The summer news slowdown is upon us

We are in the full swing of the summer news slowdown, folks. But what little is happening these days is significant — not least of which is Fawry’s in-the-works IPO.

The subscription period for the private placement portion of the e-payments platform’s initial public offering will wrap up later today. The retail offering is also still underway, and will close on Monday. Fawry’s shares will begin trading on the EGX on Thursday, 8 August. We have the latest in this morning’s Speed Round.

The two-day National Youth Conference concludes today at the new administrative capital. We have a rundown on key moments from the conference in Last Night’s Talk Shows, below.

The two-day US Federal Reserve meeting at the US Federal Reserve to review interest rates finishes this afternoon. At this point, putting your money on anything other than a 25 bps cut is a fool’s errand, but there still may not be consensus among Fed board members, with at least two potential dissenters on the Federal Open Market Committee who could vote against easing. Fed Chairman Jay Powell will be in full expectation-management mode when he faces the cameras for the post-meeting press conference, scheduled to take place soon after the central bank releases its policy statement at 8:00 pm CLT tonight.

Basically everyone is forecasting a 0.25% cut — except Morgan Stanley’s chief economist. “Weak business investment will likely make the Fed more aggressive with rates.” Chetan Ahya told CNBC yesterday (watch, runtime: 06:02). “If the Fed wants to be preemptive, it needs to cut 50 bps.”

And we all know what the president wants: America’s Twitterer-in-chief took to social media yesterday to complain that the Fed will not lower rates enough. “The Fed has made all the wrong moves. A small rate cut is not enough,” he wrote.

Oil prices rose yesterday in anticipation of a cut: Brent was up 0.51% to USD 65.05 bbl, while US crude (WTI) rose 0.47% to USD 58.32 bbl.

But US and European stock markets were a sea of red: You would expect stock markets to be buoyant in the run-up to the first Fed rate cut in a decade, but Trump’s castigation of Beijing on the eve of US-China trade talks and fears of a chaotic British exit from the EU conspired to drag down the S&P 500, which fell 0.3% at session close. European bourses also witnessed a broad decline, with Germany’s benchmark Dax 30 closing more than 2% down.

Investors from Egypt are among a cohort eyeing up investments in South Sudan’s oil, mineral, and agricultural industries,Bloomberg reports. FDI inflows to the country are expected to rise to USD 1 bn this fiscal year as it recovers from five years of civil war.

The US’ second Democratic presidential debate concluded the first of two evenings around an hour before dispatch time. Vox has declared Senator Elizabeth Warren the winner of the night, noting that she dove into divisive issues such as immigration policy. Warren and Senator Bernie Sanders seem to have “teamed up” against the more moderate candidates during the debate, highlighting an ideological divide among the party’s candidates. The Guardian has a blow-by-blow of the evening.

Uber, Lyft announce job cuts as IPOs fail to meet expectations: Ride-hailing services Uber and Lyft both made significant cuts to their operations this week in a bid to recoup losses after disappointing IPOs,the WSJ reports. Uber cut a third of its marketing team — around 400 jobs — while Lyft is eliminating the role of chief operating officer, in a move that echoes an industry-wide trend also seen at Uber last month. Both companies experienced disappointing IPOs and large 1Q2019 losses.

In international miscellany:

• Huawei shrugs off US pressure, posts strong revenue growth in 1H: Huawei’s 1H2019 revenue jumped 23.2% y-o-y to USD 58.3 bn despite the US blocking its suppliers from selling to the Chinese tech company, the FT reports. The US block “has had some impact on our development, but the scope is controllable,” said Huawei Chairman Liang Hua.
• Ethiopia planted a record 353 mn trees in 12 hours as part of a 4 bn tree-planting campaign to combat deforestation, droughts and climate change, Bloomberg reports.

The launch of the two-day National Youth Conference at the new capital yesterday was in the limelight on last night’s talk shows.

Al Hayah Al Youm’s Khaled Abu Bakr zoned in on President Abdel Fattah El Sisi’s speech, in which the president lauded Egyptians for their patience amid the reforms that have been ongoing since he assumed office in 2014 (watch, runtime: 3:29).

Youth model government session: The central focus of the conference’s first day was a “simulation” government session including a prime minister, full-fledged cabinet, and working groups presented to El Sisi’s administration assessments, analyses, policy responses, and strategies. This is the third mock-up government simulation. You can watch yesterday’s full two-hour session here, if you are so inclined.

El Sisi was shown a series of Facebook memes poking fun at the recent fuel price hikes,Yahduth Fi Misr’s Sherif Amer reported (watch, runtime: 2:50). The memes, which the president and Prime Minister Moustafa Madbouly apparently found the humor in, were presented during the mock-up government session.

M&A WATCH- EKH closer to acquiring Emisal Salts: Egypt Kuwait Holding has reached an agreement with the National Bank of Egypt (NBE) and the Chemical Industries Holding Company (CIHC) to acquire a 52.8% stake in Emisal Salts, unnamed sources told Al Mal. NBE, the largest shareholder in Emisal, will sell its entire 49.8% stake and CIHC will sell 3% from its 13.1% holding, allowing EKH to acquire a controlling stake in the company. EKH is facing competition from a consortium made up of Kuwait’s Al Madar Finance and Investment and the Saudi-Egyptian Industrial Investment (SEII), which bid EGP 700 mn for the company back in June. EKH had submitted its tender offer back in February. NBE is leading the sale process on behalf of other state-owned shareholders.

IPO WATCH- Fawry’s retail offering 32.5% subscribed o day three: The retail component of Fawry’s ongoing IPO was 32.5% subscribed at the close of yesterday’s trading session, according to a local press report. Retail investors requested some 11 mn shares from a total of 35 mn up for grabs. The e-payments platform received yesterday nearly three times as many subscriptions as it did on the first two days of the retail offering combined. The offering is set to wrap up next Monday. The private placement, meanwhile, began on Friday and wraps up later today, the company said on Friday.

Background: Fawry’s IPO will be Egypt’s first since last October, testing the waters of an anemic IPO market that has seen no action since Sarwa Capital went public last year. The IPO could set the tone for the market ahead of other planned offerings, including those in the state privatization program. The e-payments platform’s shares will debut on the EGX at EGP 6.46 apiece on Thursday, 8 August.

INVESTMENT WATCH- Mandolin maker Mondelēz to launch new product line in Egypt: Snack-maker Mondelēz International plans to open a new product line in Egypt “in the coming phase,”Managing Director of North Africa & Levant Bilal Sharabati said, according to Mubasher. Sharabati did not provide more details on the expected timeframe, or disclose the investment cost of the new line. The company’s total investments in Egypt currently surpass EGP 2 bn, with three factories that produce more than 14 local and international brands of chocolate and biscuits. The company has a 40% share in Egypt’s chocolate and biscuits market, and currently exports 45% of what it produces in Egypt to over 24 countries.

Dana Gas confirms hiring financial advisors for the potential sale of Egypt assets: Dana Gas confirmed reports earlier this week that it has hired financial advisors to study the possibility of selling down its Egypt asset portfolio in a bourse filing (pdf) on Tuesday. “The company is undertaking a strategic review of its Egyptian oil and gas assets and has hired financial advisors to look at a possible sale at full value, having substantially developed the said assets,” the UAE gas company said, without naming the advisors. The company reiterated that the reason for considering the exit is to focus on its more promising operations in Iraqi Kurdistan, and that it will remain committed to its Egypt operations in the meantime. It also said the sale is at its “early stages.”

Background: Unnamed sources told Reuters earlier this week that the company has hired investment bank Tudor, Pickering, Holt & Co. (TPH) to advise it on the sale of its Egypt assets, which are worth more than USD 500 mn. Head of Investor Relations Mohammed Mubaideen said on Monday the company is planning to invest in drilling in the El Matareya concession in the Nile Delta. The company announced on Sunday that it is abandoning its Merak-1 well in the North Arish concession after failing to find commercial hydrocarbons.

INVESTMENT WATCH- Fas Energy to invest USD 500 mn in waste energy plant: Saudi-based Fas Energy is planning to invest USD 500 mn to construct a waste-to-energy plant in 10th of Ramadan City under an MoU with the New Urban Communities Authority (NUCA), according to a company statement Mubasher picked up. The plant’s capacity will be 100 MW and will serve new communities east of Cairo. NUCA’s MoU with Fas, a subsidiary of Saudi Al Hokair, was signed earlier this week. Fas completed a solar power plant in Benban last year.

INVESTMENT WATCH- Canal Sugar plans new USD 200 mn grain terminal in Damietta: Al Ghurair Group’s Canal Sugar is planning to invest USD 200 mn in constructing a pier and grains terminal in Damietta, CEO Islam Salem said at a press conference, according to Reuters. The terminal will discharge 3k tonnes of grains per hour. Canal Sugar will self-finance part of the project, and will seek funds from infrastructure financing institutions for the remainder. The contract is expected to be finalized by the end of the year.

Canal Sugar’s Minya beet sugar factory will be completed October 2020, and production will begin in 2021, Salem said during the presser. The USD 1 bn factory is expected to be the biggest of its kind in the world. Al Ahly Capital, which had signed a shareholder agreement in December for the factory with Al Ghurair and Murban, recently entered talks with international lenders for a USD 350 mn loan for the project.

MENA-based fund managers are keeping their allocations to Egypt unchanged over the next period, according to a Reuters poll. The last poll from the newswire published at the end of last month had indicated that over a quarter of fund managers planned to increase their exposure to Egypt over the next three months. It remains unclear whether the newswire polled the same fund managers or why sentiment on Egypt has shifted. Over half of fund managers polled at the end of last month had also signaled they were bullish on Kuwaiti equities, whereas this month’s poll has the managers saying they plan on keeping their investments on Kuwait steady.

The UAE is looking hot, and Saudi is not: The UAE is fund managers’ top pick, with seven of the 10 who were polled saying they are looking to increase their investments despite Dubai being one of the world’s worst-performing stock markets. “In the UAE, ‘stable oil prices, a wide range of structural reforms and government-led spending initiatives,’ as well as underlying earnings growth should lead to accelerating economic growth into next year, said Mohamed Eljamal, head of public markets at Abu Dhabi’s Waha Capital.” As for Saudi Arabia, 60% of fund managers expect to scale back their investments in the kingdom as its petrochem and banking sectors are expected to “face major headwinds.”

Vehicle sales sustain downward trend during the first half of the year: Total car sales in Egypt stood at 74,084 vehicles in 1H2019, down 6.8% y-o-y from 79,474 during the same period last year, according to figures from the Automotive Information Council (AMIC) cited by Hapi Journal. Passenger car sales dropped 11% y-o-y to 51,311 units, while bus sales climbed 4% y-o-y to 7,053. The dip in sales is a continuation of a trend witnessed in 5M2019 and 4M2019. The automotive industry had shown signs of recovery last year following a slump that was exacerbated by the EGP devaluation in 2016.

Dubai financial regulator hands record USD 314.6 mn fine to Abraaj for “serious wrongdoing”: Former private equity giant Abraaj has been fined a record USD 314.6 mn by Dubai’s financial regulator, the Wall Street Journal reports. The Dubai Financial Services Authority (DFSA) said that Abraaj used funds from investors to pay expenses and send money to executives, then provided misleading financial information to conceal this activity. It also reportedly borrowed money just before financial reporting dates to inflate its bank balances, changed reporting periods to conceal shortfalls, withheld information, and lied about delays in cash distributions. “Serious wrongdoing by two Abraaj group companies included carrying out unauthorized activities in the DIFC and misusing investors’ monies,” DFSA CEO Bryan Stirewalt said in a statement.

Meanwhile, six Abraaj executives face criminal indictment by US prosecutors: Founder Arif Naqvi is one of six former Abraaj executives to have been criminally indicted by US prosecutors just before this fine was imposed. Naqvi is currently on USD 19 mn conditional bail, effectively under house arrest in his London home. An extradition trial will determine whether he will be sent to the US. He maintains his innocence, and has called the charges leveled against him “ludicrous.” Former Abraaj managing partner Mustafa Abdel-Wadood pleaded guilty to charges of racketeering and securities-fraud at a New York court earlier this month. He claims he lied to investors at Naqvi’s behest, and has agreed to cooperate with authorities. Abraaj was widely seen as a standard-bearer for EM private equity before its collapse last year.

EARNINGS WATCH- Edita net profit increases 26.3% y-o-y in 2Q2019: Snack food maker Edita recorded a 26.3% y-o-y increase in net profit for 2Q2019 to EGP 31.7 mn, according to the company’s earnings release (pdf). Revenues from the quarter reached EGP 862.8 mn, up 9.3% y-o-y. Commenting on the results, Chairman Hani Berzi said, “Edita’s growth in the second quarter and first half of 2019 continued to be a factor of our constantly improving product mix, with new product launches and strategic market segmentation allowing the company to expand its consumer base and capture higher value from sales.”

Cakes continued to be the largest share of total revenues in 2Q2019 at 45%, followed by croissants, which made up 32.1%. Rusks grew to 9.7% versus 7.4% in 2Q2018, while Edita’s wafer segment accounted for 8.8% of total revenues for the quarter. Gross exports were up 17.3% y-o-y to EGP 150.2 mn in 1H2019, comprising an 8.1% share of total gross revenues during the first half of the year.

MOVES- State investment bank NI Capital has appointed Mohamed Metwally as its new CEO, the bank said in a press release (pdf). Metwally previously served as Deputy CEO at HC Securities & Investment and Managing Director & CEO at Abu Dhabi-based Siraj Finance, a home finance company. He had also previously held positions at Salomon Brothers and Merrill Lynch in London, and Standard Chartered and HSBC in Dubai.

More than a war zone: Focusing her lens on day-to-day situations, as opposed to the usual tragedies, Tanya Habjouqa’s collection of images for the BBC tells the Palestinian story through a fresh pair of eyes (watch, runtime: 04:13). “Humour in the Middle East is just prevalent and I think humour is… it allows you into surprising places,” Habjouqa said. Having married a Palestinian, the photographer, who was raised between Texas and Jordan, sought to show that — despite the occupation — suffering was not the only activity going on in Palestine.

It’s another quiet morning for Egypt in the foreign press. Among the few headlines worth a quick skim:

• The IMF isn’t helping when it comes to poverty: Egypt’s increasing poverty rate is a byproduct of steps taken as part of the IMF program, Bloomberg says.
• Two Somali refugees were arrested in Arizona as they prepared to board a flight to Egypt, where they intended to travel to Sinai and join Daesh, the US Department of Justice said.
• Egyptian agricultural techniques are giving an upstate New York farm an edge. An Egyptian technique to “custom-grow” crops helped Norwich Meadows Farm become one of the most visited by high-end chefs who frequent the Union Square Greenmarket in Manhattan, says the New York Times.

Surprise: All those detox diets are a scam. From detox foot pads to sweating our butts off in steam rooms, needing to cleanse our “toxic” blood is one of the many fads the wellness industry is trying hard to push onto us, but do they work? No, CollegeHumor’s Adam Conover says (watch, runtime: 04:36). Anything can apparently be toxic if you consume too much of it — so we suggest you think twice before opening your fourteenth bag of sour cheese and onion chips this morning, instead of spending hundreds of EGP on useless “detoxifiers.”

Shoukry holds talks with Greek prime, foreign ministers: Foreign Minister Sameh Shoukry discussed cooperation with Greek Prime Minister Kyriakos Mitsotakis and bilateral relations with his Greek counterpart Nikos Dendias. Shoukry praised the Egypt-Greece-Cyprus regional alliance, and discussed with the Greek officials a tripartite summit that Cairo is set to host soon. He also touched on terrorism and energy cooperation during the meetings. The foreign minister is also scheduled to hold talks with the Cypriot president and foreign minister tomorrow.

The Damietta LNG facility will be operating at its full capacity of 5 mn tonnes a year in 4Q2019, an unnamed industry official told Youm7. Italy’s Eni said earlier this month that it is in talks over the LNG facility in Damietta and expected that it should begin operations “soon this year.” Egypt needs to settle a dispute with Damietta LNG plant operator Union Fenosa Gas (UFG), 50-50 owned by Union Fenosa and Eni, in order to resume exports from the facility. UFG has been seeking compensation from the Egyptian government after it cut gas supplies to the Damietta plant in 2012.

The Kuwait Petroleum Corporation has given an initial approval to a request from Egypt to extend once again an oil and fuel purchase agreement that is due to expire in December, a source from the Egyptian General Petroleum Corporation (EGPC) told Amwal Al Ghad. The agreement was signed in 2013 and renewed for three years in 2017. New contracts could be signed next quarter, allowing the crude shipments to continue uninterrupted in January 2020. Egypt has asked this time to increase the amount to 4 mn bbl of crude per month, the sources told the newspaper, confirming reports we picked up earlier this week. The government has also requested more favorable payment terms.

Medsofts is planning to invest EGP 180 mn in expanding the storage capacity of Nile Silos to 235k tonnes, General Manager Tarek Tawfik told Al Mal. The expansion will be funded by three banks, including CIB and United Bank, and Medsofts — ADM’s Egypt subsidiary which owns Nile Silos in partnership with Wadi Group — expects to complete the expansion in 1H2021.

The Irrigation and Water Resources Ministry has announced a nationwide state of emergency due to Egypt’s share of Nile water falling 5 bn cubic meters in 2019, according to a statement. Decreasing rainfall in the Ethiopian highlands is primarily responsible for the declining water volumes, head of the ministry’s planning sector Eman El Sayed said, according to Egypt Today. The ministry statement did not provide any details about the state of emergency. Irrigation Minister Mohamed Abdel Atti in April revealed a USD 50 bn plan to combat water scarcity through using modern irrigation techniques and reducing the cultivation of water-intensive crops. The UN Food and Agriculture Organization (FAO) warned earlier this year that Arab countries are looking at a water supply emergency, urging to urgently address the issue.

The Health Ministry is planning to spend EGP 673 mn to renovate 36 primary healthcare facilities enrolled in the first phase of the new healthcare system, government sources said. The facilities will get 700 new beds to absorb patient flow in central hospitals providing services under the scheme. The government is planning to spend EGP 2.1 bn on deploying services under the Universal Healthcare Act in FY2019-2020, Vice Minister of Finance Ehab Abou Eish told Reuters earlier this month. Egypt officially kicked off the roll out of services this month with a trial run in Port Said. The services could debut in each of Ismailia, Suez, South Sinai, Luxor, and Aswan — which Health Minister Hala Zayed said previously are priority governorates — at the beginning of the next fiscal year.

Misr for Central Clearing, Depository, and Registry (MCDR) is planning to set up a EGP 100 mn Internet of Things company, MCDR Chairman Mohamed Abdel Salam said, according to the local press. MCDR will hold 20% of the company, with the remaining ownership split between an unnamed French company and a “sovereign entity.” No further details were provided.

Tamweely Microfinance is launching seven new branches in National Postal Authority (NPA) offices throughout Egypt as part of a partnership between the two organizations, it said in a statement (pdf). The new branches will be set up in Beni Suef, Minya, Sohag and Qena, bringing the total number of Tamweely branches in Egypt to 35. These expansion efforts follow a recent capital increase to 75 mn from EGP 50. The new branches are set to start operating from early October, and the company has allocated some EGP 7 mn as funding for 3.5k new clients through the branches, said CEO Ahmed Khurshid.

DHL will announce in August the opening date of a new internal distribution center in Sixth of October, Country Manager Ahmed Elfangary told the local press. The company also plans to open four new branches and expand its fleet before the end of 2019, and has recently completed an expansion of its main headquarters at Cairo Airport.

Egyptian tennis player Youssef Hossam, whose brother Karim was handed a permanent ban from the professional sport, has been suspended for alleged “integrity violations,” reports the Associated Press. The Tennis Integrity Unit provisionally suspended Youssef, who is ranked 410th in the world, pending an ongoing probe. Youssef’s brother was found guilty last year of 16 charges including match-fixing and facilitating wagers.