Sunday, 27 January 2019

Lagarde recommends board give thumbs up to latest Egypt econ review

TL;DR

What We’re Tracking Today

We hope you all had a fantastic long weekend. Our next break doesn’t come until late April — and arrives just ahead of Ramadan. The upshot: It’s basically a weeklong break by the time you combine Sinai Liberation Day, Easter, Sham El Nessim and Labor Day. Then comes the Holy Month, Eid, summer vacation and suddenly it’s fall and the year is largely over. Why does time accelerate as you age? Check out our Calendar section at the bottom of today’s issue on the web edition for all the details.

We’re getting new airports. Trial operations began yesterday at Sphinx International Airport on the western side of town near the Pyramids. The facility will be handling some 30 flights by early February and will be fully open in 2020. Meanwhile, the airport at the new administrative capital is set to be inaugurated in April, Aviation Minister Younes Al Masry said.

And we’re getting high-profile visitors today:

  • French President Emmanuel Macron arrives today in Egypt. He’ll visit Upper Egypt before arriving in Cairo for high-level talks.
  • Sudanese President Omar El Bashir will be in Cairo for the day today to discuss agreements signed in October last year, Sudan’s official news agency SUNA reports.

It’s going to be a big week for watchers of the global economy: Chinese officials are due to travel to the United States to talk trade this week and the US Federal Reserve is set to hold its first policy meeting of 2019 when it gathers on Tuesday and Wednesday. In the meantime, central banks in the EU and Japan are trying their best to assuage the fears of investors, writes Michael Mackenzie in the FT: The Bank of Japan kept interest rates on hold last week while the ECB refused to change current policy despite acknowledging the growing uncertainties presented by US-China tensions, Fed tightening and Chinese stimulus measures.


Davos is done. Here’s why you should care: The annual meeting of the chattering class has ended. Prime Minister Mostafa Madbouly led a delegation to the World Economic Forum that included the ministers of finance, investment and trade. Key Egypt-specific takeaways:

  • Apple is interested in learning more about investment opportunities in Egypt, as we reported last week;
  • The head of the African Development Bank praised Egypt as being a model for how countries should attract and use international funding, Mubasher reports;
  • Love from Sir Suma: Sir Suma Chakrabarti, president of the European Bank for Reconstruction and Development, told PM Madbouly that the bank is keen to work with Egypt to implement development projects on the African continent, according to Arab Finance.
  • Tourism Minister Rania Al Mashat promoted Egypt’s tourism reform program to international institutions and development organizations, Al Ahram reports.

WORTH WATCHING- Al Mashat’s Davos interview with CNN (here, runtime, 06:51).

WORTH READING- The best wrap-up to come out of Davos is Mike Allen’s Deep Dive from the Swiss town on the debate about how global politics and capitalism are changing.

Trade tensions have everyone freaked out: IMF director Christine Lagarde used her pre-conference press statement to warn that US-China trade tensions are taking their toll on the global economy as the fund revised downwards its growth forecasts.

The environment was a hot topic (pun somewhat intended). Veteran broadcaster David Attenborough’s call for action on climate change was one of the highlights of the conference. He was interviewed by Britain’s Prince William (watch, runtime: 22:00).

Riyadh came in from the cold: Both the FT and Bloomberg have pieces examining Saudi efforts to rehabilitate its image on the global stage. The world’s financial elite looks ready to forgive, both conclude.


In miscellany worthy of your time this morning:

The US federal government has reopened — for now, at least. The Donald signed a three-week funding bill that does not include any of the USD 5.7 bn he wanted to build a wall along the border with Mexico. The short-term bill sets up a Valentine’s Day showdown over another bill.

Venezuela kinda-sorta has two presidents this morning after the United States recognized opposition leader Juan Guaido as the country’s rightful leader and urged the rest of the world to “pick a side.” Russia, meanwhile, is backing Nicolas Maduro. European powers said yesterday they would back Guaido if Maduro doesn’t call fresh elections within eight days.

Enterprise+: Last Night’s Talk Shows

Positive comments on Egypt from IMF boss Christine Lagarde led discussion on the airwaves last night. Vice Minister of Finance Ahmed Kouchouk said the support was expected as recent economic indicators have shown noticeable improvement (watch, runtime: 06:11). Hona Al Asema’s Reham Ibrahim also spoke with CI Capital Economist Hany Farahat who said thatthe remarks show the lender’s confidence in Egypt’s economic reform program (watch, runtime: 11:48). Farahat expects Egypt to receive the fifth tranche of the USD 12 bn facility that the country signed in 2016 in the first 10 days or two weeks of the coming month. We have more in this morning’s Speed Round, below.

The economic reform program includes social welfare spending to protected vulnerable groups, Social Solidarity Ministry spokesman Mohamed El Okaby told Hona Al Asema (watch, runtime: 02:58). El Okaby pointed to the Takaful and Karama welfare programs, which he said now cover over 2 mn families across the country.

Amr Adib also talked some econ last night, saying Egypt is creating jobs through strategic national projects (watch, runtime: 02:01)

Lowlight of the night: A video of a mother who appeared to be pushing her young son out of a window went viral over the long weekend, sparking outrage on social media. The video (and debate over what it showed) was on every channel under the sun last night (here, here, here and here).

Speed Round

Speed Round is presented in association with

Egypt will be on the IMF board’s agenda in the coming weeks, Lagarde says: The IMF’s Executive Board will discuss its fourth review of Cairo’s economic reform program “in the coming weeks,” IMF Managing Director Christine Lagarde said in a statement on Friday. Lagarde, who lauded Egyptians for their “patience and commitment” to the reforms, said she will recommend that the board approve the recently completed review, a step necessary to release the next USD 2 bn payment under Egypt’s USD 12 bn extended fund facility with the IMF.

Don’t take your foot off the gas pedal, Lagarde warns: The IMF boss called on the Madbouly government to press ahead with “structural reforms that facilitate private sector-led growth and job creation, as well as measures to increase transparency and accountability that help improve governance.” Keep an eye here on the agenda for the IMF board’s upcoming meetings for the exact date of the review.

Fifth tranche coming next month: Egypt expects to receive the next USD 2 bn tranche in February, Finance Minister Mohamed Maait told Youm7. The disbursal — which was delayed amid concerns from the IMF on how Egypt would implement a new fuel pricing strategy — will bring the total Egypt has received to USD 10 bn.

M&A WATCH- SODIC calls off all-share acquisition of MNHD: Upmarket real estate developer SODIC will not submit a mandatory tender offer to acquire at least 51% of Madinet Nasr Housing and Development (MNHD) through a direct share swap, according to a regulatory filing (pdf) on Wednesday. B-Investments, a lead shareholder of MNHD, also put out a statement via the EGX on Wednesday (pdf) saying it would not go through with the merger. SODIC had received Financial Regulatory Authority approval about two weeks ago to extend for 60 days the deadline to submit the MTO.

The EGX suspended trading in SODIC shares on Wednesday. The stock market also reversed all Tuesday trades on both MNHD and SODIC except for specific transactions that took place using the same-day settlement mechanism. Reuters also has the story.

Why the sudden move? It seems MNHD wanted more: The company said in documents seen by Enterprise that an EGP 800 mn settlement SODIC agreed in December with the Illicit Gains Authority (IGA) as well as the status of land on the North Coast warranted revisiting the share-swap ratio.

SODIC told investors on Thursday that revising the swap ratio was simply unwarranted. The IGA settlement was already disclosed and priced in, company execs said on a conference call with investors, and SODIC’s North Coast land has no real exposure to a recent presidential decree: “The sales of Caesar and Malaaz (the company’s projects in the North Coast) are both developed on registered land plots,” according to a summary of the call prepared by investment bankers and obtained by Enterprise. The related plot does not fall within the borders of El Alamein City or Ras El Hekma, the summary notes. A separate statement by SODIC (pdf) reiterated that the IGA settlement would have only a modest impact on the company’s financials. It also indicated that the request two weeks ago to delay the MTO was made with MNHD on side.

What’s next for SODIC? Speaking on the investor call, SODIC management characterized the merger as “nice to have / do” but said calling it off would have no impact on the company given its sufficient land bank, sales and delivery momentum.

What about MNHD? MNHD said much the same: A company exec speaking with Enterprise told us that operations weren’t dependent on the transaction and will not be hit by the death the merger. MNHD is targeting sales of EGP 7 bn in 2019 compared to EGP 5.5 bn in 2018, the official added.

What does this mean for the real estate industry? For the wider industry, there’s little fallout today — though competitors including TMG and Palm Hills Developments are likely breathing a little easier this morning. The merger would have created the second-largest player in the industry. But the sector is still ripe for consolidation, Allen Sandeep, head of research at Naeem Brokerage, told us. Liquidity pressures faced by players outside the Big Five will ensure that.

Background: The transaction would have been the first all-share M&A on the EGX, with regulations allowing the transaction still in the pipeline. It would also have ranked as one of the largest in EGX history. SODIC announced in October that it had preliminarily set the swap ratio at two shares of MNHD for one share of SODIC and suggested the transaction could allow MNHD to remain listed on the EGX.

Advisers: MNHD was advised by EFG Hermes and Zaki Hashem & Partners. SODIC was advised by CI Capital and White & Case.

Disclosure: SODIC is a founding sponsor of Enterprise. MNHD is a longstanding client of Inktank, Enterprise’s parent company.

Advisory body reportedly recommends court turn down Beltone’s appeal of its suspension. The Administrative Court received yesterday a report from the Board of State Commissioners recommending it reject Beltone’s appeal a suspension handed to the investment bank’s IPO unit by the Financial Regulatory Authority, reports Al Shorouk. The report found that while Beltone’s lawyers correctly followed legal procedure in filing the appeal, the appeal itself is groundless. We had reported earlier this month that the court referred the appeal to the board of commissioners following the most recent hearing; yesterday was the deadline for the report.

Is Beltone looking for a settlement? Both Al Masry Al Youm and Youm7 claim Beltone’s legal counsel had said the investment bank is pushing for a final settlement and will drop its appeal. Al Shorouk, however, cites sources close to the matter as saying the reports were not true.

Losing the appeal could pave the way for the FRA to bring a criminal case against Beltone executives, an unnamed government source told Al Shorouk. This comes after it emerged earlier this month the authority is lining up criminal charges against the company and had asked prosecutors specializing in financial crime to take on the case.

Background: The FRA suspended late last year Beltone’s investment banking IPO unit for six months over alleged “irregularities” in its management of Sarwa Capital’s IPO, which saw the structured- and consumer-finance player’s shares nosedive by 11% on their EGX debut. The authority also ordered Beltone’s brokerage arm to raise its insurance cover to EGP 50 mn and maintain it at that level for a year. The company denied the allegations and has pursued legal action against the FRA’s decisions. Its plea to the FRA’s appeals committee has been turned down.

INVESTMENT WATCH- Nestlé inaugurates EGP 250 mn Bonjorno factory: Nestlé inaugurated on Thursday its EGP 250 mn (USD 14 mn) factory for its coffee brand Bonjorno, located in the 6th of October industrial zone, according to a statement (pdf) from the Swiss food giant.

An export hub in the making: The 12,740 sqm facility, which has a workforce of about 240 employees and provides around 7000 indirect jobs, “uses Nestlé’s strong manufacturing and innovation capabilities … We aim to have the Bonjorno factory as an export hub for coffee in the region,” said Nestlé SA executive VP and head of operations Magdi Batato. Moataz El Hout, the CEO of Nestlé North Africa, said that “in the last few years, our local workforce reached almost 3,500 direct employees and invested almost EGP 1 bn into manufacturing, distribution facilities and skill development.”

Background: Nestlé acquired Bonjorno owner Caravan Marketing Company in late 2017. At the time, the company said it had plans to continue investing in the Egyptian market. The story is getting coverage in the global trade press.

INVESTMENT WATCH- Flex Films to invest USD 200 mn in Egypt: Indian polymeric films manufacturer Flex Films will invest USD 200 mn in its Egypt subsidiary Flex P Films Egypt, Flex Chairman Ashok Chaturvedi reportedly said on Wednesday. The company will invest in its second plant in Egypt, he said, according to AMAY. The company will also borrow to fund the development of the factory, he noted, adding that at it stands, the company’s current factory exports 70% of its output.

INVESTMENT WATCH- Lazard wins mandate to promote Egyptian investment opportunities worldwide: Minister of Investment Sahar Nasr has signed an agreement with financial advisory firm Lazard to promote investment opportunities in Egypt worldwide, according to a cabinet statement. The pact was signed during the Davos forum and targets major investments that will create jobs and help boost exports, the statement said.

IPO WATCH- Is Pyramid Poultry playing hard to get? Pyramid Poultry is reportedly considering an IPO despite an active acquisition offer from agricultural commodity trader and manufacturer Cairo 3A, Pyramid Poultry head Anwar El Abd told local news sources. The acquisition by Cairo 3A is one of three options the company is considering, he said. An IPO is also under consideration, in addition to only selling a minority stake in the company. He appeared to imply that the acquisition by Cairo 3A was its first option “if the price is right.” We had noted earlier this month that negotiations with Cairo 3A are in an advanced stage and an agreement might be reached in 1Q2019.

Advisors: CI Capital and Al Tamimi & Company are advising Pyramid Poultry while Matouk Bassiouny is advising Cairo 3A.

M&A WATCH- Dice completes acquisition of remaining 5% stake in Alexandria Clothing: Dice Sport and Casual Wear has completed the acquisition of the last 5% stake in Alexandria Clothing Company in a transaction worth EGP 2 mn, leaving Dice with 100% ownership of the company, according to an EGX disclosure (pdf). Dice had acquired 95% of Alexandria Clothing in 2015 a transaction worth EGP 50 mn at the time.

France’s Macron is in town today: French President Emmanuel Macron arrives in Egypt today for talks with President Abdel Fattah El Sisi and other Egyptian officials. Macron will speak with El Sisi on issues including regional politics and economic cooperation. Macron is also facing pressure from some quarters to take a firmer stance on Egypt’s human right record.

Look for plenty of news on the business front: Execs from as many as 15 French companies are accompanying Macron. Among the agreements already set to be announced:

  • Wholesale market: Egypt will be signing a cooperation agreement with France’s Rungis International Market — the world’s largest wholesale food market — to “outline a plan to develop wholesale markets in Egypt,” Supply Minister Ali El Moselhy said, according to MENA.
  • Peugeot looking at assembly? Peugeot may be looking to follow Mercedes-Benz’s lead and assemble cars here, French Chamber of Commerce Co-President Mahmoud El Kaissy said, according to Ahram Gate.

Don’t expect Egypt to buy more Rafales this week: One long-gestating agreement that may not be in the cards for the time being is Egypt’s purchase of a dozen Rafale fighter jets. An Elysee official told Reuters that the agreement will not be finalized this week, but that contracts could be signed in the months ahead. The US had imposed restrictions on key components of the jets, which effectively blocked the sale and pushed Paris to look for ways to skirt the roadblock. Egypt had reportedly quietly signed a security agreement with the US last year to remove the block on the sale.

State’s fuel subsidy bill falls 15% in 1H2018-19: Egypt’s fuel subsidy bill fell 14.7% y-o-y in 1H2018-19 to EGP 43.5 bn, Oil Minister Tarek El Molla told Reuters on Wednesday. Egypt is expecting to spend around EGP 90 bn in total on fuel subsidies in the fiscal year ending in June. Falling spending on fuel subsidies will be welcomed by the IMF, which held back on the latest USD 2 bn tranche of a USD 12 bn loan as it wanted to see how the country would continue to cut subsidies while implementing a new fuel pricing mechanism for 95 octane fuel.

Trial balloon: The new mechanism will allow the price of fuel move up or down 10% in tandem with global markets when it is implemented in April. The government has plans to extend that fuel pricing mechanism to other grades of fuel. In related news, Egypt’s consumption of fuel and natural gas fell 1.2% y-o-y in FY2017-18, according to Mubasher.

EXCLUSIVE- FinMin to begin selection process for eurobond advisors: The Finance Ministry will begin reviewing this week bids submitted by investment banks seeking mandates as lead managers for Egypt’s upcoming eurobond issuance, a member of the committee overseeing the selection process tells Enterprise. The ministry has received offers from JPMorgan Chase & Co, National Bank of Abu Dhabi, and Citigroup, among others, and is planning to select four or five banks to manage the issuance. The final lineup of bookrunners will be announced at the beginning of next week, according to our source.

Egypt’s wheat importer secures USD 1 bn in funding: State grain buyer GASC has secured USD 1 bn of a USD 3 bn funding agreement with the Islamic Trade Finance Corporation to fund purchases, a senior government source with direct knowledge of the matter told Reuters on Wednesday. “The loan can be renewed whenever the money runs out so this is GASC turning to on-sight payments from now on,” the source said. “GASC may also renew financing when the initial USD 1 bn tranche is used up so deferred payments for grain will no longer be an issue,” the source added.

The move is expected to speed GASC’s payments to global traders especially in light of a new rule by GASC last Monday that would see it using at-sight letters of credit (LCs) for upcoming wheat tenders, assuring payments to suppliers as soon as they submit the necessary documents. The agreement with the ITFC was signed last September.

Egypt’s foreign debt obligations reached USD 92.6 bn at the end of June 2018, or around 37% of GDP, up from USD 79 at the end of June 2017, according to the central bank’s December statistical bulletin report (pdf). The debt-to-GDP ratio at the end of FY2017-18 remained “within the safe limits according to international standards,” the report says. Egypt settled USD 13.2 bn worth of foreign debt during FY17-18.

Non-oil exports rose 10% y-o-y in 2018 to USD 24.8 bn, up from USD 22.6 bn in 2017, data from the General Organization for Export and Import Control (GOEIC) showed. Arab countries accounted for the lion’s share of Egypt’s exports during the year, followed by the European Union, the United States and Africa.

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Egypt in the News

Egypt’s human rights situation was in the spotlight on the eighth anniversary of the 25 January revolution, with both Reuters and Amnesty International among those weighing in. Australian outlet ABC News also notes that Friday marks the one-year anniversary of Australian-Egyptian Hazem Hamouda being held in pretrial detention. Asharq Al Awsat took note of the Armed Forces deploying security forces in Tahrir Square and other locations to preempt “any disruptors of peace,” which the WSJ’s Jared Malsin and Amira El-Fekki lament is part of President Abdel Fattah El Sisi’s determination to prevent a repeat of the 2011 uprising.

This preemption comes as supporters of El Sisi try to push constitutional reforms that would allow him to stay in power, to “finish the projects he started,” arguing that a change in leadership would destabilize Egypt and weaken the fight against Daesh, Heba Saleh writes for the Financial Times. Analyst HA Hellyer notes that, despite the lack of organized opposition, “the establishment seems, via various editorials, keen to gain at least the perception of active public acquiescence, if not open support.”

The foreign press is also still reporting on prospects for regional cooperation with the inauguration of the Eastern Mediterranean Gas Forum a week ago. Both Bloomberg and the Associated Press had coverage Wednesday on why the new regional alliance is good news. Both outlets appear to shine the spotlight on Israel, or rather, Israel’s emergence as the new friendly neighbor. Long time readers of Enterprise will note that we consider it as rather Egypt’s emergence as a global energy hub. While Bloomberg focuses on Israel’s gas export plans — including its unfeasible to plan build a direct pipeline to Europe instead of shipping via Egypt’s LNG facilities — the AP notes statements by Israeli commentators on how the time for a more overt relationship between Israel and its Arab neighbors (tired of Turkey and Iran) is neigh.

Business Insider highlights plight (and creativity) of tourism industry workers: A struggling souvenir salesman being overly zealous in his trade caught the attention of Business Insider’s Harrison Jacobs, who used the incident (and as a typical khawaja, he had to document on camera) to discuss the struggles of those who have worked in the tourism industry. He notes that while the tourism industry has seen a recovery this past year, it is not picking up fast enough for some workers. Some of them have had to get creative, including renting out feluccas to chase tourists on Nile cruises.

Also getting traction in the foreign press:

  • The Economist is the latest to raise doubts about the new administrative capital’s ability to attract residents.
  • The case of the homophobic TV host criminalized for interviewing a homo[redacted] man exposes the way religious populism, conservatism and nationalism tap into “a seemingly obsessive public outcry over profane issues,” argues The Independent.
  • The president’s decision to paint Egypt’s red-brick buildings is under criticism from local residents, who say the move should be lower on our list of priorities, according to Arab News.
  • Egypt is “stonewalling” Italy’s efforts to close the case of Giulio Regeni, who was murdered in Cairo, says the Guardian.

On The Front Pages

President Abdel Fattah El Sisi paying a visit to the new administrative capital to check on the project’s progress is dominating the front pages of state-owned dailies Al Akhbar and Al Gomhuria. El Sisi also launched a new initiative dedicated to the early diagnosis and treatment of loss of vision, Al Ahram reports. Al Akhbar also took note of an expected visit to Cairo by Sudanese President Omar Al Bashir.

Energy

Alcazar Energy begins commercial operation at USD 68.6 mn Benban solar plant

Dubai’s Alcazar Energy has begun commercial operations at its USD 68.6 mn Egypt Solar 1 PV project in the Benban solar park, the company announced on Wednesday. “The completion marks an important milestone for our company and we are fortunate to play a role in a program of this scale which is testament to the spirit of partnership and cooperation required from governments, developers, investors and lenders in mobilising large infrastructure projects such as Benban,” said Daniel Calderon, co-founder and CEO of Alcazar Energy. "Our four projects in Egypt, together with our portfolio in Jordan will bring us to a combined capacity of 411 MW in the region.”

Egypt to sign PPA for Al Nowais coal plant within one month

The Egyptian Electricity Transmission Company (EETC) plans to sign the final power purchase agreement (PPA) with Al Nowais for its USD 4 bn, 2.65 GW coal-fired power plant in Oyoun Moussa within a month, according to an EETC source. EETC has agreed to purchase the power produced from the plant at USD 0.041 per kW. Al Nowais will construct the plant under a 25-year usufruct framework.

Ganope plans drilling nine new wells in 2H2018-19

South Valley Egyptian Petroleum Holding Company is planning to drill nine new wells in its concessions to reach average crude production of 25,000 bbl/d, Mubasher reports. The company is also planning to offer new concessions in the Red Sea.

EGAS to drill 13 natural gas wells with USD 510 mn investments in FY 2019-20

EGAS is planning to drill 13 natural gas wells in the Nile Delta and Mediterranean area with more than USD 510 mn in investments in FY2019-20, Chairman Osama El Bakly said, according to an Oil Ministry statement.

Egypt’s natgas production to reach 8 bcf/d in FY2019-20

Egypt’s natural gas production is expected to reach 8 bcf/d in FY2019-20, up from 6.6 bcf/d currently, Oil Minister Tarek El Molla said. This is an upward revision from recent Oil Ministry projections that saw Egypt reaching the same figure at a later time in 2021.

Manufacturing

AOI sign MoU with Germany’s DMG Mori for Egypt manufacturing

The Arab Organization for Industrialization (AOI) signed an MoU with German machinery manufacturer DMG Mori to introduce the company’s technology domestically, AOI head Abdel Moneim Al Terras said. DMG Mori manufactures a wide range of industrial products and machinery — including metal cutting machine tools, medical devices and automotive and aerospace components. Al Terras did not specify which of the company’s production technologies AOI is looking to implement.

Tourism

Egypt, Cyprus discuss new shipping, cruise links

Egypt and Cyprus are in “advanced talks” to begin operating new shipping and cruise lines, Cyprus’ Deputy Shipping Minister Natasa Pilides said following a meeting with Transportation Minister Hisham Arafat, Financial Mirror reports.

Health + Education

Egypt, UK sign healthcare cooperation MoU

Assistant Health Minister Ahmed Elsobky and British Ambassador Sir Geoffrey Adams signed an MoU on Thursday to offer training to healthcare professionals in Egypt and encourage British pharma and healthcare providers to invest in Egypt, the embassy said.

Automotive + Transportation

Egypt to sell up to 200k automotives in 2019, says AMIC head

Automotive sales in Egypt are expected to dip slightly to 180k-200k units this year, Automotive Information Council (AMIC) boss Moustafa Hussein tells Masrawy. Auto sales in 11M2018 recorded 166.8k units and are expected to have reached around 185k units at the end of last year, according to Hussein. Social media campaigns like “Let it Rust” calling on consumers to boycott the purchase of new cars in protest against high prices are expected to have somewhat of a negative effect on sales, but the industry is mostly struggling from consumers’ reduced purchasing power, Hussein says.

Egypt discusses electric vehicles manufacturing with Switzerland

Trade and Industry Minister Amr Nassar discussed with Swiss Federal Councilor for Economic Affairs, Education and Research Guy Parmelin potential cooperation between Egypt and Switzerland in manufacturing electric cars, according to a ministry statement. Nassar also discussed with Volvo Buses President Hakan Agnevall manufacturing buses in Egypt to serve new cities, the ministry said (pdf).

Egypt signs civil aviation MoU with Kuwait

The Civil Aviation Ministry signed on Thursday an MoU with the General Authority for Civil Aviation in Kuwait organizing operational procedures for civil aviation and air transport between both countries, Kuwait News Agency reported.

Spanish-Kuwaiti consortium bidding for Egypt’s USD 8.5 bn electric railway

Eight consortiums, including one made of Kuwait-based Al Kharafi Group and five Spanish companies, are competing in a tender to construct the USD 8.5 bn Alamein-Ain Sokhna electric railway, an official from one of the Spanish companies tells Al Shorouk. The winning company will be given 30 months to complete the two-phase project, the first of which will link the new capital with 6 October at a cost of c. USD 4 bn.

Banking + Finance

Sarwa Capital receives preliminary FRA approval to for sukuk issuer license

Consumer- and structured-finance player Sarwa Capital has received a preliminary approval from the Financial Regulatory Authority (FRA) for a license to issue sukuk (sharia-compliant bonds), FRA boss Mohamed Omran revealed in a press conference last Tuesday. He noted that the approval was given around one week before the announcement. Sarwa had applied for the license earlier this month.

Other Business News of Note

GTH postpones to 27 March GA meeting to vote on EGP 11.2 bn capital increase

EGX-listed Global Telecom Holding (GTH) has postponed to 27 March its general assembly meeting to vote for a capital increase of EGP 11.2 bn through a rights issue on the bourse, IR department head Noha Agaiby said, according to Al Mal. The company’s majority shareholder, Veon Holdings, is still pushing ahead with a bid to purchase the 42.3% of GTH that it doesn’t already own. Veon was set to acquire the stake last year, but withdrew the offer after failing to receive approval for the transaction from the Financial Regulatory Authority.

National Security

Daesh claims responsibility for kidnapping Christian forensic expert in Egypt

Daesh has claimed responsibility for kidnapping a Christian police forensic expert, Reuters reported, citing a recent announcement by the group’s propaganda outlet, Amaq. While the announcement does not include a name, it appears to refer to the kidnapping of 45-year-old Adeeb Nakhlah.

On Your Way Out

Mirror, mirror on the wall, which book fair is the fairest of them all? The 50th edition of the Cairo International Book Fair, which opened last week, has come a long way — but its new home at the gleaming Egypt International Exhibition Center in New Cairo seems to have disgruntled some, Reuters reports. Booksellers who for years have set up shop at the fair’s former home in Nasr City say they are being sidelined by “stringent” participation conditions, leading them to launch their own month-long book fair in downtown Azbakeya.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.86 | Sell 17.95

EGP / USD at CIB: Buy 17.84 | Sell 17.94
EGP / USD at NBE: Buy 17.79 | Sell 17.89

EGX30 (Wednesday): 13,507 (+0.2%)
Turnover: EGP 691 mn (14% below the 90-day average)
EGX 30 year-to-date: +3.6%

THE MARKET ON WEDNESDAY: The EGX30 ended Wednesday’s session up +0.2%. CIB, the index heaviest constituent ended up 2.4%. EGX30’s top performing constituents were CIB up 2.4%, QNB Al Ahli up 2.3%, and Elsewedy Electric up 1.7%. Wednesday’s worst performing stocks were AMOC down 7.3%, Heliopolis Housing down 3.3% and EK Holding down 2.6%. The market turnover was EGP 691 mn, and local investors were the sole net sellers.

Foreigners: Net Long | EGP +20.8 mn
Regional: Net Long | EGP +2.3 mn
Domestic: Net Short | EGP -23.1 mn

Retail: 51.7% of total trades | 54.0% of buyers | 49.5% of sellers
Institutions: 48.3% of total trades | 46.0% of buyers | 50.5% of sellers

WTI: USD 53.69 (+1.05%)
Brent: USD 61.64 (+0.90%)

Natural Gas (Nymex, futures prices) USD 3.18 MMBtu, (+2.55%, Feb 2019)
Gold: USD 1,304.20 / troy ounce (+1.42%)

TASI: 8,434.89 (-0.37%) (YTD: +7.77%)
ADX: 5,019.16 (+0.97%) (YTD: +2.12%)
DFM: 2,514.36 (-0.10%) (YTD: -0.61%)
KSE Premier Market: 5,493.20 (+0.21%)
QE: 10,712.39 (+0.58%) (YTD: +4.01%)
MSM: 4,180.14 (+0.34%) (YTD: -3.32%)
BB: 1,374.16 (+0.92%) (YTD: +2.76%)

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Calendar

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

03 February (Sunday): Cairo court to hear lawsuit against Peugeot Citroen.

05 February (Tuesday): Egypt’s Emirates NBD PMI for January released.

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

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

14 February (Thursday): Central Bank of Egypt’s monetary policy committee meets to review interest rates.

19 February (Tuesday) The Cairo Economic Court to deliver decision on pharma distributors appeal, Egypt.

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

24-25 February (Sunday-Monday): EU-Arab League summit, Sharm El-Sheikh, Egypt

26-28 February (Tuesday-Thursday): 22nd International Conference on Petroleum Mineral

Resources and Development, Egyptian Petroleum Research Institute, Nasr City, Cairo, Egypt.

03-06 March (Sunday-Wednesday): EFG Hermes One-on-One Conference, Dubai.

17-18 March (Sunday-Monday): OPEC Joint Ministerial Monitoring Committee meeting, Baku (Bloomberg)

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

28 March (Thursday): Central Bank of Egypt’s monetary policy committee meets to review interest rates.

April: 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.

17-18 April (Wednesday-Thursday): OPEC+ meeting, Vienna (Bloomberg)

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

25 April (Thursday): Sinai Liberation day, national holiday.

28 April (Sunday): Easter Sunday, national holiday.

29 April (Monday): Easter Monday, national holiday.

01 May (Wednesday): Labor Day, national holiday.

06 May (Monday): First day of Ramadan (TBC).

23 May (Thursday): Central Bank of Egypt’s monetary policy committee meets to review interest rates.

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

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

30 June (Sunday): June 2013 protests, national holiday.

11 July (Thursday): Central Bank of Egypt’s monetary policy committee meets to review interest rates.

23 July (Tuesday): 23 July revolution, national holiday.

7-11 August (Wednesday-Sunday) Eid El Adha (TBC).

22 August (Thursday): Central Bank of Egypt’s monetary policy committee meets to review interest rates.

29 August (Thursday): Islamic New Year (TBC), national holiday.

26 September (Thursday): Central Bank of Egypt’s monetary policy committee meets to review interest rates.

6 October (Sunday): Armed Forces Day, national holiday.

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

9 November (Saturday): Prophet Mohammed’s birthday, national holiday.

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

26 December (Thursday): Central Bank of Egypt’s monetary policy committee meets to review interest rates.

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