Monday, 2 July 2018

Carbon inks contracts on USD 10.9 bn complex

TL;DR

What We’re Tracking Today

Welcome to FY2018-19: We are now officially in the state’s FY2018-19 fiscal year, and the Finance Ministry has welcomed the start of the new year with its customary statement. This year’s budget projects GDP growing at 5.8%, with spending reaching a record EGP 1.4 tn. It also targets a deficit of 8.4% of GDP and a primary deficit surplus of 2%. Finance Minister Mohamed Maait played up the social spending aspect of the new budget, noting that outlays for education and healthcare will reach EGP 257.7 bn, up almost 16% from EGP 222 bn in FY2017-18. Spending on commodity subsidies will ring in at about EGP 86.2 bn. The government has already cut fuel, electricity, water and metro ticket subsidies over the past few months — and has telegraphed that another wave of subsidy cuts is coming later this budget year. President Abdel Fattah El Sisi has yet to ratify the FY2018-19 budget, which passed the House of Representatives nearly a month ago. You can read our refresher here.

LEGISLATION WATCH- The House Budget Committee will begin debate of amendments to the Customs Act today, Al Mal reports. The draft law, which received Cabinet sign-off in February, is expected to slash custom duties on capital goods to 2% from a current 5% and expand temporary exemptions for production inputs and packaging equipment. The law also includes provisions designed to curb customs evasion. The latest draft also includes measures designed to facilitate the flow of goods through Egypt’s ports, including establishing a “white list” of importers eligible to benefit from expedited clearance of goods, sources had told us previously.

The Madbouly Cabinet will present its policy program to the House of Representatives tomorrow, Al Mal reports. Among its priorities: the war against terror, pressing ahead with its economic reform agenda, expanding social programs and shoring up the social safety net, improving the quality of education and healthcare, and maintaining “balanced” foreign relations, Ahram Gate reports. The program will then be the subject of debate at a plenary session of the House on 9 July, sources tell the newspaper.

Shuffle of governors expected this week? Prime Minister Mostafa Madbouly sent his list of candidates to the president for review last week. Government sources said at the time the shuffle would be announced last week, suggesting that as many as 15 of 27 governorates could be run by new faces.

The western financial press doesn’t like the outlook for emerging markets in the back half of 2018, with the Financial Times writing that “a challenging second half … awaits investors with a number of flashing warnings over a slowing macroeconomic story outside of the US.” Among them: The strong USD, slowing growth in China and “concerns over tit-for-tat protectionism.” This comes as “US equities are showing signs of strain” nine years into a bull market, the salmon-colored paper warns. The Wall Street Journal adds that “the USD’s surprisingly durable rally and expectations of strong U.S. growth are upending investments across the globe, punishing commodities and emerging markets while attracting more overseas money to the U.S.” None of that, though, justifies a squib of a piece in FTfm that claims (without citing a single source) that the recent (and sharp) outflows from emerging markets equities leaves “some investors” seeing “uncomfortable parallels between current market conditions and the 1998 Asian crisis.”

All this comes as the EGP finds itself under pressure — and as Egyptian equities are in a “technical correction” (meaning they’re down >10% from their 2018 highs), having lost 11.9% from their peak earlier this year, Bloomberg notes. The “emerging-market sell-off is taking a heavy toll on Africa,” from bonds to equities and currencies, the business information service notes.

How bad can the trade war get? Really bad, according to an Axios exclusive that suggests the Trump administration plans to “blow up” the World Trade Organization with a “stunning” draft bill that that “essentially provides Trump with a license to raise US tariffs at will, without congressional consent and international rules be damned.”

The EM / FM index shuffle: With the upgrade of Saudi Arabia to emerging markets status, market watchers are fretting about the GCC’s weight in MSCI EM given the region is “noted for its high level of state control and sometimes murky standards of corporate governance,” the Financial Times reports. Others still are worried that the MSCI Frontier index is edging “closer to oblivionwith the upgrade of Argentina and Saudi Arabia (and a potential bump for Kuwait).

No (additional) dividend for you: Across the pond, Goldman Sachs and Morgan Stanley (kind of) passed the second round of the US Federal Reserve’s annual stress tests — and the US unit of Deutsche Bank failed. The result means that Goldman and Morgan Stanley will have to freeze their dividends and share buybacks at recent levels, while Deutsche will be limited to “sending profits back to its German parent.” The Wall Street Journal has more.

In miscellany this morning:

Tide yourself over until the next season of Stranger Things: If you’re still a bit mopey that Stranger Things won’t be back until some time in 2019, go watch the trailer for the August film “Summer of ‘84,” replete with Reagan / Bush election posters, walkie-talkies, ‘80s music and a potential serial-killer cop. Read more here or here or catch the trailer (watch, runtime: 1:50)

Bored on that conference call? Play conference call bingo. Image below, courtesy some unknown genius on the interwebs. (Tap it for the larger version if you want to pinch and zoom.)

What We’re Tracking This Week

The Tenders and Auctions Act will is up for a plenary session discussion “within days,” House Planning and Budgeting Committee Yasser Omar said on Thursday. A final vote on the law may be pushed to the next legislative session, however, with this current one nearing the end of its term, according to Omar. The House was expected to vote on the law — which would decentralize tender procedures and streamline the selection process for winning bids — last month.

World Bank to offer rail and river transport funding? Transport Minister Hisham Arafat has resumed talks with a World Bank delegation for additional funding for railway and river transport projects, Al Mal reports. The minister had previously met with a delegation from the bank to discuss the issue in May. The World Bank is already providing Egypt with more than USD 500 mn in separate loans for railway development projects.

On The Horizon

Late on paying your real estate taxes? The Finance Ministry has got your back with an extended deadline to pay (without late fees) of 15 July, the ministry said in a statement on Sunday.

Enterprise+: Last Night’s Talk Shows

The airwaves were replete with miscellany last night, with the highlight being Finance Minister Mohamed Maait’s take on the beginning of the FY2018-19 year.

Maait gave a breakdown on social welfare spending in the new fiscal year in an interview with Masaa DMC’s Eman El Hosary. The minister underscored wage increases for public sector workers will see an increase to about EGP 270 bn, the largest wage increase in years. He also noted that raising the minimum threshold for tax exemptions will cost the state EGP 9 bn while bonuses to state workers will cost EGP 22 bn. Pension increases will cost an additional EGP 28 bn, he said.

Spending on public services jumped to EGP 100 bn from EGP70 bn in FY2017-18, which Maait described as “the largest increase” in public services spending (watch, runtime: 9:53).

The public will feel the impact of new welfare benefits this month, Social Solidarity Ministry spokesperson Mohamed El Akebi told Hona Al Asema’s Dina Zahra, who is filling in today for Lamees Al Hadidi. The new minimum pension payout will be EGP 750 and is available for pickup through ATM machines starting from today. El Akebi noted that some three mn citizens (or 43% of pensioners) will see their pensions increase around 23%. Another four mn will see their pensions rise by 15% (watch, runtime: 6:48).

Carbon Holdings’ USD 10.9 bn petrochemicals plant in Suez Canal Economic Zone received plenty of coverage on the airwaves last night. Former Oil Minister Osama Kamal spoke on the wider implications of the project on Al Hayah fi Masr. The complex, which the the government is positioning as among the largest of its kind in the world, will bolster FDI and create jobs directly and in feeder industries, Kamal said (watch, runtime: 2:20).

Up to 15 governors to exit stage right? A shuffle of Egypt’s governors is imminent, with some 10-15 governors set to be replaced, Yahdoth fi Masr’s Sherif Amer said, citing MP Ahmed El Segini. El Segini said he expects the shuffle to take place today or early tomorrow before Prime Minister Mostafa Madbouly addresses parliament (watch, runtime: 3:00).

Prime Minister Moustafa Madbouly is in Mauritania for an African Union summit. Cabinet spokesman Ashraf Sultan called in to Al Hayah fi Masr to discuss highlights of the gathering, which include economic development, fighting corruption and extremism (watch, runtime: 5:41).

Political analysts have their day on 30 June: Talking heads brought on their favorite political commentators to mark the fifth anniversary of 30 June revolution. Al Hayah fi Masr’s Kamal Mady hosted political science professor Tarek Fahmy (watch, runtime: 17:19), while Hona Al Asema’s Dina Zahra hosted Al Shorouk newspaper chief editor Emad al-Din Hussein, Ahram Center Analyst Ahmed Kamel al-Behiri and General Khaled Okasha to discuss the fate of political Islam and terrorism in the region (watch, runtime: 20:50).

Speed Round

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INVESTMENT WATCH- Carbon Holdings signs contracts for its USD 10.9 bn petrochemicals complex: Carbon Holdings signed on Saturday contracts with the Suez Canal Authority and a host of service providers and technical partners, kicking off its USD 10.9 bn petrochemicals facility known as Tahrir Petrochemicals Corporation (TPC). The 5 mn sqm complex would be the largest in the Middle East, the Madbouly Cabinet said in a press release. “The project is funded by international institutions and represents an added value to the Egyptian industrial sector,” Oil Minister Tarek El Molla said at the signing ceremony. Carbon Holdings CEO Basil El Baz stressed that TPC, which will take about four years to build once funds are drawn down post financial close, has received substantial backing from international financial institutions. The complex will double Egyptian exports while producing raw materials that El Baz expects will serve as catalysts for the growth of industry here at home, Reuters reports.

Background: UK Minister of Investment Graham Stuart had told Enterprise in an interview back in May that the UK will be providing Tahrir Petrochemicals with “an unprecedented” USD 1.6 bn financing package through UK Export Finance. El Molla sat down with UK Export Finance CEO Louis Taylor on Saturday to discuss the project and potential funding for future projects, according to an Oil Ministry statement.

What other oil execs are saying about the project: Sourcing funding for the project is a positive step, Robin Mills, CEO of Qamar Energy in Dubai, told The National. “They’ve finally got the financing together, which will have a positive impact for investments. The project will boost Egypt’s petrochemicals exports and, when available locally, make it cheaper than when it was imported,” Mills added.

Polish companies look eager to invest in SCZone: Meanwhile, a delegation of Polish businessmen, headed by Polish Investment Minister Jerzy Kwieciński, met with Deputy head of the Suez Canal Economic Zone (SCZone) Mahfouz Taha yesterday to explore investment opportunities there, according to Youm7.

Oil Ministry advises caution on reports of the size of the Noor field: Oil Minister Tarek El Molla pulled the brakes on reports on reserve figures on the Noor gas field off the coast of North Sinai. He tells Youm7 that the numbers being reported are not official and are not sanctioned by the Oil Ministry. The local and international press had caused a stir last week with reports that Italy’s Eni could unlock as much as 90 tcf of natural gas reserves from the Noor field, would make it about 3x the size of the supergiant Zohr gas field, if true. El Molla noted that the concession agreements for the field have yet to be ratified by the House of Representatives, so Eni would not have even started operations on the field yet.

A source in the industry tells that while the seismic studies are still in progress, drilling of the well won’t take place until later this year — and won’t reach its planned target depth before early January 2019. The source also points out that “on average, exploration wells have a success rate of around 20-25%,” calling it “absolutely extraordinary and extremely unlikely” that it would yield a mega-find on the scale suggested by the press last week.

EXCLUSIVE- CIRA relisting to take place in October: Cairo Investment and Real Estate Development (CIRA) will relist shares on the EGX in October, sources close to the transaction told Enterprise over the long weekend. The firm is planning offer new shares equivalent to 35-40% of the company’s equity. Some 80-90% of the share sale will be put up in an institutional offering, with the remainder set aside for domestic retail investors. The company has already hit the road to test appetite for the offering in the GCC and the Europe. CIRA will reportedly use a portion of the proceeds of the transaction to pay Abraaj Group for exiting its 35% stake in the company, the sources added. A source at the embattled Dubai-based private equity firm had told us last month that it had completed the exit of CIRA, saying that “Abraaj exited with a healthy return before any potential IPO so as to avoid IPO-related lockups that would impact the investment IRR.” CIRA’s shareholders are set to meet tomorrow to sign off on the relisting.

Advisers: EFG Hermes is global coordinator and bookrunner for the transaction, we’re told. White & Case is said to have been tapped to serve as legal advisers on the international offering, while Zulficar & Partners is domestic counsel to the underwriter.

Restructuring ahead of the share sale: CIRA has also spun off its real estate investment arm ahead of the transaction, our sources say. Its education arm owns and operates 24 schools in addition to Badr University. El Tamimi & Co. acted as local legal adviser on the spin-off, which is also subject to shareholder approval at a meeting tomorrow.

INVESTMENT WATCH- Ukraine’s Nibulon will invest USD 2 bn in upgrading Egypt’s grain storage and transport infrastructure under an agreement reached in May with Supply Ministry officials, according to a ministry statement. The investment will be split over four stages, the first of which is expected to begin during FY2018-19 and will involve building state-of-the-art silos along the banks of the Nile. The first are set to be built near the ports of Alexandria and Damietta. Nibulon execs are expected to visit Egypt this month to start setting up a local branch for the company and hiring a team to oversee the first phase of the project, which also involves the manufacturing of 20 barges, each with a capacity of 20,000 tonnes. The Ukrainian grains and oilseeds producer had signed an MoU with UN FAO in Cairo last year “to increase the efficiency of Egyptian companies, engaged in production of cereals, their storage and transportation.”

This came as an unnamed Ukrainian company reportedly made an offer to develop a USD 200 mn river port in Upper Egypt, a transport ministry official told Al Shorouk. The ministry intends to issue tenders to the private sector for the development and management of three ports in Assiut, Sohag, and Qena, under a 25-year usufruct contract, the official added, saying river transport will be a big theme for the ministry this year.

INVESTMENT WATCH- Evergrow scaling back investment in fertilizer plant? It appears that fertilizer maker Evergrow has reduced projected spending on its calcium diphosphate plant, with Evergrow chairman Mohamed El Kheshen stating that the Sadat City plant will cost EGP 2 bn, down sharply from an initial estimate of EGP 9.5 bn, Al Mal reports. The plant will aim to export 75% of its production, El Kheshen said.

El Sisi urges patience as economic reforms begin to show results: President Abdel Fattah El Sisi made his administration’s economic reform program the highlight of his televised speech on Saturday, which marked the fifth anniversary of the 30 June protests that ousted his Ikhwan-backed predecessor. He noted that while the reforms are tough, they are working: He cited GDP growth rising to over the 5% mark from around 2% before 2013, adding that Egypt is on track to achieve growth levels of 7% in the next few years. He also noted that FX reserves jumped to USD 44 bn from USD 15 bn in 2013. El Sisi stressed that the uprising five years ago sought to solve three major issues facing Egypt and the region in the wake of the Arab Spring: A security vacuum, the proliferation of terror groups, and a collapsed economy. The nation is on the right track on all three fronts, he said.

Coverage of El Sisi’s speech topped headlines on Egypt in the foreign press. Reuters is taking note of an online campaign calling for El Sisi to resign. The Associated Press’ coverage, which was widely picked up, emphasized the impact of the subsidies cuts and other reform measures on the average Egyptian. The newswire also noted that an Egyptian court on Saturday postponed the verdicts for hundreds of defendants detained for their involvement in a 2013 Rabaa sit-ins. Meanwhile, the GCC press is celebrating the anniversary: Gulf News is noting that five years since the events of June 2013, Egypt has re-emerged from the shadow of he Ikhwan.

The central bank’s Monetary Policy Committee left key interest rates unchanged at its Thursday meeting. The move was widely expected. The overnight deposit and lending rates remained unchanged at 16.75% and 17.75%, respectively, with the main operation rate also stable at 17.25%. The decision was “consistent with the targeted disinflation path,” the CBE said in a statement, which explains that it means to counter a temporary rise in inflation levels that is expected to follow the most recent hike in energy prices.

The central bank sees inflation falling into the single-digits “after the temporary effect of supply shocks dissipates.” Inflation levels in May rose at their slowest pace in two years, with annual headline inflation coming in at 11.4%, down from 13.1%, while monthly headline inflation dropped to 0.2% from 1.5% a month before. “[The CBE] want to assess the inflationary impact of the recent increase in fuel and electricity prices before easing policy further,” said Bloomberg Economics’ Ziad Daoud tells Bloomberg.

Egypt’s current account deficit fell 57.5% y-o-y to USD 5.3 bn in 9M2017-18, down from USD 12.5 bn in the same period last year. “This improvement was an outcome of the increase in both services balances surplus by 138.2% and net current transfers by 23.2%, [as well as a] retreat in trade deficit by 1.3%,” the CBE said in a statement (pdf), which adds that the BoP recorded a surplus of USD 11.0 bn during the nine-month period.

Remittances grew 23.1% y-o-y to USD 19.5 bn for 9M2017-18, up from 15.9 bn a year before. Travel receipts recorded a surplus of USD 5.5 bn, up from USD 651.0 mn in 9M2016-17, while revenues from the Suez Canal grew by 11.9% y-o-y to USD 4.2 bn.

Merchandise exports grew 17.6% to USD 18.8 bn, thanks to a 29.2% rise in oil exports to USD 6 bn, bolstered by higher global crude prices. Non-oil exports rose 12.9% y-o-y to USD 12.8 bn, thanks largely to increased exports of electrical appliances, fertilizers, and meds. Meanwhile, imports climbed 5.5% y-o-y to USD 46.8 bn.

Net foreign direct investment reached USD 6.0 bn in 9M2017-18, driven by some USD 3.4 bn in new oil sector investments. Portfolio investment generated net inflows of USD 14.9 bn, up from USD 7.8 bn a year ago, as foreigners continued to invest heavily in Egyptian treasury bills, with net purchases of USD 11.5 bn vs. USD 4.3 bn in 9M2016-17.

The CBE repaid USD 3.3 bn in loans during the nine-month period, but received some USD 7.7 bn in disbursements.

Egypt expects to receive the fourth tranche of a USD 12 bn extended fund facility from the IMF this week, Finance Minister Mohamed Maait told Youm7. The IMF’s board signed off on the disbursement of the USD 2.02 bn tranche on Friday; it will bring to USD 8 bn the total Egypt has so far received since signing the agreement in 2016 bn, according to an IMF press release carried by Reuters. The IMF had decided to “postpone the date for approving the next tranche of its Egypt loan to a day after the rate decision” was made, notes Bloomberg. That signals the IMF’s “continued hawkish oversight, favoring monetary austerity until inflation and money supply growth are tamed,” Naeem brokerage said in a note picked up by Bloomberg. Egypt and the IMF had reached a staff-level agreement back in May, following a positive third review of progress on economic and structural reform, which found that the country had made solid progress, with inflation levels cooling and GDP growth accelerating.

World Bank pledges USD 530 mn to improve Egypt’s healthcare system: The World Bank’s executive board approved on Thursday a five-year, USD 530 mn program to support Egypt’s healthcare system, according to an Investment and International Cooperation Ministry statement (pdf). The project will include “expanding family planning services, scaling up [Egypt’s] groundbreaking Hepatitis C program, and supporting the new Universal Health Insurance System,” according to a World Bank release. Under the program, the Health Ministry will be responsible for improving services at primary healthcare facilities and hospitals and screen 35 mn people for Hepatitis C and another 20 mn adults for non-communicable diseases.

EFG Hermes led the June brokerage league table for the Egyptian Exchange with a 16.5% market share, followed by CI Capital (10.9%), HC Securities (9.3%), Beltone (8.9%), and Pharos Holding (8.8%), according to figures released over the weekend by the EGX. For the first half of the year, EFG Hermes had 20.2% market share, followed by CI Capital (12.2%), Beltone (6.4%), Pharos (5.4%) and Arqaam (4.9%).

Is the gov’t tightening the internal timeline for the state privatization program? Public Enterprises Minister Hisham Tawfik ordered state holding companies to expedite procedures to ready their companies for the state privatization program, according to a ministry statement picked up by Al Shorouk. Tawfik ordered the companies to complete their reports on their respective companies in three weeks. Finance Minister Mohamed Maait insisted in a statement last week that the program was not delayed and that the ministry was currently coordinating with its peers on the timeline of the program. Eastern Tobacco was expected to pilot the program last month with an additional 4% stake sale.

ECA warns against price manipulation in the construction, transport industries: The Egyptian Competition Authority (ECA) is reportedly warning of predatory pricing in the construction industry, ordering its regional offices to begin an investigation into manufacturers who have been selling their goods at marked up prices. The ECA is also warning against possible price manipulation by transportation companies, according to an ECA statement, picked up by Al Shorouk.

MOVES- Civil aviation minister appoints new heads of EgyptAir, EHCAAN, Cairo Airport Company: Civil Aviation Minister Younes El Masry tapped Ahmed Adel as acting EgyptAir Chairman. Adel, who most recently served as deputy chairman at the national carrier, replaces outgoing chairman Safwat Musallam. El Masry also appointed Tarek Fawzy as head of the Egyptian Holding Company for Airports and Air Navigation, succeeding Mohamed Salam El Moselhy. Ahmed Abdelazim has also been selected as the new chairman of the Cairo Airport Company, replacing Magdy Ishak.

MOVES- Abbas Kamel was sworn in on Thursday as head of the General Intelligence Service, according to an Ittihadiya statement. Kamel had been acting chief since replacing Khaled Fawzi in January.

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Egypt in the News

El Erian on Egypt’s dismal World Cup showing: There’s lots to learn. Egyptians shouldn’t be playing the “blame game” because there’s a lot to learn from the national football team’s defeat at the 2018 World Cup, Allianz chief economist Mohamed El Erian writes for Project Syndicate. Lessons — such as managing expectations, capitalizing on existing strengths, seeing things through to the end, and understanding the scope of international exposure — “can be applied well beyond soccer – and well beyond Egypt,” he says.

The lessons are obviously lost on the Egyptian Football Association, which is still fixated on finding someone (thing) to hold responsible. The latest culprit: Fasting for long hours during Ramadan during World Cup prep time, EFA head Hany Abo Rida reportedly said, according to RT. The BBC’s Piers Edwards also attempted to analyze “what went wrong for African teams in Russia.”

Some monkey made public Mo Salah’s home address in Cairo. The 26-year-old Liverpool striker stepped out into the street to greet the mob and sign autographs “with no sign of anger or irritation,” says RT.

Also making headlines this weekend:

  • US lawmakers are pressuring Egypt to cover the medical expenses of an American citizen injured in an airstrike in the Western Desert that hit a tourist convoy that was mistaken for a terrorist group on the move, Al Monitor reports.
  • Global Data Energy published a detailed history on Egypt’s electricity sector development and diversification since the 1960s.
  • Shocker: Turkey’s unhappy with Egypt. Joint exercises between the militaries of Egypt, Greece and Cyprus in the Mediterranean are “a source of serious concern” to the nutter in Ankara, a Turkish political scientist argues in an interview with Sputnik.
  • Egypt won’t build refugee camps for migrants deported from the European Union, Deutsche Welle reports, joining Albania, Morocco, Tunisia and Algeria in doing so.
  • The Grand Egyptian Museum is getting plenty of attention from the Associated Press.
  • World’s largest coal-fired power station: The International trade press is picking up on the Hamrawein “clean coal” plant being built by the Hassan Allam-Dong Feng-Shanghai Electric consortium.
  • Amnesty denounces mass trial: Amnesty International issued a statement denouncing the mass trial of 739 people for their connection to the 2013 Rabaa sit-in as a “grotesque parody of justice.”

On Deadline

Egypt’s columnists were preoccupied over the weekend with the anniversary of 30 June — and had not one unique or interesting insight to offer.

Worth Watching

The Economist makes its case for wealth taxes: Wealth taxes have the fewest “unintentional bad consequences” and could be the solution to raising the funds governments need to support public services, such as schools, roads, and hospitals, the Economist says. Whereas income and consumption taxes have been widely popular tools over the past several decades, they tend to have adverse effects on growth (high income taxes discourage people from working) and low-income earners (who spend the majority of their income on day-to-day expenses). The magazine notes that wealth taxes are highly unpopular and are politically difficult to implement, but argues that politicians will have to “bite the bullet” and resort to this option sooner or later (watch, runtime: 2:06).

Diplomacy + Foreign Trade

Egypt, Sudan and Ethiopia will launch their joint development fund this week, Sudan’s Minister of State Osama Faisal said at a press conference following an Arab Parliament session in Cairo, Ahram Online reports. The three countries had agreed in January to set up a joint investment fund between their three countries to finance infrastructure projects as part of talks to resolve a deadlock on the Grand Ethiopian Renaissance Dam.

Meanwhile, Sudanese opposition leader Sadiq Al Mahdi has reportedly been refused entry on his return to Egypt, where he had been living in self-imposed exile, Reuters reports. Sudan’s government had accused al-Mahdi in 2014 of conspiring with armed rebels.

President Abdel Fattah El Sisi met French Foreign Minister Jean-Yves Le Drian in Cairo on Thursday to discuss increasing cooperation in several fields, in addition to regional developments, according to an Ittihadiya statement.

Japan has amended its travel advisory for Egypt to Level 1, which encourages travelers to exercise normal precaution, Egypt’s ambassador in Tokyo Ayman Kamel said, Ahram Gate reports. Japan previously had a Level 2 travel warning for Egypt, which recommends that travels reconsider traveling to the country altogether. EgyptAir had resumed flying to Tokyo last September after a four-year suspension due to weak demand.

Egypt topped the list of FDI recipients among COMESA member countries in 2017, according to a COMESA report cited by AMAY. Egypt saw the establishment of 92 new foreign projects last year with a combined total investment of USD 7.41 bn, outpacing Ethiopia (USD 3.57 bn), the Democratic Republic of the Congo (USD 1.35 bn), and Sudan (USD 1.06 bn). COMESA countries accounted for 30% of total FDI to Africa during the year, which saw overall FDI inflows to the continent drop by 21%, according to the report.

Energy

Construction on Dabaa to begin in next two years

Construction on the Dabaa nuclear power plant is expected to begin in the next two and a half years, an Electricity Ministry spokesman tells Reuters. He adds that the first 4800 MW nuclear generator is projected to be up and running by 2026. The government had compiled in April a list of 100 Egyptian companies qualified to work on the USD 30 bn Dabaa nuclear power plant as subcontractors to Rosatom, which is building the facility. Egyptian companies are expected to take on 20% of the construction work (USD 4 bn-worth).

Construction + Infrastructure

OC announces 25 July 2018 as record date for dividend

Orascom Construction has announced 25 July 2018 as its record date for an approved dividend of USD 30 mn; payment will take place during the week of 30 July 2018, the company said yesterday in a statement (pdf). Holders of EGX-listed shares will receive payment in EGP, while those holding shares on Nasdaq Dubai will reiceve payment in USD.

Veolia to construct water, wastewater treatment systems at Assiut

Veolia Water Technologies has won a contract from Egyptian Electricity Holding Company to construct and set up water and wastewater treatment plants for the Assiut power plant and the Cairo West power plant, according to a press release.

Manufacturing

Assar meets with Lava, Smart to build local mobile phone factory

Military Production Minister Mohamed El Assar met on Saturday with representatives from Indian smartphone manufacturer Lava and Egyptian Smart company to discuss cooperation in locally manufacturing mobile phones, according to Al Mal. Lava Mobiles is looking to establish a mobile phone factory in 2019, and plans to invest USD 10 mn this year, Senior Vice President Vikram Singh Parmar had said.

Health + Education

FEI pharma division plans to officially petition Health Ministry to raise med prices

Members of the Federation of Egyptian Industries’ pharma division agreed last week to present a formal petition to Health Minister Hala Zayed this week to raise med prices, division member Gamal El Leithy said. According to El Leithy, the most recent increase in fuel prices and electricity tariffs, along with a global rise in the cost of raw materials make raising med prices a necessity. Manufacturers are also looking into alternative scenarios to raising prices, including cutting taxes on factories and waiving VAT for pharma companies. Pharma companies have been trying to push for higher med prices since their last “limited” price hike was approved in January.

Automotive + Transportation

Transport Ministry signs EGP 544 mn agreement with AOI for 140 locomotives

The Transport Ministry signed on Thursday a EGP 544 mn agreement with the Arab Organization for Industry’s (AOI) railways factory SEMAF to manufacture and supply 140 locomotives for cargo trains, according to a Cabinet statement. The locomotives are expected to be delivered within 16 months. The agreement comes as the first phase of the ministry’s plan to add 800 new cargo locomotives to its fleet to encourage the use of trains, rather than trucks, for shipping purposes.

Egypt Politics + Economics

Tax Authority settles EGP 16 bn in tax disputes under Tax Dispute Resolution Act

The Tax Authority has settled EGP 16 bn-worth of disputes since the Tax Dispute resolution Act was passed in 2016, deputy head Mohamed Abdel Sattar said on Thursday, Al Masry Al Youm reports. Abdel Sattar also confirmed what we heard last week, that the Finance Ministry was considering amendments to the Tax Dispute Act that would shorten its current mandate f two years to only four months, as officials look to settle some 150k tax disputes currently before the resolution committees. Sources also suggested that the rate of tax disputes being filed has slowed with only 12,000 cases received so far this year. The two-year law, which is meant to expedite resolution of tax conflicts through the use of resolution committees, had been renewed for a second two-year mandate back in March. The ministry had said back then that the law resolved around 4,500 tax disputes and contributed EGP 15.1 bn to state coffers last year.

FinMin exempts export freight fees from VAT

The Tax Authority has decided to exempt freight fees on exports from being subject to a VAT, Tax Authority head Emad Samy tells Al Masry Al Youm. The decision, which applies to air, land and sea shipping, came after extensive lobbying by the shipping division of the Federation of Egyptian Chambers of Commerce. Meanwhile, the Suez Canal Authority also reduced transit fees on shipping lines crossing from North America to Asia, authority head Mohab Mamish said.

National Security

Security forces kill four Hasm militants suspected in attack on Alexandria security chief

Security forces killed four and arrested two militants belonging to terrorist group Hasm for their alleged involvement in a failed assassination attempt on Alexandria’s security chief earlier this year, the Interior Ministry said on Thursday. Four of the suspects were killed in a shootout during a raid on their hideout in Assiut.

Sports

Egypt ranks fifth at 2018 Mediterranean Games

Egyptian athletes clinched a total 45 medals at this year’s Mediterranean Games, ranking fifth place among the 25 competing nations, according to Al Mal. Italy snagged first place with a total of 156 medals.

On Your Way Out

Trezeguet off to Italy? Egyptian winger Mahmoud “Trezeguet” Hassan is set to join Inter Milan in the summer but will reportedly spend the next season on loan at Parma, according to Italian media, Ahram Online reports. “I will probably arrive in Milan and then go to Parma, it will be a loan for a season," Calciomercato quoted Trezeguet as telling Italian paper Per Gazzetta dello Sport.

The Market Yesterday

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EGP / USD at CIB:
Buy 17.84 | Sell 17.94
EGP / USD at NBE: Buy 17.78 | Sell 17.88

EGX30 (Thursday): 16,349 (+1.1%)
Turnover: EGP 1.6 bn (56% ABOVE the 90-day average)
EGX 30 year-to-date: +8.9%

THE MARKET ON THURSDAY: The EGX30 ended Thursday’s session up 1.1%. CIB, the index heaviest constituent ended down 0.3%. EGX30’s top performing constituents were Global Telecom up 4.7%, Elsewedy Electric up 3.6%, and Emaar Misr up 3.3%. Thursday’s worst performing stocks were Egyptian Resorts down 1.0%, Kima down 1.0%, and Ezz Steel down 0.4%. The market turnover was EGP 1.6 bn, and local investors were the sole net buyers.

Foreigners: Net Short | EGP -33.2 mn
Regional: Net Short | EGP -61.2 mn
Domestic: Net Long | EGP +94.4 mn

Retail: 68.6% of total trades | 67.1% of buyers | 70.0% of sellers
Institutions: 31.4% of total trades | 32.9% of buyers | 30.0% of sellers

Foreign: 16.5% of total | 15.4% of buyers | 17.5% of sellers
Regional: 5.1% of total | 3.3% of buyers | 7.0% of sellers
Domestic: 78.4% of total | 81.3% of buyers | 75.5% of sellers

WTI: USD 73.56 (-0.80%)
Brent: USD 78.57 (-0.83%)

Natural Gas (Nymex, futures prices) USD 2.91 MMBtu, (-0.58%, August 2018 contract)
Gold: USD 1,253.10 / troy ounce (-0.11%)

TASI: 8,339.86 (+0.31%) (YTD: +15.41%)
ADX: 4,621.15 (+1.34%) (YTD: +5.06%)
DFM: 2,864.42 (+1.54%) (YTD: -15.00%)
KSE Premier Market: 4,915.26 (+0.21%)
QE: 9,114.23 (+1.00%) (YTD: +6.93%)
MSM: 4,347.05 (-4.91%) (YTD: -14.75%)
BB: 1,313.57 (+0.20%) (YTD: -1.36%)

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Calendar

03 July (Tuesday): Madbouly cabinet presents its policy program to the House of Representatives.

09 July (Monday): Plenary session of the House of Representatives to debate Madbouly government’s policy program.

16 July (Monday): Cairo Court of Appeals to issue ruling on EGP 5.6 bn antitrust case against pharma companies including Ibnsina.

23 July (Monday): Revolution Day, national holiday.

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

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

28-29 August (Tuesday-Wednesday): CI Capital’s 5th Annual Egypt Equities Conference, Cape Town, South Africa.

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

10-13 September (Monday-Thursday): EFG Hermes’ 8th Annual London Conference, Emirates Arsenal Stadium, London.

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

22 September (Saturday): New academic year begins for public schools, universities.

24-25 September (Monday-Tuesday): Arqaam Capital MENA Investors Conference 2018, Four Seasons Resorts, Dubai.

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.

03-05 December (Monday-Wednesday): First Egypt Defense Expo, Egyptian International Exhibition Center, 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).

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