Monday, 9 July 2018

Cairo is the least-expensive city in Mideast … for expats

TL;DR

What We’re Tracking Today

It’s a relatively quiet morning at home or abroad, ladies and gentlemen. You’d be forgiven for thinking we’re slipping into the dog days of summer, but it’s still a bit early: Local teams are still working on fall and winter IPOs despite headwinds sweeping global emerging markets, and the House of Representatives is due back shortly from a brief break. Look for next week to be particularly busy in the House in what’s likely to prove the last gasp of the current legislative term before summer vacation, Culture Committee chair Osama Heikal tells Youm7.

You can expect our fearless elected representatives to fall all over themselves scoring Brownie points on Thursday. That’s when the House is expected to receive a committee report on the Madbouly government’s policy program ahead of a general assembly vote on Sunday, when MPs are back from their weeklong recess. The House panel tasked with compiling a report from various sub-committees met yesterday to begin reviewing the commentary. Some lawmakers seem unhappy with the fact that the cabinet’s agenda makes no mention of the capital gains tax on EGX trades, which has been deferred twice before and is currently on hold until 2020.

Meanwhile: It’s always a pleasure to acknowledge the achievements of our friends. The nominations for the Middle East IR society’s annual awards are out. Among the highlights for Egyptian issuers, including our sponsors, CIB and SODIC:

  • Hussein Abaza has again been nominated for best investor relations by a CEO (Middle East), pleasing all of us here no end;
  • Leading corporate for IR (Egypt) sees nominations going to CIB, SODIC, GB Auto, Ezz Steel, and Telecom Egypt;
  • Best investor relations professional (Egypt) nods go to old friends including Sherif Khalil (CIB), Yasmine Hemeda (CIB), Heba Makhlouf (SODIC) and Andre Valavanis (GB Auto). Also nominated is Sarah Shabayek (Telecom Egypt);
  • Most improved IR team (small and midcap) sees GB Auto, Ezz Steel and Arabian Cement are among the five finalists;
  • Most improved IR team (large cap) sees a nod go to Talaat Moustafa Group.

CIB takes home four nominations and GB Auto has gotten the nod in three categories, while SODIC got two nods. And as you’d expect from the GCC-centric awards program, no Egyptian company is among the nominees for leading corporate for IR in the Mideast. You can check out the full list of nominees here (pdf).

One third of sovereign funds plan to cut their equity holdings over the next three years, “citing trade wars, geopolitics and high valuations as headwinds to performance,” according to Invesco’s annual survey of 126 sovereign investors and central bank reserve managers with USD 17 tn in assets. Reuters has the rundown on the report, which found that while nearly one in two sovereign investors is now overweight equities, 35% “plan to reduce their equity exposure over the medium term.”

Mideast funds have appetite for private market asset classes, but PE isn’t among them, the UAE’s the National notes after speaking with Invesco’s head of institutional sales for the Middle East and Africa. Credit, infrastructure and real estate are all on the menu, but in a post-Abraaj world, PE is not looking terribly attractive to regional managers, the company’s 2018 Global Sovereign Asset Management Study found. The survey hadn’t been posted to Invesco’s website as of dispatch time.

Ethiopia and Eritrea appear to be burying the hatchet, announcing yesterday that they would re-open their embassies and phone lines between the two countries as Eritrea offered landlocked Ethiopia use of a port. Reuters owns the story, declaring it a “stunningly swift rapprochement between bitter regional enemies at their first summer since a war two decades ago.” It’s also another diplomatic win for Ethiopian PM Abiy Ahmed, who has in the meantime been mending fences with Cairo. Ahmed and Eritrean president Isaias Afwerki were shown on Ethiopian TV “dancing side by side to a song performed at the state dinner in Asmara. The music was sund in Oromo (Abiy is from the Oromo ethnic group),” Reuters East Africa bureau chief Maggie Fick tweeted.

We’re humming La Marseillaise this morning, and not just in anticipation of tomorrow’s France-Belgium world cup semifinal: BlackRock and Citi have become the latest Wall Street firms to announce they will expand their bases in Paris ahead of the UK’s departure from the European Union, the Financial Times reports.

Speaking of football, the week’s viewing schedule is:

  • Tuesday: The first semifinal match sees France play Belgium at 8:00pm CLT.
  • Wednesday: The second semi sees Croatia face England at 8:00pm CLT
  • Saturday: Third-place match, kickoff at 4:00pm CLT
  • Sunday: Final, kickoff at 5:00pm CLT

Four of 13 members of the Thai boys’ soccer team trapped in a flooded cave were brought to safety yesterday in a Thai-led international rescue operation. The harrowing underwater operation resumed just a couple of hours before dispatch this morning after teams restocked air tanks and rescue equipment along the lengthy escape route. Both the New York Times and CBS are running live updates on the rescue operation if you want to check in on them throughout the day.

This is how you take away your (aging) parent’s keys for good. First, you raise your infants / toddlers / elementary schoolers. Then you get the double-whammy of teenagers at the same time as you try to help the amazing people who raised you live lives that are as independent as possible. How do you set limits for an aging parent who shouldn’t be behind the wheel? The WSJ’s retirement columnist has a must-read for anyone out there grappling with that question.

It’s going to be hot and humid again today, but the Meteorological Authority says we can expect the humidity to ease a bit starting tomorrow evening. Look for a high of 38ºC today and an overnight low of 24ºC Tuesday night, heading into Wednesday.

On The Horizon

President Abdel Fattah El Sisi will unveil an unspecified new education program this month, Cairo University President Mohamed El Khosht said, Al Shorouk reports. El Khesht gave no detail about the program and wouldn’t specify whether it was K-12 or post-secondary, but claimed the unveiling will happen at Cairo University. The Madbouly Cabinet’s policy program takes the development of human capital through reforming education as one of its priorities.

Appeals Court to rule on Ibnsina antitrust case on 16 July: The Cairo Court of Appeals is expected to rule on 16 July on Ibnsina Pharma’s appeal of antitrust sanctions imposed in a case brought by the Egyptian Competition Authority. A Cairo Economic Court had ruled in March that Ibnsina, United Pharma, Ramco Pharm and Multipharma had colluded to cut credit periods and slash discounts to small and medium sized pharmacies. The companies were fined a total of EGP 5.6 bn.

An IMF delegation will visit Egypt in November to conduct its fourth review on economic progress before disbursing the next loan tranche, Finance Minister Maait told Al Shorouk on Friday.

Enterprise+: Last Night’s Talk Shows

We’re chuffed: Freedom of the press was again at the forefront of the airwaves last night, as the Maglis El Dowla (Council of State) issued a scathing report on the Press and Media Act, saying multiple articles violate constitutional provisions on freedom of speech and due process (we have more detail on the Maglis’ verdict in the Speed Round).

MPs scramble to defend the law: A case in point: Rep. Nader Mostafa, who told Hona Al Asema that the Council’s report did not address articles that had been controversial in the House of Representatives, then cites article 12, which bans journalists from filming in public spaces, attending interviews or going meetings without explicit authorization from the Supreme Media Council. The article was indeed been among those the Maglis took issue with, according to AMAY. Mostafa rejected the Maglis’ notion that the law is unconstitutional. He added that further discussion on the act will take place in the House before a final vote (watch, runtime: 10:52).

Also occupying our esteemed representatives’ minds was the Madbouly Cabinet’s platform. Rep. Elsayed Sherif told Hona Al Asema that MPs have questions and concerns that they would like the cabinet to address before they vote on the program. Among these is having the cabinet present a quarterly report to the House (watch, runtime: 6:50). Other MPs took to the airwaves to express their support for the agenda: Rep. Alaa Abed told Al Hayah fi Masr’s Kamal Mady that the plan would constitute a “quantum leap” for Egypt. He also suggested parliament broadcast the vote on the program (watch; runtime: 3:36).

President Abdel Fattah El Sissi approved the import of rice in a bid reduce prices, the talking heads said. The head of the Federation of Industries rice division, Ragab Shehata, told Masaa DMC that the president’s decision will see rice mills restart operations (watch, runtime: 6:56). Agriculture Ministry spokesman Hamed Abdeldayem also praised the decision, saying it would also help curb market manipulation by rice traders. He noted Egypt consumption of rice stands at around 3mn tonnes annually (watch, runtime: 6:08).

Masaa DMC’s Eman El Hosary showcased a report exposing the black market sale of subsidized fuel on the streets of Giza (watch, runtime: 3:13). Rep. Amr El Yazeed said the government should reinstate monitoring of fuel stations (watch, runtime: 5:22).

Also keeping the talking heads preoccupied was the arrest of the kidnappers of a six-year old child in Al Shorouk City. The case earned substantial coverage on Masaa DMC (watch, runtime: 36:54), Yahduth fi Masr (watch, runtime: 7:02) and Al Hayah fi Masr (watch,runtime: 1:35).

Speed Round

Speed Round is presented in association with

EXCLUSIVE- FinMin takes next step in taxing online ad buys and e-commerce transactions: A Finance Ministry committee is looking into setting up a tax formula for ads on social media and e-commerce transactions, ministry sources tell Enterprise. The committee looking at Organisation for Economic Co-operation and Development (OECD) best practices for how to structure the tax, the sources added, and will hold its first meeting with the OECD this week. The move implies that the ministry is looking for a wider taxation framework for social media ads and e-commerce beyond the instituting a VAT on them, as sources had previously told us. This comes the House of Representatives is already looking at a draft law to tax ads on social media, which was introduced by MPs last December.

Uber and Careem told to hurry up and pay VAT: The ministry has also appears to have set a deadline for Uber and Careem to present the ministry their financials and tax returns to file for past-due VAT on their services. The sources even implied that the deadline had passed and that the ministry was extending the deadline for another week. Uber officials reportedly promised late last month to deliver the documents once they coordinate with their parent company, while Careem officials we to have sat with tax officials last month to hand over the paperwork, we’re told. The ridesharing companies are required to retroactively pay VAT of 13% on their own share of revenues from September 2016-June 2017 and 14% VAT on everything from July 2017 onwards.

The Uber experience is one factor in the Finance Ministry’s move to review dual taxation treaties with 13 countries: The Finance Ministry wants to take a closer look at companies that operate in Egypt, but don’t pay taxes here under tax treaties. The ministry is said to want expanded power to investigate whether the companies have actually been paying their taxes abroad in accordance with the agreements. Sources close to the ministry pointed out that Uber operates as a foreign company in Egypt subject to foreign taxes, while Careem has incorporated a local company.

FinMin’s new billing monitoring system gets shot in the arm from Japan: Egypt signed yesterday a EGP 15.5 mn grant agreement with Japan’s BMC International to finance the establishment of an automated VAT collection system in Egypt, according to an Investment and International Cooperation Ministry statement (pdf). The system is part of wider plan by the Finance Minister to better monitor billings to get more accurate data for taxation.

Also from the ride-hailing space, Careem is planning to spend USD 150 mn to launch CareemFood: Careem is in talks with investors to raise as much as USD 150 mn to finance the launch of CareemFood, a regional competitor to UberEats, sources close to the matter tell Reuters. The Dubai-based firm, which is said to have rebuffed a recent acquisition offer from Uber as it embarks on a new round of fundraising, has been trialing food delivery services after acquiring regional online restaurant listing platform RoundMenu back in February. Initial reports had suggested that Careem was looking for USD 500 mn to fund the new product. CareemFood will launch in Pakistan as early as September and then in the GCC and Egypt, another source said.

EXCLUSIVE- CIRA general assembly approves listing 35% of shares: The general assembly of education outfit Cairo Investment and Real Estate Development (CIRA) met this week and settled on relisting 35% of the company’s shares on the EGX in a transaction that could come as early as October, a source close to the offering told Enterprise. The firm expects to rake in EGP 700 mn from the relisting, the source added. We were told last week that the company was considering relisting up to 40% of its shares after Abraaj exited its 35% stake. Some 80-90% of the shares on offer would be reserved for an institutional offering.

The general assembly also abandoned plans to spin off its real estate investment arm from its education arm. The general assembly felt the move would push back the relisting.

Advisers: Sources confirmed to us this week that EFG Hermes is global coordinator and bookrunner for the transaction. White & Case is said to have been tapped to serve as joint legal advisers on the international offering, with the assembly looking to add another law firm to the team. Zulficar & Partners is domestic counsel to the underwriter. The assembly also gave management approval to hire a financial advisor to prepare the fair value report for the transaction.

EXCLUSIVE- Lincom Investments planning IPO on the EGX this year or early 2019: Red Sea-focused real estate investment firm Lincom Investments is planning to offer as much as 25% of the company in an IPO on the EGX sometime toward the end of 2018 or early in 2019, company Chairman and Managing Direct Ehab El Hattawy told Enterprise on Sunday. The firm has already undergone a restructuring ahead of the listing, with First Financial Consulting and KPMG Hazem Hassan’s consulting arm advising. Lincom is currently in the market for an investment bank to manage the IPO, said El Hattawy. The firm plans to use the proceeds from the sale to invest in properties in Hurghada and the Red Sea, including a EGP 120 mn expansion of its Blue Whale resort.

IPO WATCH- State-run Alexandria Container and Cargo Handling Company (ACCH) will list additional shares on the EGX in 4Q2018, an unnamed Maritime & Land Transport Holding Co. official tells Al Mal. A committee from the Alex Port Authority, NI Capital, and the Public Enterprises Ministry is currently in talks to set a date for the sale and is said to be shopping for investment bankers. A fair value study to back the stake sale is already in progress, according to the source, who no indication of how large the transaction might be.

Background: Sources had previously said that the government was planning to sell an additional 15% stake of ACCH on the EGX, bringing the company’s total freefloat to 20%. The holding company would sell 8.7% of its shares in ACCH (out of a total ownership stake of 55.8%), with the remaining 6.3% coming from the Alexandria Port Authority’s 40% stake, sources said at the time. ACCH faced delisting earlier this year for failing to meet the EGX’s minimum free float requirements. ACCH is one of 23 companies in the state privatization program’s lineup. The official timeline for the program could be revealed as early as this week, with the Eastern Tobacco Company’s additional 4% stake sale widely expected to lead the way.

INVESTMENT WATCH- Algebra Ventures leads USD 1.5 mn funding round for Jordan’s POSRocket: Egypt’s Algebra Ventures led a USD 1.5 mn second round of funding for Jordan-based startup POSRocket, according to a press release on Monday (pdf). KISP Ventures, Arzan VC, Financial Horizon Group, and two other angel investors also participated in the funding round. The startup, which develops cloud-based POS software for restaurants and retailers, operates in Egypt and Jordan and closed an earlier initial funding round with Jabbar Internet Group and Jordan-based accelerator Propellor Inc. The company plans to use the proceeds from the latest round to continue its MENA-wide expansion. “This round is all about leverage and scale,” says founder & CEO Zeid Husban. Algebra is a USD 50 mn Cairo-based VC fund that has invested in early-stage tech companies including Eventtus, Elmenus, GoodsMart, La Reina, and Filkhedma.

INVESTMENT WATCH- Talks on Armed Forces’ USD 2 bn integrated solar panel factory stall on disagreements with Chinese partner? Negotiations between the Military Production Ministry and China’s Golden Concord Group (GCL) over a planned USD 2 bn integral solar panel factory have reportedly come to a halt after disagreements over what the partners will do with the factory’s output, unnamed sources from the Chinese company told the domestic press. The sources claim GCL wants the ministry to sign an offtake agreement to purchase the factory’s full output, claiming that the agreement is a prerequisite to securing funding for the JV from Chinese banks. Military production officials naturally enough aren’t biting, citing insufficient domestic demand for panels with a combined generation capacity of 5 GW per year and soft export prospects. The ministry and GCL had signed an MoU for the factory in May.

Orascom Construction added USD 650 mn worth of new contracts to its backlog in 2Q2018 from Egypt and the US, the company said yesterday in a statement (pdf). New awards from Egypt amounted to USD 415 mn “across important sectors such as transportation, water, and new urban developments including the Alamein cities. A portion of these projects has commenced under a letter of intent and execution is underway.” The company added USD 235 mn-worth of new projects in the US, “including the Stage 2 extension to the PHX Sky Train guideway and maintenance facility at Phoenix Sky Harbor International Airport in Arizona.”

The news comes as OC and Siemens reportedly intend to begin rebuilding Iraq’s Baiji power plant soon. The project will add 50% to the plant’s generation capacity, bringing it to 1.5 GW from a current 1.0 GW, according to Heidar Noury, Iraq’s commercial attaché in Cairo. The plant was 97% complete in 2014 before it was targeted by Daesh terrorists, Noury tells Al Mal. He added that Orascom is one of a number of Egyptian companies participating in the USD 88 bn Iraqi reconstruction process, listing Elsewedy Electric as being in contract with the Iraqi Power Ministry, as well as Arab Contractors, Petrojet, and Ceramica Cleopatra Group.

GB Auto subsidiary GB Lease announced completing its first securitized bond issuance on Monday (pdf). The company will use the proceeds from the EGP 335 mn issuance to “deleverage GB Lease’s balance sheet to improve its liquidity position, create new borrowing limits with lender banks and support the company’s future plans.” The issuance consists of three tranches of EGP 154 mn with a tenure of 13 months and variable yield of 0.55%, EGP 167 mn with a tenure of 36 months and variable yield of 1.1%, and EGP 34 mn with a tenure of 60 months and variable yield of 1.7%. “I am very pleased to report that GB Lease’s inaugural securitized offering received a strong rating that reflects the careful building over many years of a strong, resilient, well-diversified portfolio,” GB Auto CEO Raouf Ghabbour said.

LEGISLATION WATCH- The Press and Media Act contains plenty that is unconstitutional, says Maglis El Dawla: The Council of State (Maglis El Dawla) has delivered a scathing report on the Press and Media Act, calling some of its core articles “unconstitutional” and an “infringement” on “press freedoms enshrined in the constitution,” according to Al Masry Al Youm. Its report cited Article 6, which bans news organizations based or holding subsidiaries abroad from practicing in Egypt without a special permit from the Supreme Media Council, as being unconstitutional. The report also called into question articles that essentially ban paid content by media organizations and questioned the minimum capital requirement for licensed media organizations. It also noted that the act fails to provide an appeals process for companies sanctioned by the authorities. The controversial law, which had been heavily criticized by the local and foreign press, was kicked back to the Maglis after the House of Representatives made significant amendments to the proposed bill act.

Is the government reconsidering eligibility for commodity subsidies? A ministerial committee, which includes the ministers of supply, finance, and military productions, held a meeting yesterday to discuss conditions for eligibility in the commodity subsidies system, according to Al Mal. While Social Solidarity Minister Ghada Waly framed the meeting as part of the process to update commodity subsidy rolls, the move implies that there is a possibility that conditions for accessing subsidies could change.

Cairo is the least expensive city in the Middle East for expats, according to an annual cost of living survey by HR consulting firm Mercer. The nation’s capital was ranked 188 out of 211 global cities ranked on this year’s report, up just one place from last year. Cairo was cheaper than Almaty, but more expensive than Botswana’s Gaborone and Islamabad in Pakistan. The findings are based on the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. The region’s most expensive city is not Dubai (#26 globally, according to Mercer), but Tel Aviv at 16. Also expensive regionally are Abu Dhabi (40 and Riyadh (45). The three most expensive global cities for expats, Mercer says, are Hong Kong, Tokyo and Zurich. The landing page for the survey is here. Cairo was also named as the cheapest big city in the UBS Global Cities Ranking 2018, falling to the bottom of the 77 cities named in the report.

Cairo’s cost-competitiveness is starting to get notice: Broadcaster OSN plans to relocate its Dubai-based call center operations to Egypt and Jordan in 3Q2018, OSN CEO Martin Stewart told the National. The move will significantly cut down on OSN’s operational costs by hiring locally, “but [with] the same quality of service,” according to Stewart.

CORRECTION- We had incorrectly noted that the tax on sales revenues for every company operating in Egypt to fund the Universal Healthcare Act was 0.0025%. The correct value for the tax was 0.25%. The story has since been corrected on our website.

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Egypt in the News

On a wonderfully slow news day for Egypt in the international press, The Economist takes note of our emergence as a regional energy hub: The Economist had an interesting analysis piece on the economic prospects of Egypt’s plan to emerge as a natural gas export hub globally. “Not long ago it was Israel, not Egypt, that was tipped to become the region’s gas giant,” notes the publication. Egypt’s edge: Infrastructure, for starters, in the form of existing LNG terminals.

“If Egypt keeps finding new reserves … it will need those terminals to export its own gas. New finds seem inevitable,” the Economist notes. Furthermore, Egypt is not short on buyers as demand looks set to grow in both China and Europe, which is looking to wean itself off of Russian gas supplies. “Revenues from future exports will not turn the country into a flashy Gulf emirate. But they should keep the lights on in Egyptian hospitals—and perhaps pay for some new ones, too,” it concludes.

Also worth noting in brief this morning:

  • The NYT’s Declan Walsh looks into belly dancing as an art form in Egypt, and the controversy surrounding foreign dancers performing in the country.
  • The Christian population in Egypt and other Middle Eastern countries is “dwindling” amid anti-Christian terror attacks, according to AFP.

On Deadline

Government needs a comms strategy: It’s not often we find ourselves in agreement with the ‘columnists’ in the domestic press, but Emad al-Din Hussein is on point in Al Shorouk with his suggestion that government officials need a proper comms strategy if they want to deliver clear messages and don’t trip over each others’ feet.

Worth Watching

Why Egypt is so good at Squash, according to its star players: With ten out of the world’s top 20 squash players being Egyptians, BBC’S Isaac Fanin attempts to answer why is Egypt so good at the game by asking some of the the country’s highest ranked players, including former World No. 2 Ahmed Barada, World No. 3 Ali Farag, and Nour Al Tayeb. The champions cite government support back in the Mubarak-era and a competitive sports environment as young athletes, as reasons. But perhaps their most important reason for Egypt’s success for the game was having an older generation of seasoned players who broke ground for Egyptian squash players on the international circuit (watch; runtime: 7:44)

Diplomacy + Foreign Trade

Arab Contractors is competing for USD 400-450 mn worth of infrastructure projects in Mauritania, Cote d’Ivoire, Uganda, and Senegal, head of the company’s Africa sector Ibrahim Mabrouk said, Al Masry Al Youm reports. The projects include building roads and bridges and sanitation pipelines. The company has been looking at expanding its operations in African countries for several months, according to Mabrouk.

Foreign Minister Sameh Shoukry met yesterday with his Chinese counterpart Wang Yi to discuss expanding Chinese investment ahead of the eighth edition of the Arab-Chinese cooperation forum kicking off today, according to a ministry statement.

Energy

House Energy Committee approves exploration agreements

The House Energy Committee has signed off on six bills that should ultimately see the Oil Ministry offer exploration rights to concessions in the Eastern and Western Deserts, the Sinai Peninsula, Gulf of Suez, and the Mediterranean coast west of the Nile Delta, including the Noor gas field off the coast of North Sinai, Youm7 reports.

Shaker meets with Hitachi delegation to discuss upgrading electricity networks

Electricity Minister Mohamed Shaker met on Sunday with a delegation from Japan’s Hitachi to discuss upgrading Egypt’s transformer stations, Al Mal reports.

Infrastructure

Carbon Holdings to build USD 500 mn pier in Ain Sokhna

Carbon Holdings is set to build a USD 500 mn pier and develop an existing pier in Ain Sokhna, Red Sea Ports Authority head Hisham Abu Senna said, Al Shorouk reports. Abu Senna did not provide details on the expected timeline for construction, but noted that the authority signed off on allowing the company to use the pier as a landing point for ships bringing in raw materials for its planned USD 10.9 bn petrochemicals facility. The pier is considered “the first step” Carbon Holdings is taking towards establishing the facility, according to Abu Senna. Carbon Holdings had previously said it plans to break ground on the petrochem complex before year’s end.

Elsewedy subsidiaries SDM, PIP to invest EGP 880 mn in developing Sadat City industrial zones

Elsewedy Group subsidiaries SDM and Pyramids Industrial Parks signed with the Industrial Development Authority (IDA) contracts to develop industrial zones in Sadat City at a combined investment cost of EGP 880 mn, Elsewedy said in a disclosure to the EGX (pdf). IDA head Ahmed Abdel Razek had said the two contracts’ combined investment value stood at EGP 4 bn. Each EGP 440 mn contract entails developing 2 mn sqm.

Basic Materials + Commodities

Spoiled 45,000 tonnes of Russian was not bought by gov’t – Supply Min

A shipment bought by the private sector that was seized by Alexandria authorities on 1 July for being infested with worms and insects, the Supply Ministry said, Reuters reports. Authorities are questioning a businessman responsible for the import of the wheat shipment.

Real Estate + Housing

Misr Italia is preparing to launch a real estate fund targeting foreign investors

Real estate developer Misr Italia is currently preparing to launch a real estate fund, Chairman Hanny El Assal tells Al Shorouk. The fund will target foreign investors and focus on investing in hotels, as well as administrative and commercial properties, El Assal said without providing additional detail. Egypt’s first-ever real estate fund — which was set up by an alliance of the Egyptians Abroad Investment and Development Company, Pioneers Holding, and Misr Iran Development Bank — began trading on the EGX back in March, with officials saying that the EGP 80 mn fund would prepare for a second issuance in 2H2018.

Tourism

Hurghada hotel occupancy rates reach 100% during summer season

Hotel occupancy rates in Hurghada have reached 100% during the summer season, with some hotels reporting being overbooked, Chairman of travel agency Global Travel International Ali Okda tells Al Shorouk. The market in the resort town is rebounding due to better security perception, but Okda says the lack of Russian charter flights is still expected to affect tourist activity in Hurghada after the summer season ends. Hurghada hotels are also struggling to bring their prices back up after having cut prices significantly to bring visitors back after the slump in tourism.

Swiss-Belhotel plans new projects in Egypt

Swiss-Belhotel International is planning to open new hotels in Egypt as part of its expansion plans for the coming year, Senior Vice Presidents of ME Operations Laurent A. Voivenel tells TTN Worldwide. The new facilities will be in North Coast and Cairo. No further details were provided.

Telecoms + ICT

GTH to book USD 965 mn from potential sale of assets in Bangladesh and Pakistan

Global Telecom Holding (GTH) expects to book USD 965 mn in net proceeds from the potential sale of its assets in Pakistan and Bangladesh, the company said in a bourse disclosure (pdf). Amsterdam-based Veon Holdings had made an offer last week to acquire GTH’s Pakistan subsidiary Jazz and its associated operations, in addition to Bangladesh telco Banglalink, for USD 2.6 bn, which GTH now says it will largely use to pay off debts and other commitments. The remaining amount “may be resolved for distribution to shareholders as per the terms of the law.” The transaction has yet to be approved by GTH’s minority shareholders. Veon, which owns 57.7% of GTH, will abstain from voting. The firm had made mandatory offer to purchase the remaining 42.3% of GTH for nearly EGP 15.5 bn back in November, but withdrew the offer in April, causing GTH’s shares to tank.

ICT Ministry to complete its assessment of PPP projects pitched in 2015 in two months’ time

The ICT Ministry expects to complete within two months its assessment of the feasibility of several PPP projects for the sector that were originally pitched during the 2015 Egypt Economic Development Conference, Vice Minister for Digital Transformation and Automation Khaled El Attar said, according to Al Mal. The proposed projects include the EGP 2 bn development of real estate registry offices and manufacturing smart electricity meters for EGP 10 bn. Former ICT Minister Yasser El Kady had halted the implementation of these projects due to their long implementation timelines and lack of tangible results, according to El Attar.

Banking + Finance

Banque Misr lends EEHC USD 230 mn to finance investment plans

Banque Misr is lending the Egyptian Electricity Holding Company (EEHC) USD 230 mn to finance the company’s investment plans, an unnamed EEHC source tells Al Shorouk. The source declined to disclose the planned investments. The bank is sourcing the funding from a USD 500 mn loan it received from the China Development Bank in 2016. The EEHC had signed last month a USD 900 mn syndicated loan agreement to pay off its foreign currency obligations.

NBE to establish three independent mortgage financing units

The National Bank of Egypt (NBE) is planning to establish three independent mortgage financing units in 6 October City, 10 Ramadan City, and the industrial zone in Minya, as part of the bank’s plan to expand its exposure to the Central Bank’s Mortgage Finance Fund, Vice Chairman Yehia Aboul Fotouh said yesterday, Al Shorouk reports. The NBE had said in October last year that it was planning to inject an additional EGP 5 bn into the program.

GAFI issues non-objection to Sarwa establishing insurance companies

The General Authority for Investment and Free Zones (GAFI) has no objection to Sarwa Capital establishing two separate life and insurance companies, each of which will have a capital of around EGP 100 mn, Al Mal reports. Lebanese United Insurance company will own 15% of each of the companies’ shares. Sarwa is expecting to start operations one month after it receives the final approval from the Financial Regulatory Authority (FRA).

Other Business News of Note

AIB signs cooperation protocol with SCZone to provide funding, banking services to investors

The Arab Investment Bank (AIB) has signed a cooperation protocol with the Suez Canal Economic Zone (SCZone) that will see the bank provide funding and banking services to investors in the SCZone, AIB Chairman Hany Seif El Nasr said, Al Shorouk reports. AIB will also set up a branch in the zone in accordance with the agreement.

Egypt Politics + Economics

Moussa Mostafa Moussa is forming an opposition coalition — to support the president

Former presidential candidate Moussa Mostafa Moussa is forming a nationalist “opposition” coalition whose mandate is to support President Abdel Fattah El Sisi, Al Masry Al Youm reports. According to Moussa, who heads the Al Ghad Party, the coalition is meant to oppose “the homeland’s enemies.”

On Your Way Out

Egyptian equestrian Sameh El Dahan won the Global Champions Tour Grand Prix in Paris over the weekend, earning him a standing ovation from the championship’s spectators, according to Inside the Games. “The young Egyptian and his mare turned the tables on the heavyweights of show jumping, triumphing against 10 world-class riders in an electrifying jump on the spectacular stage of the Champs de Mars, next to the Eiffel Tower.” El Dahan’s victory allowed him to qualify for the LGCT Super Grand Prix in Prague this December.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.83 | Sell 17.93
EGP / USD at CIB:
Buy 17.84 | Sell 17.94
EGP / USD at NBE: Buy 17.78 | Sell 17.88

EGX30 (Sunday): 15,840 (-1.8%)
Turnover: EGP 908 mn (9% below the 90-day average)
EGX 30 year-to-date: +5.5%

THE MARKET ON SUNDAY: The EGX30 ended Sunday’s session down 1.8%. CIB, the index heaviest constituent ended down 0.8%. EGX30’s top performing constituents were Telecom Egypt up 1.2%, Amer Group, and Juhayna ended flat. Yesterday’s worst performing stocks were Global Telecom down 5.8%, Palm Hills down 5.1%, and Heliopolis Housing down 4.8%. The market turnover was EGP 908 mn, and local investors were the sole net sellers.

Foreigners: Net Long | EGP +9.6 mn
Regional: Net Long | EGP +31.4 mn
Domestic: Net Short | EGP -41.0 mn

Retail: 69.5% of total trades | 77.7% of buyers | 61.3% of sellers
Institutions: 30.5% of total trades | 22.3% of buyers | 38.7% of sellers

Foreign: 7.1% of total | 7.7% of buyers | 6.6% of sellers
Regional: 5.4% of total | 7.2% of buyers | 3.7% of sellers
Domestic: 87.4% of total | 85.2% of buyers | 89.7% of sellers

WTI: USD 73.84 (+0.05%)
Brent: USD 77.14 (+0.04%)

Natural Gas (Nymex, futures prices) USD 2.84 MMBtu, (-0.66%, August 2018 contract)
Gold: USD 1,256.80 / troy ounce (+0.08%)

TASI: 8,222.53 (+0.55%) (YTD: +13.79%)
ADX: 4,615.46 (+0.27%) (YTD: +4.93%)
DFM: 2,885.35 (+0.17%) (YTD: -14.38%)
KSE Premier Market: 5,254.07 (-1.42%)
QE: 9,325.15 (+0.70%) (YTD: +9.41%)
MSM: 4,520.02 (-0.08%) (YTD: -11.36%)
BB: 1,336.31 (+0.41%) (YTD: +0.35%)

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Calendar

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.

26-28 July (Thursday-Saturday): Green Banking: The Road to Sustainable Development, Baron Palace, Sahl Hasheesh, Hurghada.

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.

20-23 September (Thursday-Sunday): 2018 Automech Formula car expo, Cairo International Convention Center, Nasr City, Cairo.

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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