Sunday, 29 September 2019

Central Bank of Egypt cuts interest rates by 100 bps

TL;DR

What We’re Tracking Today

Of rate cuts, EGX rebounds, and a very quiet Friday: To take things in the order they happened, the news cycle here at home was dominated by the EGX rebounding at the end of last week, the CBE’s 100 bps interest rate cut on Thursday, and the relative absence of protests this past Friday. We have chapter and verse on all three stories in this morning’s Speed Round, below.

Expect traffic around downtown Cairo to be especially bad on Tuesday. That’s when our elected representatives pile back into the House of Representatives to reconvene for the final legislative session of the current parliament. Our round-up of key legislation heading into the next session will be published in tomorrow’s issue.

(That’s right, folks: We’re heading back to the polls by the end of 2020 for regularly-scheduled parliamentary elections, at which time we’ll elect not just MPs to the House, but also a new Senate, which was reconstituted under the new constitution.)

Key indicators on which to keep an eye as we head into October:

  • PMI: The purchasing managers’ index for Egypt, the UAE, and Saudi Arabia will be released on Thursday, 3 October at 6:15 CLT.
  • Foreign reserves: The Central Bank of Egypt is due to release Egypt’s net foreign reserves figures for August this week or next.
  • Monthly inflation figures for September are due at the end of next week. Inflation cooled for the second consecutive month in August to 7.5%, marking the lowest reading in six and a half years.

Among the conferences taking place in the coming days:

  • The launch of the Mediterranean Business Angels Network is taking place at the three-day Techne Summit 2019, which kicked off yesterday at Bibliotheca Alexandrina.
  • Beltone will hold its Beltone Access conference in Dubai this week.

El Erian, Soros fund’s CIO named Barclays board members: Market sage Mohamed El Erian has been tapped to join Barclays’ board as non-executive director, alongside Soros Fund Management’s Chief Investment Officer Dawn Fitzpatrick, the Wall Street Journal reported. El Erian, who is currently Allianz’s chief economic advisor, will join the board on 1 January, 2020, while Fitzpatrick joined as of last Wednesday.

An IPO flop here, a failure to launch there shows it’s time to reevaluate tech startup valuations. The recent spurt of underwhelming tech IPOs hitting Wall Street have poured cold water on some of Silicon Valley’s rising tech stars, creating expectations that valuations will be reassessed, says the Financial Times. Investors are increasingly questioning the valuations of these companies after the much-hyped Uber, Lyft, and Peloton all saw their shares take a nosedive after debuting on the market.

Goldman’s consumer finance arm is burning cash. Goldman Sachs’ entry into the consumer finance market is proving to be an expensive, but not massively successful, venture. The Wall Street Journal reports that the bank — dubbed ‘Marcus’ — has lost USD 1.3 bn since its launch, having spent heavily on buying startups and cloud-storage space, hiring, and building call centers. It has also seen loans go bad at a higher rate than rival organizations, not helped by the fact that it didn’t hire a collections team at launch.

Saudi launches visa-on-arrival: Canadians, Americans, most EU nationals as well as Japanese and Koreans are among those who can now get into Saudi Arabia as tourists with an e-visa or a visa-on-arrival. Get all the details on the kingdom’s newly launched tourism and visa website.


The Trump Administration is considering plans to stop Chinese companies listing on US exchanges in the latest escalation of its trade war with China, the Financial Times reports. Some 156 Chinese companies, with a total market cap of USD 1.2 tn, were listed on the biggest US exchanges as of February. Nasdaq responded to the idea with a sharply-worded statement stressing the importance of non-discriminatory and fair access to all companies eligible for listing.

The US intends to send 200 troops and a whole lot of equipment to Saudi Arabia to boost military defenses after the recent attack on Saudi Aramco’s facilities, the Financial Times reports. This follows the deployment of some 500 US troops to the kingdom in July, in what the US said was a bid to deter Iranian aggression.

Apple is looking at bringing feature-length films to cinemas for a limited period before releasing them on its streaming service, the Wall Street Journal reports.

Your favorite Egyptian street food chain is now in New York: Our friends at Zooba have opened the doors of their first US location in New York City’s Nolita district on Friday, according to Eater New York. The branch, for which Zooba raised USD 4 mn, is the first outlet in the dining chain’s “long-term aim of spreading across the US like bessara on baladi bread,” as the company put it. In addition to getting positive feedback for its authentic Egyptian food selection, the aesthetics at Zooba’s Manhattan store are also a point of praise in this review from TimeOut.

Enterprise+: Last Night’s Talk Shows

Different week, same stories.

Egypt brushes off OHCHR criticism: Egypt has rejected criticism from the United Nations’ High Commissioner for Human Rights Michelle Bachelet a wave of detentions that followed weekend protests earlier this month, Al Hayah Al Youm’s Lobna Assal points out (watch, runtime: 06:49). We have more on this in our Speed Round, below.

El Sisi monitors progress in new cities: President Abdel Fattah El Sisi met with Prime Minister Moustafa Madbouly and Public Enterprises Minister Hisham Tawfik yesterday to discuss the latest developments in new cities his administration is building (watch, runtime: 04:39) and (watch, runtime: 14:40).

Meanwhile, El Hekaya’s Amr Adib had a field day mocking actor-turned-activist Mohamed Ali (watch, runtime: 03:24). Memes and jokes making fun of the exiled contractor made the rounds after Ali’s call for ‘millioniyya’ failed, the host said.

Corrected on 29 September 2019

A previous version of this article referred to the UN Office of the High Commissioner for Human Rights (UNOHCHR) as the UNHCR, which is used to denote the United Nations High Commissioner for Refugees.

Speed Round

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In line with expectations, CBE cuts rates: The Central Bank of Egypt’s Monetary Policy Committee (MPC) cut interest rates by 100 bps on Thursday, the CBE said in a statement (pdf). The central bank cited last month’s inflation figures, which hit a six-year low, as well as declining unemployment and rising real GDP growth. Accelerating monetary easing on a global level amid slowing economic activity also factored into the MPC’s decision.

Where do rates stand this morning? The CBE’s overnight deposit and lending rates now stand at 13.25% and 14.25%, respectively. The main operation and discount rates is now 13.75%. Look for banks to respond today: National Bank of Egypt and Banque Misr have kept rates on fixed-rate certificates of deposit on hold, according to Al Shorouk.

The “broadly” expected cut will be a boon for the economy, Naeem Brokerage’s Allen Sandeep said, according to Reuters. Seven of the eight economists surveyed in our Enterprise poll ahead of the meeting had anticipated a 50-150 bps rate cut. Reuters and Bloomberg surveys also predicted rate cuts.

We’re approaching the interest rate range that could unlock corporate borrowing for capex: Our survey of nine companies across several industries earlier this year found that businesses are waiting for interest rates to fall within pre-float levels of 10-13% before ramping up capex borrowing.

Could the CBE have afforded a more aggressive cut? The central bank had room “to cut rates in a big way” despite last week’s sell-off on the EGX that was triggered by a bout of demonstrations during the previous weekend, Bloomberg’s Paul Wallace said ahead of the MPC meeting on Thursday. Wallace expected a 150 bps cut to be doable without affecting the EGP or triggering outflows. “It could have been more but I’m glad the MPC cut rates,” Angus Blair, chairman of economic think tank Signet said, according to Reuters.

Expect further rate cuts if inflation continues to cool. “Incoming data continued to confirm the moderation of underlying inflationary pressures” and further cuts will be contingent on “confirmation that inflation expectations are anchored at target levels,” the CBE said in its statement. The central bank has set an inflation target of 9% (±3%) by 4Q2020. The current expectation among analysts is for inflation to continue cooling heading into the end of the year, setting up another rate cut when the MPC next meets on 14 November.

Our carry trade is still a favorite: Even with two consecutive rate cuts, Egypt’s real yields remain high, meaning our carry trade “remains attractive,” EFG Hermes’ Mohamed Abu Basha told Bloomberg. The central bank can continue to exploit the attractiveness of our real yields as “the global hunt for yields is far from over,” Wallace said.

Late-week EGX30 rebound helped stymie share slide: Despite the EGX30 being the second-worst performing equity index of last week, a late-week rebound has mitigated some of the damage, with the index finishing the week down 6%, writes the Financial Times. In the first three trading days of the week, the benchmark index plummeted 11% on the back of investor anxiety about protests, almost wiping out nearly all its 2019 gains. The bond market also felt the impact, with Citi estimating that some USD 800 mn has flowed out of Egyptian government debt since the protests started. The fall was “random and politically motivated because of the protests,” said Abd Rabbo Abdel Megid, head of trading at Shuaa Securities.

The market is now up 1.9% for the year after closing up by the same amount on Thursday.

Virtually all constituents of the EGX30 closed up in the final two trading sessions of last week (29 on Wednesday, and 27 on Thursday). Shares in index heavyweight CIB, which were trading above EGP 80 prior to the protests, hit a low of EGP 70.5 on Tuesday, but have since rebounded to nearly EGP 77. Leading education play CIRA surged 10% on Thursday, according to Reuters.

Foreign investors were net buyers of the stocks, just as they were leading the sell-off earlier in the week.

High inflation and austerity may be driving protests, but the economy is still going strong: While speculation is rife about the protests and their significance, analysts still see the economy as being on track and likely to remain stable. Gary Greenberg, head of global emerging markets at Hermes, says the protests turning into a revolution is something “we don’t see happening at this point.” Thursday’s 100 bps interest rate cut is also being widely viewed as a sign that the economy remains on track.

EGX chief Mohamed Farid is among those saying the rally will continue, calling the losses “an unjustified reaction and not significant compared to (other) stock markets.” Renaissance Capital’s global chief economist Charles Robertson is of the same mind: “The market says we have priced in a bit of political anxiety through the falls earlier in the week but from this point on, there might be bargains to be found.” Although investors with memories of 2011 may have been unnerved, "our channel checks suggest margin calls on retail investors are mostly done and we expect the market to recover next week supported by the large caps," said Vrajesh Bhandari, senior portfolio manager at Al Mal Capital.

Huge security op delivers a quiet Friday nationwide: Small numbers of protesters attempted to gather in a handful of cities on Friday for a second round of protests but were thwarted by a massive government security operation, the Wall Street Journal reports. Security forces had much of central Cairo on lockdown, closing all streets leading to Tahrir Square as well as three metro stations, the Guardian reported. The only gathering of note appeared to be in Cairo’s Warraq, where hundreds chanted anti-government slogans but were soon dispersed by police. Attempted protests in Alexandria and Qena’s Qus were also shut down.

Thousands of government supporters staged a rally in Nasr City waving flags and carrying portraits of President Abdel Fattah. El Sisi. State-owned Delta Sugar Company said that it had bussed in employees to attend the rally, Reuters reported. Arab Contractors also said that it had urged workers to attend, according to the WSJ.

Around a thousand detained protesters have been questioned for their involvement in earlier demonstrations, Prosecutor General Hamada El Sawy said, according to Al Masry Al Youm. Large demonstrations and gatherings without Interior Ministry approval have been banned under the protest law since 2013. Human Rights Watch said on Friday that nearly 2,000 people had been arrested since the previous weekend’s protests, urging the government to practice restraint.

Foreign correspondents have been allowed to operate “without restrictions” to cover the demonstrations, the State Information Service said on Friday. The SIS also granted press permits to cover Friday’s events to all visiting correspondents, according to the statement, which had earlier reminded reporters to follow international best practices in their work.

International political actors add their two cents: The United Nations’ High Commissioner for Human Rights Michelle Bachelet issued a statement expressing “serious concerns” over the detentions and calling on Egyptian authorities to “respect the right to freedom of expression and peaceful assembly.” Egypt a short while later said it rejected Bachelet’s statement, describing it as “inaccurate” and arguing it was based on quick judgements and baseless conclusions. Across the pond, US House Foreign Affairs Committee Chairman Eliot Engel and committee member Michael McCaul said much of the same in a joint statement on Friday. Democratic presidential hopeful Bernie Sanders expressed support for protests and warned Egyptian authorities in a tweet that the “world is watching.” Fellow Democratic presidential candidate Elizabeth Warren urged the country to “stand with the protesters” in a tweet. This contrasts with US President Donald Trump, who last week extended his support to El Sisi during a meeting on the sidelines of the UN General Assembly, saying he was “not concerned” with the demonstrations.

The UK’s Foreign & Commonwealth Office updated its travel advice on Egypt to say that “there is currently a heightened risk of demonstrations in Cairo and other cities,” and advise its citizens to stay away from any marches “as the atmosphere could change quickly and without warning.” Both the US and Canadian embassies sent out notices to citizens on Thursday urging them to avoid potential protest areas.

What pundits had to say: A large number of pundits are questioning who is “behind” the protests, which came as a surprise to many. There is “very little or no indication” that the Ikhwan currently has the resources or organizational structure to incite the protests, despite their show of support on social media, David Butter, associate fellow at think tank Chatham House, tells Deutsche Welle. Butter says that economic grievances due to the economic reform program were “given some sort of coherence and direction” by Ali’s videos. Analyst HA Hellyer wrote for the Carnegie Endowment for International Peace that “substantial microeconomic improvements” for the average citizen are necessary to quell “economically motivated dissent.” Meanwhile, the New York Times’ Bret Stephens says that it is unlikely El Sisi will leave office, but urges the US government to ramp up pressure on Egypt to create “gradual political … reform” in exchange for the aid it provides to Egypt.

The story was widely covered in the foreign press over the weekend: New York Times | AFP | Associated Press | FT | Bloomberg | Washington Post | Telegraph | Foreign Policy | Deutsche Welle | the National.

DISPUTE WATCH- Pharma syndicate probes suspected legal violation by pharmacy chain 19011: The Pharmacists’ Syndicate is investigating pharmacy chain 19011 for a suspected breach of a law stipulating that pharmacists should own no more than two retail branches, reports Al Masry Al Youm. The investigation was opened after its owners appeared on Amr Adib’s El Hekaya last Saturday to dismiss what they say are rumors that the pharmacy chain is backed by the Armed Forces (watch, runtime: 2:00). 19011 was established in 2017 and quickly increased its number of branches to almost 100. The chain has recently acquired the right to use the names of 27 independent pharmacies, all of whom now face a probe by their professional association. A Health Ministry body recently permanently removed the names of pharmacists Ahmed El Ezaby and Hatem Roshdy from its registry over the same practice.

So why are there chains if they’re banned by law? Pharmacy chains are made possible through a legal loophole that allows chain owners to set up a pharmacy management company under General Authority for Investment (GAFI) regulations. They then expand this practice by renting the names of pharmacists who have already obtained licenses from pharma regulators, and then bring those names under their brand. The entity that nets the overall revenue doesn’t itself obtain licenses from those regulators. This is the loophole they are apparently looking to close and this is why the recent decision to take El Ezaby and Roshdy’s names off the license registry of the Health Ministry did not affect most pharmacies affiliated with their brands.

CABINET WATCH- Antiquity smugglers would now spend more time in prison, pay up to EGP 10 mn if caught: The Madbouly Cabinet has approved amendments to the Antiquities Protection Law that would set fines of between EGP 1 mn to EGP 10 mn and impose tougher prison sentences for anyone caught in possession of or selling Egyptian antiquities abroad, according to a statement out following the weekly cabinet meeting. If ratified by the House of Representatives, the amendments would also stipulate prison sentences of at least a month and fines of between EGP 10k-100k for antiquity sites and museum trespassing. Other decisions taken during the meeting include:

  • Approving restructuring the Federation of Egyptian Industries after a new law to regulate the FEI came into effect earlier this year.
  • Approving a presidential decree to build New Mansoura, which involves allocating 7.2k feddans to the New Urban Communities Authority;
  • Approving status legalization requests of 62 churches around the country;
  • A decision to rename the Sports Development Center in Heliopolis to ‘The Club’, and relaunch it as a sports and social club.

EARNINGS WATCH- Qalaa Holdings’ revenues rose 8% y-o-y in 2Q2019 to EGP 3.5 bn “driven by solid top line performance at TAQA Arabia,” the company’s energy platform, Qalaa said in its earnings release (pdf). TAQA’s revenues grew 33% y-o-y during the quarter.

ERC set to come online in 4Q2019: The Egyptian Refining Company (ERC) is set to see its first full operational quarter in 4Q2019, and is “currently seeing a ramp-up of utilization rates,” said founder and Chairman Ahmed Heikal. Qalaa’s flagship project has supplied the Egyptian General Petroleum Company (EGPC) with more than 700k tonnes of refined oil products. All units at ERC, which has drawn in USD 4.4 bn in investments, became officially operational earlier this month.

Looking ahead, management expects ERC coming online to positively impact earnings, while solid fundamentals across its subsidiaries offer “a solid hedge against changes in our external environment,” said co-founder and Managing Director Hisham El Khazindar. “Heading into the final quarter of the year, we see Qalaa’s investments across its business segments and its portfolio delivering gradual improvement in the company’s consolidated profitability over the coming period,” said El Khazindar.

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The Macro Picture

Are EMs in a better position than developed markets to withstand slower world growth? Positive real interest rates and smaller fiscal deficits are providing emerging market policymakers a range of policy tools with which to combat the global economic slowdown, argues the Financial Times (paywall). In a time where developed countries are running out of monetary policy tools to combat the slowdown, many EMs have more flexibility. “Lots of people are talking about whether [further] monetary policy [easing] is still an option for most developed markets and there is a lot of discussion about whether these countries should consider fiscal policy [instead],” Patrick Zweifel, chief economist at Pictet Asset Management, said. “This is a problem that emerging markets do not have, so they have much more room to counter the slowdown.”

What the optimist is saying: Emerging markets, unlike their developed counterparts, are not grappling with already-low, and often negative, real and nominal interest rates and large fiscal deficits, argues Zweifel. His firm’s analysis of 19 major EMs (not including Egypt) showed that the countries sometimes had both positive real interest rates and almost negligible fiscal deficits — giving them the ability to use both monetary loosening and fiscal stimuli — a privilege far less common among developed economies. Most of those countries, excluding the infamous examples of Turkey and Argentina, can cut rates without it taking a heavy toll on their currencies. The 19 economies studied are also possess average budget deficits of 1.9% of GDP, “the joint-lowest level since 2009.”

The counterpoint: Senior EM strategist at NN Investment Partners, Maarten-Jan Bakkum, meanwhile, argues that “most developing countries could only ease monetary policy if cross-border financial flows were strong.” This is pretty much dictated by future US Fed interest rate decisions, not by internal factors. “[EM] central banks have been cutting rates since the beginning of this year mainly because of Fed expectations moving towards more easing,” he said. “That theme can go further but it’s not a given and it’s not something determined endogenously in EMs, it’s exogenous.”

Egypt in the News

Leading the conversation in the foreign press on Egypt over the weekend is the second round of protests that took place on Friday. We have the full story in this morning’s Speed Round, above.

Other stories getting attention:

  • Libya doesn’t like us: Libyan PM Fayez Al Sarraj said “interference” from Egypt, France and the UAE are the cause of divisions in Libya, pointing a finger of blame at the financial and military support given to National Army chief General Khalifa Haftar in a speech at the UN last week, reports the Libyan Express.
  • Is Israel deporting migrants to Egypt? Israel is allegedly deporting West African migrants to remote areas in Egypt, an eyewitness told Zman Yisrael, the Hebrew language edition of the Times of Israel.
  • The man trying to put Jenny in the dock: The Washington Post talks to lawyer Samir Sabry, who for the past decade has fought a one-man battle against the debauchery, corruption and loud singing he believes is ruining the country.

Worth Reading

Egypt’s khayamiya has to evolve to survive: The ancient art of khayamiya is unique to Egypt, but despite enduring for years, it is now most likely to draw attention because of the multiple threats it faces, Stephanie Vermillion writes for Atlas Obscura. These include a dearth of tourism, competition from cheaper textiles imported from overseas or locally-produced fabric replicas, and dwindling interest from young Egyptians who are uninterested in taking up the craft, which doesn’t exactly promise a steady income. Most of its activity is now concentrated on Sharia Khayamiya — the Street of the Tentmakers — opposite Bab Zuweila. Here, an estimated 20 artisans work to make a living and keep the tradition alive, but it is painstaking and time-consuming. One piece of khayamiya can take weeks to complete, and, with prices for a quilt ranging from USD 200 to USD 950, it isn’t cheap to produce or to purchase.

Online sales offer a way to stay relevant: The events of 2011 and beyond took a heavy toll on the khayamiya craftspeople. "Tourists used to make up about 98% of our clientele. It's usually them who appreciate the effort put into these handicrafts as opposed to Egyptians," said one. But while Egypt’s tourism appears to be rebounding, a small international movement that has mobilized to support the artisans seems the best chance for khayamiya’s long-term survival. Traditional artisans now partner with Egyptian Etsy shop owners to reach customers all over the world. And an award-winning documentary, The Tentmakers of Cairo, has shed light on both the craft itself and the uncertain future it faces.

Diplomacy + Foreign Trade

China is looking to more than double its investments in Egypt to USD 15 bn from USD 7 bn currently, Chinese Ambassador to Cairo Liao Liqiang said on the sidelines of the China Trade Fair in Cairo. Liqiang did not provide a timeframe, but said he expected a business delegation to visit Cairo soon for talks. The fair aims to strengthen trade between the two countries amid efforts to turn Egypt into a logistics and exports hub for Chinese products.

Egypt, Cyprus, and Greece discuss trilateral cooperation at UNGA: Foreign Minister Sameh Shoukry met with his Cypriot and Greek counterparts, Nicos Christodoulides and Nikos Dendias, on the sidelines of the UN General Assembly in New York, to discuss the diplomatic ties between the three countries, according to a ministry statement. Shoukry suggested that the seventh trilateral summit in October 2019 be held in Cairo.

Energy

EGAS cancels third consecutive LNG tender

EGAS has canceled an LNG tender for six cargoes from the Idku gas liquefaction plant for loading between 5 October and 1 November, three market sources told Reuters without providing a reason. This is the third consecutive tender cancelled by the company. The tender canceled last month was due to low bids, sources told the newswire.

Infrastructure

Acwa Power to submit offers for desalination plants in Egypt “in coming weeks”

Saudi’s Acwa Power is planning to submit in “the coming weeks” an offer to the government to set up water desalination plants in coastal cities, according to a cabinet statement following a meeting between Prime Minister Moustafa Madbouly, Energy Minister Mohamed Shaker, and Acwa Chairman Mohammad Abdullah Abunayyan. This would be Acwa’s first desalination venture in Egypt. The company has been a household name in recent years for its work on several large-scale renewable and gas-powered energy plants, including a 2.3 GW gas-fired power plant in Luxor and a 200 MW solar plant in Kom Ombo in Upper Egypt. Its country manager previously said the company is planning to invest USD 3 bn in the sector this year.

Tourism

Egypt’s tourist arrivals increase 30% in 2019

Tourist arrivals have increased some 30% y-o-y so far into the year, Egyptian Travel Agencies Association boss Hossam El Shaer said. Arrivals came in at 11.34 mn visitors in 2018, leading to a 50% y-o-y increase in revenues to USD 11.4 bn throughout the year, up from USD 7.6 bn in 2017.

EgyptAir, Lufthansa expand code-sharing agreement

Star Alliance members EgyptAir and Germany’s Lufthansa have expanded their codeshare agreement “to provide more air miles to their customers in both Egypt and Europe,” EgyptAir Holding Company chairman Ahmed Adel said, according to Al Shorouk. Codesharing agreements involve an airline allowing the purchase of flight seats on flights operated by the code-sharing partner, and vice-versa.

Tourism Ministry organizes a conference for bloggers

The Tourism Ministry is organizing a conference to bring international bloggers and influencers to Egypt in a bid to promote tourism, according to Al Shorouk. Minister Rania Al Mashat said that Egypt is looking for ways to create new and distinctive content that isn’t broadcast through the usual channels.

HOTAC looking at four tender offers for Shepheard Hotel development

The Holding Company for Tourism and Hotels (HOTAC) is studying four tender offers from companies hoping to renovate and manage the Shepheard Hotel, Chairman Mervat Hataba said, according to Masrawy. The company will officially begin its evaluation in the presence of the investors today, Hataba said, adding that the offers came from two Kuwaiti investors, an Iraqi and a Saudi. The government in June reversed a decision to set up a JV to develop the hotel and decided instead to contract a multinational company to do the job.

Automotive + Transportation

Egypt in talks with Bombardier for locomotive supply

The National Railway Authority is negotiating with Canada’s Bombardier to manufacture and supply 177 locomotives, the Transport Ministry said in a statement. The negotiation also includes rehabilitating 37 Henschel and 40 Edtrans locomotives in the existing railway fleet. Reports emerged earlier this month that the authority is set to issue a tender for 100 locomotives in 4Q2019.

Egypt to receive 32 cars for third metro line

The National Tunnel Authority will receive 32 new air-conditioned metro cars worth from Hyundai Rotem for Cairo Metro Line 3, according to Egypt Today. NAT will receive the metro cars in batches from June to the end of 2020. Hyundai Rotem landed the EUR 350 mn contract to supply the 32 metro cars in July 2017.

Banking + Finance

Fitch affirms credit ratings of Credit Agricole, National Bank of Egypt

Fitch Ratings has affirmed the long-term issuer default rating for Credit Agricole Egypt (CAE) at 'AA+’ with a ‘stable outlook,’ the agency said in a press release. The agency has also affirmed its rating for the National Bank of Egypt (NBE) at 'B+' with a stable outlook. “The ratings of CAE, [the latter], reflect potential support from its ultimate shareholder, France's Credit Agricole.” The ratings of NBE, meanwhile, are “underpinned by potential support from the Egyptian authorities.”

Egypt moves closer to setting up risk assurance company to protect Africa exporters

A proposal to set up a risk assurance company to protect exporters doing business in Africa has been completed and will be presented to the central bank’s board of directors in the coming days, CBE African affairs advisor Naglaa El Nozahie told the local press. The CBE will be the main shareholder in the company, which was announced in July to support exports into Africa as part of Egypt’s strategy to improve its trade position.

Other Business News of Note

Egypt aims to open three tax and customs centers before end of year

Egypt is planning to open three tax and customs centers before the tax payment deadline in January, Finance Minister Mohamed Maait said in a statement. The centers will be opened in Alexandria, Ismailia and Damietta, and will simplify tax payment procedures, Maait said.

National Security

Terrorist ambush kills eight in North Sinai

Seven soldiers and a civilian were killed in an attack claimed by Islamic State in North Sinai on Friday, Reuters reports. Two other soldiers were also injured in the attack, security sources said. Separately, the Cairo Criminal Court has sought the legal opinion of the Grand Mufti over whether the state could execute seven defendants currently facing terrorism charges, the Associated Press reports.

Sports

Egypt’s ballots for Salah were invalid -Fifa

The Egyptian Football Association’s (EFA) votes for Mohamed Salah were not counted during the Fifa Best Player 2019 rankings because the signatures on Egypt’s ballots were in capital letters and not signed by the EFA’s general secretary, according to Associated Press. The ballots were therefore deemed unvalid, Fifa said. It was revealed last week that the EFA had not voted for Salah in the awards, resulting in the Egyptian star removing “Egyptian national team” from his Twitter bio.

On Your Way Out

Canada’s world-renowned Cirque du Soleil has come to Egypt for the first time. Its latest featured show, Bazzar, kicked off on 19 September and will run until 6 October at Hyde Park New Cairo, Egypt Independent reports. The troupe, which is renowned for its colorful performances and spellbinding acrobatic moves, was founded in 1984 by two former street performers.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.25 | Sell 16.38
EGP / USD at CIB:
Buy 16.26 | Sell 16.36
EGP / USD at NBE: Buy 16.25 | Sell 16.35

EGX30 (Thursday): 13,857 (+1.9%)
Turnover: EGP 966 mn (43% above the 90-day average)
EGX 30 year-to-date: +6.3%

THE MARKET ON THURSDAY: The EGX30 ended Thursday’s session up 1.9%. CIB, the index’s heaviest constituent, ended up 3.3%. EGX30’s top performing constituents were Palm Hills up 4.7%, Egyptian Iron & Steel up 4.3%, and Cleopatra Hospital up 4.0%. Thursday’s worst performing stocks were Elsewedy Electric down 0.8%, Eastern Co down 0.5%, and Orascom Construction down 0.5%. The market turnover was EGP 966 mn, and local investors were the sole net sellers.

Foreigners: Net long | EGP +12.0 mn
Regional: Net long | EGP +131.1 mn
Domestic: Net short | EGP -143.1 mn

Retail: 45.7% of total trades | 41.3% of buyers | 50.1% of sellers
Institutions: 54.3% of total trades | 58.7% of buyers | 49.9% of sellers

WTI: USD 55.91 (-0.89%)
Brent: USD 61.91 (-1.32%)

Natural Gas (Nymex, futures prices) USD 2.40 MMBtu, (-1.60%, November 2019 contract)
Gold: USD 1,506.40 / troy ounce (-0.58%)

TASI: 8,028.19 (-0.03%) (YTD: +2.57%)
ADX: 5,069.42 (-0.37%) (YTD: +3.14%)
DFM: 2,798.21 (-0.15%) (YTD: +10.61%)
KSE Premier Market: 6,222.91 (-0.66%)
QE: 10,420.02 (-0.20%) (YTD: +1.17%)
MSM: 4,015.98 (-0.14%) (YTD: -7.12%)
BB: 1,521.34 (+0.09%) (YTD: +13.77%)

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Calendar

28-30 September (Saturday-Monday): Techne Summit, Alexandria.

October: A forum will be organized by Russia’s Rosatom and the Nuclear Power Plants Authority to introduce local suppliers and contractors to the Dabaa nuclear plant.

October: German businessman delegation will visit Egypt to discuss good projects in order to spend German funds into Egypt

October: A delegation of 40-50 Saudi companies will visit Egypt to discuss increasing exports of Egyptian furniture.

1 October (Tuesday): The House of Representatives reconvenes for its fourth legislative session.

3 October (Thursday): Emirates NBD / Markit PMI for Egypt released.

5-6 October (Saturday-Sunday): Annual International Federation of Technical Analysts (IFTA) conference. Cairo Marriott Hotel.

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

8-10 October (Tuesday-Thursday): A delegation of 20 Korean companies visits Egypt.

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

20-24 October (Sunday-Thursday): German-Arab Chamber of Industry and Commerce’s ROI Week with ROI Institute, JW Marriott Hotel, New Cairo

22 October (Tuesday): Innovative Finance: A New Vision to Support Investment forum, venue TBD, Cairo.

23-24 October (Wednesday-Thursday): Intelligent Cities Exhibition & Conference, Hilton Heliopolis, Cairo.

23-24 October (Wednesday-Thursday): Russian-African Summit, Sochi City, Russia

23 October-1 November (Wednesday-Friday): CIB PSA Women’s World Championship, Great Pyramid of Giza, Cairo.

28 October-22 November (Monday-Friday): World Radiocommunication Conference 2019, Sharm El Sheikh, Egypt.

28 October-31 October (Monday-Thursday): A Cairo court will rule on the stock manipulation case, in which Gamal and Alaa Mubarak are involved, along with seven other defendants.

29-30 October (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

29-30 October (Tuesday-Wednesday): South Sudan Oil & Power (SSOP) Conference, Juba, South Sudan.

31 October-2 November (Thursday-Saturday): Angel Oasis 2019, organized by the Middle East Angel Investment Network (MAIN), El Gouna, Egypt.

3-5 November (Sunday-Tuesday): Electrix 2019, Egypt International Exhibition Center, Nasr City, Cairo.

7-9 November (Thursday-Saturday): BiznEx Egypt 2019, Egypt International Exhibition Center, Nasr City, Cairo.

8-22 November: Egypt will host Under-23 Africa Cup of Nations 2019.

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

9-11 November (Saturday-Monday): Vested Summit, Sahl Hasheesh, Red Sea.

10-14 November (Sunday-Thursday): GeoMEast International Congress and Exhibition, Marriott, Cairo.

11-13 November (Monday-Wednesday): Africa Investment Forum, Gauteng, South Africa.

14-17 November (Thursday-Sunday): Machtech Expo, Egypt International Exhibition Center, Nasr City, Cairo.

14-17 November (Thursday-Sunday): Transpotech Expo, Egypt International Exhibition Center, Nasr City, Cairo.

14-17 November (Thursday-Sunday): Airtech Expo, Egypt International Exhibition Center, Nasr City, Cairo.

22-23 November (Friday-Saturday): Invest in Africa 2019 conference, New Administrative Capital.

November: Suez Canal Conference for Investment, organized in cooperation with the European Union

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

December: Indian automotive delegation to visit Egypt.

3-6 December (Tuesday-Friday): Cairo WoodShow, Egypt International Exhibition Center, Nasr City, Cairo.

5-7 December (Thursday-Saturday): RiseUp Summit, to be announced and Pitch by the Pyramids, Giza Pyramids

8 December (Sunday): Pitch by the Pyramids, Giza Pyramids

9-11 December (Monday-Wednesday): Pacprocess Middle East Africa, Egypt International Exhibition Center, Nasr City, Cairo.

9-11 December (Monday-Wednesday): Food Africa 2019 Expo, Egypt International Exhibition Center, Nasr City, Cairo.

10-11 December (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

14-17 December (Saturday-Tuesday): World Youth Forum 2019, Sharm El Sheikh.

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

January 2020: 2019 Confederation of African Football (CAF) Awards, Albatros Citadel Resort, Hurghada, Egypt.

January 2020: UK-Africa Investment summit, London, United Kingdom.

9-12 January 2020 (Tuesday-Sunday): PLASTEX, Egypt International Exhibition Center, Nasr City, Cairo.

25 January 2020 (Saturday): 25 January revolution anniversary / Police Day, national holiday.

25 January 2020 (Saturday): Midterm break for public schools and universities. Also known as: Two weeks of good commute.

8 February 2020 (Saturday): Midterm break ends. Traffic in Cairo stinks once more.

11-13 February 2020 (Tuesday-Thursday): Egypt Petroleum Show, Egypt International Exhibition Center, Nasr City, Cairo.

March: The Middle East and North Africa Financial Action Task Force (MENAFATF) will visit Egypt to assess the progress of actions taken to combat money laundering and terrorist sponsoring activities.

25-26 March 2020 (Wednesday-Thursday): Mega Projects Conference, Egypt International Exhibition Center, Nasr City, Cairo.

5-7 May 2020 (Tuesday-Thursday): AFSIC – Investing in Africa, London, United Kingdom.

November 2020: Egypt will host simultaneously the International Capital Market Association’s emerging market, and Africa and Middle East meetings.

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