary art. World-renowned conductor Nader Abassi and award-winning Egyptian tenors Hany Abdelzaher, Ragaa Eldin, and Amr Medhat will perform their Italian opera masterpieces at the Arts-Mart Gallery on Friday.

Naeem Holdings’ shares will officially begin trading on the Dubai Financial Market on 25 March. The company had received approval from the Financial Regulatory Authority for its dual listing last month.

It was an unusually boring and uninspired night on the airwaves last night, with topics ranging from the state banks ‘Secure” CDs to World Cup coverage and, of course, more on the presidential election.

Social and financial protection for part-time non-government workers took up significant air time last night. The topic is a key plank of President Abdel Fattah El Sisi’s election platform. Coverage focused what are being marked as “secure deposit certificates,” which are meant to provide these workers with life and injury insurance. The product, on offer at state-owned banks, is gaining in popularity, Banque Misr head Mohamed El Etreby told Masaa DMC’s Eman El Hosary. Companies have also been buying more of the CDs to cover their workers, he said, adding that he expects the demand for them to further increase (watch, runtime: 4:55).

The Manpower Ministry is apparently also getting in on the social protection for workers game by launching an initiative with the “Sonaa al-Kheir” association to provide workers with healthcare, minister Mohamed Saafan tells Hona Al Asima’s Lamees Al Hadidi (watch, runtime: 7:00).

In a surprising turn of events, it was Kol Youm’s Amr Adib that went for an econ-related episode last night, speaking on economic development in Sinai, which he estimates will demand EGP 7 bn in funding. He urged the government to provide investors in North Sinai more incentives considering the dangers associated with investing there (watch, runtime: 7:23).

The question of whether the Support Egypt Coalition is planning to become a political party featured prominently on Hona El Assema as Lamees sat down with coalition head Mohamed Elsewedy, who offered nothing concrete and dodged the question (watch, runtime: 22:40).

The Egyptian press has been obsessed since 2011 with how citizens living abroad can cast their votes. Last night saw Al Hayah Al Youm’s Khaled Abu Bakr feature no less than three interviews on the topic (here, here and here if you must)

Over on Kol You, Amr Adib worried about voter turnout, with his studio guests predicting it would be reasonably low (watch, runtime: 2:51), but that it could be on par with the figure from 2014 (watch, runtime: 2:06).

For some reason, Lamees feels it is a national security issue that no Egyptian channel holds the rights to broadcast World Cup games. She thinks that turning to Qatar’s beIN Sports or the Israeli networks would constitute some kind of political risk (watch, runtime: 1:35).

INVESTMENT WATCH- Kia to invest in EGP 4.2 bn assembly line over the next five years: Kia Motors signed an agreement with Egyptian International Trading & Agencies, which would see them invest EGP 4.2 bn in a car assembly facility in Egypt over the next five years, according to a statement from the Trade and Industry Ministry on Monday. The project will see investments of EGP 262 mn in year one, with the plant eventually having a nameplate capacity of 15,000 cars per year. This would be the first auto assembly project developed by Kia in the Middle East, said Minister Tarek Kabil.

Is the government finally going to push to get the Automotive Directive out? Kabil noted that the agreement was part of a wave of positive news the industry can expect this year as it looks to make domestic assembly more attractive. He said that the government will be looking to raise the domestic components requirement for assembly. This comes as Kabil is expected to discuss local component requirements in the Automotive Directive with several auto producers today, Al Mal reports. As we noted last month, the government is looking to push the quota to 60% from a current 45% and 70% for light trucks over the course of eight years. The bill is expected to see the light in 2H2018, an unidentified source tells the newspaper. This appears to be a delay from the 2Q2018 deadline we’ve been hearing. The legislation had been stalled until a German consultancy completes helping with its redraft. It is unclear as of yet when that will be.

The domestic automotive industry is running out of time. We’re about 293 days away from 1 January 2019. That’s when customs duties on European Union-assembled cars fall to zero, making fully assembled imports more cost competitive than those assembled in Egypt. The government has a choice to make: Does it want to move ahead with the automotive directive and save skilled jobs and investments worth bns? Or does it want to make nice with Germany, which has led the charge against the automotive directive to promote the interests of its own domestic auto industry? The cost of making nice: Factory shutdowns on 1 January 2019.

What is the automotive directive? Effectively, it’s a proposal that would level the playing field for domestic assemblers against what they claim is an unfair trade advantage that favors imports from the EU, Turkey and Morocco. Under the proposal, Egypt would effectively maintain a 10% customs duty on non-European car imports—and impose a 30% tax on all imports including the imports of kits for local assembly. Domestic assemblers that meet local content, volume or export requirements would then get tax rebates or tax exemptions.

This is our last opportunity to emerge as a regional automotive assembly hub. Once upon a time, the Koreans studied our industrial policy. Today, they’ve leapfrogged us, as have Morocco and Turkey. Egypt is positioned to become a hub for energy exports, and our cost advantage in financial services is clear for the world to see. The automotive directive is the last opportunity we’ll have to do this in an industry that could become a national flag carrier. It’s a debate worth having, and it’s time for the government to lead on it.

IPO WATCH- Book-building for B Investments retail offering will launch today: Our friends at BPE Holding for Financial Investments (better known as B Investments) will begin taking orders for the retail offering of 5,000,000 shares today as part of the book-building process to list a total of 43,131,554 shares this month. Bookbuilding for the private placement of 38,131,554 shares began earlier this month and is expected to continue until 25 March. Proceeds of the IPO and capital increase will be used to grow the company’s current portfolio through acquisitions and new investments, the company had said. Sigma Capital is the sole coordinator and bookrunner, while Zaki Hashem & Partners are acting as legal counsel to the issuer.

IPO WATCH- Carbon Holdings has tapped EFG Hermes to run its IPO, which is scheduled to take place by December, unidentified sources tell Al Borsa. The size of the listing remains undetermined. The stake sale is likely to be the largest IPO in Egypt since 2011, although the company has yet to settle on the structure of the transaction or the secondary exchanges, sources had told us in an exclusive earlier this week. Carbon Holdings has also selected Baker & McKenzie as local legal counsel and White & Case as international counsel. The company is also hoping to borrow USD 6 bn to cover 60% of the costs of its USD 10.8 bn petrochemical complex in Ain Sokhna, according to the sources.

Gov’t hires advisors for first euro-denominated bond sale: BNP Paribas, Deutsche Bank, Standard Chartered, and Intesa Sanpaolo will manage Egypt’s first euro-denominated bond sale, the Finance Ministry said in a statement on Monday. The issuance will be worth EUR 1-1.5 bn and slated for before the start of FY2018-19. Al Tamimi & Co. and Dechert LLP are the legal advisers for the issuance. The sale comes after the government concluded a successful issuance of a USD 4 bn eurobond. Bloomberg also has the story.

Amended Capital Markets Act now law, paves the way for new financial instruments and exchanges: Amendments to the Capital Markets Act were published on the Official Gazette on Monday, making them officially the law of the land. The amendments, which were passed by the House of Representatives last month, pave the way for the introduction of new financial instruments including sukuks, futures contracts trading, and the establishing commodities exchanges.

When exactly are flights with Russia resuming? There are widely varying reports and information coming out on when exactly flights with Russia are coming. Moscow’s Domodedovo Airport added the Cairo-Moscow air route to its roster on 22 March. EgyptAir, has the first available flight taking off tomorrow. Russian airline Aeroflot still has no direct flights to Cairo listed on its website. This comes as sources tell Sputnik Arabic that flights will resume on 18 March. EgyptAir and Aeroflot employees have received permits to work at the Domodedovo and Cairo International airports, respectively, an unidentified official tells Sputnik.

Did Egypt cave to Russian demands to have their security present at our airports? It appears so, according to the Russian state paper. Sources tell Sputnik that Egyptian authorities have signed off on the presence of Russian security at the terminal dedicated to Russian flights.

India is considering providing Egypt with a USD 1 bn line of credit to finance local projects, India’s ambassador in Cairo Sanjay Bhattacharya, Al Shorouk reports. The funding would be part of a USD 10 bn line of credit India is extending to its African partners, USD 4.5 bn of which have already been disbursed to several African countries, Bhattacharya tells Al Borsa. Egypt and India will reach a final agreement on the projects that will receive the funding and the exact amount of funding needed within four months, the ambassador said, without providing further details.

A subsidiary of Elsewedy Electric signed an EPC contract worth EGP 2.12 bn with the Egyptian Electricity Transmission Company. The agreement is for the Borg El Arab–Marsa Matrouh 500KV power transmission lines stretching a total length of 255 km. The agreement will be implemented over a six-month period commencing from the date of signing and receipt of the project.

Is Abraaj going through a wave of defections? Ashish Dave, CFO of emerging markets focused PE giant Abraaj, has left the company. “I resigned six months ago to spend time with my family and pursue other opportunities,” he told Reuters on Sunday. A new CFO, appointed from within the company, would be announced soon, one of the sources said.

Two of the highest-profile Egyptians working in the global industry may also be leaving, Reuters adds, noting that three sources told them that “Mustafa Abdel‐Wadood, managing partner and global head of private equity, and Ahmed Badreldin, head of MENA private equity, informed Abraaj several months ago that they wanted to leave but were asked to stay on to help support the company during a difficult period.”

The firm is also considering a round of job cuts, the newswire notes. The exits by the executives comes a few weeks after the firm announced a restructuring and management shuffle following reports of allegations of “misuse” related to its USD 1 bn Abraaj Growth Markets Health Fund. The job cuts story was first broken last week in a Wall Street Journal report that the firm “may cut its workforce as lenders and investors review their relationship with the firm and efforts to raise a USD 6 bn fund stall.”

Scatec Solar lands Egypt transaction of the year for 2017 from Islamic Finance News: The company landed the award for its USD 335 mn project finance transaction for its six Benban solar projects. Shahid Law Firm was local legal advisor to Scatec on the financing, with Donia El-Mazghouny acting as lead partner. The transaction saw the firm advise the listed Norwegian integrated solar power developer on six PV projects being developed in Benban under phase two of the feed-in tariff programme. The award was handed out in Dubai on Sunday. You can read more about the transaction here.

Egypt wants to launch its own “Facebook”: Egypt has taken “active and positive steps” to create its own Facebook-like social media network, ICT Minister Yasser El Kady said yesterday during a Justice Ministry workshop on combating “terrorist propaganda”, Al Masry Al Youm reports. This comes less than a month after the Cabinet introduced its proposed Cyber Crimes Act to the House, with MPs arguing that the law would make it easier to run surveillance of social media.

Uber is planning to expand its food delivery platform UberEats into 100 new cities across the Middle East, Europe and Africa, a company official tells the Financial Times. The takeaway app has been “more successful” than expected after generating a profit in a quarter of the locations where it operates, according to Droege. The San Francisco-based company had announced in January that it was adding Cairo and Riyadh to its menu.

It’s another morning of slim pickings for Egypt in the foreign press, with politics and the elections being the only common thread we’re spotting.

Election boycotts do not always work, Gail Buttorff write for the Washington Post in context of the opposition calls for voters to say away from the upcoming presidential election. “Some boycotts achieve reforms, some are ignored, and some inspire post-election protests that may or may not leave the existing regime in place,” Buttroff writes. She says “the potential effect of a boycott in Egypt is yet to be determined,” but that the “real test” for the opposition “will begin the day after the election.”

Although the boycott’s effect may very well be limited, the state is working to silence critical voices ahead of the election, the Committee to Protect Journalists’ Sherif Mansour says. Mansour takes note of the arrest of several journalists for interviewing opposition candidates and the clampdown on “fake news” reports. Meanwhile, France24 joins the chorus with an interview with British-Egyptian filmmaker Omar Robert Hamilton about his novel, The City Always Wins, which was published last year.

Teenage lip is eternal: A papyrus letter sent by a teenager named Theon to his father in 2nd- or 3rd-century Roman Egypt has proven that teenage sarcasm is timeless, according to Aleteia. It was discovered in the early 1900s 250 miles outside Alexandria. “It was so nice of you not to take me with you to the city [Alexandria],” the letter reads. “It was so nice of you, sending me these great presents, just rubbish,” the boy says, vowing to never speak to his father again if he does not send for him.

Other stories worth a skim this morning:

• Egyptian filmmakers are “becoming more daring in their work” by producing films and series that contrast with conservative social norms, AFP says.
• From the Ikhwan files: Egyptian-Americans are gathering in Washington DC this week to call on US politicians to pressure the Egyptian government on human rights concerns, Al Jazeera English reports.
• Egypt arrested eight Al Ahly fans following football riots and anti-government chanting during a game earlier this month, ESPN reports.
• Egypt moves to promote scientific innovation by reducing the costs of research and exempting research institution from taxes and customs fees, according to Al Monitor.

Inside the Riyadh Ritz-Carlton: A well-reported piece by New York Times, including former Egypt hands Ben Hubbard and David Kirkpatrick, looks at Saudi Crown Prince Mohamed bin Salman’s November “anti-corruption” drive, a topic into which few Western media outlets have taken a deep dive.

“Businessmen once considered giants of the Saudi economy now wear ankle bracelets that track their movements. Princes who led military forces and appeared in glossy magazines are monitored by guards they do not command. Families who flew on private jets cannot gain access to their bank accounts. Even wives and children have been forbidden to travel. … This large sector of Saudi Arabia’s movers and shakers are living in fear and uncertainty. During months of captivity, many were subject to coercion and physical abuse, witnesses said. … the opaque and extralegal nature of the campaign has rattled the very foreign investors the prince is now trying to woo.”

Next in your reading queue: Nicholas Parasie and Egypt’s Summer Said write for the Wall Street Journal that MbS’ decision-making power reaches deep into companies, noting that since the November crackdown, “the government has quietly taken control of the country’s largest construction company, Saudi Binladin Group, and the Middle East’s biggest private broadcaster, MBC Group, people familiar with the takeover said. It is now assuming veto power over investment decisions by the kingdom’s most colorful business personality, Prince al-Waleed bin Talal.”

Somebody, somewhere wanted to get Egypt some international publicity and the best idea they could come up with was underwear. Garment manufacturer Cottonil has made the world’s biggest undershirt and boxers, making it to the Guinness World Records, Egypt Independent reports. Other impressive Egyptian records apparently include manufacturing the largest slice of cheese in the world. Cottonil: More than just a former prime minister.

Recent amendments to the criminal law regarding pre-trial detention are “disappointing,” Tarek Abdel Aal writes for Al Shorouk. The amendments extended the maximum time for pre-trial detention indefinitely, sidelining the principle that the defendant is innocent until proven guilty, he argues.

Sudan’s National Intelligence and Security Services (NISS) has reportedly directed Sudanese newspapers to stop any media campaign hostile to Egypt, according to Sudan Tribune. “Multiple sources told Sudan Tribune that the NISS media department circulated has directed the editors in chief of the newspapers to avoid raising controversial issues between the two countries and to prevent negative and escalating writings.”

Foreign Minister Sameh Shoukry and South Sudan’s President Salva Kiir signed an MoU in Juba yesterday to establish a political consultation mechanism, according to a ministry statement. The step comes as part of efforts to re-engage with Africa, which include a decision by the Supreme Media Council to launch an Africa-focused TV channel, according to Al Shorouk.

Investment Minister Sahar Nasr and the US Embassy’s Chargé d’Affaires Thomas Goldberger have signed for an EGP 2.2 mn USAID grant to the Egyptian Red Crescent to support the survivors of last year’s Rawda mosque attack, according to the US Embassy in Cairo. The grant will cover psychological and social support to families who lost loved ones in the bloodiest terrorist attack in Egypt’s modern history.

The Egyptian Electric Utility and Consumer Protection Agency (Egyptera) has delayed the announcement of the new feed-in tariff (FiT) rate for waste-to-energy (WtE) projects, Electricity Ministry sources tell Al Borsa. The meeting which would settle on the new FiT rate may be rescheduled for two weeks from now, according to the sources. Reports had emerged in January that the ministry agreed to set the FiT at EGP 1.30 per kWh, but they were never confirmed officially.

A newly established North Sinai development committee led by the President Abdel Fattah El Sisi’s advisor for national projects Ibrahim Mahlab will focus on water resources and infrastructure projects over 400k feddans, Al Masry Al Youm reports. The committee is also preparing to tender 156.5k feddans for development projects by the end of this year.

Egypt’s wheat production is expected to rise 4.3% y-o-y to reach 8.45 mn tonnes in the 2018-19 harvest season, according to a US Department of Agriculture report (pdf). The “forecast is based on an increase in the total area harvested reaching to 1.32 mn hectares.” The department also sees Egypt’s wheat imports rising marginally to 12.5 mn tonnes in 2018-19, up from 12 mn tonnes in 2017-18.

Supply chain traceability company Oritain has partnered with Egypt’s Modern Nile Cotton Company — Egypt’s largest cotton trading company — “to scientifically verify the claimed origin of the [latter’s] cotton and mitigate risks in their supply chain,” Oritain announced. The partnership is meant to ensure the authenticity of the cotton Modern Nile supplies. The issue became a hot topic after the Welspun India scandal.

The Health Ministry has launched an electronic database to monitor the production and distribution of medications across the country, Youm7 reports. The system will require local pharma manufacturers and distributing companies to enter a barcode into the database for every medication in the market since 1 January by 18 March, Health Ministry official Rasha Ziada tells the newspaper. The companies will also be required to enter data on the quantities of each medication and their distribution network. The system is meant to help the ministry oversee and regulate the pharma sector to prevent locally manufactured products from being smuggled for exports and ensure that meds are recalled from the market once they are expired. The ministry had announced its plans to create the database last year, after it struggled to keep expired meds off the market following its decision to implement price increases.

The National Shipping Company of Saudi Arabia (better known as Bahri) and the Suez Canal Economic Zone (SCZone) began implementing yesterday a 2016 agreement to establish a joint Egypt-Saudi navigation company, Al Shorouk reports. The company, which would be based in Egypt, would transport products and materials required to develop the SCZone. The agreement also includes setting up a separate joint company to provide marine services passing through the Suez Canal, and would require Bahri to transport all of its goods via the canal.

The Court of Cassation’s prosecution committee has recommended the repealing a 2017 Criminal Court ruling to place 1,538 people, including retired footballer Mohamed Aboutrika, on a terror watchlist on charges of funding the outlawed Ikhwan group, Al Shorouk reports. The Court will review the recommendation in its 18 April session.

The Prosecutor General’s office has opened a hotline for people to snitch on what they consider fake news, Al Shorouk reports. The decision comes amid a nationwide crackdown on all sorts of media platforms ahead of the March presidential election.

Egypt’s arms imports have grown 215% since 2008, securing its spot as the world’s third-largest weapons importer between 2013 and 2017, according to the Stockholm International Peace Research Institute. The jump in Egypt’s weapons purchases came as part of “the upward trend that began in the early 2000s” that saw an increase in international arms transfers, particularly to the Middle East. The rise in the region’s weaponry inflows is largely due to the prevalence of conflicts over the past five years, the report says.

Mohamed Salah’s transfer value has seen the highest increase for any player in Europe’s top leagues during the last six months, according to new data carried by BBC. The Liverpool top scorer’s market value has risen to EUR 162.8 mn from EUR 74.7 mn.

Ophthalmologist Noha Khater is the only Egyptian finalist for the Cartier Women Initiative Awards (CWIA) this year, according to the award’s website. Khater, who is also a Professor at Cairo University, is Egypt’s only eye surgeon specialized in retinal surgery. She was selected as a finalist out of some 2,800 candidates from 130 countries for her innovative work to implement a nationwide diabetic eye care service.

Photos of a baby born underwater in the Red Sea in Dahab have gone viral on social media after a Russian tourist gave birth in the sea with the aid of a Russian doctor who specializes in water births, Al Arabiya reports. The photos were taken by another Russian tourist from her balcony. Apparently, water births have become common, especially among Russians who go to deliver their babies in Dahab. We have to look forward to more of this when Russian flights come back. Talk about polluting public beaches.