Wednesday, 18 April 2018

Consumer protection boss gets power to regulate pricing

TL;DR

What We’re Tracking Today

Look for plenty of talk today on the state of the global economy as the IMF and World Bank spring meetings continue in Washington, DC. Egypt’s delegation to the semi-annual festival of hand-wringing includes Finance Minister Amr El Garhy, Central Bank Governor Tarek Amer and Investment Minister Sahar Nasr. Today’s schedule includes everything from the release of the Global Financial Stability Report to a talk on big data and machine learning in economic forecasting. IMF boss Christine Lagarde will hold a press conference tomorrow (Thursday), as will World Bank President Jim Yong Kim. You can check out the schedule for the gathering here on the event website.

Uber, Careem appeal hearing scheduled on 15 May: The Administrative Court will hold its first hearing in Uber and Careem’s appeal against the court’s previous ruling to revoke the companies’ licenses on 15 May, said Mahmoud Abdel Hamid, the head of the white taxis association that launched the suit in the first place, according to Al Mal. The court’s initial ruling was suspended last week by the Court of Urgent Matters, giving both companies legal breathing room to operate until the Higher Administrative Court reaches a final ruling on the matter. Meanwhile, the Ismail government is trying to rush the Ride-Hailing Apps Act through the House of Representatives.

Abraaj could resign as manager of its USD 1 bn healthcare fund. The Dubai-based emerging markets private equity giant is reportedly developing a plan that “seeks to swap … Abraaj with an interim manager and then a permanent replacement … Other options include turning the fund into a company or a self-governing fund,” the Financial Times reports. The news comes after the healthcare fund’s annual meeting with LPs in London “went badly …there was shouting,” according to an attendee. The healthcare fund has hobbled the until-recently high-flying firm after four of its LPs, including the International Finance Corporation, raised questions about funds that had been drawn down, but not deployed. The firm has reportedly since “admitted to drawing on investors’ funds for ‘general corporate purposes’, albeit within the terms of the fund agreement, people close to the company say,” according to the salmon-colored paper.

“The rise of Saudi Arabia and Egypt as the top Middle East choices for equity investors is taking a toll on Dubai,” writes Filipe Pacheco for Bloomberg. Trade volumes on the Dubai Financial Market fell 57% below its 15-day average to USD 24 mn on Monday, the lowest since September 2015. The DFM General Index dropped about 7% in 2018. In contrast, the EGX 30 has gained more than 18% “as investors applaud economic reforms and government plans to offer stakes in public-owned companies.” Saudi stocks have climbed more than 12% this year with foreign investors as net buyers for 15 straight weeks on the back of an expected EM classification by MSCI among other reasons. The two “are very interesting markets to look at now” compared with the United Arab Emirates, said Issam Kassabieh, senior financial analyst at Mena Corp. Financial Services in Dubai.

What’s wrong with Dubai? The bottom line is that it’s a bit bland and thin, with the consensus on the buy side being that “the banking and real estate companies that dominate Dubai’s bourse offer little in the way of triggers to trade their stock, with a few exceptions.”

Meanwhile, the gang at Ashmore has “lured the strongest inflows since 2013” on emerging markets demand, the Financial Times says, with appetite strong for both equities and fixed income offerings. The same piece, a brief entry in FastFT, also notes that Goldman Sachs is similarly upbeat about EM these days.

Fintech people, read this: For folks in banking and finance who keep a close eye on the startup world, the must-read this morning is How JPMorgan’s CIO decides which startups to partner with, which to invest in, and which to outright buy, courtesy Business Insider.

Also on fintech this morning: Egypt’s banking sector could be Ground Zero for a fintech revolution, writes Damian Radcliffe for Dubai-based Heat Sink. With a population of around 100 mn, the country has only 14 mn bank accounts and a similar number of postal service savings accounts, says AUC School Business’ Ayman Ismail, and the banking industry’s innate conservatism has a lot to do with the under-penetration of financial services. But the central bank’s financial inclusion initiative and drives into fintech by top lenders such as CIB is setting the groundwork for change.

Are you investing or working in tech? Or just find the “ecosystem” (God help us, but we hate that word) fascinating? Go read the Financial Times’ Big Read Start-up republic: Can Iran’s booming tech sector thrive? It’s a fascinating look at a country about which we all know too little.

Elsewhere this morning:

  • The US and North Korea are inching toward a summit, with five potential venues under consideration after CIA director Mike Pompeo made a top-secret visit to Pyongyang over the Easter weekend to meet North Korean leader Kim Jong Un, who remains the favorite global boogeyman of our resident 10-year-old. (Washington Post | New York Times)
  • The Financial Times’ columnists are obsessed this morning with (a) long work hours in the finance industry after a Moelis exec let loose a snarky email after finding an insufficient number of staff not at their desks after midnight and (b) when to know you don’t have what it takes to be senior management.
  • If you’re an old like some of us, you have our permission to feel down in the dumps for the next two minutes: Former US First Lady Barbara Bush has died at age 92. We like the NYT’s obit, and you’ll find others like it as well as hagiography and hit jobs on front pages all just about every US newspaper today.

Online sales of last-minute tickets for the 2018 FIFA World Cup in Russia will begin today at 12:00 Moscow time (11:00 CLT), according to FIFA. Football fans worldwide will be able to purchase tickets via FIFA’s online ticketing website, subject to availability and on a first-come, first-served basis.

What We’re Tracking This Week

Our friends at AmCham are hosting a breakfast meeting and visit to the National Museum of Egyptian Civilization in Fustat tomorrow. The visit will include an exclusive viewing of the newly inaugurated exhibition hall: “Egyptian Crafts through the Ages.” Speakers will include Antiquities Minister Khaled El Anany and Mostafa Waziry, the director-general of the Supreme Council of Antiquities. Members and their guests can register here.

On The Horizon

It’s looking rather busy this weekend and well into next week:

  • Pharos-affiliated Pride Capital, Egypt’s first fintech-focused accelerator, is hosting a workshop titled “Financing Small Merchants” on Monday, 23 April at the Greek Campus.
  • Our friends at Renaissance Capital are holding their third annual Egypt Investor Conference in Cape Town on 24-25 April.
  • GERD talks: Egypt has invited Sudan and Ethiopia to another round of negotiations over the Grand Ethiopian Renaissance Dam (GERD) in Cairo on 20 April.
  • The seventh edition of the El Gouna International Squash Open will take place on 20-27 April.
  • The Egyptian-Sudanese Business Council will hold its first meeting on Saturday 21 April.

Enterprise+: Last Night’s Talk Shows

Egypt’s upcoming oil and gas agreement with the EU and the World Bank’s latest Economic Outlook report dominated the conversation on the airwaves last night (we have chapter and verse on both in the Speed Round, below).

Egypt is expecting the results of seismic scans of the Red Sea back by the end of June in order to determine the blocks it intends to tender off to oil and gas exploration before the year is up, Oil Minister Tarek El Molla told Hona Al Asema’s Lamees Al Hadidi in phone-in. The border demarcation agreement with Saudi Arabia has opened up more exploration opportunities in the Red Sea, he also said, adding that structural and legislative reforms — such as the Natural Gas Act — have helped attract sizeable investments to the sector (watch, runtime: 41:18).

Egypt will pay back a large of chunk of its arrears to international oil companies in less than two months’ time, El Molla also said, adding that the ministry intends to clear its obligations to IOCs completely in about two years (watch, runtime: 1:30).

The ministry is still planning to implement further gradual subsidy cuts to bring down its costs, Oil Ministry spokesman Hamdy Abdel Aziz told Al Hayah Al Youm’s Tamer Amin (watch, runtime: 2:46).

Finance Minister Amr El Garhy also offered Lamees his two cents on the World Bank’s Economic Outlook report, which sees Egypt’s GDP growth rate climbing to 5% this year. Speaking from Washington, DC, El Garhy said that the report sees unemployment dropping to 11.1% this fiscal year and sinking lower to 9.7% in the next. He confirmed that an IMF delegation is due in Cairo in May to review progress on economic reform before disbursing a USD 2 bn tranche of Egypt’s USD 12 bn extended fund facility (watch, runtime: 8:58).

The report is generally “positive” and reflects the strength in investments and improvements in exports as well as tourism, former Banque Misr deputy chairman Sahar El Damaty told Sherif Amer on Yahduth fi Misr. Amer pointed out that the report sees inflation at 14% by the end of 2018 compared to government projections of around 13% (watch, runtime: 5:56).

MPs will be meeting with the ministers of finance and planning to discuss the FY2018-19 budget, Parliament’s Budget Committee chair Omar Yasser told Amer. The budget is Egypt’s largest to-date, according to MP Mohamed Badrawy (watch, runtime: 4:12), but it still does not factor in the full cost of Egypt’s long-awaited educational reform plan, Omar noted (watch, runtime: 2:03).

Education Minister Tarek Shawky promised change for the better on last night’s Kol Youm to discuss the five-year educational reform strategy. He told Amr Adib that parents should trust the ministry in its plans to overhaul the system and do away with Thanaweya Amma, adding that the government is aware of the obstacles ahead (watch, runtime: 1:19).

Meanwhile, Sophia the robot made an appearance on Masaa DMC for a chat with host Osama Kamal. Proceed at your own risk (watch, runtime: 12:23).

Speed Round

Speed Round is presented in association with

LEGISLATION WATCH- The one economic law we hoped MPs would sleep on finally passed. The House of Representatives voted in favor of amendments to the Consumer Protection Act in a plenary session on Tuesday. The law — the single, blatantly anti-free-market piece of all the Ismail government’s major economic legislation — gives its Consumer Protection Authority (CPA) head Atef “Smileyface” Yakoub actual teeth to mess with business and the economy.

Don’t believe us? Go read the full text of the law, courtesy Al-Ahram.

Mechanisms for price controls are embedded in the law. Goods or services can be deemed “strategic” by the CPA, in which case it can set price controls if it receives approval from cabinet, according to Article 8 of the law. These steps will be taken if the CPA suspects price manipulation and price gouging. Cabinet would need to sign off on the decision (thank, God). Previous reports had said that cars would be classified as strategic goods under this provision.

The act will force retailers to print a breakdown of prices on their goods including profit margins.

E-commerce, real estate, auto sales land in the clutches of the dreaded CPA: The amendments will also bring economic activities previously ungoverned by the CPA under its remit. These include e-commerce, real estate, and after-sales services in the automotive industry.

The power to censor advertisements — something the CPA does well and frequently — will now be officially vested in the authority, says the Al Ahram report.

The law also requires manufacturers to recall products that break within a year of a consumer making a purchase, according to a House Economic Committee report. The report notes that this was done specifically as a result of “numerous recent complaints in the auto industry.”

The amendments apparently also enforce stricter penalties for those violating consumer protections on quality and health issues. The proposed bill would also make the CPA an independent regulator under cabinet and not under the Supply Ministry.

Wherever he is now, Nasser is looking down on this bill and Atef Yakoub and smiling from ear to ear.

The World Bank’s Economic Outlook April 2018 report (pdf) sees Egypt’s real GDP growing 5% in FY2018 and on track to climb to 5.8% by FY2020. “Growth is expected to be driven by resilient private consumption and investment, in addition to a gradual pickup in exports (notably from tourism and gas),” the report says. The IMF expects the budget deficit to narrow to 9.8% of GDP in FY2018. “This is slightly higher than initially-budgeted, due to larger interest payments, higher international oil prices, and larger-than-budgeted exchange rates.” The report acknowledges that fiscal consolidation has gotten a shot in the arm from the increases in VAT revenues and energy subsidy cuts. The current account deficit is expected to drop to 4.9% of GDP this year, from 6.6% of GDP in FY2017. The report also sees consumer price inflation reaching 22.1% in FY2018, then to 14.0% in FY2019 and 12.0% in FY2020. Annual headline inflation rates dropped to 13.1% in March, the lowest they’ve been in almost two years.

These figures are not that far off the finance Ministry’s targets, which sees GDP growing 5.2% in FY2017-18 (which ends in June) and rising to 5.8% in FY2018-19. The budget deficit for the current fiscal year is projected to narrow to 9.8%, with expectations it will fall further to 8.4% in FY2018-19.

Extreme poverty in Egypt has practically been eradicated, notes the report. “Using the national poverty threshold, about a third (27.8%) of the population was below the poverty line in 2015.”

The report does note the toll inflation has taken on purchasing power of households, which it says is curbing “positive spillovers of economic growth and taking a toll on social and economic conditions.” It also notes the disparity in distribution of poverty, with the poverty rate in rural Upper Egypt about 3x that of cities. “Recent increases in allowances of the main social programs have helped weather the effects of inflation, but imperfect coverage and targeting leave some groups unprotected.”

As for the global economy? The IMF sees global growth at 3.9% in 2018 and 2019, a 20 bps improvement from its October 2017 forecast. Driving the uptick is faster growth in the Euro area, Japan, China, and the US, all of which grew above expectations last year on the back of improved trade and investment. Several other emerging markets will also do better this year than previous projections, including Brazil, Mexico, and European EMs. “The aggregate gains for this country group are, however, weighed down by sharp downward revisions for a few countries in the grip of civil strife, notably Libya, Venezuela, and Yemen.”

Look for trouble on the global stage after 2020, the IMF warns, noting that world growth will slow and that the “first shots” have likely been fired in a potential trade war, according to Bloomberg’s coverage, citing a press conference with the IMF’s chief economist later in the day. The report also warns that “Financial conditions are expected to tighten naturally with the closing of output gaps and monetary policy normalization.”

The landing page for the full report is here or you can go download it here (pdf), read the executive summary (pdf) or check out the foreword (pdf).

Euler Hermes upgrades Egypt’s risk rating, forecasts 5.2% growth this year: Euler Hermes has upgraded Egypt’s risk rating to C2 from C3 in its 1Q2018 review, and expects the economy to deliver 5.2% growth during the current fiscal year. Growth is expected to be more broadly based, with exports rising 10% throughout the year at the same times as inflation continues to decelerate. Egypt’s reform measures are still yielding positive results including strong foreign inflows, the credit insurance agency notes. “There were winners and losers in the short-run. Local manufacturers were among the winners, gaining market share since the lower EGP improved export competitiveness and was a powerful import diverter. But consumer-related sectors were hit by higher inflation.” On the flipside, the firm notes the “uncertain” and “protracted” political transition, regional instability, and persistently high poverty rates among our weaknesses.

IPO WATCH- The EGX’s listing committee approved yesterday (pdf) CI Capital’s request to go ahead with its initial public offering. The investment bank is hoping to raise as much as USD 100 mn (EGP 1.8 bn) from its IPO, which will see it list roughly 41.5% of its shares (225,637,282 ordinary shares) on the EGX by the end of the month. The offering will be split into two tranches, with 90% of shares set aside for institutional investors and 10% reserved for a retail offering. CI Capital had set an initial guiding price of EGP 7.29-8.26 share but said that the final price would be announced after the book building process on 19 April. Subscription for the retail tranche of the offering opened yesterday and will run until 24 April.

Use of proceeds: The company had previously said that it could re-inject as much as EGP 1 bn from its IPO proceeds into the firm through a follow-on capital increase.

Advisors: Jefferies International Limited and CI Capital Investment Banking are acting as joint global coordinators and bookrunners on the IPO. Norton Rose Fulbright was tapped as international counsel to the issuer, while White & Case is the underwriters’ counsel. Matouk Bassiouny will serve as local counsel; Pharos Securities Brokerage and HC Brokerage are acting as placements agents.

Egypt’s EGP 200 bn sovereign wealth fund is expected launch within six months, by which time the legislation establishing the fund should receive the necessary sign-off from the House of Representatives, Planning Minister Hala El Saeed told reporters yesterday, Al Mal reports. The government is currently in talks with regional and European institutions to take part in forming the fund’s sector-specific units, the minister said. Cabinet had approved last week the establishment of the fund, which will be charged with investing state funds locally and abroad across asset classes and will be tapped to manage underutilized assets.

Is this it? Are we going to be the energy export hub to the EU next week? Egypt is expected to sign a new oil and gas agreement with the EU next week, Oil Minister Tarek El Molla said yesterday, without providing further details. While he framed the announcement as a “cooperation agreement,” he added that this is part of plans to turn Egypt into a natural gas export hub for the East Mediterranean basin. Cypriot Foreign Minister Nicos Christodoulides had said earlier this month that Egypt and Cyprus would be ready to sign the contracts for a pipeline “in the near future” and that the different parties involved “are in the process of negotiating the terms of the natural gas sale and the purchase agreements.” The two countries were also waiting to hear back from the EU on their preliminary framework for the agreement as of March.

El Molla also said yesterday that the Oil Ministry is also planning to issue tenders for 10-11 oil and gas exploration blocks, as well as other drilling tenders in the Red Sea by the end of the year, according to Reuters.

Remarks at major industry gathering: The minister’s statements were but the most high-profile of a number of significant sector announcements coming out of the 9th Mediterranean Offshore Conference. Highlights:

Shell is planning to resume deepwater oil and gas exploration in the eastern Mediterranean, Executive Vice President Sami Iskander told reporters at the conference yesterday, Reuters reports. Reports had emerged last month that Shell was among several international oil companies planning to invest in exports and exploration in the East Med. The company is also reportedly nearing a USD 25 bn agreement to bring gas from Israel and Cyprus to its liquefaction plants in Egypt, as we noted last month.

Meanwhile, Italy’s Edison is planning to drill its inaugural exploratory well in the North Thekah offshore concession in the eastern Mediterranean, Edison’s Executive Vice President Nicola Monti said, Al Shorouk reports.

We cannot speak of East Med without mentioning Eni, which is also looking to ramp up production from the Zohr gas field to 1.2 bcf/d by May, and 2 bcf/d by the end of 2018, Eni JV IEOC General Manager Fabio Cavanna said, according to Reuters. El Molla had said last month that Egypt is planning to raise Zohr’s output to 700 mcf/d in May.

This comes as Egypt’s overall crude oil output rose 4.3% y-o-y to 657k bbl/d, EGPC boss Abed Ezz El Regal said, Al Mal reports.

Natural resources regulator to issue new Eastern Desert gold exploration tenders before the end of 2018? The Egyptian Mineral Resources Authority (EMRA) is reportedly planning to issue new gold exploration tenders for five blocks in the Eastern Desert before the end of the year, an unnamed EMRA official tells Youm7. The authority is reportedly waiting on Parliament to sign off on its agreements with the four firms that were awarded five blocks in the Eastern Desert and the Sinai Peninsula last year, who have yet to finalize the contracts. Oil Minister Tarek El Molla had previously said that there were no plans to offer new concessions until the agreements were sealed. Egypt’s largest gold producers had all refused to participate in last year’s bid due to EMRA’s insisting on tendering the blocks under production sharing agreements.

The countdown to the launch of Siemens’ fully commissioned power plants has officially begun. President Abdel Fattah El Sisi is expected to inaugurate the three fully-commissioned combined-cycle power plants in Burullus, Beni Suef, and the new administrative capital sometime next month, Siemens project manager Sherif Kotb said. All three stations are currently around 97% complete and will be fully operational with a combined production output of 14.4 GW by the time of the inauguration. The Egyptian Electricity Holding Company is currently in the process of selecting a company to manage the day-to-day operations of the three plants. The EEHC had announced in December it is in the process of setting up these companies and was originally planning to list all three on the EGX once the plants are up and running before year’s end as part of the state’s IPO program. However, the Electricity Ministry decided last month to push the IPO until after the state fully eliminates subsidies for electricity in FY2020-21. The power plants were not part of the 23 state companies the government named as candidates to list or sell additional stakes to the public.

Speaking of which, Egypt is on track to keep pace with rising electricity demand through 2022 thanks to 25 GW of capacity already being executed and ready for commissioning, according to a report by Arab Petroleum Investments Corporation (Apicorp). The report cites the Siemens power plants as being a major contributor to this. Apicorp says that the country will need to spend USD 28 bn in power generation and a further USD 18 bn in transmission and development by 2022 to keep up with demand. This would increase capacity 22 GW to 60 GW.

As for MENA, the region will need to spend USD 260 bn on power in the coming five years to cope with rising demand driven by population growth, urbanization and growing income levels. You can read the full report here (pdf).

Meanwhile, Egypt and Saudi Arabia are expected to sign contracts for their USD 1.6 bn electricity grid interconnection project in June, Egyptian Electricity Transmission Company head Gamal Abdel Rehim tells Youm7. Construction on the substations in Badr, Nabq, and Tibuk will begin mid-2018, according to Abdel Rehim. Electricity Ministry sources had said in January that the selection of a winning bid to complete the project has been postponed until June, since the committee reviewing the offers needs more time to sift through the technical specs of bids. Alstom, ABB, and Siemens all submitted bids for the three-phase project.

Egypt, Russia to hold meetings next month to look into resuming charter flights: Egypt and Russia are expected to meet sometime during mid-May to set a roadmap for the resumption of charter flights from Russia to Sharm El Sheikh and Hurghada, Civil Aviation Minister Sherif Fathy told reporters yesterday, Youm7 reports. The discussions will also feature an assessment of Cairo-Moscow flights, which were finally resumed earlier this month after a more than two-year hiatus and protracted negotiations. Russia has been continuously shifting the goalposts on the issue of resuming air travel to Egypt, particularly when it comes to the resort towns of Hurghada and Sharm El Sheikh. Deputy Prime Minister Arkady Dvorkovich had said in February that allowing flights from Russia to the resort towns is still “impossible.”

MOVES- Our friends at Renaissance Capital have welcomed Ahmed Hafez as the firm’s new Head of MENA Research, based in Cairo, according to a statement (pdf). Hafez was previously co-head of research and MENA equity analyst at HC Brokerage and was earlier MENA equity analyst at HSBC Securities.

MOVES- Emaar Misr has named Jamal Khalfan as non-executive chairman, the company said in a bourse filing on Tuesday (pdf).

The European Bank for Reconstruction and Development (EBRD) is considering an expansion into sub-Saharan Africa, President Sir Suma Chakrabarti tells the Financial Times. Sub-Saharan Africa requires additional funding to meet the development and climate change goals set in 2015, he said. The bank’s solid capital base and “specialty in lending to private business…could help make a big contribution to meeting globally agreed sustainable development and climate change,” he said, adding that every EUR 1 the EBRD lends attracts EUR 2.30 in other investments. Chakrabarti explained that even if the bank were to “invest a further EUR 500 mn a year in its 37 existing countries of operation…that left ample scope to expand ‘gradually’ into countries in sub-Saharan Africa that were committed to market democracy.” The EBRD president intends to pitch his proposal during the week’s IMF and World Bank Spring Meetings that wrap up on 22 April.

Shareholder resistance is expected, particularly from northern and eastern European countries, who may want the bank to remain focused on its core market. “It took the personal involvement of Barack Obama, former US president, to ensure agreement to expand the bank in 2012 into Egypt, Jordan, Lebanon, Morocco and Tunisia after the Arab spring,” notes the FT. Chakrabarti says, however, that the EBRD has demonstrated the efficiency of its business model and approach, after expanding into Turkey, Mongolia, the Middle East, as well as Cyprus and Greece, “without damaging lending to eastern Europe or diluting its unique democracy-promoting mandate.”

CORRECTION- A major goof on our part yesterday morning in a story about our friends at Orascom Construction saw us incorrectly cite where the company is listed. OC has a primary listing on the Nasdaq Dubai and a secondary listing on the EGX. With working hours running from about 7:45am until 6am the next day, we make mistakes sometimes — and we deeply regret the error.

Want to proofread us? Apologies to those offended by typos that slip through into your morning briefing, as some readers diligently and regularly point out. We would love to hire a proofreader to start working on our text at about 3:30am CLT daily. Interested? You need to be able to process 8-11k words daily (our pre-cut length; we publish typically publish 7-8k) in about two hours. Send applications to editorial@enterprise.press.

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Image of the Day

Egypt’s Aswan Dam is one example of just how much these types of structures can damage the environment. Although it keeps the Nile flood in check and produces renewable energy, the High Dam in Aswan has actually aided in the erosion of agricultural land and decline of land fertility in the Delta, since it has stopped the Nile River from carrying soil nutrients upstream, Penn State energy engineering professor Jeffrey Brownson tells AccuWeather.

Egypt in the News

Nothing to look at here, folks. Move along, move along. (It’s a very slow news day for Egypt in the international press.)

On Deadline

The nation’s columnists are skeptical about the newly approved bill regulating the salaries and pensions of ministers. El Watan’s Hazem Mounir says that increasing ministers’ pensions in lock step with salaries while appealing a court ruling that would have forced the state to raise pensions for all is “incomprehensible.” Ahram Gate’s Ismail Ibrahim said much the same thing and then called for the creation of a group to defend the rights of pensioners. In Al Masry Al Youm, Mohamed Amin does not oppose guaranteeing pensions and income for ministers, but wants to see protections for low-income government employees, too.

Diplomacy + Foreign Trade

Egyptian authorities will not accept any US suggestion to send troops to Syria, former General Intelligence undersecretary Mohamed Rashad tells Egypt Independent. His statements came in response to a Wall Street Journal article yesterday citing senior US officials claiming the Trump administration had asked Egypt to partake in a joint Arab taskforce backed by Saudi, the UAE, and Qatar, to replace US soldiers in Syria. Rashad said he believes military intervention is off the table for President Abdel Fattah El Sisi, who has maintained a neutral, diplomatic stance towards the Syrian conflict since the start.

Meanwhile, Saudi is considering sending troops to Syria “as part of broader international coalition to help stabilize” the situation, Foreign Minister Adel Al-Jubeir said yesterday, the WSJ reports. “We are in discussions with the US and have been since the beginning of the Syrian crisis about sending forces into Syria,” he said. “Discussions on what type of force needs to remain…and where those forces should come from are ongoing.” He added that Saudi had offered to send troops to fight Daesh in Syria back in 2016 under a US-led coalition. He refused to say, however, “whether the kingdom made new financial commitments for Syria.”

The Egyptian-Sudanese Business Council is hoping to double trade between Cairo and Khartoum this year from USD 529 mn last year, according to Chairman Riad Armanious. The council, which is set to hold its first meeting on Saturday 21 April (pdf), also hopes to use cross-border business ties to help smooth over a recovering but strained diplomatic relationship between the two countries. Relations between Egypt and Sudan began recovering only recently, after they soured over border disputes and negotiations for the Grand Ethiopian Renaissance Dam. Sudan had revoked COMESA customs tariff exemptions for number of goods imported from Egypt in June 2016 and later imposed restrictions on Egyptian agricultural goods.

A senior Hamas delegation was set to discuss ongoing protests in Gaza and potentially meet with Fatah officials to resume reconciliation talks during a visit to Cairo yesterday, Times of Israel reports.

Osama Nugali was sworn in yesterday as Saudi Arabia’s new ambassador to Egypt and its permanent envoy to the Arab League, Al Shorouk reports. Nugali succeeds Ahmed Kattan.

Energy

EGPC to receive first USD 400 mn tranche of USD 662 mn facility

A consortium of international finance institutions has agreed to disburse the first USD 400 mn tranche of a USD 662 mn short-term credit facility to the EGPC, a source from one of the institutions tells Al Mal. The group agreed to disburse the tranche after the EGPC secured a letter of guarantee from the Finance Ministry for the tranche. The consortium is led by the International Islamic Trade Finance Corporation and includes Islami Bangladesh Bank, Saudi Arabia’s National Commercial Bank, and Dubai Islamic Bank.

Automotive + Transportation

Nissan tops passenger car sales for 2M2018 despite market share drop

Nissan topped the list of passenger car sales in Egypt in January and February despite a drop in its market share to 23.3% from 32% last year, according to an Automotive Information Council (AMIC) report picked up by Al Mal. Hyundai came in second with a 22.1% market share, followed by Chevrolet (11%), Renault (9.5%), and Toyota (7.1%).

NAT, France’s RATP plan to set up a JV to operate, maintain Cairo Metro Line 3

The National Authority for Tunnels (NAT) is in talks with French public transport operator RATP to establish a French-Egyptian JV to operate and maintain Cairo Metro Line 3, which runs from Imbaba to Cairo International Airport, Al Masry Al Youm reports. Ownership of the new company would be an 80/20 split, with the NAT being the majority owner. The NAT is waiting on amendments to the law regulating the authority’s operations to finalize the agreements for the new company, according to NAT spokesman Hassan Tawfik. Zaki Hashem & Partners are acting as legal advisors to RATP.

Banking + Finance

FRA allows the establishment of charitable investment funds

The Financial Regulatory Authority (FRA) approved a directive allowing the establishment of charitable investment funds, whose profits would go towards charity and other social welfare and development projects, Al Masry Al Youm reports. The move had been mandated in the executive regulations of the Capital Markets Act.

Legislation + Policy

Gov’t plans to amend tax laws to relax penalties for late tax payments

The government is planning to amend the tax code to relax penalties imposed on tardy tax payments, Al Mal reports, citing reports on the government’s preliminary budget for FY2018-19. The move is meant to reduce the number of tax disputes, which delay the process of tax collection. Finance Minister Amr El Garhy said earlier this week that the government sees revenues from tax collections rising 23.4% y-o-y in FY2018-19 to the equivalent of 14.7% of GDP. The ministry’s pre-budget report suggests that tax receipts are projected to contribute EGP 770.3 bn to total state revenues of EGP 989.2 bn during the upcoming fiscal year.

On Your Way Out

She may unsettle us to our very core, but at least Sophia the Robot has nice things to say about footballer Mohamed Salah. The Saudi Arabian robot arrived in Cairo yesterday to attend the Creative Industry Summit, where she was asked some hard-hitting questions about what she thinks of Mo Salah (watch, runtime: 0:31).

The Market Yesterday

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EGP / USD CBE market average: Buy 17.64 | Sell 17.74
EGP / USD at CIB:
Buy 17.65 | Sell 17.75
EGP / USD at NBE: Buy 17.57 | Sell 17.67

EGX30 (Tuesday): 17,802 (+1.0%)
Turnover: EGP 1.4 bn (22% ABOVE the 90-day average)
EGX 30 year-to-date: +18.5%

THE MARKET ON TUESDAY: The EGX30 ended Tuesday’s session up 1.0%. CIB, the index heaviest constituent ended up 1.1%. EGX30’s top performing constituents were Kima up 5.5%, Abu Dhabi Islamic Bank up 5.2%, and GB Auto up 4.7%. Yesterday’s worst performing stocks were Palm Hills down 0.4%, Elsewedy Electric down 0.3%, and Eastern Co down 0.2%. The market turnover was EGP 1.4 bn, and regional investors were the sole net buyers.

Foreigners: Net Short | EGP -35.2 mn
Regional: Net Long | EGP +95.7 mn
Domestic: Net Short | EGP -60.5 mn

Retail: 67.3% of total trades | 66.2% of buyers | 68.5% of sellers
Institutions: 32.7% of total trades | 33.8% of buyers | 31.5% of sellers

Foreign: 15.8% of total | 14.5% of buyers | 17.1% of sellers
Regional: 16.0% of total | 19.4% of buyers | 12.6% of sellers
Domestic: 68.2% of total | 66.0% of buyers | 70.3% of sellers

WTI: USD 66.85 (+0.50%)
Brent: USD 71.91 (+0.46%)

Natural Gas (Nymex, futures prices) USD 2.75 MMBtu, (+0.29%, May 2018 contract)
Gold: USD 1,347.80 / troy ounce (-0.13%)

TASI: 8,096.40 (+0.57%) (YTD: +12.04%)
ADX: 4,706.76 (+0.52%) (YTD: +7.01%)
DFM: 3,131.33 (-0.29%) (YTD: -7.08%)
KSE Weighted Index: 415.78 (+1.52%) (YTD: +3.58%)
QE: 8,958.00 (+0.03%) (YTD: +5.10%)
MSM: 4,769.42 (+0.05%) (YTD: -6.47%)
BB: 1,301.98 (+0.19%) (YTD: -2.23%)

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Calendar

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

17-18 April (Tuesday-Wednesday): Aviation Africa 2018 conference, InterContinental City Stars, Heliopolis, Cairo. Register here.

19 April (Thursday): The National Museum of Egyptian Civilization visit and special breakfast at the American Chamber of Commerce. Register here.

20-27 April (Friday-Friday): Seventh edition of El Gouna International Squash Open, El Gouna.

23 April (Monday): Pride Capital’s “Financing Small Merchants” workshop, the Greek Campus, 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.

03 May (Thursday): Egypt’s Emirates NBD PMI reading for April released.

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.

07-08 May (Monday-Tuesday): Fourth annual Egypt CSR Forum, InterContinental Semiramis Hotel, Cairo.

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

17 May (Thursday): CBE’s Monetary Policy Committee meeting.

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

28 June (Thursday): CBE’s Monetary Policy Committee meeting.

16 August (Thursday): CBE’s Monetary Policy Committee meeting.

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.

24-25 September (Monday-Tuesday): Egypt Water Desalination Forum, venue TBD.

27 September (Thursday): CBE’s Monetary Policy Committee meeting.

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

23-24 October (Tuesday-Wednesday): Intelligent Cities Exhibition & Conference 2018, Fairmont Towers Heliopolis, Cairo.

15 November (Thursday): CBE’s Monetary Policy Committee meeting.

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

22 November (Thursday): US Thanksgiving.

25-28 November (Sunday-Wednesday): 22nd Cairo ICT, Cairo Convention Center, Nasr City, Cairo.

25 December (Tuesday): Western Christmas.

27 December (Thursday): CBE’s Monetary Policy Committee meeting.

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.

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