Sunday, 1 April 2018

The CBE has cut interest rates 100 bps, and it won’t nuke the carry trade


What We’re Tracking Today

Egyptian stocks have posted their best month since the EGP float in March, with the EGX30 rising for four straight sessions as of Thursday and extending its gain this month to 13%, write Filipe Pacheco and Tamim Elyan for Bloomberg. The benchmark, which has risen 41% since the beginning of 2017, has now climbed for seven weeks in a row, the longest streak of weekly gains since August 2014.

The election effect? The stellar performance this month was buoyed by investor expectations that the successor to the Ismail government would press ahead with sweeping economic reforms following Abdel Fattah El Sisi’s expected re-election as president, Bloomberg writes. This comes as business leaders ranging from Naguib Sawiris to Raouf Ghabbour said a second term for El Sisi would be good for the economy, telling Reuters’ Arwa Gaballa that reforms, investment in infrastructure and the float of the EGP have re-set the economy.

Footnote: These are the only positive stories on the elections we’re seeing from the foreign press.

State media are calling the election for El Sisi with 92% of the vote, based on preliminary figures. Contender Moussa “Something” Moussa got an estimated of 3% of the vote, Ahram Gate reports, coming in third in the two man race. Some 25 mn of the 59 mn eligible voters turned out to vote, which puts the turnout at around 42%.

The National Elections Authority (NEA) will announce the final results tomorrow at a 6:00 pm press conference, according to Youm7.

The government is pricing the USD at EGP 17.25 and sees oil at USD 67 a barrel in its FY2018-19 budget, Prime Minister Sherif Ismail told reporters on Thursday, according to Reuters. Economist Reham El Desoki tells Al Shorouk that the budget’s oil price forecast is very much in line with global energy expectations, as the price is expected to be volatile in light of regional and global instability. The budget, whose broad strokes were revealed on Wednesday, is assumed to be with President Abdel Fattah El Sisi for sign-off. The government had said it would present the budget to the House any day now.

Has the hunt for yield resurrected this financial WMD? Yield-hungry investors are increasingly turning to the mortgage backed security, widely blamed for the global financial crisis, Ben McLannahan and Joe Rennison write for the Financial Times. 2017 saw the issuance of USD 4.1 bn in “subprime” mortgage securities with the pace picking up in the latter half of the year, they say. “The momentum has continued into 2018, with [transactions] worth USD 1.3 bn in the first quarter — twice the USD 666 mn issued in the same period a year earlier. “[Investors] are definitely chasing yields. Whenever these deals come out, for the most part, they are oversubscribed,” says Jamshed Engineer, partner at New York hedge fund Axonic Capital.

Heading to the US with shady stuff on your social media accounts? A State Department proposal could require US visa applicants to detail their social media records and profiles, Reuters reports.

PSA #1- It’s April Fool’s Day. Also, the start of 2Q, meaning the year is a quarter of the way finished — and that the clock is ticking on your 1Q earnings release.

PSA #2- The Easter and Sham El Nessim long weekend is coming up: The two holidays fall on 8 and 9 April, respectively. We hope you’re looking forward to a four-day weekend as much as we are.

What We’re Tracking This Week

Pharos Holdings will be holding a two-day investor conference headlined ‘In Search of Egypt Alpha’ tomorrow and Tuesday. The event, set to be attended by a number of senior government officials, is expected to host around 40 companies from a range of industries, Chairman and CEO Elwy Teymour said in a statement (pdf). The opening day will see panel discussions on the energy and petrochemicals, while the second day will see meetings between fund managers and company reps.

GERD talks kicking off again this week: The ministers of foreign affairs and irrigation, as well intelligence chiefs from Egypt, Sudan, and Ethiopia, are scheduled to meet on Wednesday and Thursday to resume talks over the Grand Ethiopian Renaissance Dam (GERD). Egypt’s Supreme Committee on Nile Water met yesterday to discuss the dam ahead of the scheduled talks, Youm7 reports. This comes as Ethiopia is set to swear in Abiy Ahmed as its new prime minister tomorrow, after Hailemariam Desalegn’s sudden resignation in February postponed dam negotiations. The three countries had reached a gridlock on the dam last year, but agreed in January to continue looking for a solution.

The Game Sports Industry Conference— Egypt’s first-ever platform dedicated to the sports industry — kicks off in Cairo on Wednesday 11 April.

On The Horizon

An Egyptian-Portuguese Business Forum is set to take place in the first half of this month, Trade and Industry Minister Tarek Kabil announced, following up on a round of talks held this past October.

Enterprise+: Last Night’s Talk Shows

Between the Ride-Hailing Apps Act and the CBE cutting interest rates, the talking heads had a lot to talk about last night as they looked to wean themselves off last week’s OD on election news.

The CBE’s move to cut interest rates on Thursday was necessary and is a clear sign the bank is moving past tight monetary policies it implemented over the past two years, CI Capital Holding economist Noaman Khalid said. The CBE will likely hold back on further rate cuts when the government moves to raise fuel prices 40-50% in July, which is expected to push inflation up to 15.5-16%, he told Hona Al Asema’s stand-in host Nancy Nour. Khalid quashed the idea that prices might ever decline and instead stressed that the antidote to rising prices are higher salaries (watch, runtime: 16:57).

MPs blanket the airwaves to defend Ride-Hailing Apps Act: The current draft of the bill that would regulate the operations of ride-hailing apps, such as Uber and Careem, is the product of several meetings with the companies to incorporate their perspective, House Transport Committee head Hisham Abdel Wahed said. He also stressed that the law would only require companies to provide customer data to the authorities following an official request (watch, runtime: 33: 09). MP Mohamed Badrawy also made the same point on the confidentiality of customer data and noted that Parliament is trying to power through the legislation as quickly as possible (watch, runtime: 5:08).

The electoral process received praise from many, including human rights lawyer Saeed Abdel Hafez, who said observers did not record any instances of corruption (watch, runtime: 15:53). Al Hayah Al Youm’s Khaled Abu Bakr (watch, runtime: 13:51) and Kol Youm’s Amr Adib (watch, runtime: 3:37) were also pleased with the process. Adib still took the time to remind viewers that potential presidential candidates should begin preparing now for the 2022 elections, when President Abdel Fattah El Sisi will no longer be able to run (watch, runtime: 3:43).

The National Elections Authority (NEA) filed a complaint with the Supreme Media Council against Al Masry Al Youm for running a headline that suggested the state was urging citizens to vote, which Masaa DMC’s Eman El Hosary noted could be the first such complaint from the NEA since its establishment. Press Syndicate head Abdel Mohsen Salama downplayed the severity of the issue, telling El Hosary that the headline was likely misinterpreted (watch, runtime: 9:32). The newspaper’s editor-in-chief defended the headline and the newspaper’s overall coverage of the elections (watch, runtime: 6:37).

A Cabinet shuffle could happen after the results of the presidential elections are announced, just as it could happen at any other moment in time, Cabinet spokesperson Ashraf Sultan said in a phone-in to Al Hayah Al Youm (watch, runtime: 8:25).

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The central bank’s Monetary Policy Committee cut interest rates 100 bps on Thursday, the CBE said in a statement (pdf). The central bank’s overnight deposit rate is now 16.75%, its overnight lending rate and discount rate also dropped 100 bps to 17.25%. The move was in line with market expectations, Reuters reports, with research houses having unanimously predicted a rate cut. Nine out of 11 economists polled by Reuters and all eight economists surveyed by Bloomberg predicted a cut.

Inflation is under control: The rate cut is a continuation of the monetary easing first adopted during the February interest rate cut as inflation continues to decline, the statement said. Annual headline inflation fell to 14.4% in February from a high of 33% in July 2017, and core inflation dropped to 11.9% last month from a high of 35.3% in July — the lowest they’ve been since 2016. “Cutting key policy rates today remains consistent with tight real monetary conditions and with achieving the inflation target of 13% (±3%) in 4Q2018 and single digits thereafter,” the CBE said.

…but we’re still looking at a summertime bump in inflation: “Domestic risks surrounding the inflation outlook include the evolution of inflation expectations, the timing and magnitude of potential subsidy-reform measures, as well as demand-side pressures. Risks from the global economy are crude oil price developments and the pace of tightening financial conditions,” the CBE’s Thursday statement warned.

GDP Growth also factored into the decision. Real GDP growth reached its highest levels since 2010, growing for a fifth consecutive quarter in 4Q2017 to 5.3%. GDP in FY2017 reached 5.0, according to the CBE. The pickup was attributed to growing exports following the EGP float and a rise in consumer spending. This coincided with a drop in unemployment to 11.3% in December 2017.

Subsidy cuts in July and the impact on the carry trade has economists seeing a slowdown of the rate cuts. “The rate cut was expected given the sharp fall in inflation, but the CBE is likely to pause until the second half of the year before easing further. This will give it the chance to evaluate the inflationary effects of future rounds of subsidy reductions,” Bloomberg Economics’ Ziad Daoud said, adding “It’ll also allow it to assess the impact of the recent cuts on portfolio inflows.”

Will banks be canceling their high-yielding CDs? SAIB Bank officials will meet tomorrow to discuss interest rates, while Banque du Caire’s Asset-Liability Committee will meet on Monday to decide on whether to discontinue entirely or just lower the yield of its 15% CD, Chairman Tarek Fayed said yesterday, Al Mal reports.

Banque Misr and the National Bank of Egypt plan to lower their interest rates by 100 bps, sources with knowledge of the matter tell Al Masry Al Youm. Both institutions will also be asking for the CBE’s guidance on whether or not to cancel high-yield certificates of deposits altogether.

Banque Misr has no intention of scrapping its 17% CDs, according to Deputy Chairman Sahar El Damaty, who also said yesterday that the bank’s ALCO will meet soon to discuss Thursday’s rate cut. Banque Misr had reduced the yield on its 20% CDs to 17% after the central bank slashed rates by 100 bps back in February.

How’s the rate cut going to hit the carry trade? The CBE’s move to cut interest rates comes amid concerns that higher US interest rates will fuel a battle for funds among emerging markets, writes Bloomberg’s Ahmed Feteha. “There was a view that with inflation slowing so fast the central bank might cut more, but foreign investors will be reassured by relative caution,” said Emso Asset Management economist Oliver Weeks. T-bill yields “could dip slightly but not by much, because the market was already expecting the lower rates even before the central bank started the easing cycle last month,” said Mohamed Abu Basha, head of macro analysis at EFG Hermes. “The fact that the cuts seem to be gradual means that they will not put much pressure on yields.” The yield on one-year T-bills fell 12 bps to 16.56% in the government’s Thursday auction, according to Feteha.

The Egyptian carry trade was, and will remain for a while, at least, “‘the trade’ of EM in fixed income,” Arqaam Capital Head of Fixed Income Asset Management Abdul Kadir Hussain told Bloomberg TV. Rates are coming down, and this will put pressure on the trade, but Hussain expects it to stay “good” until the end of the year. It could get tougher starting from next year. Another similar “homerun” trade probably does not exist in the region right now, he says. Hussain also expects Egypt’s CPI to ease further, seeing May’s inflation reading coming in at 11.4%. Separately, Aviva Plc’s emerging-market debt funds are wading into riskier bonds and its favorite bets in the USD-bond segment are “Egypt, Ukraine, Paraguay, Argentina and corporate bonds in Brazil,” according to Bloomberg (watch, runtime 04:50).

The government could introduce legislation “within weeks” to establish a sovereign wealth fund, unnamed state officials tell Al Masry Al Youm. The Justice Ministry is reportedly finalizing the text of a proposed draft bill, prepared by the Planning Ministry, to establish and govern the fund, which will aim to put the state’s assets and excess liquidity to use and maximize returns by investing in both public and private equities. The new fund will be governed by the ministries of planning, investment, and public enterprises, the officials said, adding that discussions are currently ongoing to determine the makeup of the executive board. Various assets belonging to state-owned companies will be placed under the fund, they added. The government has been in talks with international consultants to settle on the fund’s goals and strategies.

This isn’t the first we’ve heard about Egypt setting up a sovereign wealth fund. Planning Minister Hala El Said had previously said that the idea was on the table. Public Enterprises Minister Khaled Badawy also alluded to the possibility, at EFG Hermes’ One-on-One in Dubai earlier this month, but had hinted at it being a plan for a later point in time.

IPO WATCH- B Investments saw its share price rise 10% to EGP 11.82 in its EGX debut on Thursday. The company, which now trades under the BINV ticker, had completed its IPO to raise EGP 460 mn last week with the retail tranche having been 84.4x oversubscribed. Sigma Capital was the sole coordinator and bookrunner, while Zaki Hashem & Partners acted as legal counsel to the issuer.

In other B Investments news, the company’s board approved plans to raise its investment in SME finance subsidiary Ibtikar to EGP 150 mn from a current EGP 30 mn, the firm said in a bourse filing on Thursday (pdf). Founding partner Aladdin Saba had previously said that the company plans to up its investments in Ibtikar to EGP 500 mn as part of an EGP 1 bn investment plan by the company in 2018. As we noted last month, the firm plans to IPO Ibtikar sometime in the next three years.

IPO WATCH- Heliopolis Housing & Development is considering the sale of another 30% of its shares under the government’s IPO program, a Public Enterprises Ministry official tells Al Shorouk. The move would bring the company’s total freefloat up to 57%, with the Holding Company for Building and Construction holding the balance. Heliopolis Housing is on the list of 23 state-owned companies set to IPO or list additional shares on the EGX. Finance Minister Amr El Garhy had previously said that the government would select the first five companies that will lead the IPO program by September or October.

Expect the program to attract investments from major foreign funds and institutions, the EGX’s Mohamed Farid tells Ahram Gate.

Egypt’s current account deficit fell 64% y-o-y to USD 3.4 bn in 1H2017-18, improving from a deficit of USD 9.4 bn in 1H2016-17, according to a CBE report (pdf) on Thursday. At play: The ongoing rebound in tourism, remittances and an increase in merchandise exports. Egypt’s balance of payments recorded a surplus of USD 5.6 bn in 1H2017-18, down from USD 7.0 bn in the same period last year.

The hard work is yet to be done: “This is a positive development, albeit an expected one, because the economic reforms undertaken so far have largely concentrated on monetary and fiscal issues,” economist Reham El Desoki tells Bloomberg. “To boost exports further, more focus needs to be directed towards cutting red tape and improving the business environment.”

That’s clear in the net foreign direct investment figure, which fell again, closing the first half at USD 3.8 bn from USD 4.3 bn in 1H2016-17. Total inflows declined to USD 6.6 bn in 1H2017-18 from USD 7.4 bn in 1H2016-17. Inflows from investments in the oil sector amounted to USD 2.1 bn.

Reforms need to take hold before we’ll see a rise in FDI: “Foreign investors need to see actual change in how business is conducted in Egypt before committing large amounts of money into the country,” El Desoki said. “I don’t expect large improvement on that front before the end of this year, so the reforms taken would take hold on the ground.”

Portfolio investments was a whole other matter, with net foreign holdings in Egypt’s T-bills growing to USD 8.1 bn in 1H2017-18, up from USD 686.7 mn a year earlier. Inflows from a burgeoning the carry trade and equity investments saw inflows reach USD 8 bn the first half of the year, up from USD 212.9 mn in 1H2016-17.

The great tourism rebound of ‘17 was the largest contributor to the decline in the account deficit. Net tourism receipts for the quarter grew nearly USD 4 bn to USD 3.8 bn, up from a deficit of USD 157.4 mn in 1H2016-17.

Remittances were the second major driver of the narrowing current account deficit, with net remittances growing by USD 3 bn to USD 13.1 bn in 1H2017-18.

Suez Canal revenues grew 10.1% in 1H2017-18 to USD 2.8 bn, up from USD 2.5 bn in the same period last year.

Egypt’s trade deficit declined 1.4% to USD 18.7 bn in 1H2017-18. This largely came on the back of a 15.4% increase in merchandise exports to USD 12.1 bn from USD 10.4 bn in the same period last year. Egypt’s oil exports grew 29.9% to USD 3.8 bn in 1H2017-18 from USD 2.9 bn a year earlier. Non-oil exports rose 9.7% to USD 8.2 bn in the first half of the state’s fiscal year, up from USD 7.5 bn in the same period a year ago. Merchandise imports rose a comparatively muted 4.5% to USD 30.8 bn.

The CBE repaid USD 3.1 bn in the first half in foreign liabilities, against a disbursement of USD 8.1 bn.

LEGISLATION WATCH- The Ride-Hailing Apps Act has received preliminary approvals from a number of committees in the House of Representatives on Thursday, according to a statement from the Investment Ministry. The House’s economics, transport, ICT, defense and national security committees all gave their initial sign off to the act, said Investment Minister Sahar Nasr. The fast-tracking of the act, which leaked to the press last week, came after an Administrative Court ordered last month that Uber and Careem be shut down.

Uber and Careem continue to push for major amendments to the Act. Despite Nasr’s praise of the inclusive process of drafting the law, which she says incorporated the views of government, the companies and taxis, it seems that the government remains the only body happy with the proposed bill. Uber and Careem lobbied hard during Thursday’s parliamentary hearings for major amendments. Their key concern: A provision that would store user data in Egypt and make it accessible to government entities. Uber Egypt’s head of public policy, Rana Kortam, argued that these provisions violate user privacy provisions and are unconstitutional. She noted that the Council of State (Maglis El Dawla) had itself objected to some of these articles, prompting some MPs to raise the usual national security flags, according to Al Mal.

Nasr tried to spread oil on troubled waters, saying the executive regulations and future amendments to the proposed act could address the companies’ concerns.

Taxi drivers are also unhappy with the bill, with their reps at the hearing objecting to articles that would see white cabs become part of Uber and Careem fleets, MP Amr El Gohary tells Al Mal. Cabbies also want to require cars in Uber and Careem’s fleets to use transportation license plates and are demanding that Uber drivers have professional, rather than personal, driving licenses. The white taxis association is planning to send a full list of its grievances to the House and Cabinet today, association head Mahmoud Abdel Hamid said.

Careem is apparently “not worried” about all of this: The recent developments, including the court ruling ordering Uber and Careem’s shutdown, is “a little bit of noise” that Careem is not particularly concerned about, Gulf Managing Director Bassel Al Nahlaoui tells Gulf News. The company is intent on working with the government to find a “win-win situation,” Al Nahlaoui says.

LEGISLATION WATCH- Price control coming to cargo transport? In other news from the transportation sector, MPs are said to be mulling legislation that could regulate pricing for the transport of cargo from ports to points inland, which House Economics Committee member Amr El Gohary tells Al Mal could both help business control costs and create more jobs.

LEGISLATION WATCH- The Cyber Crimes Act is not intended to allow the government to monitor or block social media platforms such as Facebook and Twitter, House ICT Committee secretary Ahmed Zidan said yesterday, according to Ahram Gate. The proposed bill is meant to regulate information technology and create a framework for dealing with cybercrimes, such as hacking government servers, Zidan said. MPs had claimed that the bill would, if passed, make it easier to run surveillance of social media, but would require security and police services to seek authorization before tracking any one individual. The committee had approved last month a clause of the legislation allowing the Prosecutor General to ban websites that publish content deemed criminal.

CABINET WATCH- The Ismail Cabinet approved yesterday the establishment of a freezone in Nuweiba and will offer investment incentives there including 50% tax cuts for three years. The 1 mn sqm zone is expected to see as much as USD 40 mn in infrastructure-related investment, South Sinai Governor Khaled Fouda said yesterday. The freezone is part of the government’s Sinai development strategy, which relies significantly on attracting local and Arab investors to the peninsula to spur growth, Investment Minister Sahar Nasr told reporters yesterday.

The ministers also signed off on legislation allowing the oil minister to sign oil exploration and production agreements in Ras Qattara with the EGPC, the International Egyptian Oil Company, and Croatian oil and gas company INA; in in the Gulf of Suez’s North Zaafarana concession with Zaafarana Petroleum Company, Oceaneer Zaafarana, and Sahary for Oil and Gas; and in the West Delta Deep Water Concession with Shell and PICL Egypt Corporation. Other decisions approved during the weekly meeting:

  • Approving a program that could see subsidized interest rates on loans to build or expand sporting clubs and other large areas at 10% and 12%, respectively;
  • Legislation allowing foreign universities to establish branches within Egypt;
  • Legalizing the status of marble and granite factories and warehouses in Shaq Al Thoban and turning the area into a specialized city for their production;
  • Implementing the 2030 water sustainability agreement signed with the UN Food and Agricultural Organization;

Egypt is going to have electric cars soon: The first batch of Tesla electric cars are expected to hit Egypt’s market by mid-April, Revolta Egypt CEO Mohamed Badawy said, Al Mal reports. The shipment has reportedly been stalled at customs, according to Badawy. Revolta is importing the Tesla cars as part of its plan to become Egypt’s first electric car dealer. The company is also building 65 electric vehicle stations in seven governorates with investments of EGP 65 mn.

Meanwhile, Trade and Industry Minister Tarek Kabil issued a decision yesterday allowing imports of used electric cars, provided they are less than three years old, according to a ministry statement. The move is meant to encourage the use of environmentally-friendly modes of transport and reduce demand on fossil fuels.

EARNINGS WATCH- Orascom Development Egypt reported a net profit of EGP 392 mn in FY2017, up from a loss of EGP 499.5 mn in FY2016, the company announced on Thursday (pdf). Consolidates revenues grew 78.8% to EGP 2.6 bn on the back of growth in the company’s hotel business.

Separately, ODE CEO Khaled Bishara announced on Thursday plans to raise the percentage of freefloat shares on EGX to 25% this year, up from the current 15%, Reuters’ Arabic service reports. The increase will come from the sale of shares owned by parent company Orascom Development Holding (ODH), according to Bishara.


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Egypt in the News

Coverage of preliminary results from the presidential election leads coverage of Egypt this morning in the international press, with everyone from Bloomberg and the Financial Times to Reuters and the Associated Press noting the results. For the most part, they heavily stressed their views on Moussa Moustafa Moussa as a dummy candidate. The coverage was peppered with the usual lecture from the Guardian, while the New Yorker is faulting US President Donald Trump for not criticizing the election.

Meanwhile, the Economist claims that thousands of voters who spoiled their ballots by writing in footballer Mohamed Salah’s name.

Also worth a quick skim this morning:

  • 2018 could “prove a pivotal year for tourism in Egypt” after the country decided to focus promotions on Hurghada and other Red Sea destinations instead of Sharm El Sheikh, TTG reports.
  • The Foreign Ministry has condemned the use of “excessive violence” after Israeli forces killed 16 Palestinian civilians gathered in peaceful protests at the Gaza-Israel border on Friday to commemorate Land Day, according to a ministry statement.
  • The IMF is trying to relax some of its policies in countries where its reform program has sparked social discontent, including Egypt and Tunisia, Sharmila Devi writes for the Arab Weekly.
  • The Egyptian military’s growing involvement in economy and industry has “been the source of political speculation” and debate, according to Arab Weekly.

The world’s oldest known cases of breast cancer and multiple myeloma have been discovered in the remains of mummies in an ancient Egyptian necropolis in Aswan, Jim Drury reports for Reuters. A 3,800-year old male mummy was found to have multiple myeloma, which is a type of bone marrow cancer, and breast cancer was found in 4,000-year old female one. “It’s an important finding because it shows that cancer already existed before we thought and has been part of humanity since inception. Also it shows there was a complex society behind the two people who died, which took care of them and gave them resources until they died. From a social point of view, that’s really important,” Professor Miguel Cecilio Botella Lopez says (watch, runtime 01:24).

Worth Watching

A severe sandstorm that struck several parts of Egypt over the weekend prompted a state of emergency in the New Valley, according to the Washington Post. Images and videos, like the one above (watch, runtime: 1:10), emerged of the massive sheets of sand engulfing the landscape during one of the worst sandstorms Egypt has seen in years.

Diplomacy + Foreign Trade

A delegation from Egypt’s Veterinary Quarantine Authority visited Saudi Arabia last week to discuss the lifting a ban on Egyptian fish imports, a source tells Al Shorouk. The delegation reached an agreement with Saudi authorities to hold a joint commercial committee meeting in Saudi Arabia to settle the ban, the source adds. Saudi Arabia banned imports of certain fish products from Egypt in August in fear of the tilapia lake virus, following a warning from the UN FAO. A Saudi ban on imports of Egyptian strawberries and peppers last year due to high levels of residual pesticides could be lifted ahead of the coming export season in November.

French President Emmanuel Macron will reportedly visit Egypt early in May, a source at the Foreign Ministry tells Egypt Today. Macron’s visit comes at President Abdel Fattah El Sisi’s invitation. The two leaders are expected to discuss bilateral relations, as well as a host of regional issues, they add.

President Abdel Fattah El Sisi met with visiting Pakistani Chairman of Joint Chiefs of Staff Committee, General Zubair Mahmood Hayat, in Cairoon Thursday to discuss military cooperation and counterterrorism efforts, according to an Ittihadiya statement. The Pakistani General also met with Defense Minister Sedki Sobhi.

Egypt has been lobbying heavily for South Sudan to join the Arab League, a diplomat from the pan-Arab organization tells Al Monitor. Egypt argues that Juba’s strategic geographical position “serves as the Arab gateway to Africa,” the source adds. South Sudan, which seceded from Arab League member Sudan in 2011, had filed to join the organization earlier in March.


Eni planning to drill three additional wells in phase one development of Zohr

Eni is planning to drill three additional wells as part of phase one development of Zohr, an EGAS source tells Al Shorouk. The addition, which would bring the total number of wells in the first phase to nine, comes as part of the company’s plan to raise output from the field to 700 mcf/d by May.

Basic Materials + Commodities

Egyptian cotton production to reach 420k bales in FY2018-19, says US report

Egyptian cotton production is set to grow 40% y-o-y to 420k bales in FY2018-19, according to the latest report by the USDA’s Foreign Agricultural Service. The production increase, which will also see a rise in cotton exports while imports decrease marginally, follows “new policies to increase yields and improve quality, and high farm-gate prices,” which are “encouraging farmers to expand cotton area and increase production,” the report says.

GASC purchases 475k tonnes of Russian and Romanian wheat in global tender

The General Authority for Supply Commodities (GASC) purchased 355k tonnes of Russian wheat and 120k of Romanian wheat in an international tender on Thursday, Reuters’ Arabic service reports.


Ezz benefited from improved gas supplies, currency availability

Ezz Steel benefited in 2017 from improved natural gas and electricity supplies for its DRI plants and steel works, but lack of funds and higher costs limited performance, Platts reports. Foreign currency was also readily available, Chairman and CEO Paul Chekaiban says.

Health + Education

Egypt to receive USD 200 mn loan from World Bank for Hep C survey

The Health Ministry will receive a USD 200 mn loan from the World Bank to conduct a comprehensive nationwide survey on the prevalence of Hepatitis C, according to Minister Ahmed Rady. The 25-year loan comes in support of a national plan to eliminate the virus from the country by the end of 2020. Rady had said in January that the ministry was studying an offer for a USD 500 mn World Bank loan to support the provision of treatment for hepatitis C.

Real Estate + Housing

World Bank requests increased private sector participation in low-income housing projects

The World Bank has asked the Housing Ministry to encourage increased private sector participation in low-income housing projects before the bank signs off on a USD 500 mn loan for the ministry, Federation of Egyptian Industries’ real estate development division head Tarek Shawky tells Al Shorouk. Representatives from the bank, ministry, and division have held several meetings to look into meeting the bank’s requirements, according to Shawky. The loan will be used to finance low-income housing projects established under a PPP framework.


KPIs in Cairo’s hospitality market improve across the board in 2017, says EY

Cairo’s hospitality market saw all key performance indicators improving in 2017, including a 77.7% y-o-y jump in revenue per available hotel room (RevPAR), Ernst & Young said in its Middle East Hotel Benchmark Survey Report, according to a release. Egypt and Kuwait were the only countries in the region to witness an increase in RevPAR, but Dubai had the highest RevPAR in the Middle East. The report sees Egypt benefiting in the near future from government-led initiatives to boost tourism, including the inauguration of two new airports.

Banking + Finance

GB Lease targets EGP 3 bn in new contracts in 2018

GB Auto’s financing venture GB Lease is targeting EGP 3 bn in new contracts this year, Chairman Sherif Sabry tells Al Masry Al Youm. This includes client contracts worth EGP 1 bn that GB Lease plans to close within 1H2018. The firm is also in talks with banks and other leasing companies over potential partnerships in various sectors, according to Sabry.

Other Business News of Note

Federation of Egyptian Chambers of Commerce to set up holding company by year’s end

The Federation of Egyptian Chambers of Commerce will set up a holding company to manage logistics zones and commodities exchanges before the end of the year, federation head Ahmed El Wakil said, Al Masry Al Youm reports. The company will be launched once the government completes feasibility studies on the zones and decides on their locations. The federation may also decide to list the company on the EGX once it is launched, according to El Wakil.

Egypt Politics + Economics

Abu Shoka elected Al Wafd party’s new chairman

MP Bahaa Abu Shoka has been elected the new chairman of the liberal Al Wafd party, Ahram Online reports. The party is already laying the groundwork to field a candidate in the 2022 presidential elections, Abu Shoka said yesterday, Al Shorouk reports. The 80-year-old lawyer succeeds Sayed El Badawy, who had served as party chief for two consecutive terms since 2010.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.5950 | Sell 17.6944
Buy 17.58 | Sell 17.68
EGP / USD at NBE: Buy 17.55 | Sell 17.65

EGX30 (Thursday): 17,450 (+0.8%)
Turnover: EGP 2.5 bn (116% ABOVE the 90-day average)
EGX 30 year-to-date: +16.2%

THE MARKET ON THURSDAY: The EGX30 ended Thursday’s session up 0.8%. CIB, the index heaviest constituent ended up 0.3%. EGX30’s top performing constituents were Pioneers Holding up 7.8%, ACC up 7.8%, and Palm Hills up 6.7%. Thursday’s worst performing stocks Juhayna down 4.2%, Qalaa Holdings down 2.4%, and Egyptian Resorts down 1.2%. The market turnover was EGP 2.5 bn, and foreign investors were the sole net buyers.

Foreigners: Net Long | EGP +56.8 mn
Regional: Net Short | EGP -50.4 mn
Domestic: Net Short | EGP -6.4 mn

Retail: 65.9% of total trades | 68.8% of buyers | 63.0% of sellers
Institutions: 34.1% of total trades | 31.2% of buyers | 37.0% of sellers

Foreign: 13.7% of total | 14.9% of buyers | 12.6% of sellers
Regional: 15.1% of total | 14.1% of buyers | 16.1% of sellers
Domestic: 71.2% of total | 71.0% of buyers | 71.3% of sellers

WTI: USD 64.94 (+0.87%)
Brent: USD 69.34 (+0.84%)

Natural Gas (Nymex, futures prices) USD 2.73 MMBtu, (+1.30%, May 2018 contract)
Gold: USD 1,327.30 / troy ounce (-0.20%)

TASI: 7,870.87 (-0.37%) (YTD: +8.92%)
ADX: 4,585.40 (+0.76%) (YTD: +4.52%)
DFM: 3,108.53 (+0.58%) (YTD: -7.76%)
KSE Weighted Index: 415.78 (+1.52%) (YTD: +3.58%)
QE: 8,573.99 (+0.24%) (YTD: +0.59%)
MSM: 4,773.51 (-0.01%) (YTD: -6.39%)
BB: 1,318.39 (+0.25%) (YTD: -1.00%)

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02-03 April (Monday-Tuesday): Pharos Holding’s investor conference: In Search for Egypt Alpha, Cairo.

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

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

11 April (Wednesday): The Game Sports Industry Conference, Nile Ritz-Carlton Hotel, Cairo.

17-18 April (Tuesday-Wednesday): Creative Industry Summit, Four Seasons Nile Plaza Hotel, Cairo.

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): Labor Day, national holiday.

02-03 May (Wednesday-Thursday): Cisco Connect Egypt 2018, Nile Ritz-Carlton Hotel, Cairo.

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

07 May (Monday): International Data Corporation’s CIO Summit, The Nile Ritz-Carlton Hotel, Cairo.

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

04-05 September (Tuesday-Wednesday): Euromoney Egypt Conference 2018, Cairo.

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.

28 April 2019 (Sunday): Easter Sunday, 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. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.