Egypt is among the top 50 most water-stressed countries in the world.

News dirth to reach a crescendo next week on expectations of widespread food coma epidemic: The August news lull continues, with yesterday being one of the slowest news days we’ve seen all year, and it’s not even Eid yet. Expect next week to be an even duller week in Egypt-related news as Sunday, Monday and Tuesday are national holidays. Don’t worry though: we will be in your inboxes on Wednesday and Thursday to add some color to the week’s non-events.

The CBE and Capmas are due to release July’s inflation figures sometime this week. Inflation unexpectedly plummeted almost five percentage points to 9.4% in June — the first time Egypt has seen single digit inflation since March 2016. While some research houses have lowered their overall projections for the year, it is widely expected that we see inflation in July rise on the back of last month’s cuts to fuel and electricity subsidies.

Don’t put money on a rate cut this month: Investment banks are expecting the Monetary Policy Committee to keep interest rates on hold when it meets on Thursday, 22 August.

Meanwhile, net foreign reserves inched up to USD 44.91 bn at the end of July from USD 44.35 bn in June, CBE data showed. Expect the figure to jump more substantially next month, when the final USD 2 bn tranche of the IMF loan is added to the pile.

Members of the UN Security Council have condemned “in the strongest terms” Sunday’s terrorist attack and expressed condolences to the families of the victims in a joint statement. General Secretary of the Arab League Ahmed Aboul Gheit also issued a statement denouncing the attack.

US Treasury Secretary Steven Mnuchin formally called out China for being a “currency manipulator,” in a Treasury statement late Monday. The statement came after the Chinese onshore and offshore exchange rates hit 11-year lows early Monday, two days after Trump vowed to impose new 10% tariffs on the remaining USD 300 bn-worth of Chinese goods starting 1 September. “As a result of this determination, Secretary Mnuchin will engage with the IMF to eliminate the unfair competitive advantage created by China’s latest actions,” the Treasury statement said.

The designation fulfilled a Donald Trump promise to officially label China a currency manipulator, says Reuters. US officials have long criticized Beijing of controlling its currency to help exporters, but this is the first official accusation since 1994.

Investors pulled almost USD 3 bn from EM equities and bonds this week on US-China trade war fears, the Institute of International Finance’s flow tracker estimates, according to Reuters. Around USD 6.8 bn has exited emerging markets since last Thursday, including USD 2.33 bn on Friday alone. A separate IIF alert dubbed the current flow reversal ‘Trade Tantrum 2.0’, a reference to the spike in outflows in May. Asian markets sustained especially heavy losses last Friday: USD 1 bn exited Chinese equities, while India saw USD 400 mn of outflows and Taiwan lost USD 760 mn (over two days).

The US-China trade war is weighing on the big bn’naires, Bloomberg reports. The world’s wealthiest 500 people lost 2.1% of their collective net worth on Monday as stocks plunged on the back of rising trade tensions between China and the US. Amazon’s Jeff Bezos was the biggest loser, after the online giant lost USD 3.4 bn in the turmoil. But don’t reach for the violins just yet: he’s still the richest person on the planet with USD 110 bn.

It’s not enough to rely on rate cuts. Global headwinds call for better portfolios, says El Erian: Investors need to start rethinking portfolio building strategies as economic and political headwinds are beginning to take on a bigger role in asset price movements, undermining the comfort investors sought in monetary easing, Mohamed El Erian writes for the Financial Times. Growing US-China trade tensions, which have so far only seen “a series of ceasefires” and no truce, “means that portfolio positioning just for the beneficial effects of more liquidity will be challenged more than in the past,” he says.

AI is looking to displace research houses at investment banks…: AI is playing a crucial role in generating information for cost-conscious investment banks looking to downsize by laying off human researchers, according to Bloomberg. Ploughing through news articles, government statements and social media accounts all over the world that mere mortals couldn’t possibly process, machines end up reducing one of banking’s most significant outlays. There was a 30% drop in research budgets last year in the UK, data from the Financial Conduct Authority shows, while the 12 biggest banks have cut their front-office staff covering currencies, such as traders and researchers, by 7% since 2015, according to London-based research analytics consultancy Coalition Development Ltd.

…and humanity in general: Tech companies are racing to be the first to build a machine capable of human-level intelligence, the FT says. Elon Musk’s OpenAI and Alphabet’s DeepMind have both built deep learning systems using artificial neural networks that model the human brain, but many experts remain sceptical about whether machines will ever approach human levels of cognition without an algorithmic breakthrough. This might be about to change though, after Microsoft last month made a decisive move in the pursuit of artificial general intelligence and invested USD 1 bn in OpenAI.

All eyes on Scale: Silicon Valley’s next big thing is a three-year-old startupScale. Valued at over USD 1 bn after securing USD 100 mn in series C funding, the company teaches AI systems how to ‘see’ like humans. Using specially-built software to review images, most of which it can label automatically, it cuts down a time and labor-intensive process that usually costs companies bns in human labor. A network of contract workers then reviews the images, making any necessary adjustments. Clients raving about its efficiency and cost-effectiveness include Uber, Waymo and OpenAI, according to Bloomberg.

Egypt getting its money’s worth in Suez Canal gains: A cabinet infographic showing a 5.4% jump y-o-y in Suez Canal revenues to USD 5.9 bn in FY2018-2019 was the main point of discussion on Al Hayah Al Youm with Khaled Abu Bakr (watch, runtime: 09:01). Abu Bakr highlighted the role the second Suez Canal played in bringing up the revenues four years after the project’s construction. We have more on this in our Speed Round, below.

The news that foreign reserves inched up to USD 44.91 bn at the end of July from USD 44.35 bn in June also got a mention on the air (watch, runtime: 10:17). Cairo University Professor Mostafa Badr told Abu Bakr the recovery of foreign reserves shows the IMF reform program has succeeded.

PM urges gov’t to step up efforts in new cities: Prime Minister Moustafa Madbouly held talks with Transportation Minister Assem El Gazzar as well as NUCA and Housing Ministry officials to talk about construction progress in over 14 new cities (watch, runtime: 18:47).

Sound eggonomics: The government has launched a national poultry investment campaignto boost the industry, cabinet spokesman Nader Saad told Hona Al Asema’s Reham Ibrahim (watch, runtime: 12:26). The campaign will take place over five different governorates, including Luxor and Qena. Egypt currently meets 95% of its poultry consumption needs.

Egypt among top 50 most water-stressed countries, according to WRI: Egypt is among the countries most at risk of water shortages, with the World Resources Institute (WRI) ranking it the 43rd most water-stressed country out of 164 countries. Data shows that Egypt’s Red Sea coastlines, including Sinai, are the most water-stressed regions in the countries, followed by the north coast, delta and Cairo metropolitan area. The WRI calculates the baseline water stress by factoring in water usage relative to renewable water supplies.

It’s worse for nearly a quarter of the world’s population: Qatar, Israel, Lebanon, Jordan, Saudi Arabia and the UAE are among the 17 countries — home to a quarter of the world’s population — facing extremely high baseline water stress. Population growth, socioeconomic development and urbanization are all increasing the demand for water, while climate change is making it harder to predict and plan for when rainfall will come. WRI has warned of social, political and health problems if better information, planning and management is not used to address the crisis.

What are we doing about it? As we noted on Monday, the Housing Ministry unveiled new details of its water conservation plan. It includes building 39 desalination plants with a capacity of 1.4 mn cubic meters (cbm) of water per day, and the construction of 52 wastewater treatment plants. The plan also involves promoting water-saving devices as well as bringing in the private sector to help irrigate cash crops using recycled water. Decreasing rainfall in the Ethiopian highlands has led to a 5 bn cubic meter shortfall in Egypt’s share of Nile water. The Irrigation Ministry announced a state of emergency at the end of July in response to the findings.

Egypt’s economic reforms have been a boon to some investors but painful to most others, says Bloomberg: Last week’s Capmas announcement that Egypt’s poverty rate in FY2017-2018 rose to 32.5% from 27.8% in 2015 has Bloomberg analyzing the wider impact of Egypt’s 2016 economic reforms. While the EGP float and subsidy cuts have driven GDP growth to 5.6% (the best in the region), ended an FX shortage, and turned Egypt into a premier destination for emerging market portfolio investments, “one-third of the population lives in poverty, about double the figure at the start of the century,” note Abeer Abu Omar and Paul Wallace. “At the same time, businesses are cautious and there’s little fresh foreign investment beyond oil and gas,” they added, citing PMI data which shows business contracting in all but two of the past 11 months.

There is cause for optimism: “Still, there was an improvement in July. And the investment component of GDP rose 12% year-on-year in real terms in 2H2018,” the piece notes. “These are the side effects of the fiscal restructuring program that was kicked off in 2016, and hopefully they’re short-term effects,” Allen Sandeep, director of research at Naeem Holdings, told Bloomberg last week. He predicted a rebound as private investments and consumer demand as inflation fell to single digits from a 35% peak 2016.

Improved business climate, interest rate cuts are part of the solution: Analysts, including Sandeep, see interest rate cuts as part of a wider macro solution. “The situation is still weak and getting weaker in terms of demand, and that’s got to do with interest rates being high,” Sandeep said, adding that “private investments won’t really take off until the cost of capital drops.” “Improvements in the business environment and public-service delivery, along with interest-rate cuts, would spur further growth,” says said Omneya Ramadan, a senior consultant at Cairo-based Decode Economic and Financial Consulting.

DISPUTE WATCH- Americana Egypt minority shareholders call for EGP 24 share price in disputed MTO: Minority shareholders of Americana Egypt are asking for a share price determined in a 2016 valuation of the company in a planned mandatory tender offer (MTO) by majority shareholder Adeptio AD Investments, sources close to the matter told Al Mal. The 2016 acquisition valued the company’s share price at EGP 24, a figure seen by the minority shareholders as close to the share’s real value.

Why the old valuation? Minority shareholder Hatem Sultan told the local press last week that, after the 2016 acquisition agreement, Adeptio made a few undisclosed internal and structural decisions that may have impacted the company’s value. He made it clear that they will continue their fight with the company until it makes a “suitable offer.” The minority shareholders wrote to the FRA relaying their views after it emerged that Adeptio is planning to conduct a new fair value estimation of the share price. Adeptio said it “would take into account” the recent acquisition in the new valuation, which is expected to be revealed in early 4Q2019.

Background: Adeptio, which is led by Emirati businessman Mohamed Alabbar, acquired in 2016, 67% of Americana Egypt’s parent company, Kuwait Food Company (Americana), over a two-year process. This resulted in Adeptio controlling some 90% of the subsidiary’s shares, and prompted an FRA-ordered MTO to purchase the remaining shares. Adeptio submitted an appeal against the order, which the FRA promptly rejected. It then challenged the appeal’s rejection at an economic court, but had its claims dismissed.

EARNINGS WATCH- Ibnsina Pharma’s 2Q2019 profits surge 26% y-o-y: Ibnsina Pharma reported a 26% y-o-y increase in consolidated net profits to EGP 60.5 mn in 2Q2019, up from EGP 48 mn last year, the company said in a statement (pdf). Revenues rose 24% y-o-y to EGP 3.9 bn. The company grew its distribution network in 1H2019. It now operates 62 distribution centers, up from 57 in 1H2018. The company’s gross profitability for 1H2019 was boosted by “a temporary change in the contribution of different sectors to absolute revenue growth, with the company’s (cash intensive) wholesale segment seeing its contribution decline relative to traditional levels.” Ibnsina Pharma served more than 42k customers across Egypt and made 2.7 mn deliveries (up 4% y‐o‐y) during 1H.

Outlook: “Heading into the second half of 2019, we are taking all measures to ensure that core profitability and the bottom line continue on their positive trajectory, with a focus on fostering economies of scale across our distribution network and leveraging the bonuses traditionally provided by our suppliers’ at year‐end,” co-CEO Mahmoud Abdel Gawad said.

INVESTMENT WATCH- SCZone revises investment forecasts downwards: Suez Canal Economic Zone (SCZone) boss Mohab Mamish has revised downwards investment forecasts, announcing in a press conference yesterday that he expects the zone to attract USD 50 bn of investment by 2030 instead of USD 55 bn by 2024 forecast in March this year (watch, runtime: 6:21). Investments currently stand at USD 25 bn and are expected to reach USD 30 bn “in the coming period,” Mamish said, adding that up to 1 mn jobs will be created in the zone over the coming decade. The SCZone is a key component of a government plan to draw foreign investments in the automotive, electronics, ICT, and pharma. The planned USD 7 bn Russian Industrial Zone (RIZ) is also expected to attract investments in pharma, agricultural equipment and other industries.

Meanwhile, revenues from the Suez Canal increased 5.4% y-o-y during FY 2018-2019 to USD 5.9 bn, compared to USD 5.6 bn a year earlier, according to a cabinet infographic. Proceeds that went to state treasury rose by 19.3% during the fiscal year, reaching a record high of EGP 72.2 bn (c. USD 4.3 bn).

We’re all for having our strengths praised in the Nigerian press (even if it sometimes comes with a dash of hyperbole): A flowery piece in Nigerian outlet the Guardian continues this week’s theme of All The Things Egypt Gets Right, with the main thrust being that the writer’s Afcon visit left him impressed with our infrastructure and organization. Read for the memorable descriptions, including the “exquisite edifice” that is our airport, and the Cairo-Alex desert road, which, according to the writer, appears to have been “polished with Kiwi polish.”

But on a less complimentary note: Egypt is among a cohort of countries that value “what they consider to be stability and security in Sudan” above democracy, Richard Downie argues in World Politics Review, who says Egypt’s top priority for Sudan being that it keeps its Islamist base in check.

Ever noticed how Egyptians don’t really know their PO box numbers? It’s a bit of a pain when you’re ordering something online from abroad and are tempted to type in any random five numbers, knowing that your package might end up somewhere in Sohag instead of your neighborhood. But that’s really not a big issue at all in comparison to many in Cote d’Ivoire who don’t have street addresses and are relegated to relying on nearby “landmarks” for their deliveries. This is but one of several hurdles that online retailer Jumia faces in the country, Danielle Paquette writes for the Washington Post. Paquette details one day in the life of a woman who delivers orders for Jumia: “She had eight hours, 32 packages to deliver and no addresses.” One customer instructed her to “look for the ice cream cart,” while another asked her to wait for him by “a patch of gravel” on a dirt road. Not quite what you’d call an exact science.

But the lack of addresses is not the only infrastructural issue Jumia faces in Cote d’Ivoire and the rest of Africa: The prevalence of cash (and distrust of online transactions), safety concerns for valuable packages, and “labyrinths of red tape” are all holding back internet retail on the continent. “Today only 1% of goods sold in Africa are purchased on a screen, but if that share swells to 10 — closer to U.S. and European levels — McKinsey analysts forecast annual sales will hit USD 75 bn, unleashing an economic boom and a new age of convenience on the continent.”

Netflix documentary double bill shines a spotlight on privacy, data, and the threat of social media: Facebook’s reputation as the world’s biggest espionage agency is in the spotlight again these days with the release of the Netflix documentary The Great Hack (watch, runtime: 1:54:13). The film does a pretty good job chronicling the 2017 Cambridge Analytica scandal, which saw the political consultancy firm gather data on Facebook users and use it to target swing voters in key states that helped Donald Trump win the 2016 US presidential election. The film also highlights Cambridge Analytica’s role in Brexit and numerous other political campaigns in developing countries using data gathered from Facebook.

Check out Terms and Conditions May Apply for a more nuanced picture: The Great Hack falls slightly short by focusing on the Cambridge Analytica whistleblowers’ stories at the expense of addressing the wider system of “terms and conditions” that allows for the manipulation and monetization of private data. To get a more nuanced look at a world where the users of social media are the products in a USD tn industry, we recommend watching 2013’s Terms and Conditions May Apply (watch, runtime: 1:19:10). The tactics used by social media companies — from hard-to-read terms and conditions agreements to the hiring of casino consultants to help us get addicted to notifications — are explored at much greater length in this film. Taken together, we dare you take another one of those Facebook quizzes or try that Face app.

The Egyptian Electric Utility & Consumer Protection Regulatory Agency (Egyptera) has set new network usage prices for independent power producers that directly supply consumers, sources told the local press. Ultra-high voltages will be charged at 3.26 piasters per kWh, high voltages cost 8.43 piasters per kWh and medium voltages will carry a charge of 10.83 piasters per kWh.

The Egyptian Navy signed yesterday an MoU with China’s Hutchison Ports to build a container terminal in Abu Qir, according to an Ittihadiya statement. The Chinese company will train more than 1.5k Egyptian engineers and workers to carry out the different roles required at the port. The port is expected to see 1 mn containers traded each year after the project is completed.

The National Tunnels Authority signed two contracts with South Korea’s Hyundai Rotem and France’s Socofer to provide 6 new metro trains and 2 locomotives for line 2 of the Cairo metro, according to a Transport Ministry statement. Hyundai will provide the new trains at a cost of USD 131 mn and the first train will arrive after 2 years. Socofer will provide the locomotives at a cost of EUR 3.7 mn. The contracts will be partially financed through an EUR 100 mn loan from the European Bank for Reconstruction and Development (EBRD). The new purchases are part of an EGP 30 bn plan to revamp Lines 1& 2 of the Cairo Metro.

The Financial Regulatory Authority (FRA) has granted Shuaa Securities a short selling license, Masrawy reported. The growing list of brokerages authorized to short sell includes Arqaam, EFG Hermes, CI Capital, the Arab African International Securities, Prime Holdings, HC Securities, and Premiere Securities. Short selling transactions are due to hit the EGX in 3Q2019, FRA deputy head Khaled El Nashar said earlier this month.

Prime Holding plans to establish a EGP 100 mn consumer finance subsidiary, Prime said in a bourse filing (pdf). The move comes days after the firm’s CEO Mohamed Maher said that the company was considering the move.

The Financial Regulatory Authority (FRA) plans to launch its own arbitration center to settle non-banking finance related disputes in early 2020, the FRA’s Vice Chairman Khaled El Nashar told Al Mal. The FRA is working on completing the administrative structure of the center, which will be specialized in handling arbitration cases between companies and their investors. The center was formed with a presidential decree last month.

Egyptian and French naval forces have carried out joint military drills in the Mediterranean, the armed forces said in a statement.

The Confederation of African Football (CAF) has fined Zamalek USD 22.5k for disorderly fan behavior during a match with Morocco’s RS Berkane in Alexandria, according to the organization’s disciplinary board (pdf). The board said that Zamelek’s fans used lasers, “excessive” smoke and flares, and threw water bottles after the team won the match via a penalty shootout. The Moroccan team has also been fined USD 30k for “aggressive gestures” towards officials.

Tributes are pouring in for US author Toni Morrison, who died on Monday evening aged 88, we learned yesterday. She was a famed novelist — with books including Beloved, Song of Solomon, and The Bluest Eye — as well as an essayist, playwright, and teacher. She received multiple awards throughout her life, including the Pulitzer prize, the Nobel prize, the Légion d’Honneur and a Presidential Medal of Freedom. Perhaps most importantly, she was a strong and iconic voice chronicling the African American experience.

“The Chanel No.5 of ancient Egypt”: A team of researchers have recreated a perfume believed to have been worn by Cleopatra, according to Atlas Obscura. Using ancient perfumes Mendesian and Metopian recovered from a 300 BC site north of Cairo, archaeologists David Littman and Jay Silverstein worked with experts to replicate the same scent attributed to Egypt’s most famous queen. “This was the Chanel No.5 of ancient Egypt,” Littman says. “It was the most prized perfume of the ancient world.”