Sunday, 16 December 2018

The taxman wants the power to freeze the accounts of tax cheats

TL;DR

What We’re Tracking Today

The end-of-year news slowdown is not upon us. It just feels that way after an unusually quiet weekend here and abroad. We figure the news cycle has at least a week to go before things quiet down, and there’s always the central bank’s 27 December interest rate decision to which to look forward.

** Results of our 2019 Reader Poll are out tomorrow. Learn what you and your peers expect of interest rates, employment trends and more in what we immodestly believe is the largest survey of executive sentiment in Egypt.

The cost of insuring Egyptian bonds against default hit its highest level in 16 months in December amid turbulence in emerging markets and concerns about the EGP, Reuters writes. Five-year credit default swaps have surged to 3.79%, their highest levels since August 2017, Markit data showed. Credit default swaps are contracts that insure buyers of sovereign debt against potential default.

Our pick for the theme of the week in the financial press: Volatility is back. “Big swings” in the US stock market are at their highest level since 2011, the New York Times writes, as 2018 was the “year volatility came home to roost,” Reuters adds. This comes as three in five S&P 500 financial stocks are now in bear market territory (down 20% or more since January) the Financial Times notes and as European shares are on track for their worst quarter since 2011. The doom mongering reaches an educated peak in Investors have nowhere to hide as stocks, bonds and commodities all tumblein the NYT.

It is interest rate week in the United States: With US shares turning in their worst December in 16 years, investors are looking to the US Federal Reserve’s interest rate decision this week for a “Santa rally.” The Fed is expected to raise rates at the two-day meeting, which ends Wednesday, and traders are looking for a hint of its plans for 2019.

President Abdel Fattah El-Sisi is heading to Vienna today to attend the High-Level Africa-Europe Forum in the Austrian capital, Egypt’s ambassador to Austria Amr Amer said, according to Al Shorouk.

If it’s the end of the year, it’s time for Doom & Gloom — Bloomberg style. We look forward to the business information service’s Pessimist’s Guide every year, and the 2018 installment was really worth waiting for: It imagines what a run of climate disasters could do if they were to happen all at once. “The seeds were sown after an unexpectedly severe El Niño and widespread droughts diminished food production around the world, roiling trade patterns already broken by a tariff war. Hunger was rampant and refugees were on the move. … All the weather disasters and most of the policy scenarios described here have happened in the past. Just not at once.” “Bonus”: Egypt makes an appearance this year, as the package imagines bread riots after spiraling wheat prices force the government to cut bread subsidies. Read: The Pessimist’s Guide to 2019: Fire, Floods and Famine.

Requiring less imagination: Don’t be fooled by eight consecutive weeks of inflows into emerging market assets. Slower global growth, US interest rate hikes, the trade war and a weakening Chinese economy will all be bad for emerging markets in 2019, Bloomberg reports after taking the pulse of contrarian analysts, including the Societe Generale strategist who called 2018 as the year of the Emerging Markets Zombie Apocalypse. The best case scenario: A rebound sometime in 2019, just don’t ask the contrarians when that might take place, as the consensus appears that there is “no imminent turnaround for EM assets.”

Don’t cry for the carry trade: The JPMorgan Emerging Markets Currency Index (“probably the most-watched measure of its ilk”) has fallen 10.9% so far this year and is down 43% since the start of 2000, the Financial Times reports — but in reality, “the major EM currencies, at least, have been a profitable investment for most investors.” What gives? Sometimes, charts lie. Or don’t tell the full truth. Read: Emerging market currencies defy the doom mongers.

International news worth knowing this morning:

  • GERD: The Grand Ethiopian Renaissance Dam won’t be completed until 2022. (AP)
  • China’s weakening economy? China’s economy is flashing warning signs, adding to global market jitters (WSJ | NYT)
  • The neverending exit: UK Prime Minister Theresa May has threatened to tank her Brexit agreement with the EU unless European leaders make concessions (FT)
  • Climate accord: Nearly 200 countries reached an agreement yesterday to keep the Paris climate change agreement alive with rules on how it will be implemented. (Reuters)

For the productivity nerds among us: Go read the Financial Times’ How I became more productive in 2018, which surveys business leaders, authors and FT writers. Among the many gems here: Stop bloody multitasking, people. It hurts more than it helps.

And for the Stranger Things fans among us: We’re still not sure how we missed it last week, but the episode titles for season three are out (watch, runtime: 1:01). Eight episodes will drop sometime in 2019.

Enterprise+: Last Night’s Talk Shows

The airwaves were abuzz last night with commentary on President Abdel Fattah El Sisi’s remarks at the inauguration of several infrastructure projects over the weekend.

Of particular interest to the talking heads was El Sisi’s exchange with Cairo Governor Khaled Abdel Aal, who was unable to answer several of the president’s inquiries about his governorate, including its budget and the scope of its infrastructure projects over the past four years. Hona Al Asema’s Reham Ibrahim and El Hekaya’s Amr Adib wagged their fingers at the governor and suggested the Local Development Ministry should look to replace him (watch, runtime: 05:19 and runtime: 08:38).

El Sisi also reiterated his concern over the prevalence of obesity in Egypt, and called for the inclusion of graded physical education classes in all schools to help ward off obesity from a young age (watch, runtime: 04:02). The Education Ministry is already looking into training staff to implement the president’s instructions, general education department head Reda Hegazy told Masaa DMC’s Eman El Hosary (watch, runtime: 04:10).

Egypt has officially submitted a bid to host the 2019 African Cup of Nations, which kicks off in six months, and is up against South Africa for the gig. Egyptian Football Association member Ahmed Megahed said on Hona Al Asema that Egypt meets the requirements in place to host the championship (watch, runtime: 06:30) but sports critic Lotfy Sa’an sees several shortcomings in our preparedness (watch, runtime: 05:42).

Explaining the new education system: Elsewhere on the airwaves, Education Minister Tarek Shawki and Higher Education Minister Khaled Abdel Ghaffar explained the country’s new education system yet again to El Hekaya’s Amr Adib, and explained how it is meant to equip students for the labor force (watch, runtime: 01:39 and  runtime: 02:52).

Speed Round

Speed Round is presented in association with

The taxman wants the power to freeze funds in the corporate and personal accounts of alleged tax cheats: The Finance Ministry is looking to discuss with the central bank legislation that would allow the government to freeze funds in the corporate and personal bank accounts of alleged tax cheats, Finance Minister Mohamed Maait said yesterday, according to Al Mal and Masrawy. The measure would give the Tax Authority the power to freeze sums equivalent to those the authority believes the account holders owe the state treasury.

The questions here are many, ranging from the criteria you need to trigger before making the list of cheats to whether the freeze could be ordered without a court order and what, if any, appeal mechanism might be put in place.

Background: The ministry had previously been angling for direct access to corporate bank data through amendments to the Income Tax Act, now-former Tax Authority head Emad Samy had told us. The idea, which was meant to help clamp down on tax evasion, was nixed by the central bank on the basis that it would violate client data privacy provisions.

Tourism Minister Rania Al Mashat unveiled Egypt’s Tourism Reform Program (E-TRP), her ministry’s long-term strategy aimed at reforming the tourism sector, at an AmCham luncheon on Thursday. The five-pillar strategy focuses on institutional and legislative reforms, ramping up tourism promotion campaigns, developing tourism infrastructure, and rebranding Egyptian tourism to come in line with global trends.

Administrative reforms and capacity building: Al Mashat plans to lay the groundwork for the strategy by introducing far-reaching administrative reforms such as overhauling her ministry’s internal structure to increase its efficiency and focusing on hiring high-quality staff to fill managerial positions. The minister also stressed the importance of attracting more women and young people to the industry — and on the need to building up the skills of tourism workers through vocational training.

Legislative reforms: E-TRP sees changes to the legal framework governing tourism, which has remained unchanged for nearly five decades. The minister did not delve into the specifics of the legal amendments she plans to introduce, but she did note that the overwhelming majority of the industry’s labor force is unofficial and unregistered, suggesting that her ministry will be looking to introduce measures to bring the sector’s employees into the formal economy through a mix of incentives and new requirements. Industry will play a role in drafting the new legislation, she said, to ensure the measures are well-rounded.

Al Mashat confirmed that the strategy will see the ministry launching a private equity fund to upgrade Egypt’s hotels and resorts and help restructure those that are struggling financially. The fund will be at the heart of the infrastructure development element of the strategy, which will also focus on bringing hotel health and food safety and overall quality up to international standards across the domestic industry.

Re-branding Egypt and ramping up tourism promotion: The ministry intends to rebrand Egypt as a “responsible” choice for tourists that boasts green tourism destinations and empowers women economically. This rebranding will be promoted globally through campaigns, travel expos, and a full-court-press on social and other media. The ministry will also host a summit geared exclusively toward influencers during the first half of 2019 to give tourism promotion a shot in the arm. The marketing strategy will also shift towards focusing on specific destinations within Egypt, in accordance with the seasons. Campaigns will focus on tapping new source markets, particularly in Asia and Eastern Europe, as well as doubling down on well-established markets such as the Gulf. The ministry had selected in September a consortium made up of Egyptian Media Group subsidiary Synergy, and Middle East Communications Network to run Egypt’s tourism promotion campaign abroad, replacing JWT.

Hotel occupancy rates in Cairo are expected close 2018 up 7% to 70% total occupancy, Colliers International said in its latest report on Cairo’s hospitality market (pdf). Occupancy grew from last year largely on the back of the country’s improved socio-economic climate as it recovers from the effects of the EGP float in late 2016. “This growth is expected to continue into 2019 bolstered by a number of upcoming government based tourism investments such as the new Grand Egyptian Museum in Giza and the development of Maspero Triangle in Downtown.” Cairo’s largest source market for hotel occupants this year was the GCC, accounting for 55% of the domestic market, followed by local travelers at 23% and Western European tourists, according to the report. “Anecdotal evidence” suggests Chinese tourist arrivals are also on the rise in Egypt and will jump by as much as 95% y-o-y in 2018.

What we’re missing: “Cairo’s hotel market continues to lack internationally branded economy, midscale and lifestyle hotels. There is a gap in the market to meet demand from millennials who seek differentiated, trendy, yet affordable accommodation.” Colliers also sees that Egypt is not doing enough to carry out “focused marketing efforts” in China and that hotels in the country are not equipped to cater to these tourists.

EXCLUSIVE- Meet MIHC Chairman Basel El Hini: Just five weeks into a mandate to reposition the state-owned giant, Misr Insurance Holding Company (MIHC) Chairman and Managing Director Basel El Hini (LinkedIn) sat down with us for a talk about the potential of Egypt’s insurance sector, the company’s plans to grow beyond just insurance, a management reorganization and capacity build-up plans. Among the revelations: MIHC is looking to hire a new CEO for Misr Insurance. The job description for the position (the company is looking for someone with private-sector experience) is here (pdf). Edited excerpts:

Public service roots and private sector knowhow: I am no rookie as far as public sector service is concerned, having worked in Banque Misr, Banque du Caire and as an advisor to the finance minister. I also served as deputy chairman for finance and investment at MIHC, where I worked towards a long-held out hope that the company would not only grow to a regional insurance player, but to grow outside of insurance to become the largest non-banking financial service firm in the country. Having paid my dues, I left to join the private sector in 2016. When the current public enterprise minister approached me and I found that our visions for the industry and company were aligned, I accepted the position.

Mandate to shake things up: Simply put, my mandate since my appointment five weeks ago was to develop the government insurance sector and take it to another level. This includes across-the-board development and growth of MIHC’s three segments of insurance, investment and real estate — a huge wealth with which to be entrusted. On the insurance side, I am tasked with restoring the market position of Misr Insurance and Misr Life Insurance as industry giants by improving their market share and driving value appreciation. To get there we need to build up the capacity of the human resources and maximize profitability for the state through the adoption of the latest technology and the ultimate satisfaction of the client.

Core insurance business is the biggest challenge: The biggest challenge was the fact that in the core business of the group, where newcomers to the market — equipped with industry best practices — have seen us lose our edge and market share. We need to overcome that and we need to overcome that quickly. It’s not where we should be. We have the crown jewels in Misr Insurance and Misr Insurance Life.

All actors need to focus on growing the market rather than fighting over scraps: Beyond competition from the newcomers, the sector’s biggest challenge is that insurance makes up less than 1% of GDP, which is not large by any standard. It is a low penetration ratio as an industry. It is something that everyone should work to increase rather than competing over a smaller piece of the pie. It is a view shared by many in the industry. Companies and shareholders in the market have a tendency to focus on our own profitability and market share, instead of thinking about growing the market as a whole. I intend to try to work on that in cooperation with my colleagues in the market.

We should walk and then run. I would love to break the 1% barrier. But for a country like Egypt, we should not be talking about less than 3% in the foreseeable future. And then we’ll start to take off.

The opportunity for MIHC is in the turnaround: The biggest opportunity for MIHC is in the scope of the turnaround across its insurance, investment, and other financial services. But we will need to work on multiple different fronts in parallel to make it work. Technology is key, and the good news is that there have been excellent steps taken at both Misr Insurance and Misr Life Insurance that will be felt in the very near future.

Reaching out to the private sector: On the finance side, when it comes to dealing with stakeholders, we want to work with the private sector. We don’t want to do things on our own — we’re not the best in everything. We need to bring in service providers in various aspects, including asset management, and real estate facility management. We have a huge investment portfolio and a huge real estate portfolio on the side. We have the majority of Khedival Cairo real estate portfolio. It needs to be developed and maintained — something that maximizes value and enhances profitability for the state.

HR capacity building from the ground up: Our biggest priority is our HR capacity buildup. The workforce isn’t satisfied with where their company is at the moment. They really do love their companies. It’s a goal management shares with the workforce. We need to build capacity and restore their confidence, that they can tackle this massive task in a short period.

A fresh perspective from a new CEO in Misr Insurance: We intend to bring in a CEO at Misr Insurance. My ideal CEO is someone who understands the business of insurance and the institutional organization required. The CEO has to have the leadership and management skills and can deploy them in a demonstrable way with regional or international institutions. We need a fresh perspective. We need best practices that are derived from stories of success at the regional and international markets. I’m looking for private-sector candidates.

IPO WATCH- Hassan Allam still on track for 1H2019 IPO of up to 35% of its shares: Hassan Allam Holding is expected to offer 30-35% of its shares on the EGX during 1H2019, sources told Reuters, suggesting the IPO will be the largest the country has seen since the end of 2016. The company had previously said it would offer as much as 44.3% of its shares in an offering that would include both ordinary shares on the EGX as well as global depository receipts on the London Stock Exchange.

Advisers: The company has tapped EFG Hermes and Renaissance Capital as joint global coordinators and bookrunners and Arqaam Capital as bookrunner. Shearman & Sterling is international counsel to the issuer, while White & Case is international counsel to the underwriters. Matouk Bassiouny is local counsel to the issuer while MHR & Partners, in association with White & Case, is local counsel to the underwriters. Inktank Communications is investor relations advisor.

CABINET WATCH- Government to begin land grant program for industry: Cabinet greenlit at its weekly meeting on Thursday presidential decrees designating state-owned land to be allocated at no cost to select manufacturing projects. The decrees identified land in underdeveloped areas around El Wadi El Gedeed, Minya, Beni Suef, Upper Egypt and the Red Sea. Qualifying investments can apply for up to 40k sqm each. Investments will need to be labor or tech-intensive, highly reliant on locally-sourced inputs, an SME or micro enterprise, or bound for export. Investors will be required to start work on their project within a year of allocation.

Cabinet completes review of SWF bylaws and articles: Cabinet also approved on Thursday the articles and bylaws governing Egypt’s forthcoming sovereign wealth fund, according to a Cabinet statement. The 53-article document now goes to the Council of State (Maglis El Dawla) for review. The framework would establish the SWF as a separate legal entity with authorized capital of EGP 200 bn and issued capital of EGP 5 bn. It also lays out the SWF’s organizational and governance structures.

The bylaws also outline principles under which its affiliated companies ought to operate, as well as procedures to follow in the case of conflicts of interest or in the face of liquidation. The fund’s stated mission is to “contribute to Egypt’s sustainable economic development through its assets and funds, which are to be managed efficiently and purposefully in compliance with globally-recognized best practices and standards.” The bylaws also require the HQ for the fund to be set up in Cairo, with branches in other governorates. The fund will move into ‘setup phase’ within a month of finishing the bylaws and naming a chief executive. The former is expected before the end of this month and the latter by mid-January.

Also approved during the Council of Ministers’ weekly meeting:

  • Launching a EUR 60 mn program, funded by the European Emergency Fund for Africa, to curb illegal immigration in Egypt;
  • Accepting a EUR 350 mn loan from the European Investment Bank to renovate Cairo Metro Line 1, which is part of a larger EUR 600 mn financing package;
  • Amending a law to increase fines for failure to register death certificates (the move is likely part of the clampdown designed to stop relatives of the deceased from continuing to receive social assistance in the dead person’s name).

Pharos to launch a microfinance venture in 1Q2019: Our friends at Pharos Holding will expand into microfinance in 1Q2019, co-CEO Alaa El Afifi told Reuters. The firm is planning to scale up the portfolio to EGP 600-800 mn in the first half and is also planning to grow its private equity business during the year. “We are going to take stakes in companies that allow us to manage or participate in the management,” El Afifi said. Pharos’ microfinance plans, which we had noted earlier this year, are part of a move into fintech and a potential venture into leasing. We have also recently had the pleasure of speaking with El Afifi for our weekly My Morning Routine feature. Take a look at excerpts from the (almost) non-business related conversation.

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Up Next

FRA to look into an appeal by Raya’s Khalil on 23 December: The Financial Regulatory Authority (FRA) will hold a hearing on 23 December to review the conditions it set for Raya Holding founder Medhat Khalil’s mandatory tender offer (MTO) to take Raya private, local news reported. A prior hearing was held on 3 December, according to the reports. Khalil had appealed last month the conditions under which the FRA ordered him to execute a MTO for 100% of Raya upon determining that he and his family own more than the threshold 33% required to trigger an MTO. Khalil asked for a two-month deadline extension, and requested, among other things, to appoint an independent financial advisor to determine the fair value for Raya.

Administrative court postpones hearing on Beltone appeal to 5 January: An administrative court has postponed to 5 January a hearing on Beltone Financial’s appeal against a six-month suspension to its investment banking arm, Youm7 reported. The Financial Regulatory Authority suspended Beltone’s investment banking arm last month, alleging there were “irregularities” in the IPO of structured- and consumer-finance player Sarwa Capital, which Beltone managed. The firm has denied any wrongdoing. The FRA is also scheduled to hear a grievance appeal by Beltone on Monday, 17 December.

Egypt in the News

Topping foreign coverage of Egypt is the discovery of a uniquely well-preserved 4,400-year-old tomb in Saqqara, this time dating back to Neferirkare Kakai, the third king of the Fifth Dynasty of the Old Kingdom, Reuters reports. Archaeologists removed the last layer of debris from the tomb last week and found five shafts inside, revealing the tomb’s owner, “Wahtye,” a high priest. Officials expect more finds in the coming months. The story is getting wide international play this morning in outlets ranging from the BBC and DW to the Telegraph and National Geographic.

Other headlines worth noting this morning:

  • Egypt has the third-largest number of journalists behind bars and is responsible, along with Turkey and China, for more than half of all jailed journalists in the world, CPJ said in a report. Reuters has the story.
  • President Abdel Fattah El Sisi said immigrants have to abide by the culture of their host country at last month’s youth forum in comments that were picked up byBreitbart News, Express and Daily Mail.
  • “Mumm”, a local food delivery start-up, has helped connect more than a 100 cooks to hungry Egyptians looking for affordable home-cooked meals across the country,Euronews noted.
  • “Ways of the Lord,” a work of fiction written by Shady Lewis Botros, is one of few books that explore what it’s like to be a Christian living in Muslim-majority Egypt, Hamza Hendawi writes for AP.
  • Tourism in Egypt could see quicker revival through conferences and expositions, former chairman of the Tourism Chambers in Egypt Ilhamy Al-Zayat says, since they advertise Egypt’s security and stability, Xinhua reported.

On The Front Pages

In lockstep with the airwaves, the front pages of the country’s three main state-owned dailies focus this morning on President Abdel Fattah El Sisi’s speech at the inauguration of several projects yesterday (Al Ahram | Al Akhbar | Al Gomhuria). Al Akhbar and Al Gomhuria also give special attention to progress on the government’s nationwide Hepatitis C survey, while Al Ahram features a piece on the return of normalcy to Al Arish.

Worth a Listen

Egypt-born computer scientist Rana El-Kaliouby talks to the Wall Street Journal about breaking down cultural and technological barriers, self-doubt, the future of artificial intelligence, and entrepreneurship in an episode of the WSJ’s Secrets of Wealthy Women podcast. El-Kaliouby is the CEO of Affectiva, an artificial intelligence outfit working on software that recognizes emotions.

Diplomacy + Foreign Trade

WB VP for infrastructure visits Egypt, meets with top Cabinet members: ًWorld Bank Vice President for Infrastructure Makhtar Diop met with Prime Minister Moustafa Madbouly and Investment Minister Sahar Nasr during a trip to Cairo over the weekend, according to a Cabinet statement. Diop also held separate talks with Oil Minister Tarek El Molla and Transport Minister Hisham Arafat.

Diop focused during his meetings on ways for Egypt and the bank to cooperate on Africa-based infrastructure projects during our one-year tenure chairing the African Union. The World Bank sees Egypt as a promising hub for natural gas exports into the continent, as well as African electricity interconnection projects via Egypt, and air travel between African nations.

African nations see eye to eye on AfCFTA: African trade ministers have reached consensus on the need to expedite the implementation of goods and services trade liberalization under the African Continental Trade Area (AfCFTA), according to a Trade Ministry statement (pdf). The ministers, who met in Cairo last week, also agreed on the application mechanism, the statement noted, without providing further detail. The AfCFTA was signed in March 2018 by 44 countries with the goal of creating a pan-African single market and eventually, a single currency, alongside unobstructed movement for persons. The agreement will formally exist once at least 22 signatory governments ratify it.

Energy

Oil ministry, Schlumberger sign three MoUs, one for Egypt manufacturing

The Oil Ministry and Schlumberger have signed three MoUs, one of which will see state-owned Petrojet cooperate with Schlumberger on building electrical equipment and early production systems, according to a ministry statement. The other MoUs will see Schlumberger train young Egyptian geologists and petrochemical engineers, and advise on occupational safety and health matters.

Basic Materials + Commodities

Egypt’s orange exports expected to increase by 7%

Egypt’s orange exports are expected to increase by 7% or 110,000 MT in the marketing year (MY) 2018-2019, according to a US Department of Agriculture report. The expected jump in exports comes on the back of plans to increase the cultivated area by 5.1%, leading to an 8.6% surge in production. “Most likely Egypt will remain the sixth largest orange producer and the first or the second largest exporter of fresh oranges in the world, depending on Spanish performance in MY2018/19,” the report said. Top importers of Egyptian oranges include Saudi Arabia, Russia, the Netherlands and China.

Tourism

Russian flights to Egypt’s Red Sea may resume in March 2019

Russian airliners could resume flights to Hurghada and Sharm El Sheikh as early as March, as Egypt has taken the “necessary” measures to enhance airport and flight security, Russian tour operators said, according to Al Shorouk. The operators’ statement comes as a Russian security delegation is currently in Egypt to inspect security procedures at Hurghada International Airport. The delegation will wrap its inspection today.

Giza necropolis to get WiFi and golf carts, courtesy of OIH

Orascom Investment Holding (OIH) signed on Thursday a contract with the Supreme Council of Antiquities that will see OIH upgrade and operate facilities around the Giza necropolis, according to a statement from Matouk Bassiouny, OIH’s legal counsel. The contract retains the council’s authority over the area, and mandates OIH with building an on-site transportation network, cafeterias and food and souvenir kiosks, and a screen theater, as well as provide cleaning services, digital guides, complimentary WiFi and other facilities to visitors, Al Masry Al Youm reported.

Telecoms + ICT

Egypt’s TE, Fiber Misr sign MoU on subsea fiber optic cable services

State-owned Telecom Egypt has signed an MoU with systems integrator Fiber Misr to collaborate on providing submarine communications cable services, according to a CIT Ministry statement. The two companies will work together to service submerged fiber optic cables in the Mediterranean, Red Sea, Arabian Gulf, and off the coast of East Africa. They will periodically repair, install, inspect, recharge and store the cables, as well as provide logistics support to deep-sea vessels on duty.

Automotive + Transportation

Egypt’s car component makers eager to see sector development strategy in action

Auto components manufacturers want to see the government implementing a sector development strategy that sets uniform quality standards, provides incentives to exporters, and introduces protectionist policies by disallowing cheaper, poorly made imports, member of the Federation of Egyptian Industries’ automotive components division Khalid Khalil said. Trade Minister Amr Nassar said earlier this month that his ministry is planning to introduce policies aimed at attracting foreign investments to the sector, pouring cold water on the introduction of the so-called automotive directive — legislation which would have local assemblers incentives to start manufacturing.

Legislation + Policy

Egypt’s GAFI introduces periodical earnings reporting to freezone companies

The General Authority for Freezones and Investments (GAFI) has made it mandatory for companies operating in freezones to present copies of their financial statements during the first quarter of every fiscal year, GAFI head Mohsen Adel said. The companies are required to submit the statements, with accompanying notes and disclosures, to officials from GAFI and the finance and investment ministries.

Egypt Politics + Economics

Egypt Copts protest killing of father and son by police

Hundreds of Coptic Christians staged a protest in Minya on Thursday to express anger over the killing of a father and son by a police officer the previous day, Reuters reported. The incident followed an argument between the father and son, 49 and 21, and the policeman at a construction site near a church the latter was patrolling. The officer has been taken into custody.

Sports

Mo Salah named BBC African Footballer of the Year 2018

Mohamed Salah was voted the 2018 BBC African Footballer of the Year for the second consecutive year, BBC reports. The Egypt and Liverpool forward beat Medhi Benatia, Kalidou Koulibaly, Sadio Mane and Thomas Partey to win the vote-based the prize.

On Your Way Out

What was trending in Egypt in 2018? Mohamed Salah (shocker) topped this year’s list of most searched people in Egypt followed by Haifa Wehbe, according to a Google trends report. Topping general searches were Thanaweya Amma results followed by top English football club Liverpool. Top searched events in 2018 was the World Cup followed by locations for polling stations for the March presidential vote. “Mahragan La2 La2” was the most searched song.

The Planning Ministry is launching an online platform for citizens to rate public service offices, according to Ahram Online. The move is aimed to create an interactive environment between citizens and decision-makers and track and evaluate the quality of public services to improve them, according to a ministry statement. The platform, whose final version is expected to be launched by the end of December along with a mobile application, is also hoped to curb corruption.

Egyptian actor and opera legend Hassan Kamy died on Friday at the age of 82, Reuters reported. Kamy joined the Cairo Conservatory in the 1950s before studying to be an opera singer in Italy. Throughout his career, Kamy performed in more than 270 operas worldwide and starred in several Egyptian films and TV shows before retiring in 2001. He also owned and ran a bookshop called L’Orientaliste, according to a 2015 interview with Egyptian Streets.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.86 | 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): 12,997 (+1.1%)
Turnover: EGP 997 mn (24% above the 90-day average)
EGX 30 year-to-date: -13.5%

THE MARKET ON THURSDAY: The EGX30 ended Thursday’s session up 1.1%. CIB, the index heaviest constituent ended up 0.04%. EGX30’s top performing constituents were Orascom Construction up 6.5%, and Global Telecom up 6.2%, and Heliopolis Housing up 5.4%. Thursday’s worst performing stocks were Egypt Aluminum down 1.5%, Pioneers Holding down 0.6% and Telecom Egypt down 0.5%. The market turnover was EGP 997 mn, and foreign investors were the sole net buyers.

Foreigners: Net Long | EGP +82.3 mn
Regional: Net Short | EGP -80.2 mn
Domestic: Net Short | EGP -2.1 mn

Retail: 63.6% of total trades | 58.8% of buyers | 68.4% of sellers
Institutions: 36.4% of total trades | 41.2% of buyers | 31.6% of sellers

WTI: USD 51.20 (-2.62%)
Brent: USD 60.28 (-1.90%)

Natural Gas (Nymex, futures prices) USD 3.83 MMBtu, (-7.20%, January 2019 contract)
Gold: USD 1,241.40 / troy ounce (-0.48%)

TASI: 7,914.29 (+0.31%) (YTD: +9.52%)
ADX: 4,861.54 (+0.50%) (YTD: +10.53%)
DFM: 2,599.05 (+0.99%) (YTD: -22.88%)
KSE Premier Market: 5,387.53 (-0.01%)
QE: 10,456.14 (+0.22%) (YTD: +22.68%)
MSM: 4,448.11 (-0.77%) (YTD: -12.77%)
BB: 1,319.32 (-0.07%) (YTD: -0.93%)

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Calendar

December: The government will announce the second phase of its privatization program before year-end, Public Enterprises Minister Hisham Tawfik said. The committee overseeing the state privatization program is also scheduled to hold a meeting next month to look into how market conditions developed since the privatization program was put on ice

11-17 December (Tuesday-Monday): Egypt-Russia business forum.

14-16 December (Friday-Sunday): AutoTech 2018, Cairo International Exhibition and Convention Centre, Nasr City, Cairo.

14-16 December (Friday-Sunday): NEXUS Arab Future Summit 2018, The Nile Ritz Carlton, Cairo.

17 December (Monday): The Financial Regulatory Authority will hear a grievance appeal by Beltone against a six-month suspension handed to its investment banking arm over “irregularities” the authority says it found in Sarwa’s IPO, according to Al Mal.

18 December: The Planning Ministry will be hosting an event at the Sonesta Cairo Hotel.

18-19 December (Tuesday-Wednesday): Federation of Egyptian Chambers of Commerce leaders are scheduled to meet with their Saudi counterparts in Aswan to launch a collaboration project to support SME development in Egypt and Saudi Arabia, head Ahmed El Wakeel said.

19 December (Wednesday): Cairo Economic Court to rule into an appeal by pharma companies

Mid-late December: The bylaws and articles governing Egypt’s upcoming, EGP 200 bn sovereign wealth fund will be completed, Planning Minister Hala El Said said. Cabinet is currently conducting its final review.

Mid-late December: The Electricity Ministry is set to sign an MoU with Cypriot officials to begin constructing the USD 1.5 bn subsea power cable to link Egypt’s electricity grid with Cyprus’, minister Mohamed Shaker said, according to Al Mal.

25 December (Tuesday): Western Christmas.

27 December (Thursday): CBE’s Monetary Policy Committee meeting.

January 2019: Flat6Labs will launch their 12th startup accelerator cycle.

Early January 2010: Government to release details about its international bond issuance.

01 January 2019 (Tuesday): New Year’s Day, national holiday.

01 January 2019 (Tuesday): Custom duties on EU-made car imports will fall to 0%, and we still have no automotive directive or any policy incentivizing local car manufacturing.

05 January 2019 (Saturday): An administrative court will hear Beltone Financial’s appeal against a six-month suspension the FRA handed to its investment banking arm, Youm7 reported.

07 January 2019 (Monday): Coptic Christmas.

10-13 January 2019 (Thursday): International Property Show (IPS), Egypt International Exhibition Center

19 January 2019 (Saturday) Cairo Criminal Court scheduled hearing of Gamal and Alaa Mubarak’s stock market manipulation case

21-22 January 2019 (Monday-Tuesday): EPEA and IFC’s SME Governance Workshop at the Fairmont Nile City Hotel.

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.

26 January 2019 (Saturday): Supreme Administration Court’s Uber / Careem appeal date, Egypt.

28-29 January 2019 (Wednesday-Thursday): Banking Technology North Africa, Nile Ritz Carlton Hotel, Cairo, Egypt.

7 February 2019 (Thursday): Egypt Building Materials Summit, Venue TBD, Cairo, Egypt

11-13 February 2019 (Monday-Wednesday): Egypt Petroleum Show, Egyptian International Exhibition Center, Cairo.

19-20 February 2019 (Tuesday-Wednesday): The Solar Show MENA 2019, Nile Ritz Carlton Hotel, Cairo, Egypt.

26-28 February 2019 (Tuesday-Thursday): 22nd International Conference on Petroleum Mineral Resources and Development, Egyptian Petroleum Research Institute, Nasr City, Cairo, Egypt.

27-30 March 2019 (Wednesday-Saturday): Cityscape Egypt 2019, Egypt International Exhibition Center, Nasr City Cairo.

April 2019: The African Tripartite Trade Area (TFTA) agreement is set to take effect in April after a majority from the participating governments ratified it, COMESA Secretary General Chileshe Kapwepwe according to Al Shorouk.

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).

June 2019: International Forum for small and medium enterprises (SMEs).

05-06 June 2019 (Wednesday-Thursday): Eid El Fitr (TBC).

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

December 2019: Egypt will host for the first time the Pack Process trade expo for the Middle East and African region

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