Wednesday, 18 July 2018

Companies piloting privatization program unveiled


What We’re Tracking Today

The House of Representatives will be breaking for summer at the end of next week, Rep. Mostafa Bakry confirmed to Youm7 yesterday. The House has been rushing to complete discussions on the Madbouly Cabinet’s policy program after House Speaker Ali Abdel Aal warned Reps. that the term could be extended to August if they’re unable to get through their full agenda by the end of next week. The committee tasked with reviewing the program has concluded its report and is recommending that a vote of confidence be given to the Madbouly Cabinet.

Ruling on Ibnsina antitrust case postponed to September: The Cairo Economic Court decided to postpone its ruling on Ibnsina Pharma’s appeal of antitrust sanctions imposed in a case brought by the Egyptian Competition Authority to 18 September, Al Mal reports. The court had ruled in March that Ibnsina, United Pharma, Ramco Pharma 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.

Egypt gets some love from the IMF with some advice on the way forward: IMF Egypt Mission Chief Subir Lall laid down where he sees Egypt’s focus, challenges, and opportunities for how best to move forward from here. In a piece published on the IMF’s website, Lall sees that the most important issues that face Egypt over the coming years are tied to a rapidly growing population, the modernization of its economy, and how best to ensure a modern social safety net to protect the most vulnerable in society.

To tackle these issues, Lall recommends taking advantage of the 3.5 mn Egyptians projected to enter the workforce in the next five years, and the best way to do that is to strengthen the private sector. “if Egypt can support the emergence of a strong and vibrant private sector to productively employ this emerging generation of workers,” he said. He also urged the state to progress with modernizing the economy through shedding of subsidies and empowering SMEs, while continuing to ensure a strong safety net.

Lall took stock of what was already done, praising the economic reform measures during an interview with the state-owned MENA. He commended the central bank’s monetary policy for helping contain inflation, as well as government efforts to shore up the social safety net. Egypt recently received the fourth USD 2 bn tranche of its USD 12 bn Extended Fund Facility with the IMF, after passing the third review of the economic reform agenda with flying colors.

IMF is not as happy with Bahrain: Bahrain needs a comprehensive package of reforms to reduce its fiscal deficits over the medium term, the IMF said. “Despite planned fiscal consolidation measures, fiscal and external deficits are projected to continue over the medium term, due to the large and growing interest bill,” IMF’s Executive Board said in a report on Sunday. “Public debt is expected to increase further over the medium term and reserves are projected to remain low.” The statements come as the kingdom is seeking to secure crucial support from rich neighbors to avoid a currency devaluation.

Fed pushes for gradually increasing rates amid strengthening economy: US Federal Reserve Chairman Jerome Powell “believes that – for now – the best way forward is to keep gradually raising the federal funds rate” in a way that keeps pace with a strengthening economy but does not increase rates so high or so fast that it weakens growth. In a written testimony to the Senate Banking Committee on Tuesday, Powell dismissed the notion that the Trump administration’s trade war would cause a disruption, adding that the job market will remain strong and inflation will stay near 2% over the next several years, according to Reuters.

What does this mean for EMs? All this to say that emerging markets, already reeling from higher interest rates, an appreciating USD, and fallout from the Trump trade war have some pain to look forward to.

Why is Indonesia bucking the EM zombie apocalypse? Because it raised rates: Indonesia appears to be surviving the EM sovereign bond sell-offs, as institutional buyers are piling into Indonesian bonds, Stefania Palma writes for the FT. “There are more long-term investors committed to Indonesia than in the past,” said Roland Mieth, EM portfolio manager at Pimco. Indonesia has moved to raise rates higher and the currency has weakened, with the country’s local-currency sovereign bonds offer desirable returns. It continues to be at risk so long as the Fed appears to be moving to raise rates and foreigners hold 38% of the country’s local-currency debt.

Fund managers have turned “increasingly bearish” about global growth,“ according to a survey compiled by Bank of America Merrill Lynch picked up by the Financial Times. The survey found that “more respondents now thought global profits would not improve over the next 12 months than expect them to get better. A net 9% expect them to stay the same or get worse — the gloomiest assessment since February 2016,” notes the salmon-colored paper.

Solomon to replace Blankfein at Goldman Sachs helm as of October: David Solomon will be replacing Lloyd Blankfein as CEO of Goldman Sachs Group as of 1 October. “The news, announced Tuesday — after more than a year of jockeying, choreography and speculation — fully and finally sets in motion one of the most significant succession plays on Wall Street,” Bloomberg said yesterday. “The handover is taking place as Goldman Sachs diversifies away from its trading operations, a traditional profit center, and pushes deeper into newer areas like consumer lending.”

US President Donald Trump may have finally found a politically-costly gaffe, after going soft on Russian president Vladimir Putin on US allegations that Russia meddled in the 2016 elections. He even praised Putin for denying and condemning the results of the US investigation. Trump now is back-peddling after his comments received widespread condemnation from politicians and voters across party lines, Reuters reports.

Enterprise+: Last Night’s Talk Shows

It was a mixed bag on the airwaves last night, with the talking heads covering everything from the latest and greatest from the House of Representatives to new updates on ration cards. Topping the economic programing was our friend CIB Chairman Hisham Ezz Al Arab’s sit-down with Masaa DMC’s Osama Kamal.

Ezz Al Arab discussed the global banking system’s shift towards digital platforms, noting that most banks around the world are moving towards cutting down the number of branches they operate and going digital instead. This paradigm is difficult to apply in Egypt, however, since it necessitates certain legislative and infrastructural changes, Ezz El Arab said (watch, runtime: 5:42).

On a separate note, Ezz Al Arab swiftly quashed rumors that CIB was recently involved in defrauding a retail client. The issue arose when a client of the bank lodged a complaint against a customer service employee, whom the client accused of fraud. The bank looked into the complaint and, after a thorough review of the client’s transactions, concluded that the issue is unrelated to the bank, Ezz El Arab said. He also dispelled a separate rumor that one of the bank’s branch managers had fled the country after stealing a sizeable sum from clients’ deposits at CIB (watch, runtime: 5:30 and runtime: 6:05).

Kamal also noted that the London Business School chose to feature CIB as the first regional company case study. This was largely because of its “use of data in day-to-day decision-making,” Academic Director of the university’s Leadership Institute Randall Peterson told Kamal. Peterson also lauded the bank and its leadership for the great strides it has taken in developing its services (watch, runtime: 11:51).

The House of Representatives “has no choice” but to approve the Madbouly government’s policy program, since there is no alternative to opt for, Rep. Moataz Mahmoud told Hona Al Asema’s Dina Zahraa (watch, runtime: 3:19). Talk about a vote of confidence. The House has prepared a 500-page report in response to the program, which shows the amount of effort invested in its review, Rep. Ahmed El Segeny said (watch, runtime: 2:13).

Elsewhere in parliament, several reps. are under threat of being stripped of their membership for “disrupting” parliament’s work, Rep. Salah Hasaballah told Zahraa. Parliament’s disciplinary committee is currently looking into reports filed against four representatives, and Parliamentary Speaker Ali Abdel Aal will ultimately decide whether to bring the issue to a vote in the general assembly (watch, runtime: 7:43).

The Supply Ministry will allow subsidy benefactors to add newborns to their family data as of August, with the data updates expected to be reflected in each family’s monthly rations by the end of the year, ministry spokesman Ahmed Kamal said (watch, runtime: 4:23).

Egypt has made good progress on its reforms, despite the difficulties accompanying these measures, former executive director of the Egyptian Center for Economic Studies Sherif El Diwany told Masaa DMC’s Osama Kamal. El Diwany tipped his hat to the government for the reforms and the central bank for its monetary policy, saying that he has reason to believe inflation could drop below 10%. He also stressed the importance of increasing competition in the Egyptian market to raise the quality of goods and services provided, and called on Egyptians to take the lead in investing in the country (watch, runtime: 12:16).

Sudan’s ambassador to Egypt Abdel Mahmoud Abdel Halim touched on Egyptian-Sudanese relations ahead of President Abdel Fattah El Sisi’s upcoming visit to Khartoum in a phone-in to Al Hayah fi Masr. According to Abdel Halim, El Sisi and Sudanese President Omar Al Bashir have met over 20 times during the past three years alone (watch, runtime: 4:26).

Antiquities Ministry’s Mostafa Al Waziri called on Yahduth fi Masr to talk about the recent discovery of a large black granite sarcophagus in Alexandria (watch, runtime: 4:15).

Speed Round

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Gov’t names five companies to pilot privatization program: The Madbouly Cabinet announced the five state companies that will pilot the state privatization program on Tuesday. Alexandria Mineral Oils Company (AMOC), Eastern Tobacco, Alexandria Container and Cargo Handling, Abou Kir Fertilizers, and Heliopolis Housing will lead the program, according to a cabinet statement. As all the companies are already listed, this initial wave will only see share sales and no IPO. The cabinet had decided on the size of the stake sale as well as a timeline for the program at a meeting yesterday, but these were not announced. A source had told us last month that Eastern Tobacco will likely pilot the program in September with a 4% stake sale.

El Sisi pushed for the announcement: Finance Minister Mohamed Maait was supposed to have announced the program following a cabinet meeting this week or next. The cabinet’s statement from yesterday noted that President Abdel Fattah El Sisi had pushed for the announcement early.

Just in the nick of time? The announcement, which was long awaited, comes following numerous delays, which appear to have caused some consternation in the investment community. Egypt has the capacity to drum up enough interest to sell stakes from four major public companies on the EGX this year, but time is running short, Renaissance Capital MENA CEO Ahmed Badr told Bloomberg in an interview on Monday. The program was first teased back in 2016, with the government initially looking to launch the program in 2017.

More details to come? It had been widely anticipated that the announcement of the program will come with details on the timeline and the size of the stake sales. We expect these to come out sometime in the coming few weeks.

Heliopolis Housing prepares to hire investment bank to manage additional stake sale under state privatization program: State-owned Heliopolis for Housing and Development is in talks with a number of investment banks to manage upcoming stake sale on the EGX under the government’s privatization program, Vice President and MD Wael Youssef said yesterday, Al Mal reports. The list of names includes our friends at Pharos and EFG Hermes, as well as Beltone Financial, CI Capital, Arqaam, Eagle, and Al Ahly Capital, he said. The company will make a final decision by 31 August at the latest. Youssef did not specify the size of the stake sale. Heliopolis Housing currently has c. 27.6% of its shares listed on the EGX.

INVESTMENT WATCH- Emaar wants to double Egypt investments to EGP 100 bn over the next five years: UAE-based real estate developer Emaar is looking to double its investments in Egypt to EGP 100 bn over the next five years, Founder and Chairman Mohamed Alabbar tells Al Mal in an interview. The company, which spends an annual EGP 10 bn into new local projects, plans on investing EGP 6 bn on its six hotels in Marassi and is currently pursuing other opportunities in the North Coast further away towards Marsa Matrouh, including the EGP 2 bn Marassi Marina project. Emaar recently completed renovation work for EGP 1.5 bn on Alamein Hotel in partnership with Orascom Construction. Emaar is also in talks with the New Administrative Capital Company for Urban Development over acquiring land for a new mixed-use development. Alabbar had told Investment Minister Sahar Nasr last year that he would be pursuing large investments in the Alamein area, as well as the new capital and South Sinai.

Egypt is on the map for Investec Asset Management now that the firm “ is ready to get back into the market after reducing risks at the start of the year,” according to Bloomberg. The firm, which manages some USD 36 bn in EM fixed-income assets, sees that Egypt’s assets are attractive thanks to its ongoing economic rebound, said Investec’s Co-head of EM Fixed Income Werner Gey van Pittius.

Gey van Pittius appears to be quite optimistic about the prospects of emerging markets assets overall, which “have shown signs of stabilization this month amid easing of trade tensions between the US and China after equities and currencies suffered their worst quarters since 2015.” Local-currency bonds in EMs also contain more value in comparison to their USD counterparts, he said, adding that they offer a real-yield premium of more than 4 percentage points over developed-market government bonds, and also that the USD’s strength will likely be “short-lived.”

Middle East M&A values up 62% in 1H2018, surpassing global average: M&A transaction values in the Middle East rose 62% y-o-y in 1H2018 to USD 25.4 bn, up from USD 15.7 bn in 1H2017, according to a report from Baker Mckenzie. 65% of all Middle East M&A activity was cross border activity in 1H2018, while domestic transaction values in 1H2018 spiked three-fold driven largely by the pending USD 5 bn merger of Saudi Arabia British Bank and Alawwal Bank in Saudi Arabia. The jump in value of regional M&A activity surpassed the global average growth of 59% y-o-y to USD 2.5 tn. Transaction volumes globally fell 12% y-o-y.

Prospects look good moving forward: "With a handful of standout mega [transactions] and the governments across the Middle East cantering to implement investor-friendly reforms and policies, the region is set to experience promising levels of M&A activity in the second half of the year,” said Omar Momany, Head of Corporate/M&A at Baker McKenzie Habib Al Mulla.

UAE leads inbound and outbound cross-regional transactions: The UAE continued to drive both inbound and outbound M&A in the region, the report said. The value of cross-regional transactions targeting the Middle East increased 174% y-o-y to USD 8.1 bn in 1H2018, from USD 6.4 bn in 1H2017. “The UAE was the most attractive target country to overseas investors in 1H2018, with a total of 34 inbound [transactions] valued at USD 6.6 bn,” the report notes. By value, outbound cross-regional transactions increased 20% y-o-y to to USD 7.6 bn, with volumes up by 9%. “The UAE was the most active acquirer” both by volume and value with more than 75% of the total value of cross-regional acquisitions originating from the Middle East and 35 outbound transactions worth USD 5.8 bn.

The energy sector was the most attractive acquisition target sector for inbound regional investment, both by volume and value in H1 2018, with a total of 15 transactions amounting to USD 7.4 bn.

Egypt’s non-oil exports grew by 14% y-o-y in 1H2018 to USD 12.75 bn, compared to USD 11.22 bn in the same period last year, the Trade and Industry Ministry said in a statement. Our biggest export market was the UAE (USD 1.33 bn), followed by Turkey (USD 1.13 bn), and Italy (USD 773 mn). Chemical products were the top exported commodity, reeling in around USD 2.59 bn, followed by textiles (USD 449 mn), and medical products (USD 249 mn).

Meanwhile, the CBE has amended its targeted projections for remittances in FY2017-18 to USD 26.0 bn, according to an emailed statement from the CBE (pdf). This came as the CBE amended the count on remittances figures for 10M2017-18 to USD 21.9 bn from USD 26.0 bn. Remittances in April grew to USD 2.3 bn from USD 1.7 bn in April 2017.

LEGISLATION WATCH- FRA completes Capital Markets Act regs allowing sukuks, margin trading, futures market, green bonds: The Financial Regulatory Authority (FRA) completed yesterday the final amendments on the executive regulations for the new Capital Markets Act, which include provisions that govern the issuing of green bonds, sukuk, margin trading, and futures exchanges, FRA boss Mohamed Omran said yesterday, Amwal Al Ghad reports. Short-term bonds appear to be the only major financial instrument that didn’t make it into the regs. We heard last month, though, that the FRA had begun fleshing out new legislation that would open the door for issuing short-term bonds.

In other news from the FRA: It looks as though life insurance will be compulsory for recipients of subsidized financing for SMEs after all, as per an agreement yesterday between FRA and the SMEs Association, Omran said yesterday, according to Al Mal. The Egyptian Federation of Insurance has been tasked with preparing a price list for insurance policies which will be divided into tranches based on the size of the facility, he added. Omran had said last month that the initiative seeks to ensure that some 2.4 mn entrepreneurs who have received some EGP 8.4 bn in subsidized SME financing as of 1Q2018 have insurance coverage. FRA has made insurance for SMEs a crucial component of its strategy to reform the wider insurance sector, which it is undertaking primarily through amendments to the Insurance Act.

Strategy for non-banking financial sector unveiled in two weeks: This comes as part of the FRA’s strategy for the development of the non-banking financial sector, which will be unveiled in full in two weeks’ time, according to Omran. We had first heard of the strategy back in April. Omran had said at the time that it would involve both structural and legislative reforms to boost the industry and improve its contribution to economic growth, will pave the way for the introduction of new financial instruments.

Meanwhile, the FRA is looking into how best to implement a mandatory insurance policy for public venues and gatherings, including sporting tournaments and concerts, FRA boss Mohamed Omran said, Al Masry Al Youm reports. The policy would also be applicable to spaces such as malls, cinemas, and sporting clubs, according to Omran. He did not disclose when FRA expects to complete its studies on the matter.

House signs off on a number of international agreements, including USD 500 mn from World Bank: The House of Representatives signed off yesterday on a number of international agreements, including a USD 500 mn loan from the World Bank aimed at supporting the state’s K-12 educational reform strategy, according to Amwal Al Ghad. The House also approved a EUR 150k funding package from the Spanish Agency for International Development Cooperation (AECID) and a KWD 500k from the Kuwait Development Fund. The general assembly also referred to the House Energy Committee a USD 200 mn loan from the European Bank for Reconstruction and Development (EBRD), which will be used to improve efficiency at the Suez Oil Processing Company, Al Shorouk reports.

The House is also preparing to go paperless, Bloomberg reports, citing the state news agency. The move, which will see Reps. use tablets in place of their pen and pads, aims to reduce the amount the legislative body spends on ink and paper, according to House Speaker Ali Abdel Aal. He made no reference to the specific cost or timeline for the transition.

Egypt to receive USD 380 mn tranche of USD 3 bn loan from ITFC: The International Islamic Trade Finance Corporation (ITFC) signed off on the disbursal of the first tranche of a USD 3 bn loan agreement signed with Egypt last January, ITFC CEO Hani Sonbol said yesterday, Al Mal reports. Preparations are currently underway to wire the USD 380 mn tranche, which will be used for the purchase of basic goods and commodities, such as petroleum, wheat, and other subsidized food staples. The government is also gearing up to sign two new loan agreements with the ITFC in September for the Export Development Authority and General Authority for Supply Commodities, according to Sonbol, who added that one of the agreements would be worth USD 300 mn.

Marriott CEO sees tourists flocking back to Egypt amid political stability: Tourists are flocking back to Egypt as the stable political situation has helped to quell travelers’ fears, President and CEO of Marriott International Arne Sorenson said, according to Hotel Management. Sorenson added that the country is seeing more stability and optimism now than there was in 2012, which faced uncertainty.

Healthy pipeline for Marriott in the coming period: Marriott plans to add more than 1,200 guest rooms in four new hotels in Egypt. The group has been seeing an uptick in hotel investment in Egypt, especially in the development of cities and the New Administrative Capital. "These are projects that can attract many investments," Alex Keyriakidis, president and MD of the Middle East and Africa at Marriott, said. Marriott is currently in talks with the government to develop new hotels in El Alamein, Alexandria, Luxor, Aswan, and Red Sea towns.

Meanwhile, Ukrainians continue to be among those who are contributing to the rebound in tourism inflows to Egypt, which is one of three top vacation destinations for Ukrainians, the Bobr Times reports. Around 1 mn Ukrainian tourists are expected to visit Egypt this year. These “recovering” numbers have helped to spur investments in tourism and hotels, according to Sorenson.

MOVES- Timothy Collins has resigned as Palm Hills Developments’ Vice Chairman of the board of directors, the company announced yesterday (pdf). Collins is stepping down “as a result of having to manage various competing investments.”

Abu Dhabi Financial Group’s Abu Dhabi Capital Management has made a USD 55 mn offer for Abraaj Group’s assets, “challenging a bid from Cerberus Capital Management,” sources told Bloomberg yesterday. The firm told Abraaj — which is liquidating and undergoing a court-ordered restructuring after allegations surfaced about the misallocation of funds — that “it would pay USD 30 mn to buy the rights to manage Abraaj’s funds and USD 25 mn to cover the company’s costs and end-of-service payments for employees,” according to the sources. Cerberus had made a bid for USD 25 mn. Colony Capital is also said to be in advanced talks to acquire a number of Abraaj’s funds and Global PE firm Actis has reportedly started talks to acquire the Group’s stake in Nahda University.


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Up Next

President Abdel Fattah El Sisi will inaugurate the three Siemens combined-cycle power plants next Tuesday, according to government sources. The fully-commissioned plants in Burullus, Beni Suef, and the new administrative capital will have a combined production capacity of 14.4 GW. The Electricity Ministry had reportedly settled on Siemens to also run the day-to-day operations and management of the three plants, but the two sides have yet to sign official contracts.

El Sisi will reportedly be visiting Sudan tomorrow to meet with Sudanese President Omar Al Bashir over the Grand Ethiopian Renaissance Dam (GERD) and the South Sudan peace process. El Sisi might also be visiting Beijing in September to attend the Forum on China-Africa Cooperation.

El Sisi will also host the sixth National Youth Conference at the end of the month, Al Masry Al Youm reports. Organizers have opened the floor for the public to submit questions for El Sisi to respond to during the conference through the “Ask the President Initiative,” according to the president’s Twitter account. The upcoming edition of the conference will be geared towards university students, but it remains unclear where it will be held.

Plan for a four-day weekend bridge? Prime Minister Mostafa Madbouly declared Monday, 23 July a public holiday for government offices and state-owned companies in observance of Revolution Day. The CBE has also officially announced banks and the EGX will be off on Monday. We expect to see many caving to the temptation of bridging for a four-day weekend.

Heatwave today: Look for daytime highs of 40°C and overnight low of 24ºC, according to the Meteorological Authority. Temps will keep dropping through the rest of the week until it rises back to 40 °C next Wednesday.

Egypt in the News

Commentary on the passing of the controversial Press and Media Act is leading the conversation on Egypt in the foreign press this morning. Critics are concerned that the legislation’s “vague wording” will allow the government to legally crack down on dissent and freedom of expression, BBC and Reuters say. “The law comes as a conclusion to the recent era of restrictions on free speech,” the Telegraph quotes former Press Syndicate official Khaled El Balshy as saying.

Other headlines worth noting in brief:

  • South Africa’s orange exporters are wary of increased exports from Egypt, which have been dampening their sales, according to Fresh Fruit Portal.
  • Honey made by Egypt’s Hero was said to contain carcinogenic antibiotic residues, according to the Hong Kong-based Consumer Council, EJ insight reports.
  • A mysterious sarcophagus recently discovered in Egypt could house the body of Alexander the Great, some archaeologists speculate, according to National Geographic.

On Deadline

Opinion writers giving us lessons on the need for public health: The poor quality of Egypt’s healthcare services has a direct negative effect on the country’s development, Ashraf Abdel Aal says. He explains that poor healthcare means that Egypt’s working class is not as productive as it could be if citizens had access to quality services that could help them ensure they are in good health. Abdel Aal points the finger of blame at the lack of and improper distribution of funding for the healthcare sector, noting that the state’s budget allocation for healthcare has fallen short of its required threshold for several years and the funding that is provided is mostly used to pay wages, rather than actually improve services.

Worth Reading

Over the span of a few short years, China has undergone a mobile payments revolution that now sees the country’s reliance on cash payments dwindling, Yuan Yang writes for the Financial Times. Last year alone, China accounted for nearly half of the world’s digital payments. Chinese citizens have become accustomed to using mobile payments for everything from stores to food stalls to transportation services, and many of these services no longer accept cash payments. “This transformation has been spearheaded by millennials, who were the early adopters of mobile payments, but it has rapidly spread across generations. Millennials’ parents — the 40-60 age group — have adapted to the technology, especially in big cities, although they tend to use it for fewer functions … Only the older generations cling on to cash.”

The increased reliance on fintech has also led to a behavioral shift in how people handle money in China. Whereas older generations traditionally relied on saving up their own income to be able to afford big purchases, China’s millennials are opening up the space for credit and lending services. Altogether, China’s fintech advancements are significant.

But these services are struggling to expand internationally because most other countries are significantly lagging in providing the necessary infrastructure and culture. Can you imagine trying to make an Egyptian fruit vendor accept e-payments? Consumers are also wary that relying so heavily on apps and e-payments would turn their data privacy into a martyr.

Diplomacy + Foreign Trade

The EU has agreed to provide Egypt with a USD 50 mn loan this year to finance some of the Irrigation Ministry’s mechanical and electric projects, Minister Mohamed Abdel Aati tells Al Mal. The projects would include upgrading aerial networks at some 850 water stations and purchasing EGP 120 mn worth of spare parts for other upgrades, according to Abdel Aati.

Egypt has managed to mediate a truce between Syrian opposition factions, according to the State Information Service. The ceasefire agreement, which was guaranteed by Russia and brokered by Head of Syria’s Tomorrow Movement Ahmed Jarba, stipulates joint antiterrorism efforts, release of detainees, and the return of refugees and displaced to their residences.


15th well from Nooros gas field comes online

The 15th well at the Nooros gas field has come online, pumping an additional 180 mcf/d into the national grid, the Oil Ministry announced yesterday. The Nedco well allows production from the Nooros field to remain steady at 1.2 bcf/d. On a related note, Eni and EGPC JV Belayim Petroleum Company (Petrobel) — which completed work on the well in record timing of under two months — reportedly intends to pump an additional 0.5 bcf/d into the national gas grid by mid-2019, as it brings its South Balteem well online, sources tell Youm7.

Basic Materials + Commodities

Supply Ministry to announce cap on rice imports

The Supply Ministry will set a cap on the amount of rice Egypt will import and will also select specific countries from which rice can be sourced, Minister Ali El Moselhy said yesterday. Egypt will probably need to import between 500-700k tonnes of rice next year to cover local consumption needs, according to El Moselhy. The ministry will announce these rules within three months. The government had decided last month to import rice, following previous measures to clamp down the cultivation of the water-intensive crop.


Syrian investors to establish USD 500 mn projects at Nubaria Industrial Zone

A group of unnamed Syrian investors are reportedly planning to establish projects worth USD 500 mn at the Nubaria Industrial Zone in sectors including food, textiles and plastic, Nubaria Investment Association boss Awni El Megharbel claimed yesterday, without providing any additional detail.

Telecoms + ICT

Military Production Minister signs MoU with Indian Lava to establish local smartphone production line

(The Military Production Ministry inked a MoU with Indian smartphone manufacturer Lava to establish a mobile phone production line in Egypt, CEO Vikram Singh Parmar said, Al Masry Al Youm reports. The production will be set up at one of the facilities belonging to the ministry. Minister Mohamed El Assar had met earlier this month with Lava representatives to discuss the project, which earlier reports suggested could be coming online by 2019. No details on the investment value were disclosed but Lava had said last year that it could invest USD 10 mn in Egypt in 2018.

Vodafone Egypt begins testing fixed line services

Vodafone Egypt has begun testing its fixed line services with state-owned landline monopoly Telecom Egypt, External Affairs and Legal Director Ayman Essam said. Vodafone has yet to reach a final decision on whether or not it will offer fixed line services at all, according to Essam, since they are not particularly lucrative. The National Telecommunications Regulatory Authority (NTRA) is currently investigating why the nation’s three private mobile network operators are facing delays in offering fixed line services since they received their operating licenses two years ago, as we noted yesterday. Orange Egypt had said in December last year that it would begin offering fixed line services as of 2018.

Automotive + Transportation

Transport Minister invites France’s Alstom to bid on upgrading Giza-Beni Suef railway line

France’s Alstom was invited to bid on the tender for upgrading the Giza-Beni Suef railway line, Transport Minister Hisham Arafat said yesterday. Alstom is already working on railway projects in Egypt, including the development of the Cairo Metro Line 3. It is also bidding to deliver six trains and two locomotives for Cairo Metro Line 2. The new trains are part of the government’s plans to overhaul the railway sector.

Egypt Politics + Economics

El Sisi ratifies law establishing Supreme Authority for Upper Egypt Development

President Abdel Fattah El Sisi ratified yesterday the law establishing the Supreme Authority for Upper Egypt Development, Al Shorouk reports. The law mandates the authority with drafting a holistic strategy for the economic, social, and urban development of regional areas. The executive regulations for the law are expected within three months. The House of Representatives had approved the law in June.


Egypt’s squash team is expected to dominate at WSF World Junior Squash Championships

Egypt’s “formidable” squash team is expected to dominate at the WSF World Junior Squash Championships kicking off in Chennai, India today, according to Business Standard. “The Egyptians dominate the seedings in the individual events with four of the top eight in the men’s section and an equal number in the women’s event.” Egypt’s main challengers will be from Malaysia, Hong Kong, England, and the USA, but remains “the overwhelming favourite” to make a gold medal sweep at the championship, according to the Hindu. Our friends at CIB are the proud sponsors of the team representing Egypt at the championship.

On Your Way Out

Egypt has the lowest average postpaid package cellular rate plan in the Arab world, according to a report released by the Arab Advisors Group. The report shows Jordan holding the lowest average prepaid package rate, while Lebanon and Mauritania hold the highest average prepaid and postpaid package rates, respectively. The report analyzes cellular tariffs for 48 cellular operators in 19 Arab countries as of May this year.

A racing team from Ain Shams University (ASU) won the Cost and Manufacturing award at the Formula Student engineering competition in the UK earlier this week, according to the Institution of Mechanical Engineers. The competition sees competitors producing “a prototype for a single-seat race car for autocross or sprint racing, and [presenting] it to a hypothetical manufacturing firm.” In the competition’s overall ranking, ASU’s team landed in the 31st spot out of 81 competitors.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.84 | Sell 17.94
Buy 17.85 | Sell 17.95
EGP / USD at NBE: Buy 17.78 | Sell 17.88

EGX30 (Tuesday): 15,443 (-1.5%)
Turnover: EGP 792 mn (17% below the 90-day average)
EGX 30 year-to-date: +2.7%

THE MARKET ON TUESDAY: The EGX30 Tuesday’s session down 1.5%. CIB, the index heaviest constituent ended down 3.1%. EGX30’s top performing constituents were Heliopolis Housing up 2.9%, Emaar Misr up 2.7%, and Telecom Egypt up 1.9%. Yesterday’s worst performing stocks were Porto Group down 4.0%, Abu Dhabi Islamic Bank down 3.3%, and CIB down 3.1%. The market turnover was EGP 792 mn, and local investors were the sole net buyers.

Foreigners: Net Short | EGP -44.8 mn
Regional: Net Short | EGP -13.1 mn
Domestic: Net Long | EGP +58.0 mn

Retail: 48.0% of total trades | 50.0% of buyers | 46.0% of sellers
Institutions: 52.0% of total trades | 50.0% of buyers | 54.0% of sellers

Foreign: 30.5% of total | 27.6% of buyers | 33.3% of sellers
Regional: 5.0% of total | 4.2% of buyers | 5.8% of sellers
Domestic: 64.5% of total | 68.2% of buyers | 60.9% of sellers

WTI: USD 67.80 (-0.41%)
Brent: USD 71.89 (-0.37%)

Natural Gas (Nymex, futures prices) USD 2.74 MMBtu, (+0.15%, August 2018 contract)
Gold: USD 1,228.10 / troy ounce (+0.07%)

TASI: 8,462.59 (-0.33%) (YTD: +17.11%)
ADX: 4,783.59 (-0.18%) (YTD: +7.73%)
DFM: 2,913.14 (-0.22%) (YTD: -13.56%)
KSE Premier Market: 5,346.08 (-0.8%)
QE: 9,449.64 (+0.10%) (YTD: +10.87%)
MSM: 4,442.49 (-0.14%) (YTD: -12.88%)
BB: 1,358.13 (+0.46%) (YTD: +1.98%)

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

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

05 August (Sunday): Egypt’s PMI reading for July released.

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.

18 September (Tuesday): Cairo Economic Court to issue ruling on EGP 5.6 bn antitrust case against pharma companies including Ibnsina.

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).

10-13 October 2019 (Tuesday-Sunday) Big Industrial Week Arabia 2019, Egypt International Exhibition Center.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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