Enterprise interest rate poll: Economists see a rate cut this Thursday

It’s interest rate week: The Central Bank of Egypt’s Monetary Policy Committee is set to meet this Thursday, 26 September, to review key interest rates. Nearly all of the economists surveyed in our interest rate poll (which you’ll find in this morning’s Speed Round, below) agree that the central bank could move ahead with more monetary easing, taking comfort from unexpectedly low August inflation figures.

A rate cut would be in line with the wider policy stance across emerging markets, with the appetite for monetary easing seeming on the march in Russia, Brazil, China, and the Czech Republic. And that’s to say nothing of the US Federal Reserve and European Central Bank’s back-to-back rate cuts…

President Abdel Fattah El Sisi landed yesterday in New York City, where he is set to attend high-level meetings at the United Nations General Assembly, according to an Ittihadiya statement. The meetings and general assembly debate get underway on Tuesday and run until next Monday, 30 September. You can check out the full schedule of events set to take place over in the Big Apple here.

Conference season continues this week:

• “The Future of Investment in Egypt,” a conference organized by the Egyptian Businessmen’s Association, the Egyptian Junior Business Association and the Alexandria Business Association, will take place tomorrow at the Cairo Marriott Hotel.
• The Engineering Export Council of Egypt’s three-day Home Appliance and Tableware Show (HATS) will begin tomorrow at the Kempinski Royal Maxim.
• A roundtable discussion titled “Investing in Renewable Energy and Sustainable Development”will take place at the Nile Ritz Carlton on Tuesday.
• The launch of the Mediterranean Business Angels Network will take place at the international investment and entrepreneurship event, Techne Summit 2019, on 28-30 September in Bibliotheca in Alexandria.

Glossing over oil facility attacks, Aramco hires IPO bookrunners: Saudi Aramco has reportedly tapped UBS Group and Deutsche to act as bookrunners for its upcoming IPO, Reuters reports, citing two unnamed sources with knowledge of the matter. Bloomberg separately reported that the state-owned oil giant is also enlisting Barclays and BNP Paribas to hawk shares. The move is seen as a sign that the company is pushing ahead with the IPO despite recent drone attacks on two of its facilities, which hit 50% of its production and disrupted around 5% of the global oil supply.

Wealthy Saudis are being pressured by the government to take anchor positions in Aramco as it prepares to go public, the FT reports. Four sources with knowledge of the talks spoke of a plan to “strong-arm,” “coerce” and “bully” rich families to buy into the company, many of which had members imprisoned at the Riyadh Ritz-Carlton in 2017.

But tourism in the kingdom will soon be possible: Saudi Arabia will announce the launch of electronic tourist visas on 27 September, according to the FT. Muslim pilgrims can get permission to visit Saudi Arabia for Hajj, but currently only citizens of Bahrain, Kuwait, Oman, and the UAE can travel freely to the country for tourism.

Former Tunisian leader Zine El Abidine Ben Ali has died in exile at the age of 83 after battling prostate cancer for years, according to the Guardian. Ben Ali ruled Tunisia for 23 years before being deposed in 2011. He was convicted by a Tunisian court on multiple counts in absentia in 2011, having fled to Saudi Arabia following his resignation. His lawyer said that his body will be transferred to Mecca, pending the family’s decision on burial arrangements.

WeWork is a highly problematic organization that still has a future — despite what critics may say, writes Philip Delves Broughton, author of “What They Teach You at Harvard Business School,” in the Financial Times. With the company delaying its IPO and the news that its USD 47 bn valuation has now reportedly shrunk to around USD 15 bn, it may be tempting to count it as down and out. It also has a — to put it mildly — highly unorthodox working culture, where it spends almost twice what it makes in annual revenue and talks about “elevating the world’s consciousness” and “operationalizing love.” But the company has 834 locations either open or soon to open in 126 cities around the world, its revenue in 2018 was USD 1.9 bn and it has over 12k employees, meaning that it can’t be written off just yet.

Friday’s Global Climate Strikes,inspired by 16-year-old climate activist Greta Thunberg, may well be the largest mass protest for action on global warming in history, Vox reports. With over 2,500 events having been scheduled to take place in over 163 countries, activists suggest more than 4 mn people around the world turned out to call for political and economic change to reduce the environmental impact of global emissions.

In other global miscellany:

• More troops, sanctions in the Gulf: The US will deploy an undisclosed number of troops to GCC allies and place sanctions on Iran’s central bank in response to last week’s attack on Saudi Aramco’s Abqaiq and Khurais oil refineries. (Wall Street Journal)
• No US-China trade agreement before 2020 election? President Donald Trump said on Friday that he does not need to strike a trade agreement with China before the 2020 US presidential election. (CNBC)

It doesn’t get more 1984 than this — it’s not enough they’re taking your private data from your phone, tech giants are using your Smart TV: Smart TVs are sending sensitive user data to companies including Netflix, Google and Facebook, according to the Financial Times. The companies receive, at the very least, information about the device people are using, their locations, and possibly even when they are interacting with it, which means they can tell when you’re home and when you’re not. Google defended the move, saying, “smart TV app developers can use Google’s ad services to show ads against their content or measure the performance of ads.” Facebook argued that its common for data to be transmitted, and that, “this could, for example, include an app sending data to Facebook to create a login interface, or provide a Like button.” Finally Netflix lent its two cents saying that information Netflix received depends on how Netflix performs and appears on screen, “We do not receive any information about other applications or activity on smart TVs.”

President Abdel Fattah El-Sisi's arrival in New York for the UN General Assembly high-level meetings was at the top of all the talking heads’ agendas last night.

El Sisi’s speech at the UNGA will focus on counterterrorism and combating extremism, Masaa DMC's Eman El Hosary said (watch, runtime: 1:49). The president is also expected to hold meetings with several world leaders in the lead-up to and on the sidelines of the meetings. Al Hayah Al Youm’s Khaled Abu Bakr, meanwhile, gave his co-host a report from New York (watch, runtime: 6:17).

The president is set to plug investments in Egypt in a series of sit-downs scheduled with major US companies and other institutions, Foreign Minister Sameh Shoukry told El Hekaya’s Amr Adib over the phone (watch, runtime: 4:55).

Friday’s protests in Cairo and other cities also earned some airtime. Adib told his viewers that the demonstrations were led mostly by the children of incarcerated Ikhwan members and were short-lived (watch, runtime: 8:04). Al Hayah Al Youm’s Lobna Assal spent a significant chunk of time warning viewers that some of the protest coverage was fabricated, saying calls to protest should not be followed blindly (watch, runtime: 28:04).

SURVEY- The Central Bank of Egypt (CBE) could cut benchmark interest rates by 50-150 bps when its Monetary Policy Committee (MPC) meets this Thursday, according to seven of eight economists polled by Enterprise. The economists cited the unexpected inflation rate in August, which dropped to the lowest level in six-and-a-half years, as being the primary driver towards a cut. “We think the continued decline in inflation should allow for further cuts,” said EFG Hermes Mohamed Abu Basha, who sees rates going down 50 bps. Pharos, Beltone, HC and Shuaa all see rates being cut by up to 100 bps, while CI Capital said that the MPC could go for an aggressive 150 bps cut.

Egypt’s annual headline inflation rate fell to 7.5% in August from 8.7% in July, a low not seen since January 2013. Low readings in July and August came despite the government raising fuel prices between 16% and 30% in July and new electricity subsidy cuts coming into effect. In a note earlier this month, Capital Economics forecast a 50% cut to the overnight deposit rate, stating that recent inflation figures and global easing trends “means that the MPC won’t hesitate in lowering interest rates again at this month’s meeting.”

The CBE last month cut rates by 150 bps, bringing the overnight deposit and lending rates to 14.25% and 15.25%, respectively. The main operation and deposit rates were both cut to 14.75%. It was the first time the bank had cut rates since February when the overnight deposit and lending rates were reduced by 100 bps.

But the CBE could afford to wait before cutting again, said Renaissance Capital’s Ahmed Hafez, pointing to a potential hike in inflation in September amid rising global oil prices. “I think inflation could negatively surprise in September (on a monthly basis). Perhaps 2.5-3% if press reports on vegetable supply shocks are true,” Hafez said, adding that cutting rates during these shocks would not make sense. He noted, though, that the strengthening of the EGP could persuade the MPC to reduce rates in spite of this.

Will treasury yields be affected? Beltone’s Alia Mamdouh, who predicts a 50-100 bps cut, sees Egyptian treasury yields remaining attractive thanks to a strong EGP and real interest rates in light of inflation decelerating. Mamdouh reminds us that domestic fuel prices will be subject to a review by the end of September, but expects them to remain unchanged.

Beyond this week: “A favorable base effect and EGP strength will continue to advocate benign annual inflation readings till year-end, keeping inflation rates within the CBE’s target zone of 9% (+/-3%) by the end of 2020, particularly barring any expected price shocks,” Mamdouh said.

EXCLUSIVE- Gov’t could move ahead with stake sales within two weeks: Abu Qir Fertilizers or Alexandria Container and Cargo Handling (ACCH) could offer stakes as part of the privatization program within two weeks’ time, Public Enterprises Minister Hisham Tawfik told Enterprise. The companies have completed all the necessary procedures and are ready to go to market next week or the week after, depending on market conditions. Tawfik pointed to the EGX gaining 20% as an indication that “the time is appropriate.” Tawfik also confirmed his remarks last month in which he noted that IPOs under the wider privatization program have been pushed to after January 2020.

How much are we looking at? The order and size of the stake sales is yet to be determined by the investment banks quarterbacking the sales, but the market expects that both Abu Qir and ACCH could sell stakes as large as 20%.

Heliopolis Housing and Development’s (HHD) secondary offering will not take place before the end of the year pending the wrap-up of a handful of procedures, the minister added. HHD was originally planned to offer a 32.25% stake, but the company was said to have been pulled from the lineup altogether in April. Shortly after, it emerged that a plan to offer a 25% stake in 4Q2019 was still in the works, with as much as 10 percentage points of the offering to be earmarked for a private equity investor or a partnership between a private equity investor and a property developer.

Enter SODIC, eyeing the 10% stake: Our friend SODIC CEO Magued Sherif told Reuters on Thursday that the premier real estate developer is among the investors eyeing the 10% stake. “In principle we are interested in the matter, but the offer terms are not clear,” he said. “We will see whether the offering conditions are right for us.” HHD is currently working on preparing a booklet of conditions for investors and real estate developers, Tawfik told Masrawy. Shareholders approved handing the company’s management to a private sector partner as part of the share sale process at an extraordinary general assembly meeting in August. The company’s managing director, Sahar El Damaty, also said last month that NI Capital would issue a tender in September to select the bookrunner for the offering.

Exporter sees first settlement under long-anticipated export subsidy program: The finance and trade ministries have signed a settlement agreement with Sumitomo Tires that will see the company receive overdue subsidies in less than five years as part of the government’s new export subsidy framework, the Finance Ministry said in a statement. The company is planning to begin building a new EUR 10 mn factory in Port Said this month, which it expects to complete within six months, Managing Director Richard Nelson said. The factory will start production by mid-2020, he added.

Background: The government kicked off last week a new export subsidy framework designed to promote exports as a main driver of economic growth. Under the program, around 1,000 small companies and exporters are set to receive their dues “immediately,” while larger corporations will be encouraged to commit to new investments to speed up their payments. The Egyptian Businessmen’s Association estimated last year that the government could owe exporters EGP 9 bn. Others in the field have put the figure even higher.

STARTUP WATCH- Halan to launch in Ethiopia this year: Cairo-based tuk-tuk and motorcycle ride-hailing startup Halan plans to begin operations in Ethiopia before the end of 2019,CEO and founder Mounir Nakhla told Reuters. The company is set to begin operations in Adama, some 150 km away from the capital city of Addis Ababa, where it aims to recruit the 1k vehicles currently in operation before launching countrywide. Halan, which was founded in November 2017 and currently operates in 20-25 cities in Egypt and Sudan, also plans to expand to more cities in Sharkeya, Dakahlia, Damietta, Qena, and Gharbeya this year. Nakhla intends for Halan to become pan-African in the long term, saying he sees tremendous potential for growth on the continent.

Background: Halan uses tuk-tuks and motorcycles to transport passengers and goods. The app currently has some 10k active drivers per month and completes several mn rides per month, almost half a mn of which are in food delivery. In December, Halan raised mns in a series A round from a group of investors, including Algebra Ventures and Battery Road Digital. It is currently in the midst of a series B funding round, and has raised “slightly less than USD 20 mn,” while employing over 100 people, Nakhla said.

Egypt climbs nine places in WEF tourism competitiveness index: Egypt jumped nine places to rank 65 in the World Economic Forum’s 2019 Travel and Tourism Competitiveness Index (pdf). Egypt’s rise from the 74th spot last year comes amid improved promotion and marketing efforts, making it the most improved country in the MENA region. The country was also helped by a special focus compared to its regional peers in environmental sustainability and cultural resources, and performed well in the security and safety index.

Ethiopia rejects Egypt’s GERD proposal: Ethiopia’s Foreign Ministry has dismissed Egypt’s proposal for the Grand Ethiopian Renaissance Dam as “disrespectful” and one that “puts Ethiopia’s sovereignty under question,” according to the Ethiopian News Agency. Ministry spokesperson Nebiyat Getachew also said at a presser on Friday that the proposal would “complicate” the filling of the dam. Egypt’s proposal involves extending the time taken to fill the dam’s reservoir beyond two years in cases of extreme drought in the Blue Nile, and release a minimum of 40 bcm of water each year, as opposed to Ethiopia’s proposed 35 bcm. The statement came after Egypt said the new round of talks over GERD left the countries at a deadlock. Egypt, Ethiopia, and Sudan will hold a new round of talks between 30 September and 3 October in Khartoum to discuss technical issues. The countries’ irrigation ministers will then meet immediately afterwards on 4 and 5 October in an attempt to hash out an agreement.

A sobering reminder of why people around the world are protesting climate change: In 1900, the burning of fossil fuels produced some 2 bn tonnes of carbon dioxide. Now, they count for almost 20 times that amount, this chart from the Economist shows. Add to this the accessibility of other resources, the ability to manufacture plastic, and the global population explosion, and you can see how carbon dioxide emissions have shot up over the last 70 years. Mns of people around the world demonstrated on Friday in what observers are calling the largest-ever climate change protests.

Small-scale protests in a number of Egyptian cities on Friday night are leading the conversation on Egypt in the foreign press (Associated Press | Reuters | AFP | New York Times | Financial Times | Wall Street Journal | CNN | BBC | the Guardian). Pundits drew a link to calls for protests by former contractor Mohamed Ali, whose videos accusing the government of misusing public funds have gone viral over the past several weeks. El Sisi rebuked Ali’s claims as “sheer lies” during the National Youth Conference last week.

Also getting attention: 2011-era activist Wael Ghonim alleges that his brother Hazem has been arrested and his family’s home raided in response to a video he posted last week, the Times (UK) reports (paywall).

Also making the rounds:

• Sinai development: State investment in redeveloping the Sinai Peninsula is generating substantial profits, but crowding out the private sector, Haaretz says.
• “Ghost cities?” With the current focus on the government’s EGP 3 bn New Alamein City, Al Monitor explores how previous infrastructure projects have led to the existence of underpopulated “ghost cities” in Egypt.
• Gouna Film Festival: This year’s Gouna Film Festival has made it to entertainment industry mainstay Variety, which commends the festival for highlighting filmmaking talent in the Arab world.
• Pharaonic Egypt: Crocodiles were among the most venerated of ancient Egypt’s mns of mummified animals, with evidence showing that thousands were bred in hatcheries, some decorated with jewelry, and others hunted in the wild to meet demand, the Washington Post reports (paywall).

No, confidence is not always king: The mistaken belief that confidence always equals great leadership often results in arrogant men taking top roles they are not well suited to, business psychology professor Tomas Chamorro-Premuzic argues in his book Why Do So Many Incompetent Men Become Leaders? Modern workplace culture tends to prize confidence over virtually all other leadership traits, with 63% of the 3k women surveyed in a recent KPMG study on women’s leadership (pdf) citing confidence and determination as the top two characteristics of leaders. But while charisma may be dazzling, overconfidence can actually be a compensatory strategy for lower competence, Chamorro-Premuzic argues.

Modest leadership, often exhibited by women, is actually more effective: Several studies — including Google’s Project Oxygen — show that the best leaders are more focused on the well-being of their teams and individual team members than they are on personal glory. Traits such as emotional intelligence, empathy, and clear communication create a supportive environment, where teams can focus on achieving results. At heart, employees want their leaders to be “one of us” and not “one of them,” research shows. The so-called “confidence gap” between men and women is a fallacy, Chamorro-Premuzic claims, saying rather that women are less likely to overrate themselves compared to their male counterparts. This is partly because assertive women face backlash when promoting their abilities that men don’t have to contend with.

A new waste-to-energy plant, founded in 2018 in Ethiopia, is now burning 80% of Addis Ababa’s garbage, generating electricity to power 30% of the city’s homes, and creating hundreds of jobs, this World Economic Forum video shows (watch, runtime: 04:04). The Reppie plant takes almost 500 mn kgs of garbage per year, keeps it in a bunker for five days to allow moisture to seep out, and then burns it at 1000 degrees, turning the rubbish to electricity. With landfill sites generating some 10% of the world’s methane — a gas 25 times more potent than CO2 — this initiative is a relatively environmentally friendly way of treating waste. While it is not as effective as reducing waste, it is still an important step for energy production, says Samuel Alemayehu, global MD at Cambridge Industries, who hopes to roll the design out to different African cities.

Egypt, Hungary ink manufacturing cooperation MoU: Trade Minister Amr Nassar and the Hungarian Foreign Affairs and Trade Ministry’s Parliamentary State Secretary Levente Magyar signed on Thursday an MoU to boost industrial cooperation, cabinet said in a statement. The MoU will see increased cooperation on “joint manufacturing projects, technology transfer, and human resource development,” as well as on organizing seminars and workshops and conducting manufacturing-related research.

Agreement allows Iraqis living abroad to obtain visas upon arrival in Egypt: Egypt and Iraq signed an agreement to allow Iraqis living in the Gulf, the US, Canada, and Europe to obtain visas upon arrival at Egyptian airports, the Iraqi Foreign Ministry said.

State-owned EGAS expects to sign seven new gas exploration agreements with international companies worth at least USD 712 mn during 4Q2019, Chairman Osama El Bakly said, according to a ministry statement (pdf). Companies will drill 23 exploratory wells under the terms of the agreement, he said, without naming the concessions or companies involved. El Bakly also said that Egypt’s natural gas production hit a record 7.2 bcf/d in September, up from 7 bcf/d at the end of June.

Egypt’s existing natural gas infrastructure may not be sufficient to support our export ambitions, Egyptian LNG’s (ELNG) senior optimization manager Tamer Abdelsalam told Houston’s Gastech conference, according to Petroleum Economist. One of Egypt’s two LNG export terminals, at Idku, will return to full capacity next month following years of operating below capacity. However, reopening the Damietta LNG plant may not be as imminent, Abdelsalam said. The problem of congestion will likely get worse as production from Zohr and BP’s West Nile Delta continues to increase and Egypt begins importing gas from Israel and — in a few years — from Cyprus. A possible solution, he said, is to expand Idku by adding a third train.

In related news, state-owned EGAS has offered to sell six LNG shipments from Idku liquefaction plant by 1 November, sources told Reuters on Friday.

BP solar energy subsidiary Lightsource is planning “a couple” of 100 MW projects for Egypt as it eyes as much as USD 8 bn-worth of projects across the globe, the company’s CEO Nick Bolye told the National. Egypt’s sunny climate, rising electricity prices, and a large number of “bankable parties” all make it an interesting market for the company, Bolye added. BP is already the largest international investor in the country. Lightsource is “adopting a wait-and-see approach,” in other Middle East countries.

The Egyptian Electricity Transmission Company (EETC) signed on Thursday a EGP 587 mn agreement with a consortium made of Xian, XD-Egemac, XD-Shiky, and NCC to develop a turnkey 500/220 kV gas insulated transmission station, according to Ahram Gate. The EETC also signed a separate EGP 80 mn contract with ABB to expand a transmission station. The expansion will take around eight months to complete, according to EETC Chairman Sabah Mashali.

The government’s universal health insurance scheme will be rolled out in Ismailia in January 2020, officials at the Universal Health Insurance Authority told Egypt Today. Seven hospitals as well as a number of medical units, of which 16 are currently being developed and equipped ready for the new system, will be included in the scheme. Universal health insurance was first introduced on a pilot basis in Port Said in July.

The Grand Egyptian Museum (GEM) is around 93% complete, Secretary-General of the Supreme Council of Antiquities Mostafa Waziri said, according to Al Mal. Close to 48k artifacts were transferred to the site, Waziri said. Tourism Minister Rania Al Mashat has previously said that the museum’s expected official inauguration date is 4Q2020.

More than 1 mn tourists have passed through the Taba border between Israel and Egypt since the beginning of 2019, marking a 30% increase since last year, according to Globes. The Israel Airports Authority expects 150,000 tourists to visit the Sinai Peninsula during the upcoming Jewish holidays.

Egypt rejected allegations that it has cracked down on activists who cooperate with the UN Human Rights Council, according to Reuters. “These persons who alleged that they are targeted by acts of reprisals had in fact perpetrated crimes punishable by law and were subjected to legal measures such as investigation, arrest, or trial,” Egyptian diplomat Ayman Ammar said during a UN debate on Thursday. Egypt was among a number of countries named in UN Secretary General Antonio Guterres’ annual report into reprisals against human rights activists.

Twitter has permanently suspended 271 accounts based in Egypt and the UAE, citing a “multi-faceted information operation” targeting Qatar and Iran, the social media platform said. The accounts were created and managed by DotDev, a tech company operating in Egypt and the UAE, Twitter said.

The Egyptian Football Association (EFA) has appointed Hossam El Badry as the national football team’s new head coach, succeeding Javier Aguirre, who was sacked in July following the Pharaoh’s last-16 loss to South Africa in the African Cup of Nations, according to the BBC. El Badry’s debut game in charge will be in November when the Pharaoh’s play their first qualifying games for the 2021 Nations Cup finals in Cameroon.

Al Ahly Football Club secured a 3-2 victory over rival Zamalek to win the Super Cup title, says King Fut. Friday’s win marks the 11th Super Cup title for Al Ahly.

Egyptian-Canadian actor Mena Massoud is set to be an ambassador for the government’s ‘Speak Egyptian’ initiative, the Emigration Ministry announced last week. The program, launched by Emigration Minister Nabila Makram, aims to encourage Egyptians living abroad to learn and practice speaking their mother tongue. Massoud, who plays the titular role in the recent film adaptation of Disney’s Aladdin, has been praised for his commitment to speaking Arabic and his role representing Egypt internationally.

Greek campus theater turned office space named among most beautiful workplaces in the world: Cybersecurity firm Trend Micro’s office at the Greek Campus was featured on Inc’s list of the world’s most beautiful office spaces. With its “past meets present” theme, the office occupies what was once a three-floor theater space and “pays homage to ancient Egypt in everything from the lighting to the furniture.”