EGX30 down 13.2% in 2018.

We here at Enterprise would like to wish all our readers a very merry Christmas as the Coptic Orthodox Church celebrates Christmas tomorrow. As it is also a national holiday, we will not be running an issue on Monday, and will return on Tuesday, 8 January.

Sadly, we cannot report that year’s festivities would go off without an incident as an attempted bombing at a church in Nasr City led to one policeman being killed. We have the story chapter and verse in the Speed Round below.

Also, as we are still working on improving our dispatch software, we apologize for delays in receiving today’s issue.

Egypt will auction today USD 750 mn-worth of one-year USD- denominated treasury bills, the CBE said on its website. The sale is expected to be settled on Tuesday, according to Reuters.

US Secretary of State Mike Pompeo is set to visit Egypt sometime this week as part of a Middle East tour that will begin in Amman on Tuesday, 8 January and wrap on 15 January. Cairo will be Pompeo’s second stop during the tour, where he will discuss with officials regional issues and economic and counterterrorism cooperation, according to a US State Department press release. The one-week tour will also take him to Bahrain, the UAE, Qatar, Saudi Arabia, Oman, and Kuwait.

PSA- Expect relatively colder weather in the capital over the next few days, with temperatures set to reach highs of 15-17ºC and lows of 8-10ºC, according to the Egyptian Meteorological Authority.

Fed further hints at a pause of monetary tightening to the carolling bells of EM investors everywhere: Emerging market assets rallied on Friday on news that the US Federal Reserve may consider pausing its tightening cycle and ahead of a US-China meeting next week, Bloomberg reports. Fed Chairman (and one of The Donald’s pain in the rear dejeur) Jerome Powell said the Fed would take a “patient” approach to monetary policy tightening after “US data seem to be on track to sustain good momentum into the new year.”

Bank of America, Citigroup and BlackRock seem to be finally leaning towards giving EM stocks the thumbs up, Bloomberg noted. A New York-based Standard Chartered strategist also expected EM currencies to regain strength as early as in the first quarter of this new year.

The investment climate in 2019 still pervades most business-focused publications. With so much regulation, further projected tumult in international markets, not to mention Brexit, it is perhaps not surprising that the Financial Times is predicting headaches for fund managers in the year to come. Besides Brexit, the salmon-colored paper sees the upcoming “senior managers and certification regime” — a system introduced by the UK’s Financial Conduct Authority — as being a significant regulatory regime shift for fund managers post Mifid II. “Under the regime, high-ranking individuals will have to sign off public reports which examine whether a fund gives value for money. Executives will be personally on the hook should a product disappoint.” Pay for fund managers is also an issue drawing concern as the head count in the industry increases. Green investing and environmental concerns are also being cited by Bloomberg as something to draw significant interest this year, while free pressures, cyber security and a potential selloff is also having managers seat.

On the latter point, a significant drying up of liquidity in big chunks of the credit market is drawing concern from some top level managers including Eoin Murray, head of investment at Hermes Investment Management. He warns that this could lead to a proliferation of gating, whereby managers block investors taking money out of funds to prevent their collapse. Deloitte is also warning of a rise in valuations causing further market volatility, in its 2019 Investment Management Outlook report (pdf).

Got the chomps to beat the top stock picks by the FT? Well the paper appears to not shy away from a challenge with its annual contest to see if readers can pick the five performing stocks that will beat the market in 2019. This year (the first where readers are invited to participate) contestants can take either a long or short position — betting that the shares will either rise, or fall. “The portfolios are equally weighted and have no base currency (meaning foreign exchange movements have no effect on the end result) and dividends do not contribute to the returns.”

One stock looking pretty shaky these days is surprisingly Apple. The Wall Street darling is suffering after CEO Tim Cook issued a 1,400 word warning to investors earlier this month that its sales revenues for the quarter will fall short of targets. But unlike Apple in the glory days of Steve Jobs, many have questioned if the company still has the innovation bug to overcome some of the challenges it is facing, including issues with suppliers as a result of the Trump administration’s trade war. Eyes now turn to the CES tech trade show in Las Vegas, where Apple usually dominates, to see if the company can wow consumers with some new innovative products, according to Bloomberg.

The Golden Globes get underway late this evening and will continue into the wee hours of tomorrow morning. The “boozy, informal dinner” is expected to be less of a political spectacle than the last two editions, in which hosts heavily referenced US President Donald Trump’s election and the #MeToo campaign against [redacted] harassment, Reuters says.

**#5 Wait? What? There’s a potential for a US military aid cut? By far the most important piece of news from the talking heads over the weekend is Amr Adib lending credence to sparsely reported news that US House of Representatives Democrats are pushing for a spending cut on Egypt’s military aid as a result of human rights concerns. The story appears to not be covered in major foreign publications beyond Al Monitor, which cites documents that neither confirm or deny that the cut is a reality. Nonetheless, Adib bellowed that the US should keep its nose out of Egypt’s business and take back all of its aid, saying that other allies such as Russia, China, and Germany would rush to take Washington’s place (watch, runtime 02:57).

Apart from that short dive into the story, the expected inauguration of the Middle East’s biggest mosque and church in the new administrative capital today dominated the airwaves.

Preparations are underway for President Abdel Fattah El Sisi to officially inaugurate the houses of worship, and Pope Tawadros II is scheduled to deliver a speech at the mosque, Father Sergius Sergius said on Hona Al Asema (watch, runtime: 3:30). Masaa DMC’s Eman El Hosary also had a chat about the preparations with the new administrative capital spokesman Khaled El Husseiny (watch, runtime 5:40).

The Manpower Ministry has recently established a committee to promote women’s empowerment and gender equality in the workplace, and is mandated with setting policies to address the overarching issues that result in gender disparity, Minister Mohamed Saafan said on Hona Al Asema. Head of the Egyptian Center for Women’s Rights Nihad Abu Komsan also discussed the committee with host Lama Gebril (watch, runtime: 10:00).

Deputy Social Solidarity Minister Nevine El Kabbag discussed the “Decent Life” initiative President Abdel Fattah El Sisi launched last week with Hona Al Asema’s Lama Gebril (watch, runtime: 03:11).

Al Wafd Party’s Hani Sarie El Din talked about the party’s centennial and the state of political parties in Egypt with El Hekaya’s Amr Adib (watch, runtime: 02:30).

**#1 The Egyptian bourse’s benchmark EGX30 index fell 13.2% in 2018 amid global markets fluctuations and the emerging markets sell-off, EGX Chairman Mohamed Farid said. Farid noted that EGX50 also fell 16.3% last year. Foreign purchases in the EGX dropped to EGP 5.73 bn in 2018 from EGP 9.55 bn the year before, an annual report showed (pdf).

Volumes down but values are up: Trade volumes declined to 60.8 bn securities from 77.9 bn the previous year despite total trades values rising 7.92%, registering EGP 358.5 bn from around EGP 332.2 bn in 2017. The number of transactions went down last year to 6.3 mn from 7 mn.

The number of new investors went up 8.5%, reaching 24,000 from 22,000 last year and the number of foreign institutions that entered the market went up to 1,187 from 1,164 last year.

Looking ahead, Egypt is also planning to launch a new index to replace one of its five indices before the end of 1Q2019 as part of efforts to restructure its stock market.

**#2 IPO WATCH- NIB to select nine companies for second phase of state privatization program: The National Investment Bank (NIB) is expected to nominate nine state-owned companies for the second phase of the state privatization program, according to a Planning Ministry statement. The statement did not provide further details on the selection process or when NIB is expected to unveil the lineup, but noted that all companies being considered have strong financials and have brought in a combined EGP 4 bn in dividend revenues for the bank.

Background: Public Enterprises Minister Hisham Tawfik had said last month that the government would announce the second phase of the privatization program by the end of 2018. The committee overseeing the program is also scheduled to hold a meeting this month to look into how market conditions developed since the stake sales were put on ice last October amid the emerging markets selloff. A senior government official had told us that the program could resume as early as 1Q2019 or as late as the start of the new fiscal year in July, based on market conditions. The state could use the delay to tweak the list of already-traded companies set to sell additional shares and companies set to make an initial public offering under the program, the source said.

**#3 FinMin revises upwards its public debt targets for Egypt: The Finance Ministry is targeting reducing Egypt’s public debt to 80-85% of GDP by the end of FY2021-22, according to an initial draft of the FY2019-20 state budget presented to President Abdel Fattah El Sisi last week, according to an Ittihadiya statement. A senior government official had told Enterprise last month that the ministry’s comprehensive debt control strategy, which has been in the works since August, aims to reduce Egypt’s public debt to 72-75% of GDP by FY2021-22 from 98% today. State budget guidelines for FY2019-20 released in November had set a public debt target of 79.3% of GDP for that fiscal year. The ministry is still hoping to maintain its 2% primary budget surplus during the next three fiscal years.

Background: The Finance Ministry was expected to officially unveil its debt control strategy at the end of last month. According to sources, who spoke to Enterprise, the strategy centers largely on the diversification of debt instruments — including the issuance of green bonds, sovereign sukuks, zero-coupon bonds, and two other new-to-Egypt instruments — as well as the diversification of the currencies in which we borrow and our sources of funding.

**#4 M&A WATCH- Al Nour for Dairy in talks to acquire Greenland after Almarai talks fall through: Al Nour for Dairy Industries — which counts businessman Mohamed Halawa and Lactalis as shareholders — is reportedly in talks to acquire Americana Group subsidiary Greenland Group for Food Industries, according to a domestic press report citing sources with knowledge of the matter. Saudi dairy product producer Almarai had been looking to acquire Greenland in a transaction worth as much as USD 75 mn last year, but talks have fallen through over disagreements on the transaction value. The sources did not disclose the expected value of Al Nour’s acquisition. The company is expected to complete due diligence on Greenland during 1Q2019. Greenland had been in the red for seven years but returned to profitability in 2015.

NUCA grants CIRA 81 feddans in west Assiut for private university project: The New Urban Communities Authority (NUCA) has agreed to giving CIRA 81 feddans in west Assiut to establish a private university, local news reported. Conditions for the land includes that CIRA carry out the project, whose construction is expected to take 10 years, in partnership with an international university. No further details were provided.

Administrative Court refers Beltone appeal against FRA decision to Board of Commissioners: An administrative court has referred Beltone Financial’s cases against the Financial Regulatory Authority (FRA) to its Board of Commissioners and set 26 January as deadline to receive legal advice, Matouk Bassiouny’s head of litigation, Osman Mowafy, told Al Mal. The FRA last year suspended Beltone’s investment banking arm for six months for irregularities it said it found in an IPO the firm managed. Beltone denies any wrongdoing. The FRA rejected a Beltone appeal against the decision last month.

MOVES- Emaar Misr CEO Mohamed El Dahan submitted his resignation last week, El Dahan told Al Mal, without providing a reason for his decision to leave the company. El Dahan has been with Emaar since 2005.

**#6 A policeman was killed on Saturday while trying to defuse a bomb that was found near a church in the district of Nasr City. Two policemen and a passerby were also injured in the explosion, security sources told Reuters. Pope Tawadros offered his condolences after the attack while Azhar condemned it, Youm7 reported. The attack comes two days before Coptic Christians celebrate their Christmas on Monday. Egypt recently set up a committee to confront sectarian violence, in a first of its kind move for the country to admit there’s a problem, Fathiya Al Dakhakhni wrote for Asharq Al-Awsat.

The story has been guiding the conversation on Egypt in the foreign press this morning. Beyond wire pickups of the attack, publications, including the Wall Street Journal (paywall) are suggesting that the event shows the security challenge the government faces to protect Coptic Christians who continue to be targeted by terrorists. The Economist had published a piece prior to the attack highlighting the struggle of Coptic Christians amid continued attacks by Islamists.

The attack also received significant coverage on the airwaves last night, with Amr Adib and Masaa DMC’s Eman El Hosary also covered the death of a police officer and the injury of another in an explosion near a church late last night (we have the full story in Speed Round, below). Adib called the incident as an example of inter-religious harmony, since an imam is the one who alerted police about the explosive, and the police officer who died trying to dismantle the bomb was a Muslim (watch, runtime 2:55).

Are we hosting the African Cup of Nations? The football supremos at CAF will reveal this coming Wednesday whether Egypt or South Africa will host this year’s African Cup of Nation.

Egypt, Sudan begin trial runs on electricity grid connection project in three weeks: Egypt and Sudan will begin trial runs for the first phase of a USD 60-70 mn electricity interconnection project in three weeks at a capacity of 100 MW, local news reported. A government source said 95% of the project has been completed. The electricity minister had previously said the two countries would exchange 200-300 MW of power in the first phase, with the second phase expected to be completed in 1Q2020 bringing capacity to 600 MW.

A government committee mandated with defining Egypt’s informal economy is set to meet for the first time this month. Look at the committee’s work comes in light of the Madbouly government’s bid to convince the World Bank and the IMF to agree to include the informal economy in calculations of Egypt’s GDP.

Bond issuance plans to be made clear this month: Finance Minister Mohamed Maait said last month that the government would unveil its international bond issuance plans for 1Q2019 in January.

**#7 El Sisi 60 Minutes interview tops coverage: Leading the conversation on Egypt in the foreign press this morning is the expected airing of President Abdel Fattah El Sisi’s interview with CBS’ 60 Minutes today, in which he addresses Egypt’s ties with Israel and allegations that Egypt is holding thousands of political prisoners. CBS said in a statement that Egypt’s ambassador in Washington contacted the show’s producers to request that the interview not be aired. The statement does not make clear what prompted this alleged request. The New York Times’ David Kirkpatrick and the Washington Post’s Tamer El Ghobashy cover the story in depth, with each placing particular emphasis on El Sisi’s discussion of Egypt and Israel’s military cooperation in Sinai.

Egypt’s “Two is Enough” population control program is not enacting real behavioral change or effectively addressing the real reasons Egyptians tend to favor having several children, Ruth Michaelson writes for the Guardian. While the government is providing subsidized contraceptives through its clinics, the campaign has thus far failed to provide a way to change the widespread mentality — particularly among the poor — that children are a source of income. Doctors also say that the program must begin targeting children while they are still in school, in addition to educating adults. “The campaign will increase [redacted] education for some medical professionals, but will not begin a programme of [redacted] education in schools, currently non-existent. It also ignores options for women with unwanted pregnancies, with abortion seen as a legal grey area in Egypt.”

Other headlines worth a skim:

• Egypt named in CNN Travel, Bloomberg travel lists: Egypt made it on made CNN Travel and Bloomberg’s listsof 19 places to visit in 2019and top cruise destinations of 2019.
• Rights activist Amal Fathi’s husband has appealed to President Abdel Fattah El Sisi to pardon his wife from a two-year prison sentence over a Facebook video in which she denounced [redacted] harassment, according to AFP.

**#8 Electric cars were around almost as long as gas guzzlers. 171 years to be exact: They may be viewed as “hipster” today, but electric cars first made their debut long before your parents or even your grandparents were born.Half a century before present-day gas-fueled cars were invented, eventually taking center stage, British inventor Robert Anderson had already developed the world’s first electric vehicle, Marisa Gertz and Melinda Grenier write for Bloomberg. In fact, there was one battery-powered car for every two gas-fueled ones on the street by 1900, before the former began gradually vanishing due to a rise in demand for the latter in the 1920s.

So why are we hearing about electric cars now? Well, the newswire suggests it mostly boils down to the affordability of the Ford Model T. Gas powered cars adoption of self starters over the cumbersome hand crank also helped speed up the popularity of the fossil fuel cars. It didn’t take long for the electric vehicle to lose touch with the buyers, with them having largely fallen of the consumer map by the 1930s.

But as governments began imposing stricter controls on carbon emissions in the 1990’s amid a wave of environmental awareness, manufacturers started to look for alternative fuel vehicles. US giant General Motors took the initiative to make some 1,000 electric cars in 1997 to test market readiness. But the story was short-lived with the company announcing in 2003 that it would no longer produce electric cars due to low demand. In the same year, Tesla Motors emerged, spurring what you could call an EV revolution. Today, there are 179 different models of EVs on the global market, and north of 230 will be available by 2021.

Egypt’s Syrian community has been a boon for the Egyptian economy: A number of Syrians living in Egypt have opened up businesses of varying sizes, with some setting up a neighborhood pastry shop and others establishing factories, says TRT World. Due to their refugee status, many Syrians face bureaucratic hurdles in obtaining licenses in Egypt, but have collectively contributed some USD 800 mn to Egypt’s economy and created several jobs (watch, runtime 02:29).

President Abdel Fattah El Sisi reassured Palestinian President Mahmoud Abbas in a meeting yesterday that reconciliation efforts will remain on Egypt’s priority list, according to an Ittihadiya statement.

President El Sisi and Tunisian Foreign Minister Khemaies Jhinaoui met yesterday to discuss regional concerns, including the situation in Libya, joint counterterrorism efforts and stepping up cooperation in Africa, according to an Ittihadiya statement.

Qalaa Holding’s subsidiary TAQA Arabia is expected to connect its USD 80 mn, 50 MW solar power plant in Aswan’s Benban solar power park to the country’s national grid on 15 January, according to El Watan. Alcazar Energy and FAS Energy have also completed the construction of their 50 MW solar plants in the Benban complex and have begun trial operations ahead of connecting them to the national grid, according to a local news source.

The Ganoub El Wadi Petroleum Company is expected to launch exploration and production tenders for 10 oil and gas offshore blocks in the Red Sea during 1Q2019, after initially planning to issue the tenders last year, according to a local news outlet. The postponement is due to delays in the issuance of required permits.

The New Urban Communities Authority (NUCA) has allocated a 187-feddan land plot to the New Aswan city authority to develop a freezone, deputy head of NUCA Tarek El Sebai said. The move came in response to a request from the investment ministry amid efforts to increase the number of freezones to boost investment.

Gold miner Centamin’s output from the Sukari gold mine in 2018 fell 2% below its full-year target of 480k ounces due to “lower than expected underground grade delivered in December,” according to a company release (pdf). Preliminary figures indicate that gold poured in 4Q2018 reached 135-140k ounces. Centamin had cut its output targets twice last year, from an initial forecast of 580k ounces.

Trade and Industry Minister Amr Nassar met yesterday with LG Egypt CEO Don Kwak to discuss the company’s future manufacturing and export plans, according to Mubasher. According to Kwak, LG is looking to increase its reliance on locally sourced components in its manufacturing and expand its exports to African markets.

Concorde Engineering and Contracting is looking to construct two new hotels at a combined cost of EGP 1 bn on the North Coast, with the first phase expected to launch in 2H2019, Concorde’s CEO Sayed Mohamed told the local press. Construction of the project 10-feddan project is anticipated to take approximately three years.

A team of Polish and American archaeologists have uncovered a 2,300-year-old Ptolemaic-era fortress near the Red Sea coast, according to Live Science. A separate team led by the University of Chicago also discovered a large urban villa dating back to the New Kingdom in Tell Edfu.

Indian smartphone manufacturer Lava will begin producing phones in Egypt, in partnership with the Military Production Ministry, before year-end, CEO Vikram Singh Parmar said, according to Al Masry Al Youm. No further details were provided. The company signed an MoU with the ministry last year, and will set up the line in one of the latter’s facilities.

The Transport Ministry is in talks with the European Bank for Reconstruction and Development (EBRD) for a EUR 100 mn fund facility to build a new railway line linking 6 October dry port to El Manashy village in Giza, Minister Hisham Arafat said, according to Al Mal. The 6 October port, a planned USD 110 mn logistics facility, will house cargo zones, customs clearance offices and multipurpose storage facilities linked to Egypt’s key seaports.

The Supreme Media Council has extended the deadline for submitting applications for news website permits until the end of January, the council said on Thursday. The licenses apply to news websites whose capital exceeds EGP 100k a year under temporary licensing regs the council had issued in October. The regs are only in effect until the executive regulations to the second part of the Press and Media Act — which became law in September — are passed. The council has already approved licenses for 113 websites.

The government is planning to target 100 of Egypt’s poorest villages through the “Decent Life” initiative President Abdel Fattah El Sisi launched last week, Deputy Social Solidarity Minister Nevine El Kabbag said on Friday, according to Masrawy. The villages, which are largely concentrated in Giza, Minya, Assiut, Sohag, Qena, Luxor, Aswan, El Wadi El Gedeed, Qalyubia, Beheira, Marsa Matrouh, and North Sinai, all have a poverty rate of 70% or more.

Pop singer Sherine Abdel Wahab could face another round of questioning from authorities over comments she made that could be considered “offensive to Egypt”, Ahram Online reports. Samir Sabry, a lawyer who’s known for going after high profile figures, has filed a lawsuit against Abdel Wahab who was heard mumbling “it's such a waste that I live in Egypt” during a concert on new year’s eve. The singer was sentenced to six months in jail last year for a joke in 2017 about falling ill from drinking Nile water, but she won an appeal against the ruling.

Egyptian security forces destroyed 37 tunnels to Gaza in 2018, the army said in a statement. The story was picked up by the Jerusalem Post, Anadolu Agency and Middle east Monitor.

33 Egyptian squash players have progressed to the quarter final round of the Dunlop British Junior Open championship in Birmingham, taking up more than half of the 50 spots available in the round, according to PSA World Tour. The remaining 17 spots have been filled by Malaysian players.

A KPMG study has valued Mohamed Salah as the fourth most expensive footballer in the world, and the first in the Premier League, at a price tag of EUR 168.3 mn, reports King Fut. Mo trailed behind Lionel Messi (EUR 203.3 mn), France’s Kylian Mbappe (EUR 215 mn) and Neymar Jr. — the world’s most valuable player, according to KPMG — at EUR 229.1 mn.

Scotland’s National Museum claims that it is in possession of a block of stone from Egypt’s Khufu pyramid, which will be put on display starting 8 February, according to Al Mal. Egypt’s Antiquities and Repatriation Department Supervisor-General Shaaban Abdel Gawad is in talks with Egyptian and Scottish officials to verify the news and determine whether the artifact was smuggled. Eternal antiquities guru Zahi Hawass has of course chimed in to quash the reports, saying that the pyramid’s outer casing has been destroyed, according to Ahram Online.

The Belgian royal family was in Egypt over the weekend for a four-day trip that included visiting the Giza Pyramids as well as Aswan and Luxor, according to Al Mal. Hawas of course obliged these mere mortals with a guided tour during their visit.