Monday, 8 October 2018

Finance ministry testing Asian appetite for Egyptian debt

TL;DR

What We’re Tracking Today

Good morning, friends, and welcome back from our somewhat impromptu long weekend. And to those Canucks celebrating, Happy Thanksgiving.

Your next regularly scheduled holiday is the Prophet Muhammad’s Birthday on or about 20 or 21 November — conveniently just in time for US Thanksgiving.

That means Egyptian businesses are on track to have closed in observance of a record 18 national holidays this year, according to our faithful correspondent Davide C’s latest accounting, completed on Thursday when it was made clear that yesterday would be off. That’s one day more than in 2017 — and about 2x what Davide tells us is the long-term average of 8.6 days per calendar year in Italy, our nearest Mediterranean sibling. (And all of that is before you count days on which your staff “bridged” a holiday.)

Keep the faith: The EGX30 closed down 1.5% on Thursday. With the trading week set to start in a couple of hours, the words of EFG Hermes strategist Mohamed Al Hajj ring in our ears: “While the market could continue to trade sideways in the short term, we cannot justify a change in our view on Egyptian equities given current valuations, earnings per share growth, and the medium-term outlook for local interest rates.”

The IMF and World Bank Annual Meetings kick off today in Bali, Indonesia, with the talk of the town being the economic outlook for 2019. Expect the durability of the “ongoing recovery” from the financial crisis and prospects for the “next crisis” to be high on the minds of attendants. You can check out the landing page for the meetings, which go on until Sunday, 14 October, here.

Finance Minister Mohamed Maait and Vice Minister of Finance Ahmed Kouchouk are in Bali for the meetings.

Egypt is using the meetings to test appetite in Asia for an upcoming USD 5 bn eurobond offering. A nondeal roadshow kicked off in Seoul yesterday and is set to continue throughout the coming weeks, taking officials across Asia and also to Europe. We have more in today’s Speed Round, below.

The IMF’s World Economic Outlook report is set to be released tomorrow. That’s when the fund gives its view on the growth outlook for the global economy, emerging markets, MENA and Egypt. As is customary, two chapters are already out (Chapter 2, Chapter 3).

Trump administration could boost US funding for IMF? In a sign that the internationalism may not have completely flatlined in Washington, the Financial Times reports that “the Trump administration has left the door open for a US funding boost to the IMF, calling for a ‘careful evaluation’ of the global lender’s finances to make sure it has enough money to rescue struggling economies.”

Growth momentum in most advanced economies has been strong enough to conceal the “fragility” of EMs and propel global growth figures, Chris Giles writes for the Financial Times. Most countries seem to have relatively healthy growth indicators, but a closer look tells us that EMs are lagging behind amid a drop in investor confidence. “With the US economy notable strong, pushing unemployment to its lowest level in almost 50 years, and other advanced economies still growing faster than long-term sustainable rates, the short-term concern in the global economy is centered in emerging economies. These have hit a rough patch … suffering from outflows of money, depreciations of their currency and therefore an increase in the burden of foreign currency denominated debt.”

What oil production cuts? Russia and Saudi Arabia have added around 1 mn bbl/d of crude since June, with pledges for greater room for further production. Saudi production jumped around 700k bbl/d to 10.7 mn bbl/day as of October, Saudi Energy Minister Khalid Al Falih said at Russian Energy Week. “I anticipate that November will be slightly higher,” he said, potentially breaking the production record set in November 2016, according to Bloomberg. Russia, which already broke its post-Soviet production record last month, could add another 300k bbl/d of supply within a “few months,” according to Russian Energy Minister Alexander Novak.

So why is oil still trading north of USD 80? Despite the production increases, brent crude was up to USD 85.20/bbl on Thursday. If you ask Russian President Vladimir Putin, the fault lies squarely with Donald Trump, whose push to end the Iran nuclear agreement and sanctions against Venezuela is behind the price rise: “Donald, if you want to find the culprit for the rise in prices, you need to look in the mirror,” said Putin. The ramp-up in production in Saudi, Bloomberg suggests, is enough to mitigate lower supply from Iran and Venezuela, but not to completely replace it.

Also worth a moment of your time this morning:

Saudi Aramco’s IPO is back on and will take place by 2021, Crown Prince Mohammed bin Salman told Bloomberg in an interview.

Schroders and Lloyds said yesterday they are mulling a wealth management “alliance” that Reuters says would be “among the biggest wealth management tie- ups in recent years and would come amid widespread consolidation in the broader industry sector.”

Did China hack Apple and Amazon with a chip the size of a grain of rice? That’s the contention in an epically reported piece by Bloomberg Businessweek that’s being vehemently denied by both companies. The US Department of Homeland Security is looking into the allegations.

A dissident Saudi journalist disappeared on a visit to his country’s consulate in Istanbul. Turkey claims Jamal Kashoggi, a longtime regime figure now writing from self-imposed exile, was executed inside the consulate by a Saudi hit squad. KSA denies the charges.

The head of Interpol disappeared on a visit to China. Turns out Meng Hongwei, the international police organziation’s president, is in the clink and under investigation on corruption charges. He has since resigned his post.

The Nobel Prize in the economic sciences will be announced today. The 2018 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel will be made public in a live-streamed ceremony late this morning. The prize caps an award season that saw Iraqi human rights activist Nadia Murad and Congolese surgeon Denis Mukwege jointly win this year’s peace prize on Friday for their campaigns to end [redacted] violence in war.

PSA #1- The fitness goals of the olds. Reddit, hardly known for its large over-40 crowd, featured an epic thread over the long weekend on how the olds among us are aiming to stay fit into their dotage. An inspiring must-read for anyone looking to get serious about health and fitness with the approach (or passage) of that 40th birthday.

PSA #2: Google will show off new hardware tomorrow at its fall launch event. We’re iSheep, but we like the Pixel lineup very much. The Verge and Tom’s Guide have the rundown on what you can expect. Also for non-Apple folk: The new Surface Pro 6 tablet looks particularly nice.

PSA #3- We’re heading into fall in the nation’s capital. Expect pleasant daytime highs of 29-31°C this week and next, with overnight lows of 19-22°C.

Enterprise+: Last Night’s Talk Shows

It was a quiet night on the airwaves after a long and fairly relaxing weekend.

A fire that ravaged palm tree plantations in New Valley’s El Rashida village was the talk of the town. There were no casualties but the fire did threaten to spread to nearby residential areas, according to Reuters. Rep. Daoud Suleiman told Masaa DMC that 53 people were taken to hospital after the fire. He said that it will take up to a fortnight to fully extinguish the blaze. The governor in New Valley held a meeting with villagers in the area to discuss how to handle similar situations in the future, he also said, adding that the government intends to compensate farmers (watch, runtime: 14: 21). Al Hayah Al Youm’s Kamal Mady also covered the story (watch, runtime: 1:49).

(Also this weekend, one person was killed and four others injured when a blast rocked a Total fuel depot in Mostorod, Total said in a press release on Thursday (pdf).)

A conspiracy against education reform? Education Ministry employees have allegedly been trying to sabotage Minister Tarek Shawky’s K-12 curriculum reforms by intentionally delaying the delivery of schoolbooks, Amr Adib said on El Hekaya (watch, runtime: 2:12). Shawky himself phoned in to confirm that the plan has run into resistance. He reassured Adib, though, that schoolbooks have been delivered, noting that new measures have been introduced to prevent private school suppliers from price gouging, to the disgruntlement of some employees (watch, runtime: 4:03).

Worst job in the history of bad jobs: Listening to our countrymen complain about the private sector. The Consumer Protection Authority (CPA) will be operating out of kiosks in the capital city’s major public squares for today only to listen to consumer complaints, CPA boss Reda Abdel Moaty told Hona Al Asema. The outlets will operate from 8am CLT until midnight (watch, runtime: 6:40).

Also addressing the disgruntled last night was the director of the cabinet’s complaints division, Tarek El Refai, who spoke to Hona Al Asema’s Lama Gebriel about a new system for listening to citizens’ grips. Most voters’ complaints seem to be about garbage, because that was the one topic on El Refai’s brain last night. He said that those need to be accompanied with photographic evidence (watch, runtime: 29: 37). We can help, Mr. Tarek…

Gebriel also spoke to the head of the Finance Ministry’s macro-fiscal division, Sarah Eid, about the explanatory booklet that the ministry publishes every year to help simplify the state budget for citizens (watch, runtime: 21: 51)..

President Abdel Fattah El Sisi’s Armed Forces Day speech: The president delivered a nine-minute speech on the occasion of 6 October in which he recounted the events leading up to the war. You can watch the full speech in Arabic (runtime: 9:18) or dip into a full readout here.

Speed Round

Speed Round is presented in association with

** #1 EXCLUSIVE- With the price of oil stubbornly high, the Madbouly government may be looking at a fuel hedge after all. The cabinet of Prime Minister Mostafa Madbouly is drafting a policy change that would allow the Finance Ministry to move ahead with a hedging strategy to shield the state budget against the rising price of oil and other key commodities, a government source told Enterprise yesterday. The policy would outline options and set the framework through which the finance minister can adopt hedging strategies without further straining the state budget. The policy package would also allow the minister to create a government-affiliated unit that would track commodity prices as part of the hedging strategy.

Global oil prices rose at a much faster pace than the government initially expected, the source also told us. Finance Minister Mohamed Maait had said last month that plans to sign fuel hedging contracts with global banks, widely believed to be JP Morgan and Citibank, had been temporarily shelved and would be killed entirely if global oil prices were to stabilize. Last week, however, sources told us that government is now expecting its fuel subsidy bill for FY2018-19 to jump to EGP 100 bn, up from an initial projection of EGP 89 bn, after Brent crude prices surged beyond the USD 80/bbl mark to reach a four-year high.

Deficit reduction target under pressure: According to Bloomberg, every USD 1 increase above the budgeted oil price of USD 67/bbl adds EGP 4 bn (USD 222 mn) to the state’s annual outlay, possibly preventing the government from hitting its budget deficit target of 8.4% for the fiscal year. A government source had told us earlier this month that the gap is likely to come in at something closer to 8.6%. All of this comes as some analysts are tipping crude to break the USD 100/bbl mark amid a US-driven ban on Iranian oil.

** #2 FinMin kicks off Asia roadshow ahead of planned eurobond issuance, will also tap European investors: The Finance Ministry has launched a nondeal roadshow in Asia that is meant to help Egypt attract new investors to its debt market ahead of an anticipated USD 5 bn eurobond sale, according to a ministry statement (pdf). A delegation led by Finance Minister Mohamed Maait kicked off the roadshow in the South Korean capital of Seoul yesterday and is set to meet with prospective investors throughout the week. The pan-Asian roadshow will pick up again in the second week of November, with visits to Singapore, Hong Kong, China, and Japan on the agenda, according to the statement, which adds that officials intend to use the trip to gauge the Asian market’s appetite for Egyptian debt, as the government works to broaden its investor base by exploring previously untapped markets. Maait had previously said that Egypt was looking to test Asian markets for the potential issuance of JPY- and CNY- denominated samurai and panda bonds. The coming weeks will also see ministry officials travel to the UK, France, Italy, Switzerland, and Germany to promote the upcoming issuance. Reuters also has the story.

The Finance Ministry will hire advisors for the issuance soon after the roadshow, sources told Al Mal. It is still not yet known when the government would issue the bonds, but Maait had previously put the window at some time between January and March 2019.

Widening the pool of investors in Egyptian debt is critical amid outflows from domestic offerings during the ongoing Emerging Markets Zombie Apocalypse. The move comes after Egypt canceled four treasury bonds auctions in September due to yields that had surged to highs of 20% for five- and 10-year treasury bonds, according to some traders. Maait had also suggested that Egypt may be looking east for liquidity, and the Finance Ministry is said to be working on a comprehensive debt control strategy that would set limits on both internal and external borrowing in a bid to bring down overall public debt levels. The country’s foreign debt levels at the end of FY2017-18 stood at USD 92.64 bn.

Egypt’s foreign debt levels will continue to rise until 2020, Beltone Financial’s Alia Mamdouh speculated yesterday, telling Hona Al Asema’s Lama Gebriel that an influx in FX-denominated receipts from tourism, oil and gas, and exports will help offset the impact (watch, runtime: 5:37).

** #3 IPO WATCH- Qalaa could list TAQA, ERC in 4Q2019, says Heikal: The reasonable assumption on a date for the listing of Qalaa Holdings’ TAQA Arabia and the parent company of the Egyptian Refining Company (ERC) should be 4Q2019, market conditions permitting, said Qalaa Holdings Founder and Chairman Ahmed Heikal in an interview with Bloomberg TV at the end of last week. Heikal had said back in the July that the IPOs were part of a plan to list as many as eight of Qalaa’s subsidiaries over the next five years.

ERC to be fully operational by May 2019: ERC’s USD 4.3 bn refinery in Mostorod, which is currently 98% complete, will be fully operational by May of next year, Heikal said. Construction on the refinery looks set to be complete in a month and the commissioning phase has started, he noted.

The second half of 2019 will see ERC hit its stride in terms of both revenue and profitability, said Heikal. And with the new International Maritime Organization fuel sulfur regulations coming to effect in 2020, ERC should be hitting very nice margins that year. EBITDA for ERC in 2020 — its first full year of operations — should be in the neighborhood of USD 1.5-1.6 bn.

Global oil prices have hit ERC’s projected margins slightly, but it was not pronounced, said Heikal. This is because ERC is a second stage refinery, so not as susceptible to crude price volatility. Heikal sees oil will stay at USD 70-85/bbl for some time. “We’re not subscribing to the USD 100 scenario, but at least in Qalaa, I’ll be happy.” As for TAQA, sourcing locally-produced gas from E&P companies is an option, as it is the largest private distributor of natural gas fuel in Egypt.

Algeria exit could take place in 2Q2019: Closing on the sale of its stake in Algerian cement company Zahana will depend on the pace of the Algerian government, he said. The Algerian government wants to complete the transaction before 2Q2019, he added.

You can watch the full interview here (watch, runtime: 6:47).

** #4 IPO WATCH- CI Capital, Jefferies, Emirates NBD sign contracts to lead Enppi IPO: CI Capital, Jefferies International Limited, and Emirates NBD have signed contracts to manage state energy contractor Enppi’s planned IPO, the Oil Ministry said in a Friday statement. The IPO will see Enppi offer for sale up to 24% of its shares, the statement confirms, but the timing of the offering remains unclear. A Finance Ministry source had told Enterprise last month that Enppi’s IPO is “likely” to take place in 1Q2019 and will most probably be the first state company to IPO under the privatization program, but a final decision has yet to be taken.

IPO WATCH- IWAN Developments looks to list after restructuring: Real estate developer IWAN Developments is currently setting up a holding company to consolidate its subsidiaries and plans to list the new company on the EGX, CEO Waleed Mokhtar tells Amwal Al Ghad. Mokhtar did not provide further details on the expected size or timing of the listing, saying that the company is “waiting for the right time and conditions” for the IPO.

** #5 Euromoney pens love letter to Egyptian investment banks: After singing the praises of EFG Hermes, which has led the Egyptian industry’s push into both non-bank financial services and regional markets, Euromoney notes in its mash letter that “Beyond EFG Hermes, long the unrivalled leader of Egyptian investment banking, firms such as CI Capital and Pharos Holding are demonstrating that they, too, have ambition. Such is the sector’s appeal that Naguib Sawiris, the founder of telecom firm Orascom and one of Egypt’s richest men, has entered investment banking, buying Beltone Financial in 2015 and investing heavily in its growth in Egypt and globally.” The epically long piece gets plenty right and serves as a good overview of the industry to those who have not previously been indoctrinated into the Priesthood of the Grand Wizards of High Finance. Read: The renaissance of Egyptian investment banking.

** #6 Rencap’s Ahmed Badr goes back to Credit Suisse to lead push into KSA: Our friend Ahmed Badr is set to rejoin Credit Suisse in Dubai four years after joining emerging and frontier specialist Renaissance Capital. Badr led Rencap’s push into Mideast markets and was a consistent advocate of the Egypt story, spearheading Rencap’s opening of a dedicated office in Cairo and landing the outfit its first Egyptian IPO. Bloomberg reports that Badr will become a managing director and “be responsible for boosting the Zurich-based lender’s equity operations in the Middle East and North Africa, according to two people with knowledge of his move. … The Saudi Arabian equities market will be his biggest priority, according to one of the people.” Badr was previously head of equities in Dubai for Credit Suisse.

INVESTMENT WATCH- Russia’s TMH to build USD 100 mn factory to manufacture railway cars in Egypt: Russia’s Transmashholding (TMH) is looking to establish a USD 100 mn facility in Egypt to manufacture railway cars, the company’s local representative, Hamdy Abdel Hamid, told Al Shorouk yesterday. Talks are currently ongoing to establish the factory within a Military Production Ministry complex, with the aim of covering local needs and exporting surplus output. Details on the timeline and financing for the project were not disclosed.

Announcement comes after big contract win: The Egyptian National Railway signed an agreement with TMH last month that will see the Russian company supply 1,300 railway cars, of which 30% are set to be manufactured locally, according to Abdel Hameed. The agreement, which covers stock maintenance and labor training for 15 years, is set to be financed through a loan by a Russian-Hungarian banking consortium that carries a 1.58% interest rate with a 14-year repayment period and four-year grace period, he added. Egypt will pay a total of EGP 22 bn to buy the cars and will receive the first batch within 14 months and the last car within 40 months from the start of manufacturing.

LEGISLATION WATCH- Public Enterprises Act amendments completed: The Public Enterprises Ministry has completed drafting the amendments to the Public Enterprises Act that could open the door for the government to list state holding companies, Minister Hisham Tawfik tells Al Masry Al Youm. He did not disclose details of the proposed amendments, which he said will soon be presented to the Madbouly Cabinet for approval. An early draft of the changes, which leaked to Al Mal in August, revealed that the legislation would allow private-sector companies to own stakes of just under 50% in the ministry’s holding companies. The amendments would also limit government seats on the boards of state holding companies to seven seats at most and could set a three-year term limit for the boards. The amendments are expected to be introduced in the current legislative session of the House of Representatives.

** #7 EXCLUSIVE- Is the FinMin trying to up the tax on fun? Members of the Federation of Egyptian Industries’ (FEI) Cinema Industry Chamber met with the Finance Ministry last week to discuss proposed legislation that would raise taxes collected on entertainment venues including cinemas, theaters, and nightclubs, government sources told Enterprise yesterday. In addition to setting a minimum entry charge of EGP 20, the changes — to which chamber members object — would raise the duties on different venues as follows:

  • 15% on Arabic film tickets, up from 5% previously;
  • 30% on foreign film tickets, up from 20%;
  • 15% on theater tickets, up from 10%;
  • 15% on circus tickets, up from 5%;
  • 30% on ballet and opera tickets, up from 5%;
  • 40% on night club entrance fees, up from 10%.

Wedding venues could also be made to pay a fee of EGP 1 per person, while group trips such as safaris would be taxed at 25-50% of their value. Members of the chamber claimed the proposed increases would be bad for business and will be meeting this week to further discuss the issue.

Background: This proposal has been circulating since 2016 and has been kicked down the road multiple times. That having been said, the treasury has made it clear that boosting tax receipts will be a key component of its drive to ease pressure on the budget as fuel prices see higher outlays for the subsidy program.

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Up Next

Egypt, Greece, Cyprus summit will be at head-of-state level: It appears that the tripartite summit this week between Egypt, Greece and Cyprus will be attended by the presidents of the three countries, according to Ahram Online. Expect gas in the East Mediterranean to top the agenda. Talks between President Abdel Fattah El Sisi and his Greek and Cypriot counterparts will also encompass security cooperation and migration, in addition to some of the region’s hotspots like Syria, according to the newspaper. The summit, which is set to take place on Wednesday, 10 October, was initially to be led by the foreign ministers.

Also on the horizon:

  • An IMF delegation is due in town mid-October for a review of Egypt’s progress on its reform program ahead of the disbursal of the fifth USD 2 bn tranche of the country’s extended fund facility.
  • President Abdel Fattah El Sisi is in Moscow next Wednesday, 17 October. Military cooperation is high on the agenda, Russia’s deputy foreign minister told TASS on Friday.
  • The House will convene for its first general assembly of the new session on 21 October.
  • The 2018 Narrative PR Summit will take place at the Four Seasons Nile Plaza on Sunday, 28 October.
  • An Egyptian-Sudanese presidential summit is set to take place in Khartoum. The gathering has yet to be officially confirmed.

Image of the Day

Former President Anwar El Sadat hosted US President Richard Nixon during the latter’s world-tour in 1974 that took him to Egypt, according to the Washington Post. The two were spotted shaking hands at the Giza Necropolis. Nixon resigned from his post less than two months later, as the Watergate scandal broke out in the US.

Egypt in the News

Melania Trump’s visit to Cairo as part of her four-nation tour of Africa topped coverage of Egypt in the foreign press over the weekend. Melania discussed in a meeting with President Abdel Fattah El Sisi and his wife, Entissar Amer, issues related to child welfare, education, and women’s role in society, according to an Ittihadiya statement. The US’ First Lady concluded her trip with a tour and brief presser at the Giza Pyramids, according to Reuters. The story won wide coverage from the AP, WaPo, New York Times, CNN, and many more.

The biggest business story of the long weekend in the international media: Patrick Werr’s piece for Reuters on foreign direct investment falling in the second quarter to “its lowest levels since just after an IMF-backed austerity plan began two years ago, a sign more pain my lie ahead before Egyptians begin reaping benefits.” Reuters calculates that Egypt attracted USD 600 mn in non-oil FDI in 2Q, down from USD 956 mn in 1Q and USD 1.5 bn in 4Q17. Analysts from EFG Hermes, CI Capital and Naeem offer color commentary, as does China-focused business consultant Hesham El Abd. The story got wide pickup in the international business press.

Carnegie ME Center’s drive-by on the economy: Any gains made with the upturn in Egypt’s macroeconomic outlook will be neither sustainable nor inclusive, writes Wael Gamal for the Carnegie Middle East Center’s Diwan blog. Gamal says economic gains have primarily come from tourism and the natural gas sector, the latter of which is not labor-intensive. Growth in jobs in industry and agriculture has been much slower.

Football spat with KSA? The Associated Press’s piece on “Egyptian soccer being shaken by a Saudi minister’s alleged meddling” got plenty of pickup over the weekend.

On Deadline

Another columnist sees teachers’ rights as central to educational reform: Teachers’ rights are once again in the spotlight amid arguments that a curriculum overhaul won’t be enough to reform education in Egypt. The government’s strategy to develop K-12 education needs to address the quality of teachers employed by the system, Hania Sobhy writes for Al Shorouk, and the quality of classroom teaching won’t improve if educators are not given a chance to develop new skills and are not paid a livable wage.

Diplomacy + Foreign Trade

Egypt, IDB sign USD 3 bn cooperation framework for 2019-21: Egypt and the Islamic Development Bank (IDB) signed a USD 3 bn cooperation framework between them for 2019 to 2021, according to a statement from the Investment and International Cooperation Ministry. The framework, which governs funding allocation and cooperation programs between the two, will rest on four avenues of cooperation: renewable energy and sustainable development, infrastructure development, trade and private sector support, and human resources training. The agreements will also see the IDB move its regional headquarters to Cairo. It is worth noting that Egypt signed in September two agreements to unlock a total of USD 3 bn in financing from the International Islamic Trade Finance Corporation, a subsidiary of the IDB.

Separately, Egypt signed an agreement with the UNDP that would unlock USD 31.5 mn in funding from the Green Climate Fund to help mitigate the impact of climate change and rising sea levels in the North Coast, Ahram Online reports.

Japan’s JBIC ready to fund Egypt electricity and transport projects: A delegation from the Japan Bank for International Cooperation (JBIC) has signaled the bank’s interest in funding renewable energy and transport projects in Egypt, Al Mal reported. The delegation had met with Egyptian Electricity Minister Mohamed Shaker on Thursday to discuss strengthening cooperation.

Saudi food authority inspects Egyptian factories to whitelist food exporters: A delegation from the Saudi Food and Drug Authority (SFDA) is in town to inspect 60 Egyptian food factories looking to be added to the SFDA’s whitelist of approved exporters if they meet quality and health standards, Egypt’s Food Safety Authority chief Hussein Mansour tells Al Masry Al Youm. The two authorities had been in talks earlier this year to ease some of KSA’s regulations on imports of Egyptian agricultural products, which include only allowing imports from suppliers approved by and registered with the SFDA. Egypt imposed new regulations on the inspection of agricultural products ahead of export after the kingdom and several other countries slapped bans on imports of Egyptian fruits and vegetables.

Egypt is considering withdrawing from its role as broker between rivaling Palestinian factions, Israel Hayom reports. Intelligence officials blamed Palestinian Authority (PA) leader Mahmoud Abbas for deliberately “torpedoing the plan devised [by Egypt],” which he accused of favoring Hamas.

Energy

Eni to increase its investments in Zohr to USD 16 bn

Italy’s Eni plans to increase its investments in the Zohr gas field to USD 16 bn, up from USD 12 bn, by the time it completes the field’s development in July 2019, according to an unnamed source. Production from the field reached 2 bcf/d last month and is expected to plateau at 2.7 bcf/d next year.

Basic Materials + Commodities

Centamin cuts output targets, shares drop 12%

Gold miner Centamin has cut its 2018 output target from its Sukari mine in Egypt to 480k ounces from a previous forecast of 505k-515k ounces due to operational improvements at its taking “longer than planned to materialise,” according to a company release. Centamin had previously cut its output target in May from an initial forecast of 580k ounces due to lower grade gold at Sukari. The announcement caused Centamin’s share price to drop 12% on Friday, according to the Financial Times.

Drilling results for Aton’s Rodruin concession show strong potential

Assay results from Canada’s Aton Resources three drill holes at the Rodruin concession in the Eastern Desert confirm the presence of very high grade zones of mineralization with coarse gold, which point to a significant find, according to a press release from the company (pdf).

GASC purchases 180k tonnes of Russian wheat

The General Authority for Supply Commodities (GASC) purchased 180k tonnes of Russian wheat in an international tender on Thursday, according to Reuters’ Arabic service. Traders tell Reuters that the lowest offer GASC received in the tender was USD 233.95 per tonne FOB from Daewoo. The wheat is scheduled for delivery between 1-10 December.

Manufacturing

Russian-Spanish consortium sign MoU to manufacture Dabaa plant components

The National Authority for Military Production signed an MoU on Saturday with Proton Technologies to locally manufacture components for the pipelines system that will be used to build the Dabaa nuclear power plant, according to Al Shorouk. Proton Technologies — a consortium comprised of Russia’s Tubes 2000 and Spain’s Tubacex — is expected to present a feasibility study on the project, Tubacex CEO Jesus Esmoris said, without providing a timeline for the project. Russian nuclear energy company Rosatom had submitted last month its safety analysis report on the nuclear power plant to the Egyptian Atomic Energy Authority (EAEA).

Real Estate + Housing

Sawiris in talks with NUCA to partner on residential project

Orascom Investment Holding’s (OIH) Naguib Sawiris is reportedly hoping to enter into a partnership agreement with the New and Urban Communities Authority (NUCA) to jointly develop land for a residential project in the Sheikh Zayed City extension, sources told Al Shorouk. OIH is looking to use funds from its recent USD 90 sale of subsidiary MENA Submarine Cable Systems to develop at least 1,000 feddans. No further details were provided.

Automotive + Transportation

Finance Ministry to receive USD 150 mn loan from EBRD for Damietta-Mansoura freight line

The European Bank for Reconstruction and Development (EBRD) has agreed to give the Finance Ministry a USD 150 mn loan to finance the automation of the signaling system on the Damietta-Mansoura cargo railway line, Minister Hisham Arafat said, Al Shorouk reports. No further details were provided, but Arafat said that the government was planning to automate signaling systems along a number of different service rail lines by FY2020-2021. We had noted in January that the ministry was seeking the loan to partially finance the 150 km freight line, which would take three years to fully construct.

Banking + Finance

EGPC receives USD 1 bn syndicated facility from HSBC-led consortium

The EGPC has reportedly received a USD 1 bn syndicated loan from an international and regional banking consortium led by HSBC, sources close to the matter tell Al Shorouk. The facility will be used to partially repay the debts owed by EGPC subsidiary, Petroleum Export Limited, to foreign partners. We had reported in July that HSBC had been tapped to arrange a loan with five=year maturity that would be used to prepay EGPC cargo deliveries. Back in May, sources claimed the EGPC had been seeking two loans from a local banking consortium worth a combined USD 850 mn in order to repay arrears to international oil companies.

Local banks including Banque Misr to provide EGP 3 bn for new shopping mall in the Fifth Settlement

A number of local banks, including Banque Misr, are reportedly arranging a EGP 3 bn that will be used by a major Saudi developer to build a EGP 6 bn shopping mall in New Cairo, sources tell Al Masry Al Youm. The developer, who they refused to name, will supply the balance. No other details were provided.

AfDB receives request from Egypt to increase its stake by 800 shares

The African Development Bank’s (AfDB) board of directors is looking into Egypt’s request to acquire an additional 800 shares in the bank, AfDB Vice President Khaled Sherif tells Al Ahram. Sherif made no mention of the value of the shares, but said that the move would make Egypt AfDB’s second largest shareholder after Nigeria.

Egypt Politics + Economics

FinMin extends deadline to file for real estate tax exemption

The Finance Ministry extended the deadline for those looking to file their real estate tax exemption documents to 30 June, 2019, AMAY reports. Those with properties valued at less than EGP 2 mn, and not used for any rental or commercial purposes are eligible.

Khaled Ali banned from travel

An Egyptian judge issued a travel ban for former presidential candidate and rights lawyer Khaled Ali on suspicions of involvement in an illicit foreign funding case, Reuters reported, citing MENA. Other prominent activists, including Hossam Bahgat and Gamal Eid, are involved in this case, which dates back to 2011.

On Your Way Out

Two Egyptian companies selected for the 2018 VC4A Venture Showcase – Series A: Two Egyptian startups, research platform Nawah-Scientific and mental health platform Shezlong, will showcase their business to investors at the Africa Early Stage Investor Summit to raise USD 250k-USD 5 mn in series A capital, VC4A announced on Friday. The summit will be held in Cape Town on 11-12 November.

Egyptian diver, bikers, hockey team break three Guinness world records: Egypt’s Reem Ashraf broke the Guinness world record for the longest female open saltwater Scuba dive with a record of 55 hours and 25 minutes, according to her Facebook page. A group of Egyptian bikers also made it in for the longest heart-shaped route after biking 6,853 km to raise awareness about heart diseases, while El Sharqiya’s men’s hockey team were added after securing their 12th consecutive African championship title win.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.85 | Sell 17.95
EGP / USD at CIB:
Buy 17.86 | Sell 17.96

EGP / USD at NBE: Buy 17.78 | Sell 17.88

EGX30 (Thursday): 14,105 (-1.5%)
Turnover: EGP 710 mn (2% below the 90-day average)
EGX 30 year-to-date: -6.1%

THE MARKET ON THURSDAY: The EGX30 index ended Thursday’s session down 1.5%. CIB, the index heaviest constituent ended down 0.5%. Pioneers Holding was the only EGX30 constituent that ended in the green zone, up 0.2%. While Thursday’s worst performing stocks were Arab Cotton Ginning down 4.6%, Palm Hills down 4.0%, and Egyptian Iron and Steel down 3.9%. The market turnover was EGP 710 mn, and foreign investors were the sole net sellers.

Foreigners: Net Short | EGP -30.7 mn
Regional: Net Long | EGP +25.5 mn
Domestic: Net Long | EGP +5.2 mn

Retail: 61.5% of total trades | 61.7% of buyers | 61.3% of sellers
Institutions: 38.5% of total trades | 38.3% of buyers | 38.7% of sellers

Foreign: 24.3% of total | 22.2% of buyers | 26.5% of sellers
Regional: 7.0% of total | 8.8% of buyers | 5.2% of sellers
Domestic: 68.7%of total | 69.0% of buyers | 68.3% of sellers

WTI: USD 73.71 (-0.85%)
Brent: USD 83.22 (-1.12%)

Natural Gas (Nymex, futures prices) USD 3.19 MMBtu, (+1.37%, Nov 2018)
Gold: USD 1,203.30/ troy ounce (-0.19%)

TASI: 7,893.62 (-1.30%) (YTD: +9.23%)
ADX: 4,990.25 (-0.34%) (YTD: +13.45%)
DFM: 2,790.17 (-0.06%) (YTD: -17.21%)
KSE Premier Market: 5,306.67 (-0.15%)
QE: 9,847.05 (-0.56%) (YTD: +15.53%)
MSM: 4,516.13 (-0.21%) (YTD: -11.44%)
BB: 1,323.94 (-0.08%) (YTD: -0.58%)

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Calendar

07-11 October (Sunday-Thursday): Egypt-Romania Business Council to meet in Bucharest.

08-14 October (Monday-Sunday): The IMF and World Bank annual meetings in Bali, Indonesia.

09 October (Tuesday): IMF to release World Economic Outlook report.

09 October ( Tuesday): Monetizing Innovation: How to build a smart fintech business model, The GREEK CAMPUS, Room 109, Cairo.

09-11 October (Tuesday-Thursday) Egypt Renewable Energy Conference, Cairo, Egypt.

10 October (Wednesday): Foreign ministers of Egypt, Cyprus, Greece to meet in Crete.

Second week of October: NI Capital expected to select winning bid in its tender for the management of Alexandria Containers & Cargo Handling’s stake sale.

12 October (Friday) Egypt plays its third 2019 Africa Cup of Nations qualifier against Swaziland

12-14 October (Friday-Sunday): 2018 annual meetings of the World Bank and International Monetary Fund, Bali, Indonesia.

Mid-October: IMF delegation due in town for its fourth review of Egypt’s economic reform program.

23 October (Tuesday): First Conference on Sukuk (Sharia-compliant bonds), Cairo.

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

24-25 October (Wednesday- Thursday) 9th Arab-German Energy Forum, Cairo, Egypt.

25-27 October (Thursday-Saturday): 57th ACI World Congress & 43rd ICA Annual Conference 2018, Four Seasons Nile Plaza, Cairo.

28 October (Sunday): 2018 Narrative PR Summit, Four Seasons Nile Plaza, Cairo.

03-06 November (Saturday-Tuesday): World Youth Forum 2018, Maritim Jolie Ville Golf Course, Sharm El Sheikh, Egypt.

05 November (Monday): Egypt’s Emirates NBD PMI for October released.

05-07 November (Monday-Wednesday): World Travel Market London exhibition, London, England, UK.

06-07 November (Tuesday-Wednesday): 2018 IIF MENA Financial Summit, Al Maryah Island, Abu Dhabi, United Arab Emirates

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.

04 December (Tuesday): Egypt’s Emirates NBD PMI for November released.

08-09 December (Saturday-Sunday): Business for Africa and the World: The Africa 2018 Forum, Maritim Jolie Ville International Congress Center, Sharm El Sheikh.

12 December (Wednesday): Banking and Finance Congress 2018, Cairo, venue TBD.

13-15 December (Thursday-Saturday): Forum on “ The Role of Digital Financial Communication and Solutions in Enhancing Financial Inclusion,” Sharm El Sheik, venue TBD.

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.

22-25 January 2019 (Tuesday-Friday): World Economic Forum (WEF) Annual Meeting, Davos-Klosters, Switzerland.

23 January 2019 (Wednesday) 50th Cairo International Book Fair.

25 January 2019 (Friday): Police Day, national holiday.

20-22 April 2019 (Friday-Sunday): Spring meetings of the World Bank and International Monetary Fund, Washington, DC.

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 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; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.