Sunday, 13 October 2019

Inflation falls to 4.3% in September, once again defying expectations

TL;DR

What We’re Tracking Today

Egypt’s headline inflation fell in September for the fourth consecutive month in September, beating pretty much everyone’s expectations. The surprisingly benign numbers are fanning the flames of expectation for a third-consecutive interest rate cut when the Monetary Policy Committee next meets on 14 November. We have chapter and verse in this morning’s Speed Round.

Ethiopian Prime Minister Abiy Ahmed was awarded the 2019 Nobel Peace Prize on Thursday “for his efforts to achieve peace and international cooperation” in resolving the border dispute with Eritrea, the Norwegian Nobel Committee announced. Ahmed’s recognition comes amid tensions with Egypt over the Grand Ethiopian Renaissance Dam, prompting Ahmed to speak with President Abdel Fattah El Sisi on Friday. We have the story in this morning’s Speed Round, below.

The main headquarters of the Universal Healthcare Authority will be inaugurated tomorrow in Cairo, the local press reports.

Key dates for your diaries this month:

  • The IMF and World Bank annual meetings start tomorrow and wrap up on Sunday.
  • The two-day ‘Egypt Can’ conference starts on Wednesday, 16 October. The event will be attended by 65 of the biggest foreign investors in Egypt, as well as representatives from international financial institutions, businesses and the Egyptian government.
  • The Intelligent Cities Exhibition & Conference will take place at the Hilton Heliopolis on 23-24 October.
  • A B2B conference for German and Egyptian companies to talk cooperation will take place on Monday, 28 October in Cairo. Click or tap here to register.
  • The US Federal Reserve will meet on 29-30 October to review key interest rates.

The US and China appear to have reached a temporary truce in their trade war, with phase one of a provisional agreement set to see the US hold off on planned tariff increases in exchange for some concessions from China, the Financial Times reports. Under the terms of the agreement, China will increase purchases of certain agricultural goods, and take new measures related to intellectual property, currency, and financial services.

Response to the planned agreement has been mixed: Some fund managers and economists have described it as “more cosmetic than real,” offering few substantive benefits and of too limited a scope to remove the uncertainty accompanying the US-China relationship. The planned agreement falls short of resolving many of the thorniest issues between the two nations, and the US has not rolled back any of the existing tariffs imposed on Chinese goods since early 2018, nor has it declared any intention to ease its crackdown on Huawei, Bloomberg says. Equities advanced globally on Friday in anticipation of a trade truce, although US stocks gave up some of their gains after the agreement was announced.

US Fed to go on bond-buying spree: The US Federal Reserve will start on 15 October purchasing USD 60 bn-worth of treasuries bills a month until at least the end of 1Q2020, to pump reserves into the banking system, it said in a statement on Friday. The move was in response to a recent spike in the overnight funds rate to near the top end of the Fed’s target range, but doesn’t “represent a change in the stance of [its] monetary policy.” Alongside the open market operation, the Fed will also increase until January overnight lending through repurchase agreements (repos) “to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities.” The FT and Reuters have more.

Libra dealt another major blow as financial backers head for the exit doors: MasterCard, Visa, eBay, Stripe, and Mercado Pago are pulling the plug on their financial backing for Facebook’s digital currency, Libra, according to the FT. The companies have flagged concerns about international regulators and government scrutiny over what the cryptocurrency might mean for the global banking and financial systems. PayPal also backed out of Libra last week.


Arab League threatens retaliatory measures as Turkish invasion of Syria continues: Arab foreign ministers yesterday called on the UN to halt military support to Turkey and threatened to take “diplomatic, economic, investment, cultural measures” as Ankara pushed ahead with its invasion of north east Syria, according to a communique seen by the Associated Press. Arab League Secretary General Ahmed Aboul Gheit called the incursion an “invasion of an Arab state’s land and an aggression on its sovereignty,” Reuters reported. Turkey said it had taken a key border town yesterday, four days after it began the operation. We have more on Egypt’s response to the situation in this morning’s Diplomacy + Foreign Trade section, below.

Europe hasn’t taken kindly to Turkey’s threats. Reuters reports that Germany and France have both banned arms sales to Turkey, while economic sanctions are reportedly also on the table. EU governments reacted with fury after Ankara threatened to send mns of refugees to Europe last week.

Tensions in the East Med are also rising: The French navy is joining Cyprus for naval exercises today as Turkish military-escorted drillships arrive in the area where Cyprus licensed Eni and Total to drill, the Associated Press reports. Eni has said that it will not begin drilling if Turkish warships appear in the area. President of the European Council Donald Tusk on Friday called on Turkey to stop its “illegal” drilling operation.

The ‘tanker war’ comes to the Red Sea: An Iranian oil tanker came under attack near Saudi Arabia’s Jeddah on Friday, damaging its two main tanks and causing an oil spill in the Red Sea, according to the Wall Street Journal. Iranian authorities are investigating the apparent missile attack.


Matouk Bassiouny & Hennawy took home the “Single [transaction] Legal Advisor” award at the Private Equity Africa 2019 ceremony held in London on Thursday, the company announced in a statement (pdf). The firm was handed the award for its work as lead counsel to Alta Semper Capital’s USD 50 mn agreement with Oncologie et Diagnostic du Maroc (ODM).

Enterprise+: Last Night’s Talk Shows

The economy was topic du jour on the airwaves last night:

IMF gives us love, but concerns remain: El Hekaya’s Amr Adib noted the IMF’s final review of the economic program, which waxed lyrical on our macroeconomic performance but highlighted concerns such as persistently high unemployment and lagging structural reforms (watch, runtime: 05:41). We have chapter and verse on this in our Speed Round, below.

Public debt levels fall in FY 2018-2019: Public debt levels fell to 90% of GDP in FY 2018-2019, down from 108% in FY 2017-2018, Finance Minister Mohamed Maait told President Abdel Fattah El Sisi in a meeting on Saturday, according to Masaa DMC’s Eman El Hosary (watch, runtime: 01:32).

Ancient industry: The discovery of an Ancient Egyptian industrial area in Luxor was the highlight on Al Hayah Al Youm with Lobna Assal (watch, runtime: 02:52). We have more on this in our Tourism section, below.

Speed Round

Speed Round is presented in association with

Headline inflation falls again in September, clearing the way for more rate cuts: Egypt’s annual headline inflation rate dropped for the fourth consecutive month to 4.3% in September from 7.5% in August, its lowest recording in nearly seven years, according to Capmas data (pdf) released on Thursday. Annual urban inflation decelerated to 4.8% — the lowest it’s been since November 2012 — according to central bank data (pdf). Annual core inflation almost halved to 2.6% in September from 4.9% in August. Monthly core prices fell 2.3% compared to -0.4%. Reuters and Bloomberg also have the story.

Headline vs. core: Headline inflation accounts for a basket of goods and services in an economy while core inflation removes volatile products such as food and fuel.

Food and beverage price inflation plunges: The slowdown was driven primarily by food and beverage prices, which grew just 0.3% y-o-y. “This is a key success factor in controlling inflation and reaching low levels,” Radwa El Swaify, head of research at Pharos, told Bloomberg. “The government focused efforts this year on the supply of food in the market to control any volatility in its price, and that is why inflation has continued to be lower than expectations for several months.”

Adjusting the base year: The CBE and Capmas calculated last month’s inflation figures according to an adjusted base period, with the base year now set at September 2018 instead of January 2010. It also used new weights taken from the Household Income, Expenditure and Consumption Survey (HIECS) 2017/2018 to better reflect consumption patterns. Weightings for food and beverages, clothing and footwear and communications were all reduced, while the remaining nine categories were increased.

The base effect remains a key factor in explaining the lower inflation readings, alongside the strength of the EGP and “more cautious spending behavior,” Beltone Financial said in a research note. Food and beverages, which is usually a prime source of inflationary pressure, showed negative growth for the first time at -0.6%, compared to 6.1% in August.

The surprisingly low inflation reading pushed up the stock market, with the benchmark EGX30 index rallying to close at 0.8% on Thursday, driven by index heavyweight CIB rising 0.3% and Cairo for Investment and Real Estate Development (CIRA) rising 3.9%.

Successive months of plummeting inflation all but ensures more monetary easing ahead. The fast-paced deceleration makes it likely that the CBE will move to cut rates again when it next meets on 14 November, albeit at a slower pace of 50 bps, Eskaros said. Beltone also predicts “benign” inflation readings until the end of the year, giving the CBE room to push on with its aggressive easing cycle. The investment firm anticipates a 50-100 bps cut during the November meeting. EFG Hermes’ Mohamed Abu Basha, meanwhile, suggests that inflation could pick back up again towards 8-9%. Despite this, he expects a 100 bps cut next month.

Real interest rates among the best in the world: The latest figures mean that Egypt’s inflation-adjusted interest rates have now risen to 8.5% — despite the CBE cutting interest rates by 250 bps over the past two months. Real interest rates have now overtaken Turkey and Ukraine to become among the highest in the world, Bloomberg says. The EGP saw its biggest rally since the middle of September after the inflation figures were released, making it the world’s second best performing currency against the USD after Ukraine’s hryvnia. That said, EFG’s Abu Basha warns that inflation may accelerate over the next few months, putting pressure on real rates.

Doubts over Abu Qir, ACCH share sales in December: Repeated delays to the state privatization program are causing analysts to doubt whether plans to sell stakes in state-owned Alexandria Container and Cargo Handling (ACCH) and Abu Qir Fertilizers at the end of December are achievable, Patrick Werr writes for Reuters. Public Enterprises Minister Hisham Tawfik said last week that the government will offer stakes in the two companies during 4Q 2019, but the slow pace of the program is raising questions about how committed the government is to privatization. “The fact that [the stake sales] are continuously being delayed suggests that there is significant resistance from within the regime towards the government ceding control,” emerging markets economist at Capital Economics Jason Tuvey said.

But external factors are also a legitimate cause for concern for the government. There are concerns that global recession jitters would undermine the success of the share sales and result in accusations that the shares were sold below their fair value, much like the accusations that were leveled in the post-Mubarak era, an unnamed Egyptian economist and an anonymous asset manager said.

Our stock exchange needs a shot in the arm: The EGX’s USD 40 bn market capitalization lags behind Casablanca’s and is nearly 11 times smaller than Riyadh’s Tadawul. Privatization through share sales could both boost our market cap and “provide more variety on the bourse,” emerging markets economist at Capital Economics Jason Tuvey said.

Background: Tawfik said last week that the State Council has completed its review of the share sales and granted them the necessary approvals, but the legal procedures have been delayed due to the death of the judge who was in charge of the case. Both ACCH and Abu Qir could have gone to market earlier this month. However, when scattered protesters broke out late September, causing the EGX to experience its sharpest fall since 2015, the government signalled it’s taking more of a long-term approach to the program. This led to a postponement, and fueled expectations of more postponements in a program that has drifted far away from a planned 2018 kick off date. So far, the program has only seen a single sale of a 4.5% pilot in stake in Eastern Tobacco earlier this year.

IMF out with final review of Egypt’s reform program: The International Monetary Finance (IMF) released on Friday its fifth and final policy review of Egypt’s economic reform program, which was conducted last July ahead of disbursing the final USD 2 bn tranche of the institution’s USD 12 bn facility to Egypt. This disbursal marked what the fund saw as a successful completion of the three-year program, with the IMF’s then-Acting Managing Director David Lipton saying that macroeconomic indicators have “improved markedly,” driven by the government’s “strong ownership of their reform program and decisive upfront policy actions.”

Read the report: Tap or click here for the landing page or download directly here (pdf).

Economic indicators “broadly” favorable: The IMF says that macroeconomic performance remained strong throughout FY 2018-2019. This was supported by a “continued sound policy implementation” and strong growth in the natural gas, tourism, and construction sectors, as well as unemployment reaching is lowest-ever level in a decade — 8.1% in 1Q2019 and 7.5% in 2Q2019.

But progress on structural reforms has been “uneven”: The fund says that the government remained “broadly on track” with its commitments, but lists a number of reforms that were either missed or delayed. These include:

  • Guidelines for industrial land allocation approved in March did not include a market-based allocation mechanism;
  • The government divested minority shares through IPOs of just one state-owned company by mid-June, instead of four;
  • The introduction of the fuel price indexation mechanism was delayed
  • The passage of new executive regulations to the procurement law was delayed.

A quick rundown of other highlights from the report:

Egypt’s projected economic growth for FY 2019-2020 remains at 5.9%,unchanged from the previous review. “In the near term, the increased production of natural gas and ongoing recovery in tourism, as security conditions have stabilized, are expected to support real GDP growth close to 6%,” the IMF says.

Inflation projections for the current fiscal year have been revised downwards to 9.6% from 10.7%. The fund expects inflation to reach 7.4% by the end of FY 2020-2021. It’s worth noting that these projections were made three months ago, when inflation had only just fallen to 9.4%. We’ll hazard a guess that these projections may have been slightly lower had they had the knowledge that inflation would plunge more than 5 percentage points by September.

Improving exchange rate flexibility: The EGP has appreciated 8% year-to-date from the time the fund wrapped up its final review in May, “reflecting in part increased portfolio inflows through the interbank market due to the cancellation of the repatriation mechanism in late 2018.” The appreciation was further supported by a general improvement in financial markets.

Foreign currency reserves are currently well above the fund’s reserve adequacy metric. FX reserves inched up to USD 45.11 bn at the end of last month. The IMF sees the figure down to USD 43.7 bn by the end of the fiscal year before hitting USD 48.5 bn in FY 2023-24.

Expectations for net FDI have been downgraded. The IMF originally predicted FDI to hit USD 9.5 bn in FY 2018-2019 and USD 11.2 bn in FY 2019-2020. The fund has lowered these projections substantially to USD 6.5 bn and USD 8.1 bn respectively.

Looking ahead:  The IMF says that “sustained reform implementation” will be necessary to push on with strong medium-term growth. The government will need to focus its structural reform efforts towards an “inclusive private-sector and export-led growth model” if it is going to accommodate the growing labor force. High public debt levels continue to leave us vulnerable to weakening investor sentiment or a deterioration in the global economy, it warns.

The World Bank has maintained its expectations that Egypt’s economy will grow at a 5.8% clip this fiscal year and accelerate to 6% in FY 2020-2021 — assuming that macroeconomic reforms continue and the business environment improves, it says in its latest economic update (pdf). This is slightly lower than the government’s FY 2019-2020 target of 5.9% growth. Net exports of goods and services, a contraction of oil imports supported by increased natural gas production, and an increase in private investment have all been driving growth. “Egypt is sustaining its robust growth, fiscal outturns are improving, and external accounts are stabilizing at broadly favorable levels,” the report said.

Egypt continues to lead growth in the MENA region, thanks to exchange rate, fiscal, and energy reforms improving the macroeconomic climate. The report also highlights improving primary and budget balances, and decreasing debt as positive indicators. The Central Bank of Egypt’s recent rate cuts, prompted by “a remarkable decline” in headline inflation, are expected to improve private sector cash flow, the report says.

Structural reforms and increased private sector participation essential to sustain growth: Challenges to continued growth include “sluggish” non-oil exports, low levels of FDI, and a challenging budget structure, with low tax revenues being insufficient to finance development needs. The bank warns of an urgent need for a new wave of structural reforms, including removing core institutional constraints and supporting private sector expansion, to drive productivity and job creation. Private sector job creation has been fairly weak, the PMI for FY2018-2019 has been “relatively feeble,” and credit extended to private businesses was only 22% of total domestic credit in the fiscal year, the report said.

Has the battle over steel tariffs finally been resolved? The High Administrative Court has overturned a court decision to freeze the Trade Ministry’s decision to impose a 25% duty on steel rebar and a 16% duty on iron billets for three years, the local press reports. The administrative court ruled against the imposition of the duties back in July, after a number of rolling mills said they had been forced to halt production. The ministry filed an appeal against the decision, claiming that the tariffs will help protect local steelmakers.

Duties will gradually decrease: The Trade Ministry said in a statement following the hearing that the import duties will be gradually tapered over the coming three years. Steel rebar tariffs will remain at 25% until 11 April 2020, when they will fall to 21%. This will be reduced to 17% from 11 April 2021 to 12 April 2022. Iron billet duties will remain at 16% until 11 April 2020, before falling to 13% until 11 April 2021 and 10% until 12 April 2022. The ministry will lift the tariffs completely after 12 April 2022.

Steelmakers are not happy. Mohamed Eliwa, president of Misr Steel, said that factories want duties no higher than 7% in the first year, decreasing to 5% and 3% over the following two years. As it stands, producers will face huge losses, said Mohamed El Swaify, director of sales at El Ola Steel.

LEGISLATION WATCH- President Abdel Fattah El Sisi has formed a committee to work on amendments to the Public Enterprises Act, the local press reported. The committee will be chaired by the president’s assistant for national and strategic projects, and will feature Public Enterprises Minister Hisham Tawfik, and representatives from the finance and planning ministries, general intelligence, the Administrative Control Authority, and national security.

What do we know about the legislation so far? In April local media quoted Public Enterprises Minister Hisham Tawfik saying that the amendments would remove listed companies in which the government owns a 75% stake from the legislation, and bring them within the scope of the Companies Act. The legislation was first announced by Tawfik over a year ago.

El Sisi, Abiy Ahmed vow to overcome obstacles to successful GERD negotiations: President Abdel Fattah El Sisi and Ethiopia’s Prime Minister Abiy Ahmed reiterated their mutual commitment to successfully negotiating an agreement on the operation of the Grand Ethiopian Renaissance Dam (GERD), according to an Ittihadiya statement. The two leaders, who spoke on the phone last weekend, stressed the importance of reaching an agreement that would be satisfactory for Egypt, Ethiopia, and Sudan. This agreement will fall within the purview of the Declaration of Principles signed by the three nations in 2015, which is intended to form the basis for negotiations, the statement added.

This comes amid rising tensions following stalled talks: Tensions have been escalating between Egypt and Ethiopia in recent weeks, as talks on the operation of the GERD stalled once again. Ethiopia’s rejection of an Egyptian proposal that included conditions on filling the dam’s reservoir prompted an accusation of inflexibility and a call for international mediation from Egypt’s side. Ethiopia, however, is opposed to mediation and has said that Egypt’s proposal is rooted in an inequitable colonial-era water allocation and veto power on any Nile project.

CABINET WATCH- The Madbouly Cabinet approved on Thursday a USD 500 mn loan from the World Bank to support Egypt’s social safety net for three years, according to an official statement. Egypt had signed the agreement for the facility, which will be used to expand the Takaful and Karama cash subsidy programs, in September.

Siemens Gamesa awarded Ras Ghareb wind farm contract? The council of ministers also gave the Egyptian Electricity Transmission Company the green light to contract Siemens Gamesa to build a 500 MW wind energy plant under a build-own-operate framework. The statement does not specify the location of the plant, but our guess is that it’s Lekela’s Ras Ghareb plant. Local press reports last week had suggested that Denmark’s Vestas was the frontrunner in the tender.

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Image of the Day

Who said creativity and stocks didn’t go together? The results of a 2009 study that found stocks with memorable ticker names outperform in the market still rings true, according to the Economist. A decade later, the same portfolio of companies with eye-catching tickers were again found to have outperformed. Some of the stocks in the winning portfolio are shown in the image above.

Egypt in the News

The foreign press is still not done covering the recent demonstrations in Egypt. Deutsche Welle and Al Monitor were each out with a piece on the economic reforms and austerity measures that drove the demonstrations. Meanwhile, Amnesty International is alleging that prominent activist Alaa Abdel Fattah has been subjected to torture during his detention at Tora prison, and is calling on Egyptian authorities to investigate the allegations. Amnesty also condemned the sentencing of two individuals tortured as children to 10-year jail sentences in a separate statement.

Worth Watching

Insider tracking of global oil supplies is information worth paying for. Predicting changes in the availability and price of oil can be extremely lucrative, and geospatial analytics company Orbital Insight is leading the field in capturing and selling data that can then be sold to hedge funds, energy companies and others looking to anticipate oil price moves, this Wall Street Journal video shows (watch, runtime: 05:33). The company has used satellite imagery and AI to find over 25k oil tanks located throughout the world, and it regularly examines their contents to estimate how much oil is inside each one.

Measuring shadows is the key to calculating volume: Oil tanks have floating roofs that rise and fall, according to the volume of oil inside — which could range from 50k barrels to over 1 mn. Orbital’s computers measure the shadows cast on or around the area of each tank to gauge the quantity of oil inside: the bigger shadows, the less oil there is inside the tanks. Examining this data over time allows the firm to track when stockpiles grow and shrink in different regions, offering insight into supply availability in parts of the world where data is scarce or unreliable. The result is that traders across the world have access to this valuable information weeks — and sometimes months — before official figures are released.

Diplomacy + Foreign Trade

Egypt supports the right of Kurds to fight Turkish invasion of Syria -Shoukry: Egypt considers the Turkish incursion into northern Syria an occupation and called Kurdish resistance efforts a “legitimate right in self-defense,” Foreign Minister Sameh Shoukry told the Syrian Democratic Council ahead of an emergency Arab League meeting in Cairo yesterday, a ministry statement said. Shoukry also held talks with Jordanian Foreign Minister Ayman Al Safadi and Bahraini Foreign Minister Sheikh Khalid bin Ahmed bin Mohammed Al Khalifa, while President Abdel Fattah El Sisi met with Jordanian King Abdullah II on Thursday to discuss the situation, according to an Ittihadiya statement. Arab foreign ministers yesterday called on the UN to halt military support to Turkey and threatened to take “diplomatic, economic, investment, cultural measures… to confront the Turkish aggression,” according to a communique seen by the Associated Press.

The Eurasian Economic Union (EAEU) will build joint infrastructure in Egypt’s Russian Industrial Zone, the organization’s Industrial Policy Council decided last week, according to Belarusian news agency BelTA. This will be the union’s first large-scale joint project in a third country. The time frame of the project, which was announced during the Big Industrial Week exhibition in Cairo last week, was not disclosed.

Energy

ADES wins second deepwater drilling contract in Egypt

ADES SAE has signed a second deepwater drilling contract in Egypt’s Mediterranean waters with an unnamed international oil company, the company said in a statement. Advantage, a joint venture between ADES and Vantage Drilling International, will drill the Nigma 1 well over 73 days on a profit-sharing basis. The company signed a deepwater drilling contract with Dana Gas in March, and a two-year contract with an unnamed Egyptian energy company in June for its Admarine IV jackup rig in Egypt, and

Egypt targets 700k bpd of crude oil and condensates in FY 2019-2020 -El Molla

Egypt aims to produce 700k bpd of crude oil and condensates in FY 2019-2020, Tarek El Molla said in a meeting with industry players on Friday, according to a ministry statement (pdf).

Idku natgas exports reduced by 80% since August -source

Natural gas exports from Shell’s Idku terminal have been reduced by 80% since August due to low global prices and oversupply, an oil industry source told the local press. The terminal is currently exporting 100 mcf/d, down from around 500 mcf/d in August. Exports fell from 600 mcf/d in July due to rising domestic consumption, an EGAS source said in August. The Oil Ministry said last week that has reduced gas production to 6 bcf/d from 7 bcf/d due to lower domestic international demand.

Manufacturing

Rosatom considers establishing factories in Egypt to produce Dabaa components

Rosatom is considering establishing factories with Egyptian companies to manufacture components for the Dabaa nuclear plant, company sources have said, according to Al Mal. Rosatom subsidiary Atomstroyexport (ASE) has reportedly visited a number of factories and businesses in Egypt to assess whether local firms have the capacity to produce the required components. ASE’s Egypt director Anatoly Kovtunov said last week that the company will begin construction on the plant by the middle of next year.

Real Estate + Housing

NUCA to begin Warraq Island development in 1H 2020

The New Urban Communities Authority (NUCA) will begin the first phase of the Warraq Island development in 1H 2020, Al Shorouk reports. The authority will spend more than EGP 1 bn constructing 10k housing units and other infrastructure during the initial phase. NUCA last week purchased 300 feddans on the island and remains in negotiations with the landowners for the remaining 200 feddans.

Tourism

Zahi Hawass discovers industrial area from Ancient Egypt in Luxor

Zahi Hawass (aka Egypt’s Indiana Jones) has uncovered an ancient industrial area complete with 30 workshops in Luxor’s Valley of the Monkeys, according to an Antiquities Ministry statement. A tomb was also discovered in the Valley of the Kings containing the tools used in making tombs. Hawass and his team have been working on the excavations since 2017, and are still hoping to find the elusive tombs of Queen Nefertiti and Queen Ankh Amon.

The story is getting coverage in the foreign press: ReutersVoice of AmericaXinhuaFox NewsGizmodo

Flights to Sharm El Sheikh from France, Sweden resumed

Direct flights between Stockholm and Sharm El Sheikh have resumed after being suspended for more than eight years, with the first flight from the Swedish capital landing in the Red Sea resort on Thursday, according to Al Shorouk. Direct flights from France are also set to resume in a week or so, according to Samir Manea, head of the Sharm El Sheikh tourism committee.

Banking + Finance

Saudi Egyptian Construction Co signs EGP 1 bn loan agreement with NBE

The Saudi Egyptian Construction Company (SECON) has signed a EGP 1 bn loan agreement with the National Bank of Egypt (NBE) to finance works at its SECON Nile Towers project, Secon CEO Mohamed Al Taher said. The company will use the loan to fund part of its EGP 3.5 bn Nile Towers project along Corniche El Maadi.

ADIB Capital considers arranging EGP 1.1 bn loan for El Ezaby

ADIB Capital is considering arranging and marketing a EGP 1.1 bn loan for El Ezaby Pharmacies, banking sources told Al Shorouk. The loan will be Sharia-compliant comply and aim to restructure the company’s USD debt. The investment bank has reached out to local banks to form a consortium to manage the medium-term loan.

KarmSolar signs EGP 230 mn loan agreement with Banque Misr

KarmSolar has signed a EGP 230 mn loan agreement with Banque Misr to build 24 MW solar power plants, CEO Ahmed Zahran told the local press. Zahran did not say how many plants the company will establish with the money. KarmSolar is also in talks with five local and international banks for a EGP 1 bn loan to finance additional plants, Zahran said separately. The banks include International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), Zahran said, adding that he wants to secure the loan before the end of the year.

FRA grants Elite Financial first financial advisor license since introducing new regs

The Financial Regulatory Authority has granted Elite Financial Consultancy the first license as an independent financial advisor since introducing new licensing regulations, deputy chairman Seif Eldin Awny told the local press. The company plans to offer a range of services targeted mainly at SMEs, including fair share value studies, restructuring, consultations, due diligence, and fundraising. Under the 2018 regulations, companies are required to renew their registration every three years. Companies will be removed from the registry and risk losing their operating licenses if they are found to be in violation of any laws.

Other Business News of Note

Egypt auctions 750 factories to SME investors

The government has auctioned off 750 factories in industrial areas to SME investors, Prime Minister Moustafa Madbouly said at a presser on Thursday. President Abdel Fattah El Sisi has ordered a total of 4.5k factories to be put up for auction.

Egypt Politics + Economics

Nine UK students leave Egypt on safety concerns

Edinburgh University has recalled nine students studying in Cairo after two of them were detained by authorities, the BBC reports. The students were later released but the university has ordered them to leave the country due to safety concerns. More than 2.9k people have been arrested since sporadic anti-government protests occurred last month.

Egypt sentences six to death on terror charges

The Giza criminal court has sentenced six people to death for attacking security forces at a hotel near the pyramids in 2016, the Associated Press reports. Eight defendants received life sentences and 12 others were handed 10-year sentences. The defendants were convicted of attacking an Egyptian security post near the Three Pyramids Hotel in January 2016.

On Your Way Out

Egyptian startup Tekeya wants to start a global food waste reduction movement: Recently established Egyptian startup Tekeya is seeking to reduce food waste and offer affordable meals to people living below the poverty line, Egypt Independent reports. The platform allows charitable organizations to purchase food that would otherwise go to waste from food providers, including supermarkets, restaurants and hotels, at reduced prices. These organizations then distribute the food to those in need free of charge. The Agriculture Ministry has estimated that 50 kg of food per person is wasted every year in Egypt.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.21 | Sell 16.33
EGP / USD at CIB:
Buy 16.22 | Sell 16.32
EGP / USD at NBE: Buy 16.23 | Sell 16.33

EGX30 (Thursday): 14,302 (+0.8%)
Turnover: EGP 634 mn (9% below the 90-day average)
EGX 30 year-to-date: +9.7%

THE MARKET ON THURSDAY: The EGX30 ended Thursday’s session up 0.8%. CIB, the index’s heaviest constituent, ended up 1.1%. EGX30’s top performing constituents were CIRA up 3.9%, Egyptian Resorts up 3.1%, and Heliopolis Housing up 2.6%. Thursday’s worst performing stocks were Orascom Construction down 1.0%, Palm Hills down 0.5% and EFG Hermes down 0.2%. The market turnover was EGP 634 mn, and foreign investors were the sole net buyers.

Foreigners: Net long | EGP +43.5 mn
Regional: Net short | EGP -25.3 mn
Domestic: Net short | EGP -18.3 mn

Retail: 60.2% of total trades | 51.3% of buyers | 69.1% of sellers
Institutions: 39.8% of total trades | 48.7% of buyers | 30.9% of sellers

WTI: USD 54.70 (+2.2%)
Brent: USD 60.51 (+2.4%)

Natural Gas (Nymex, futures prices) USD 2.21 MMBtu, (-0.2%, November 2019 contract)
Gold: USD 1,488.70 / troy ounce (-0.8%)

TASI: 7,695 (-0.3%) (YTD: -1.7%)
ADX: 5,073 (+0.4%) (YTD: +3.2%)
DFM: 2,810 (+0.0%) (YTD: +11.1%)
KSE Premier Market: 6,213 (+0.0%)
QE: 10,227 (+0.3%) (YTD: -0.7%)
MSM: 4,013 (-0.7%) (YTD: -7.2%)
BB: 1,523 (+0.3%) (YTD: +13.9%)

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Calendar

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.

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

14-20 October (Monday-Sunday): IMF, World Bank annual meetings, Washington, DC.

16-17 October (Wednesday-Thursday): Egypt Can conference, undisclosed location.

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.

22 October (Tuesday): 20th Century Middle Eastern Art annual auction: Sotheby’s Gallery, London

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 (Monday): B2B conference for German companies organized by the German-Arab Chamber of Industry and Commerce and the Bavarian Ministry of Economic Affairs, Regional Development and Energy, InterContinental Semiramis, Cairo.

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 key interest rates.

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.

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

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.

12 November (Tuesday): Egypt Economic Summit, venue TBA.

13-15 November (Wednesday-Friday): Africa Early Stage Investor Summit, Cape Town, South Africa.

14 November (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

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.

24 November (Sunday): Arabia Investments lawsuit against French Peugeot (after being postponed)

25 November (Monday): Global Trade Matters international dialogue on climate neutrality, Marriott, Cairo.

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, American University in Cairo, New Cairo Campus

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.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2020 Enterprise Ventures LLC.