Tuesday, 15 May 2018

Moody’s says Egypt among riskiest EMs on debt

TL;DR

What We’re Tracking Today

Inflation figures are due today. Initial data from the CBE showed the annual headline inflation rate in April dropping to 13.1% from 13.3% in March, while core inflation was up fractionally to 11.62% from 11.59%.

These largely flat figures lead analysts to believe that the Central Bank’s Monetary Policy Committee will leave interest rates on hold ahead of subsidy cuts in July. These included Pharos Research’s Radwa Swaify, who said that the recent hike in Metro ticket prices, more consumer spending during Ramadan, the expected hike in energy and power prices in July, and higher oil prices all point to a transient rise in inflation. CBE Governor Tarek Amer had also said earlier this week that the committee has a number of global factors to consider, such as rising oil prices and US interest rates, as well as expected US sanctions on Iran.

Moody’s singles out Egypt, other EMs in warning over debt vulnerabilities: Egypt was among seven emerging markets Moody’s rating agency is warning may hold the biggest risks to global rising debt costs and tightening global financial conditions out of the 125 sovereigns it has analyzed. In a research note out on Sunday, the firm said that sovereigns with relatively short average maturity of debt and weak debt affordability are generally the most exposed to a larger than expected rise in borrowing costs. "In our view, exposure to a shift in financing conditions is highest for Lebanon, Egypt, Pakistan, Bahrain and Mongolia. Sri Lanka and Jordan are also highly exposed," says Moody’s Vice President and Senior Analyst Elisa Parisi-Capone. “Moody’s concludes that a moderate shock would generally be manageable, with limited impact on sovereigns’ debt affordability and debt burdens…In the severe shock, all the most exposed emerging market and frontier market sovereigns would see fiscal strength weaken. Absent a policy response that effectively mitigated the erosion of fiscal strength, these shifts would strain ratings.”

Egypt is already taking steps: Finance Minister Amr El Garhy had stated last month that Egypt is considering shifting away from costly short-term domestic debt towards longer-term borrowing, as falling interest rates provide cheaper options to finance its fiscal deficit. It will increasingly rely on five- to seven-year bonds instead of Treasury bills that have shorter maturities and currently make up the bulk of local-currency borrowing. He had also noted that the onus for lower borrowing costs now falls on the central bank. CBE Governor Tarek Amer himself had noted on Sunday that Egypt was looking for longer-term debt.

The report comes as investors in the riskiest EMs have been nursing losses lately on fears of a rate hike by the US Federal Reserve and higher USD, says the FT.

Turbulence in emerging markets is leaving investors conflicted as to whether it’s time to buy as EMeconomies witnessed their largest sell-off since 2016 in the last two weeks.

The Bulls: Morgan Stanley is betting that US treasury yields won’t fluctuate wildly from current levels and predicts that the USD will be weaker than expected, Bloomberg notes. “In short, we believe that the market has exaggerated the risks for EM and that current levels represent a tactical opportunity to add risk,” Morgan Stanley strategist James Lord says. Manulife Asset Management’s Richard Segal agrees that while the selloff was warranted given how stretched valuations became, “prices are now at attractive levels and it’s a good occasion to step back in.”

The Bears: Nomura Holdings takes the opposite view, citing concern that the balance of payments could bring some pain later this year. “Even if we are right that global growth is holding up, this is likely to be only a brief respite for EM,” analysts at Nomura said. “In our mind, Q3 2018 is the high-risk quarter for a painful EM snapback.”

GERD talks in Addis Ababa today: Foreign Ministers and intelligence chiefs from Egypt, Sudan, and Ethiopia are meeting in Addis Ababa today to resume negotiations over the Grand Ethiopian Renaissance Dam (GERD), according to a Foreign Ministry statement.

This comes as Sudanese President Omar Al Bashir reportedly endorses a major reshuffle to the country’s cabinet yesterday that includes “eight ministers, five ministers of state and 10 governors,” according to Sudan’s state news agency. Al Bashir had fired Sudanese Foreign Minister Ibrahim Ghandour last month — who was instrumental to GERD talks — without offering any explanation.

Spurring private sector investments in Egypt over the coming period is both lengthy and risky without the necessary expertise, our friend Ahmed Heikal tells Al Shorouk. In the second half of a two-part interview with the newspaper, the Qalaa Holdings founder and chairman also commented on other key issues, including the shifting dynamics of global politics and the prospect of a global trade war, and how these could have an impact on Egypt’s affairs. Heikal had announced in the first part of his interview that Qalaa Holdings is planning to begin listing multiple subsidiaries on the EGX as of 2H2019, and will invest in a variety of sectors once its USD 4.3 bn Egyptian Refining Company in Mostorod is up and running.

Ramadan could be off to a very hot start if it begins on Thursday, as temperatures for the day are set to rise to highs of 37-40°C in Cairo and the Nile Delta, and 35-39°C in the northern coastal cities, according to the national weather service. We should know for sure today whether the holy month will begin Wednesday or Thursday.

The EGX will return to its traditionally shorter trading hours for the holy month. The trading session will run 10:00 am until 1:30 pm. Tap or click here for the full schedule.

So, when can we eat? Presuming Ramadan is on Thursday, as the national astronomy research center earlier suggested: Maghrib is at 6:42pm CLT. You’ll have until 3:20 am on Friday to finish your sohour.

What We’re Tracking This Week

President Abdel Fattah El Sisi will host his fifth National Youth Conference tomorrow, Al Ahram reports. No details were provided on the location of tomorrow’s edition. Organizers have set up a website for citizens to submit questions to which El Sisi will respond during the gathering.

House to discuss Public Procurement Act this week: The House of Representatives’ general assembly will discuss amendments to the Public Procurement Act sometime this week, Youm7 reports. The law would grant Egyptian products preferential treatment in government contracts and promote local industry.

On The Horizon

Cyprus, Egypt to resume talks on electricity linkage project next month: A Cypriot delegation will visit Egypt next month to resume talks on the USD 4 bn project to connect the electricity grids of Egypt, Cyprus, and Greece, government sources said. Egypt and Cyprus had approved the route for the 2,000 MW subsea power cable for the connectivity project and agreed on the cable’s landing point in Egypt in March. The Cypriot delegation’s visit comes as Egypt is moving ahead with a separate interconnection project with Sudan. The Egyptian Electricity Transmission Company will issue a local and global tender for power lines and transformers for the project within days, sources had said.

Contracts to connect our electric grid to Saudi Arabia’s could also be signed by the end of June, sources say.

The IMF should issue its progress report on Egypt’s economic reform program in two weeks’ time, Deputy Chief of Media Relations Alistair Thomson tells Al Masry Al Youm. A delegation is in town until 17 May to finish a review that should unlock another USD 2 bn of the USD 12 bn IMF extended fund facility by June or July.

Uber / Careem appeal postponed to Saturday: The Supreme Administrative Court has postponed its hearing of an appeal by Uber and Careem against a lower court decision ordering the suspension of the companies’ operations to 19 May. The two companies are currently operating under a Court of Urgent Matters ruling that stayed the initial suspension. The House of Representatives had also passed last week legislation to govern ride-hailing app services.

Enterprise+: Last Night’s Talk Shows

The killing of 55 Palestinians yesterday during protests against the inauguration of the US embassy in Jerusalem was the biggest story on the airwaves last night as the talking heads took turns to express their sadness and outrage. We have more details on the story in Speed Round, below.

Palestinian hospitals were scrambling to keep up with the influx of wounded citizens, leading officials to contact Egyptian authorities to allow for injured citizens to cross the Rafah border and receive medical attention at Egyptian hospitals, Palestinian Health Ministry spokesman Ashraf Al Qodra told Hona Al Asema’s Lamees Al Hadidi (watch, runtime: 5:07). Ambulances have been stationed at the border to transport the wounded passing into Egypt to the nearest hospitals in North Sinai, all of which are on high alert and have been fully equipped to meet the patients’ needs, Egypt’s Health Ministry spokesman Khaled Megahed said (watch, runtime: 2:43).

Kol Youm’s Amr Adib made it a point to express his frustration with Arab countries’ lukewarm stance on the Palestinian cause. He also reiterated that Palestinians are fully within their rights when protesting and should not be at risk of being killed by Israeli soldiers when doing so (watch, runtime: 8:00). The issue was also tackled on Masaa DMC (watch, runtime: 9:23) and Al Hayah Al Youm (watch, runtime: 17:12).

The Planning Ministry has signed off on a new system for government employees’ wages, which is meant to declutter the way wages are broken down, Central Organization for Management and Administration head Saleh El Sheikh told Lamees. He explained that the previous wage system — which included a base salary and about a dozen categories for supplementary wages and bonuses — resulted in disparities between employees of the same seniority, and that the new system should introduce more equality. He stressed that the new system does not entail a wage increase, but that it puts in place a clear framework for future salary raises (watch, runtime: 7:52). He was not clear if this would mean amendments to the Civil Service Act were coming.

With Ramadan just around the corner, food prices during the holy month was a necessary topic of discussion for Lamees, who sat down with Food Industries Holding Company head Alaa Fahmy, Federation of Egyptian Chambers of Commerce Secretary General Alaa Ezz, and MP Mohamed El Zeni (watch, runtime: 36:32). Fahmy gave Lamees the lowdown on the Ahlan Ramadan supermarket expo, as well as the company’s plans to dispatch vehicles to bring food products to low-income neighborhoods that might not have access to retail outlets (watch, runtime: 2:14).

Banks should allow metro commuters to pay for membership cards in instalments to help alleviate the financial burden of the ticket price hikes, Kol Youm’s Amr Adib said. He repeated the previous two nights’ calls for frequent metro users to rely on a membership as a way to cut down costs, saying that the memberships have been in high demand (watch, runtime: 8:19).

Speed Round

Speed Round is presented in association with

EXCLUSIVE- Will Consolis be the first major foreign company to invest in the newly privatized railways? French infrastructure and utilities developer Consolis Group is looking to open a factory in Egypt to manufacture equipment and materials which will be used in railway development. The company has made an offer to the Egyptian Company for Pipes and Cement (Siegwart) to use some of its underutilized railway facilities to get the project off the ground, going so far as proposing a JV between them be formed, sources close to the talks tell Enterprise. Consolis is in talks with two unnamed US investors to come in on the project, they added. We can assume that Bain Capital Private Equity is one of those investors as it acquired a majority stake in Consolis back in 2017 from LBO France (pdf). While the Ismail Cabinet has been relying on foreign contractors to supply materials from abroad to overhaul the railway system, this is the first major investment we’ve heard of by a foreign company in the sector since it was opened up to private investment by the passing of the Railway Act.

LEGISLATION WATCH- FRA sends Capital Markets Act regs to Council of State for review: The Financial Regulatory Authority (FRA) sent yesterday the final draft of the Capital Markets Act’s executive regulations to the Council of State (Maglis Al Dawla) for review, FRA Vice Chairman Khaled El Nashar said, Al Mal reports. The regulations — which are expected to lay out the procedures for the introduction of new financial instruments such as sukuk and futures exchanges — will then be presented to Investment Minister Sahar Nasr before they are issued by the Ismail Cabinet. The Capital Markets Act was published in the Official Gazette back in March, a month after it received Parliament’s sign off.

EXCLUSIVE- Finance Ministry to implement overhaul of corporate tax filing system in FY2019-20: The Finance Ministry’s plan to revamp the tax filing system for corporations will take place in FY2019-20 to allow the ministry to adapt its administrative structure to the new changes, Tax Authority chief Emad Samy told Enterprise on Monday. As we noted last month, the ministry is looking to make it fully digital and build a single platform, which includes issuing smart cards, to file and report all of one’s taxes (income, real estate, VAT, etc.) to reduce bogus receipts and write-offs and maximize revenues. The wider tax plan, which will come through amendments to the Income Tax Act, will include unifying the country’s billing and receipt collection system. Other previously announced changes include making electronic tax filing mandatory to all companies and having a preliminary filing in April with the bulk of tax documentation being collected at settlement time in June.

The ministry is going through internal changes to implement the plan, said Samy. These include merging the sales tax unit with the Tax Authority to centralize tax collection and administration. Consultancy firm EY is currently advising the ministry on the restructuring. The ministry will also issue an international tender to help map out the new procedures before the law is amended.

INVESTMENT WATCH- Finance in Motion pledges USD 100 mn in funding to SMEs this year: German-based asset manager and self-styled impact investor Finance in Motion is looking to provide loans and funding to Egypt’s SMEs to the tune of USD 100 mn this year, said the firm’s head of Egypt, Yemen and Iraq operations Mohamed Morsy. The company, which has EUR 1.9 bn in assets under management, is looking to increase that funding to USD 200 mn in five years primarily through the USD 250 mn SANAD Fund, he added. Earlier this month, the fund, along with the Arab African International Bank (AAIB) and German development bank KfW, launched their JV microfinance startup, SANDAH. SANAD holds a 30% stake in SANDAH.

INVESTMENT WATCH- Kuwait’s Asasat for General Trading & Contracting Company is planning to invest c.USD 16.5 mn in a touristic resort in Egypt, according to Chairman Mishary Al Mershad. The company, which has recently opened a new office in Cairo to manage upcoming projects in the country, expects to break ground on the new 120-feddan North Coast resort after finalizing its contracts in August.

MOVES- So long, Smiley Face: Supply Minister Ali El Moselhy appointed yesterday Rady Abdel Moty Ali as the new head of the Consumer Protection Agency (CPA), Youm7 reports. Ali replaces Atef “Smiley Face” Yakoub, whose term leading the agency has expired. El Moselhy also formed a new board of directors with representatives from the Council of State (Maglis El Dawla), Trade and Industry Ministry, and Federation of Egyptian Industries.

Yakoub leaves with the mother of all unwanted parting gifts, the Consumer Protection Act, which he defended in a workshop on Monday with the Federation of Egyptian Industries. He claims that the law — the most Nasserist piece of economic legislation we’ve seen since the reform agenda came out — will help bolster Egypt’s exports by enforcing strict quality control standards under Article 3. What he doesn’t say is that the law sets condition for government-enforced price controls, sets stringent recall guidelines, and grants the CPA the right to censor ads. Yakoub said that President Abdel Fattah El Sisi is expected to ratify the law by July.

EARNINGS WATCH- EFG Hermes reported a net profit after tax and minority interest of EGP 249 mn in 1Q2018, marking a 6% y-o-y increase “when adjusting for one-off gains related to the sale of our stake in Lebanese bank Credit Libanais in the comparable period last year.” Revenues also increased to EGP 945 mn during the quarter. “In spite of challenging regional market condition, EFG Hermes is off to a strong start in 2018 aided by a strategy that focuses on building Egypt’s leading NBFI platform, a larger buy side business and a sell side business that extends beyond MENA into frontier markets,” CEO Karim Awad said on the results.

Looking forward: “2018 will see the continuation of our diversification and expansion strategy, with at least one more on-ground expansion into a new geography and the full operational launch of our factoring business under our NBFI platform both planned during the year.”

Ibnsina Pharma reported a 46% y-o-y jump in net profit for 1Q2018 to EGP 28.0 mn, up from EGP 19.1 mn in the comparable period last year, the company said in its earnings release (pdf). The company recorded a 51.1% y-o-y increase in revenues to EGP 2.9 bn, up from EGP 1.9 bn in 1Q2017, as Ibnsina “delivered organic growth across all existing business lines by optimizing its distribution network and expanding its product offering through accretive agreements with global pharma manufacturers,” Co-CEO Omar Abdel Gawad said. “

The company expects to sustain its strong momentum for what remains of the year, Abdel Gawad added, especially as its distribution agreement with Danish insulin maker Novo Nordisk kicks off in June, contributing around EGP 300 mn to Ibnsina’s topline during its first year. The agreement is part of Ibnsina’s plans to increase investments to EGP 700 mn over the next five years in order to expand its activities, which was made possible by its 4Q2017 IPO.

Oriental Weavers reported a 21% y-o-y drop in 1Q2018 net profit to EGP 204 mn, down from EGP 258 mn during the same period last year, according to a company release (pdf). Looking ahead, the company will focus on product innovation and sales performance. “We will continue to invest in our business, supporting future growth and profitability while consistently improving cost efficiency,” Founder Mohamed Farid Khamis said.

Arabian Cement reported a net profit after tax of EGP 162 mn in 1Q2018, up from EGP 59.7 mn during the same period last year, according to a company release (pdf).

Global Telecom Holding (GTH) reported a net profit of USD 38.2 mn in 1Q2018, up from USD 1.2 mn during the same period last year, according to a company release (pdf). The company’s total revenues saw a 7.0% y-o-y drop to USD 699 mn from USD 752 mn in 1Q2017.

Faisal Islamic Bank reported a net profit of EGP 777.9 in 1Q2018, up from EGP 439.7 mn during the same period last year, according to an EGX filing.

Could Red Sea energy reserves outshine Zohr? Preliminary seismic studies in the Red Sea has indicated there are “huge amounts” of oil in the area that could exceed the magnitude of the Zohr gas field in the Mediterranean, Red Sea Governor Ahmed Abdallah announced yesterday, Al Masry Al Youm reports. A seismic vessel will locate specific areas for oil drilling in September before the Oil Ministry issues a global tender to begin drilling in the area, according to Abdallah. For now, we’re taking Abdallah’s words with a grain of salt until we here from the Oil Ministry. Oil Minister Tarek El Molla had said last month that the ministry is planning to issue an unspecified number of drilling tenders in the Red Sea by the end of the year.

LEGISLATION WATCH- Cyber Crimes Act forces service providers to hold user data for 180 days: It appears that the Cyber Crimes Act, which grants the government widespread oversight on internet activity, is following in the footsteps of the Ride-Hailing Apps Act, mandating that internet service providers hold user data and records of web activity for a period 180 days, according to Al Mal. Article 2 of the act states that all ISPs must hold on to all records of internet activity, including voice calls, browsing content, and IP addresses used, among others. While the law does hold this data to be confidential, ISPs must grant access to this data if authorities come calling or if the requested by the National Telecommunications Regulatory Authority — which is designated as the primary regulatory body enforcing the law.

Other features of the law includes granting the government the right to block certain websites under Article 7. Under Article 30, the law imposes prison sentences of no less than one year and fines of up to EGP 200k on anyone who creates, manages or uses a website or an online account aiming to commit or facilitate a crime. We anticipate heavy criticisms and concerns over user privacy from the foreign press in the days to come.

Parliament to hold final vote on the law today: The House of Representatives gave a preliminary nod yesterday to the Cyber Crimes Act but postponed the final vote to today due to lack of quorum, Al Masry Al Youm reports.

In other legislative news, parliament also approved the Food Cart Act during its plenary session yesterday, Ahram Gate reports. The 17-clause bill, which governs permits, equipment, location, and food safety standards, imposes an annual fee on food cart owners of no more than EGP 5,000 for a three-year, renewable permit. Vendors will also be exempt from paying taxes in the first three-year period. MPs also gave their final approval yesterday to legislation governing clinical trials and another on social housing, according to Al Mal. They also signed off on legislation allowing the oil minister to sign oil exploration and production agreements in North Sinai and the Western Desert, according to Ahram Gate.

Egypt’s FM suggests RIZ contracts will be signed next week: Egypt and Russia are expected to sign the contracts for the Russian Industrial Zone during the Egyptian-Russian Economic Summit in Moscow, which will run from 21 to 24 May, Foreign Minister Sameh Shoukry said yesterday, according to a ministry statement. The 5.25 mn sqm zone will be built in the Suez Canal Economic Zone in three phases spanning 13 years, with work on the first phase set to begin this year. Talks to set up the RIZ had begun in 2014.

Russia could restore air travel to Egypt’s Red Sea resorts soon: The current level of security cooperation between Russia and Egypt is setting a “good foundation” for the restoration of direct flights to Egypt’s Red Sea resort towns, Russian Foreign Minister Sergey Lavrov said after meeting with Shoukry in Moscow, the Associated Press reports. Russia’s Deputy Prime Minister, Arkady Dvorkovich, had said in February that allowing flights from Russia to Sharm El Sheikh and Hurghada is still “impossible.”

Russia also “appreciates” Egypt’s refusal to send troops to Syria as part of an Arab military force that would cover America’s withdrawal after defeating Daesh, Lavrov told reporters, TASS says. The Russian minister also said that Cairo and Moscow’s ongoing cooperation is acting as a stabilizing force in the region, “where new hotbeds of tension are snowballing with already existing ones,” according to TASS. The two ministers discussed other regional issues, including the latest developments in Palestine and Israel, as well as anti-terrorism cooperation during their meeting.

Uber is considering launching Uber Pool in the Middle East as part of its plans for growth in the region, COO Barney Hartford tells Forbes Middle East. Obstacles like a challenging regulatory environment make this more of a long-term plan, but the company is definitely looking to enter the high occupancy vehicle segment in markets like Egypt. Uber was said to be investing as much as USD 100 mn to build a support center in Egypt this year under a plan that sees it “doubling down” its investment in the MENA region and Pakistan where it sees numerous opportunities for growth.

Dana Gas announced yesterday that it has reached a settlement agreement that will end the legal battle with holders of its USD 700 mn sukuk, the company said in a statement (pdf). “A committee representing bondholders agreed on terms that offer two options to creditors,” according to Bloomberg. “The first option allows holders to tender their sukuk to the company at USD 0.905 to the USD, including an early participation fee of USD 0.025…the second option offers an immediate payout of 20% of the face value of the existing sukuk, with the rest being rolled over into a new three-year wakala sukuk with a profit rate of 4%.”

Having the second-highest air pollution level in the world is not quite the ranking we were hoping to top: Cairo has the second-highest level of air pollution among the world’s megacities, the World Health Organization (WHO) said in a report put out last week. Cairo’s air pollution levels between 2010 and 2015 were second only to New Delhi, and registered significantly higher concentrations of particulate matter than Beijing and Mexico City. Air pollution levels remain “dangerously high” in many parts of the world, and cause around 7 mn deaths per annum “from exposure to fine particles in polluted air that penetrate deep into the lungs and cardiovascular system,” the WHO warned.

At least 55 Palestinians were shot and killed by Israeli fire yesterday during protests along the Gazan border against the opening of a US embassy in Jerusalem, according to Palestine’s WAFA news agency. As many as 2,771 more Palestinians were injured, with around half of these injuries caused by live ammunition from Israeli forces. The Associated Press describes it as the “deadliest day there since a devastating 2014 cross-border war.”

Egypt sent humanitarian aid, including food and medical supplies, into the Palestinian enclave and kept the Rafah border crossing open yesterday, Al Masry Al Youm reports. The Egyptian Foreign Ministry also put out a statement yesterday condemning the “serious escalation.” Egyptian officials on Sunday had urged Hamas officials, who were in Cairo for talks, to de-escalate the tension, but US President Donald Trump’s decision earlier this year to move the US embassy to Jerusalem was met with backlash from the get go. A number of organizations yesterday also condemned the move, including Egypt’s Al Azhar, the Organization of Islamic Cooperation, as well as Russian and Turkish diplomats and officials. The Arab League also called the move “illegal” and said it would hold an ”urgent” meeting on Wednesday to discuss their official response.

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Image of the Day

Yes, we can’t get enough of Tahteeb: Thousands of men in rural and Upper Egypt continue to gather every week to compete in the ancient traditional martial art of Tahteeb,according to Daily News Egypt. The friendly fight that involves young men fencing with sticks is featured on the walls of ancient Egyptian temples, including El Karnak, and was recognized by the UNESCO as an intangible component of Egypt’s cultural heritage back in 2016. As fans of all things martial arts, we generally pull a story on this every year.

Egypt in the News

Topping coverage of Egypt in the foreign press this morning is return of the bodies of 20 Egyptian Christians beheaded in Libya in 2015, according to statements by a Libyan security official to Reuters.

Meanwhile, Paula Regeni, the mother of murdered Italian student Giulio Regeni, began yesterday a fast to protest the arrest of Egyptian activist Amal Fathy, the Associated Press reports. Fathy, who was arrested last week after posting a Facebook video about her personal experience with [redacted] harassment, is married to the rights lawyer who has been helping the Regeni family with the investigation into their son’s death in Cairo.

Also worth noting in brief this morning:

  • The state security prosecutor ordered the detention of 20 people yesterday for protesting against the latest metro ticket price hikes, bringing the total number of people jailed for participating in these demonstrations to 30, Reuters reports.
  • Egyptian citizen Abdalla Omran has been held in immigration detention in the US since 2015, after he overstayed a tourist visa and resisted deportation twice, Murtaza Hussain and Alice Speri write for The Intercept.
  • An Egyptian food technology researcher is experimenting with producing baladi bread with a low wheat content to reduce Egypt’s need to import wheat, according to Black Sea Grain.

On Deadline

The state must end its monopoly on Egypt’s economy, which will only grow if it clears the way for the private sector to invest more than the state, Mohamed Mekky writes for Al Shorouk. Despite reassurances from various officials that the government is committed to supporting the private sector, investment is nowhere near the levels it needs to reach. This either means that investors are still skittish because of the country’s political situation or they just don’t find it possible to compete with state institutions, Mekky says.

Worth Reading

Employers need to adapt to a rapidly changing workplace as the coming years are expected to see new jobs rise and old ones disappear, Ahmad Waarie writes for Forbes Middle East. It is estimated that 65% of today’s primary school students will grow up to take jobs in roles that do not exist yet, while 5% of employees will see 100% of their day-to-day tasks automated, he says. Jobs carried out by humans in EMEA stood at 91% three years ago, dropping to 85% today, and expected to reach 75% in another three years.

The full-time worker model is also changing slowly, with 24% of Middle Eastern employers expecting a rise in contingent workers over the next few years. “Employers have to help workers upskill before it is too late, while also shifting the types of jobs on offer—adapting some roles to be carried out by workers with low skill sets, while redesigning others to satisfy those with wider skill sets,” says Waarie. Other expected changes in the Middle East include a rising number of women entering the workforce and a growing demand for gender equality. “Between 2006 and 2016 the number of women in work more than doubled from 20% to 48%.”

Worth Watching

How to handle the “manageable, not insoluble” refugee crisis: The global refugee crisis could be better managed if refugees are allowed to work, children are educated, and host countries are given the financial and logistical support they need to accommodate the influx of refugees, says former British foreign secretary David Miliband. “This is a global crisis, not just a Middle Eastern crisis, and it needs a genuinely global solution,” according to Miliband, who himself was born to a family of refugees who fled to Britain from the Nazis in the 1940s (watch, runtime: 4:28).

Diplomacy + Foreign Trade

A delegation of US companies is visiting Egypt in October to discuss investment opportunities, according to US-Egypt Business Council Chairman Omar Mohanna. The council will organize meetings between the US delegates and Egyptian companies to discuss new investments or trade exchange in the fields of food, agriculture, manufacturing, and construction, he adds.

Manufacturing

B-Tech to invest EGP 500 mn over the next five years in brand Ultra

Home appliances retailer B-Tech is planning to invest EGP 500 mn over the next five years in its electrical appliances brand Ultra, which caters to the mid-income segment, Chairman Mahmoud Khattab said yesterday. B-tech is looking to grow Ultra’s product portfolio and output, as well as open eight new branches during 2018 to bring its total number of shops around the country to 75.

TCI Sanmar to invest EGP 300 mn in three new production lines by August’s end

India’s TCI Sanmar Chemicals is investing EGP 300 mn to launch three new production lines by the end of August as it looks to increase sales up to 445k tonnes this year, according to CEO Sherif Menoufy. The company, which already owns an industrial complex in Port Said, is looking for a land plot in the Suez Canal Economic Zone (SCZone) to expand its Egypt investments.

Tourism

Colliers International reports jump in 1Q2018 occupancy rates

Hotel occupancy rates in Egypt’s main touristic cities rose in 1Q2018 as “Egypt’s tourism industry appears to be on the road to recovery,” Colliers International says in its quarterly review on MENA hotels (pdf). Occupancy soared 44% y-o-y in Sharm El Sheikh, while Hurghada also saw a double-digit y-o-y increase of 28%. Cairo and Alexandria’s hotels saw occupancy rates rise 3% and 9% y-o-y during the quarter, respectively. Colliers had predicted in a previous report (pdf) that occupancy rates in Sharm El Sheikh and Hurghada will reach 46% and 45%, respectively, during 2Q2018. Colliers International’s Christopher Lind had said in March that hotel occupancy rates across Egypt were expected to rise significantly over the next five years as the hotel sector stabilizes.

Cabinet announces river transport projects at meeting with tourism investors

The Ismail Cabinet announced during a meeting with tourism investors yesterday plans to carry out river transport projects to promote Nile tourism, including constructing piers in Beni Suef, Sohag, and Minya, according to a statement. Cabinet is also looking into a proposal to move several cruise ships to the Greater Cairo area from Aswan to cater to the expected influx of tourists ahead of the opening of the Grand Egyptian Museum.

Cabinet sets six-month deadline to complete first phase of Holy Family Trail

The Cabinet committee mandated with overseeing the Holy Family Trail decided yesterday to set a six-month deadline to complete the first phase of the trail, according to a Cabinet statement.

Banking + Finance

Jordan’s Ethmar for Islamic Finance plans to enter Egyptian market in 3-5 years

Amman-based Ethmar for Islamic Finance is planning to enter the Egyptian market within 3-5 years, says CEO Ziyad El Refaei. The Arab world’s first Islamic micro-financing company says that 40% of finance seekers in Egypt seek Islamic funding, compared to 30% in Jordan.

Other Business News of Note

Trade Ministry issues six-month deadline for importers, manufacturers to meet standards for several products

Trade and Industry Minister Tarek Kabil issued yesterday a six-month deadline for importers and manufacturers of several products to comply with previously imposed standards, according to a statement. The requirements include meeting energy efficiency standards for electric products such as household refrigerators and ACs, as well as other specifications for surgical equipment, shoes, residential storage units, and lead-free gasoline, among others.

On Your Way Out

Four workers were killed yesterday in an explosion, presumably caused by an old landmine, in the new administrative capital, Reuters reports. The landmine is “likely a remnant of the 1973 war Egypt fought with Israel,” security sources said.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.77 | Sell 17.87
EGP / USD at CIB:
Buy 17.76 | Sell 17.86
EGP / USD at NBE: Buy 17.72 | Sell 17.82

EGX30 (Monday): 16,984 (-1.2%)
Turnover: EGP 1.4 bn (20% ABOVE the 90-day average)
EGX 30 year-to-date: +13.1%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session down 1.2%. CIB, the index heaviest constituent ended down 0.3%. EGX30’s top performing constituents were ACC up 3.1%, Orascom Construction up 2.3%, and Abu Dhabi Islamic Bank up 2.1%. Yesterday’s worst performing stocks were Palm Hills down 4.5%, TMG Holding down 4.2%, and SODIC down 3.4%. The market turnover was EGP1.4 bn, and local investors were the sole net sellers.

Foreigners: Net Long | EGP +160.0 mn
Regional: Net Long | EGP +10.8 mn
Domestic: Net Short | EGP -170.8 mn

Retail: 50.0% of total trades | 52.6% of buyers | 47.3% of sellers
Institutions: 50.0% of total trades | 47.4% of buyers | 52.7% of sellers

Foreign: 28.7% of total | 34.2% of buyers | 23.1% of sellers
Regional: 7.2% of total | 7.6% of buyers | 6.9% of sellers
Domestic: 64.1% of total | 58.2% of buyers | 70.0% of sellers

WTI: USD 70.98 (+0.03%)
Brent: USD 78.27 (+0.05%)

Natural Gas (Nymex, futures prices) USD 2.84 MMBtu, (-0.21%, June 2018 contract)
Gold: USD 1,313.70 / troy ounce (-0.34%)

TASI: 8,070.69 (+0.59%) (YTD: +11.68%)
ADX: 4,446.81 (+0.49%) (YTD: +1.10%)
DFM: 2,905.03 (+0.45%) (YTD: -13.80%)
KSE Premier Market: 4,764.52 (-0.54%)
QE: 8,934.39 (+1.33%) (YTD: +4.82%)
MSM: 4,689.66 (+0.07%) (YTD: -8.03%)
BB: 1,272.07 (+0.08%) (YTD: -4.48%)

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Calendar

17 May (Thursday): Expected date for the start of Ramadan.

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.

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; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.