Tuesday, 5 November 2019

Lamees talks military companies on the EGX.
Plus: Egyptian bonds are top performers YTD in 2019.

TL;DR

What We’re Tracking Today

Whether you’re looking for macro indicators, new product ideas (hint: nano-lending), debate on the EGX, or the regional IPO outlook, it’s a packed issue for you this morning.

GERD talks kick off in Washington tomorrow: Foreign Minister Sameh Shoukry is due to sit down on Wednesday with his Ethiopian and Sudanese counterparts for a discussion on the Grand Ethiopian Renaissance Dam (GERD) in Washington, DC. Officials from the World Bank and the Trump administration will participate in the talks. President Abdelfattah El Sisi thanked his American counterpart for offering to host the meetings in a phone call yesterday, according to an Ittihadiya statement. A El Sisi’s office said on Twitter that the president has “full confidence” that the US-sponsored meetings will succeed in breaking the deadlock.

First Vice President of the European Bank for Reconstruction and Development (EBRD) Jurgen Rigterink is in town tomorrow. During his three-day visit, Rigterink will meet with senior Egyptian government officials, including Investment Minister Sahar Nasr and Public Enterprises Minister Hisham Tawfik. Rigterink is also expected to sign new project agreements for Egypt, the EBRD said, without providing further details.

Egypt’s defense minister, joins Greek, Cypriot counterparts in ongoing Medusa drills: Defense Minister Mohamed Zaki flew to Greece yesterdayfor the main event of the ongoing one-week Egyptian-Greek-Cypriot trilateral “Medusa 9” military drills, which kicked off last Friday. Zaki is expected to hold talks with his Greek and Cypriot counterparts.

Key dates on which to keep your eye:

  • Today is PMI day, with October’s reading of the IHS / Markit Purchasing Managers’ Index expected at about 6:15am CLT;
  • Sunday, 10 November is inflation day, with the CBE and state statistics agency CAPMAS releasing figures for headline and core inflation;
  • Thursday, 14 November is interest rate day, when the CBE’s Monetary Policy Committee meets to seat interest rates. The committee has cut rates at its last two meetings.

Not all analysts are bullish on Aramco: With all the Aramco hype in the financial press this week, CNBC reminds us that there are still some analysts raising questions about the listing process and the company’s susceptibility to volatility in the region:

  • Many of the details are yet to be worked out, leaving investors in the dark about the company valuation (somewhere between USD 1 tn and USD 2 tn), how much of the company will be listed, and how much it will pay out in dividends.
  • Regional politics remains a concern for investors, remembering that a little over a month ago a drone strike was able to take out critical infrastructure at the oil giant, wiping out a significant chunk of the company’s production for an extended period.
  • Oil prices have been consistently low since the 2014 market crash, and some analysts see the IPO as coming several years too late. The rise of the US as a global shale exporter probably means that prices aren’t climbing significantly any time soon.

Could Aramco IPO spur recovery in Egypt’s petchem sector? Shares in EGX-listed petrochemical companies will recover on the back of Aramco’s initial public offering, RT Arabic would have your believe, arguing that the listing will make petchem equities shine brighter than bank stocks, the longtime darlings of the EGX.

FPOs are stealing tech IPOs’ thunder as investors look to get in on the ground floor: A wide range of investors, including hedge funds and sovereign wealth funds, are finding final private offerings (FPOs) increasingly attractive for tech companies on their way to an IPO, says Bloomberg. An FPO is essentially a “late-stage venture capital funding round” that also sees companies raising money through new share issuances — except this all happens on the private market, meaning it’s easier for investors to grab a piece of the company than if they were to hold out for time-consuming IPOs. “The demand comes as startups stay private longer, making an FPO a way to buy a stake in a more mature company before those companies enter public markets.”

All three US stock indices close at record highs: US equities closed at new record highs yesterday on the back of trade optimism, the Wall Street Journal reports. The Dow Jones finished ahead 0.4% to hit a record 27,462, the S&P 500 also advanced 0.4% to close at a new high of 3,078, and the Nasdaq rose 0.6% to 8,433. The WSJ attributes recent growth to “cyclical stocks,” shares that tend to be bought by investors when they’re confident about the economy.

US stocks are outpacing global equities, with the Dow on track to record its best annual performance since 2013, having risen 22% YTD. That beats European stocks (+15% in the same period), China (up 10%) and emerging markets (up 5%), according to the WSJ. “The trend shows how steady consumer spending and strength in the labor market keep supporting US stocks despite fears of a recession and outsize moves toward haven assets like bonds and gold.” Analysts say the prospect of a detente in the US-China trade war is making US equities all the more appealing to investors, particularly as other developed countries see mediocre growth ahead.

Remember the subprime mortgage-backed securities that almost blew up the global economy? They’re back (albeit with a different name). Bloomberg reports that banks are now selling securities made up of home loans taken out by people with poor credit histories who are unable to qualify for normal mortgages. They’re calling these products ‘non-qualified mortgage bonds’, or non-QM bonds for short. The good thing is that the size of the market is not yet big enough present a systemic threat to the economy — and that’s just as well with a delinquency rate of 3-5%.

Export-dependent economies are being hit particularly hard by the US-China trade war, the Financial Times reports. South Korea is one of nearly 100 countries that saw the value of its exports shrink in 1H 2019 — up from 33 last year. Exports of machinery and transport equipment have been particularly hard hit. Global trade volumes shrank 1.2% y-o-y in August, representing the longest period of contraction since the global financial crisis.

Export economies may breathe a sigh of relief if the US and China ever put pen to paper, but emerging market stocks shouldn’t expect to feel the benefits. The Wall Street Journal’s Mike Bird says an agreement will “offer little more than temporary relief” for EM equities absent a stimulus program in China. “Halting additional U.S. tariffs on Chinese goods might provide a meager lift for EM equities. But given China’s struggle to deal with its mounting debt pile while providing further stimulus to the economy, growth will very likely continue to slow,” he writes.


Raise capital, Lebanese central bank tells local lenders: Lebanese banks have been told by the central bank to increase their capital by USD 4 bn over the next year to protect themselves against a possible credit downgrade, Bloomberg reported, citing the state-run National News Agency. The request comes a few days after banks stepped up efforts to limit overseas transfers, and almost a week after ratings agency Fitch downgraded Bank Audi and Byblos Bank, two of the country’s biggest lenders. Thousands have been protesting in the streets for the past few weeks, forcing Prime Minister Saad Hariri’s resignation and prompting warnings of a growing economic crisis.

The Trump administration has begun pulling out of the landmark climate agreement signed in Paris in 2015, the Associated Press reports. Secretary of State Mike Pompeo called the emission reduction targets an “unfair economic burden” on the US economy. Almost 200 countries signed the agreement four years ago in which they pledged to reduce CO2 emissions.

Wall Street is freaking out about Elizabeth Warren, the New York Times writes after interviewing more than two dozen hedgies, PE types, bankers, analysts and industry lobbyists. The fear? Warren has “made battling corporate greed and corruption a central theme of her fiercely populist campaign.” Goldman Sachs says her proposed tax hikes and “ultra-mn’aire tax” (a 2% annual tax on the wealth of households worth USD 50 mn to USD 1 bn) could lower corporate earnings by 11%, while doomsdayers have warned that a Warren presidency would result in a double-digit stock market decline.

For finance and tech nerds alike: Microsoft is about to roll out a new ‘unified’ Office app for iOS and Android that combines Word, Excel and PowerPoint in a single app that takes up less space. Don’t expect to be modeling on your iPad anytime soon, but the tech giant is claiming that the single download will make your life easier in other ways. The Verge has the details.

Enterprise+: Last Night’s Talk Shows

It was a quiet night on the airwaves, but one story is of particular interest to the business and finance community: Lamees’ second and final show of the week dove deep into President Abdelfattah El Sisi’s suggestion last week that military-owned companies could trade on the EGX.

Lamees on listing businesses owned by the military: Al Kahera Alaan’s Lamees El Hadidi commented on El Sisi’s recent announcement that we may one day see shares in military-owned companies trading on the EGX as part of the state privatization program. El Hadidi said the companies would have to abide by new governance and regulatory standards to ensure transparency. Achieving this would remove some of the controversy that surrounds the military’s engagement in the economy and bring it into the open, she said. There would also be strong investor demand for sectors in which the army is active — such as construction materials, mining, petroleum, and chemicals, El Hadidi suggested. We had the full story in Sunday’s issue.

Lamees phoned Hisham Tawfik, Mohamed Farid: Public Enterprises Minister Hisham Tawfik told El Hadidi over the phone that proceeding with stake sales in military-owned companies will take some time to gauge their potential. EGX boss Mohamed Farid said in a separate call that daily turnover on the bourse has been stable in recent months and that the time is ripe for successful EGX debuts. El Hadidi suggested, though, said that at around EGP 800-900 mn daily, turnover remains too low, prompting Farid to counter that the market needs to list larger companies if it’s going to raise volumes and attract more foreign investment. This is problematic, he admitted, as there are not many large companies left to list on the exchange.

You can watch the full segment here (runtime: 26:18).

Sherif Amer hosts Unilever CEO Alan Jope about … corporate governance, of all things: Unilever’s CEO Alan Jope spoke of a worldwide trend in corporate governance in an interview with Yahduth Fi Misr’s Sherif Amer. “The thing that we see changing the most is moving from shareholder primacy to a multi stakeholder model,” Jope said (watch, runtime: 1:20). The influential Business Roundtable — a business lobbying group composed of execs from some of the biggest US corporations — in the summer suggested moving towards a business model that accounts for the views of all a company’s stakeholders — including employees, suppliers and the environment — rather than primarily focusing on shareholders.

What captured the imaginations of the talking heads last night?

Talking point #1: El Sisi spoke with Trump ahead of DC talks: El Sisi thanked US President Donald Trump in a phone call for America’s offer to mediate talks with Ethiopia and Sudan to resolve the Grand Ethiopian Renaissance Dam dispute. Both Masaa DMC’s Eman El Hosary (watch, runtime: 2:02) and Hona Al Asema’s Rehan Ibrahim (watch, runtime: 1:43) took note. The talks kick off in Washington tomorrow.

Talking point #2: Another ministerial meeting: El Sisi sat down with Prime Minister Moustafa Madbouly and Housing Minister Assem El Gazar to follow up on work in the new urban cities. The meeting was widely reported. Among the note-takers were El Hosary (watch, runtime: 0:38), Ibrahim (watch, runtime: 1:20), and Al Hayah Al Youm’s Lobna Assal (watch, runtime: 1:06).

Speed Round

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Egypt’s bonds outperformed this year, despite consecutive rate cuts -Emirates NBD: Egypt’s local currency bonds have been the best performing in the world in 2019, with investor appetite seemingly undeterred by the Central Bank of Egypt (CBE) cutting rates 350 bps so far this year, according to Emirates NBD’s monthly insight report. The finding provides a measure of context for Bloomberg’s assertion last week that EGP-denominated bonds have been underperforming since small-scale protests broke out in a few cities in September.

Real interest rates remain appealing, spurring investor appetite: The report points to the stability of the EGP and Egypt’s real interest rate remaining higher than its emerging market peers as the key reasons for yields on EGP-denominated bonds at 38.4% in USD terms. With a real interest rate of 8.5%, investors are likely to continue piling into Egyptian treasuries unless the CBE pushes ahead with severe monetary easing. “Having said that, even in that scenario the real interest rate is likely to among the top quartile of emerging market economies even after assuming a slight pick-up in inflation from lower base going forward which in turn should keep investors interested,” Emirates NBD says. The bank sees the CBE cutting rates by 400 bps over the next 12 months.

Speaking of yields: Egypt’s short-term government treasury yields are picking up for the fourth consecutive week, after falling 200 bps after the CBE began cutting interest rates in August. A gauge used by Al Mal to measure average yields showed that returns on interest on the 180-day bonds rose by 0.02% and rates on 273-bonds increased by 0.13%. On the other hand, interest rates on long term bonds fell for the second consecutive week by 0.09% for three-year papers, 0.014% on 7-year treasuries, and 0.6% on 364-day treasuries. This sustained trend confirms that the market is pricing in another rate cut when the CBE’s Monetary Policy Committee next meets a week from Thursday.

Foreign investors have increased their holdings of Egyptian treasury bills to 17.3% at the end of August 2019, according to Emirates NBD, with many of them investing in short-term securities with a maturity no longer than 12 months. The government stepped up its issuance of short-term bonds, with their share increasing from 20% in June to 25% in August.

Emirates NBD sees Egypt’s economy growing at a 5.6% clip in 2019 before accelerating to 5.8% in 2020. The forecasts place us at the top of the non-GCC oil importer pack in 2019, and second in 2020.

FinMin sets more ambitious public debt reduction target, but more conservative GDP growth estimate, for FY2020-2021: The Finance Ministry is expecting Egypt’s public debt levels to drop to 80% of GDP during the next fiscal year — a more ambitious goal than the ministry had announced in June, Minister Mohamed Maait told the local press. The Finance Ministry had initially set its sights on bringing public debt to 80% of GDP by FY2020-2021, before revising its target to 84.8% in official documents seen by Enterprise earlier this year. The government began in March implementing its comprehensive debt reduction strategy, which relies largely on a gradual shift toward longer-term debt and diversifying its debt instruments.

The government is also forecasting GDP growth at 6.5% in FY2020-2021, up from a target of 6% for the current fiscal year, the domestic press reports. The ministry had initially forecasted 7.2% GDP growth for FY2020-2021. We reported in early June that the Finance Ministry was looking to revise its 2020-2021 growth target downward to 6.5%, which we said at the time officials believed was a “more realistic” medium-term target given the headwinds then building in the global economy. The IMF and World Bank’s annual meetings in Washington, DC, last month subsequently rang warning bells about slowing global growth.

In other news from the Finance Ministry: The government has begun working on Egypt’s new unified tax digitization system, according to a Cabinet statement. The new system is meant to streamline procedures and encourage informal businesses to go legit. IBM is designing an integrated model for the automated system, while e-Finance, SAP, and Ernst & Young also have pieces of the project. The government expects to roll out a beta model for large-scale taxpayers before gradually expanding the system to encompass all tax payments.

Background: The project is part of the new unified tax payment system that creates a single tax filing system for income tax, stamp tax and VAT. The Madbouly Cabinet has greenlit the proposed legislation introducing a unified system and pave the way for a new electronic billing and tax payment platform.

Are the Ruskies going to follow the UK’s lead and finally resume flights to Sharm? A delegation of Russian officials is due in town in the next few days to look into resuming flights from Moscow to Egypt’s Red Sea resorts, Civil Aviation Minister Younes El Masry said, according to Masrawy. Russia has been cagey for over four years about restoring charter flights to Egypt, despite successive inspections of the Hurghada and Sharm El Sheikh airports appearing to indicate that security procedures are up to par. El Masry said he is hopeful that this meeting will see a breakthrough on the flight ban. Industry experts have also said they expect the British government’s decision to end its own ban on flights to the Red Sea last month to nudge Moscow in the same direction.

Background: Russia and the UK had both imposed a flight ban to Sharm El Sheikh Airport after the downing of a Russian airliner in 2015, but Moscow has remained hesitant to give the go-ahead to airlines to return. Russia has used tourism as a pressure point since then and had resumed flights to Egypt (but not to the Red Sea) after inking the USD 30 bn Dabaa nuclear power plant agreement in 2018.

INVESTMENT WATCH- ADNOC Distribution eyeing entry into Egyptian market? Emirati fuel retailer ADNOC Distribution is looking at Egypt as a potential market for its planned expansion out of the UAE, COO Mohammad Al Hashimi tells Bloomberg TV (watch, runtime: 7:15). Al Hashimi said that he sees Egypt as a “great market” with “massive growth,” positive macro indicators, and rising income levels. He otherwise remained tight-lipped on his company’s expansion plans, saying other countries in North Africa could also be target markets for ADNOC Distribution.

IPO WATCH- Real estate developer Castle Development plans EGX listing in 2021: ABC Construction Company subsidiary Castle Development is planning to offer an undisclosed number of shares on the EGX in 2021, CEO Ahmed Mansour tells Al Mal. The company will begin preparing for the IPO next year, with an eye to go to market by mid- or end of 2021. He did not disclose whether the company has hired financial and legal counsel, or is currently in the market for advisors.

OC-Engie-Toyota consortium’s 262.5 MW Ras Ghareb wind farm ready for commercial operation ahead of schedule: A consortium comprised of Orascom Construction (OC), Engie, and Toyota Tsusho Corporation has fully completed the construction and commissioning of its 262.5 MW wind farm in Ras Ghareb 45 days ahead of schedule, according to an OC statement (pdf). The wind farm has been connected to the national grid and has been ready for commercial operation since 31 October, according to the statement. The wind farm, which was set up under a build-own-operate framework, will see its power output sold to the government under a 20-year power purchase agreement.

Startup types and bankers alike, take note: The Financial Regulatory Authority (FRA) is now allowing microlenders to begin offering nano lending services — providing mobile-based cash loans — with a cap of EGP 3k per transaction and a maximum tenor of 90 days, according to a statement. FRA Chairman Mohamed Omran said nano lending will be used to service individuals who are not financially included and are most in need of financial services. Lenders will still be required to conduct credit inquiries for applicants seeking a loan of EGP 500 or more. Under the system, credit scorer iScore will be allowed to monitor transactions to provide credit ratings for users. Three local and international companies have offered to set up a special system to digitally evaluate nano lending via phones. The Central Bank of Egypt had reportedly been planning to allow mobile lending this year as part of the country’s financial inclusion drive and in a bid to reduce the role of cash in the economy.

LEGISLATION WATCH- FinMin drawing up new law to resolve tax disputes: Tax affairs advisor to the finance minister, Ramadan Seddik, is drafting temporary six-month legislation to resolve open tax disputes, cabinet said in a statement, without mentioning any details of the law. The bill is being fast-tracked, and will be handed to the Madbouly Cabinet to be voted on in parliament and ratified by the president before the end of the year.

Draft Income Tax Act would solve 2019 tax disputes: The ministry’s overhaul of the Income Tax Act would resolve tax disputes dated between the end of 2018 and until 31 December 2019 by extending the mandate of the government’s tax dispute resolution committees, according to a copy of the draft seen by Enterprise last month.

The MENA region’s IPO activity will also pick up over the next 12 months following a weak third quarter, Ernst & Young said in its Global IPO Update 3Q2019 (pdf). “IPO activity is expected to progress cautiously, with an optimistic outlook,” the report says, citing Kuwaiti equity upgrades to the MSCI index, Saudi Arabia’s planned privatization drive, and amendments in the UAE to list freezone companies.

We also have a privatization program don’t forget, one that is seemingly on hiatus until the new year. Public Enterprises Minister Hisham Tawfik said last week that Alexandria Container and Cargo Handling and Abu Qir Fertilizers are ready to sell additional shares in the EGX, and are waiting on the results of the Aramco stake sale before moving ahead. Heliopolis Housing and Development is also slated to go public next year after the company has awarded the 10% stake + management rights contract to one of the bidders.

The third quarter was weak for MENA IPOs, with only three companies listing between July and September with total proceeds of USD 256 mn. “Investors returned to a more cautious posture” following a strong second quarter, the report says

Globally, it’s much of the same story: Global headwinds — including the US-China trade war, ongoing protests in Hong Kong, and the prospect of a hard Brexit — have all put a damper on investor sentiment during the past quarter. The number of IPOs going to market in 9M2019 dropped 26% y-o-y, while the proceeds from these transactions dropped 24% y-o-y. The third quarter of the year, which the advisory firm notes is usually a slow period for IPOs, saw a total of 256 IPOs, marking a 16% dip from the previous quarter. However, EY says the “backlog of high-quality IPOs continues to grow as issuers wait for better market sentiments.”

EARNINGS WATCH- CIB net profits rise 23% in 3Q: CIB posted consolidated quarterly profits of EGP 3.18 bn in the third quarter, up 23% from EGP 2.59 bn in the same period last year, according to a company press release (pdf). Revenues for the quarter came in at EGP 6.06 bn, up 1% y-o-y. The bank booked EGP 8.54 bn in net profit over the first three quarters of 2019, a 22% y-o-y increase from EGP 7.02 bn in 2018. Revenues for the period totalled EGP 16.9 bn, up 11% y-o-y. Management said the strong growth figures “largely drew on its flexible balance sheet structure” which allows it to quickly adapt to major developments in the market.

Looking ahead: “We are positive about the bank’s growth prospects as visible in its resilient balance sheet fundamentals alongside management’s current focus on growing the bank’s lending portfolio,” the bank’s management said. Read CIB’s full consolidated earnings release here (pdf).

EARNINGS WATCH- Ibnsina quarterly profits rise by 25%: Ibnsina Pharma posted quarterly net profits of EGP 142.4 mn in 3Q2019, a 25% increase on the same period in 2018, according to the company’s latest earnings release (pdf). This was driven by a 26% y-o-y increase in quarterly revenues to EGP 4.4 bn. Over the first nine months of the year the company has generated revenues of EGP 11.9 bn, a 26% y-o–y increase from 2018. This has produced a net profit of EGP 245.6 mn, up 29% from last year. Co-CEO Omar Abdel Gawad attributed the rise in revenues to the company’s “unique value-proposition and integrated services portfolio.”

Looking ahead: Ibnsina will slowly restore its “wholesale segment contribution” to normal levels in order to keep borrowing costs under control, Co-CEO Mahoud Abdel Gawad said. The company has succeeded in lowering its net debt-to-equity ratio to 1x from 1.2x during the third quarter and sped up its cash conversion cycle by two days. “We expect continued improvement on both the working capital and net debt front over the coming period,” Mahmoud said.

Also reporting their results as we build toward the peak of earnings season next week:

CI Capital’s net profit before minority interest rose 26.6% in 9M2019 to EGP 381.07 mn, from EGP 300.95 mn in the same period last year, the company said in a statement to the EGX (pdf). Revenues increased to EGP 1.8 bn compared to EGP 1.4 bn during the same period last year.

Real estate developer Madinet Nasr Housing & Development reported a consolidated net profit of EGP 631 mn during 9M2019, down from EGP 869.1 mn during the same period last year, the company said in a bourse filing (pdf). Revenues also fell to EGP 1.4 bn during the first nine months of the year, from EGP 2.1 bn in 9M2018.

Abu Qir Fertilizers net profits were more or less flat in FY2018-2019, which ended on 30 September 2019. Profits fell a marginal 0.17% to EGP 751.6 mn, from EGP 752.8 mn in the previous fiscal year, according to a bourse disclosure (pdf). Revenues fell 7.66% to EGP 1.98 bn, from EGP 2.15 bn.

Correction: 6 November 2019

An earlier version of this story incorrectly said that CI Capital’s net profit increase 26.2%, and that revenues increased to EGP 1.7 bn from EGP 1.4 bn. These figures have been corrected.

MOVES- Orascom Investment Holding Executive Chairman Naguib Sawiris will assume the position of CEO after Tamer El Mahdi submitted his resignation, effective 31 December 2019, the company said in a bourse disclosure (pdf). Sawiris previously served as CEO of the group before he resigned in January 2017 and nominated El Mahdi to fill the vacancy. OIH subsidiaries include the investment bank Beltone Financial.

MOVES- Private equity firm BPE Partners has named Mostafa El Anwar as its new CEO in a statement (pdf). El Anwar has 18 years’ experience in investment management in both international and regional companies, and was part of Morgan Stanley’s M&A team in London before becoming BPE’s CEO.

MOVES- The European Investment Bank has tapped Alfredo Abadto head its Cairo office, according to a statement. Abad has over three decades of experience as a finance professional, and spent eight years as a senior executive in the African Development Bank, where he worked in Abidjan and Tunis, before joining the EIB in 2005.

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Egypt in the News

It’s another quiet morning for Egypt in the international press:

  • Ancient Egypt: Belgian archaeologists have discovered remnants of a book believed to date back to 2040 BC in the village of Deir El Barsha near Minya, the Brussels Times reports.
  • Over 13k people in one building? Esquire profiles Hassan Morshedy, CEO of Memaar Al Morshedy, whose Skyline project will break the record for the largest residential property in the world.

Worth Watching

Why the battle over 5G is bad news for meteorologists: Ongoing negotiations at the World Radiocommunications Conference in Sharm El Sheikh are expected to set regulations that would ensure the deployment of 5G will not come at the cost of less effective weather forecasting. This year’s meeting comes after meteorologists voiced concerns that the debut of 5G could interrupt weather satellites and cause havoc when predicting weather events. Because 5G networks use a frequency band close to the one used by weather satellites, the worry is that 5G will interfere with the signals picked up by satellites.

Enter, the US, who would do anything to get ahead: While scientists are proposing stricter limits on 5G interference the US has other ideas and has been auctioning off bands to mobile networks ahead of the 5G rollout.

A video from the Wall Street Journal offers clues on why this is the case: US telecom companies are being heavily backed by the US Federal Communications Commission (FCC), which auctions off parts of the country’s allotted radio spectrum to the private sector. The FCC competes with the National Telecommunications and Information Administration, which auctions the other part to federal agencies that are big-time spectrum users, such as NASA and the DoD. As a result, US tech firms have limited access to spots along the spectrum, and are primarily using high band to deploy 5G services. This recent Wall Street Journal video explains more (watch, runtime: 5:17).

The WRC is underway until 22 November. It is organized by the UN-affiliated International Telecommunications Union’s — the worldwide organization responsible for global radio spectrum that convenes every three to four years to review radio regulations.

Energy

SolarizEgypt to build solar power plants for Port Said industrial complex

SolarizEgypt is set to equip an industrial complex in Port Said with solar power plants to generate energy for 22 of the 58 facilities in the complex, Al Mal reports. The plants will generate a combined total of 569 MW of clean energy, and will receive an undisclosed amount of financing from the United Nations Development Programme (UNDP).

Health + Education

Universal healthcare to launch in Luxor and South Sinai March 2020

President Abdel Fattah El Sisi instructed the government to begin rolling out the universal health insurance system in Luxor and South Sinai in March 2020, according to Ahram Online. The government’s universal healthcare scheme is set to be introduced in Ismailia in January 2020, after being introduced on a pilot basis in Port Said in July. The program will cover all of Egypt by 2032 over six phases.

Real Estate + Housing

MNHD to rent Sarai land plot to Total Egypt for 25 years

Madinet Nasr for Housing and Development’s board has agreed to rent a 3k sqm plot in its Sarai development to Total Egypt for 25 years, the company said yesterday (pdf). The land will form part of the French company’s new 7k sqm service station. The value of the agreement was not disclosed, and the final contract has yet to be signed.

Telecoms + ICT

Software development company Andela launches operations in Egypt

African software development company Andela launched its operations in Egypt through remotely managed centers, marking the company’s first entry into the MENA region, according to Hapi Journal.

Number of mobile subscriptions in Egypt reach 94.5 mn in July

The number of mobile subscribers in Egypt reached 94.54 mn in July, up slightly from 93.99 mn in June and down 1.9% y-o-y from 96.36 mn in July 2018, according to a Communications Ministry report (pdf). The number of ADSL subscribers, meanwhile, increased 1% m-o-m to 6.96 mn in July, up from 6.88 mn in June. There were almost a mn new ADSL users in the year to July 2019, rising from 5.99 mn in July 2018. Mobile internet users also rose to 36.51 mn by the end of the month, up 10% y-o-y.

Automotive + Transportation

Transport Ministry could roll out turnstiles at railway stations across the country

The Egyptian National Railways (ENR) is mulling installing electronic gates in railway stations to stop passengers with no tickets from boarding trains, Transport Minister Kamel El Wazir said, according to Gulf News. This comes after a train conductor allegedly forced two youth out of a moving train for not purchasing tickets, causing one of them to die. The idea of installing turnstiles at railway stations had emerged before but appears to have been shelved.

Egypt builds 6,000 km railway to Sudan

Egypt is building a 6k km railway line connecting Upper Egypt with Sudan to facilitate trade between the two countries, according to Egypt Today. The railway will link Abu Simbel to the Sudanese town of Abu Hamad within 36 months. Egypt, Sudan, and Ethiopia had agreed to create a joint fund to raise capital for a network of railway lines and roads connecting the three countries back in 2018.

Banking + Finance

Three banks to give Misr Italia EGP 650 syndicated loan

Misr Italia Real Estate Group is set to receive a syndicated loan worth EGP 650 mn from Al Ahli Bank, Egyptian Gulf Bank, and Arab Investment Bank, according to the local press. The loan will be used to finance the construction of the Cairo Business Park project in New Cairo.

National Bank of Egypt, NBK ask FinMin to guarantee USD 700 mn ANOPC loan

The National Bank of Egypt and the National Bank of Kuwait have requested letters of guarantee from the Finance Ministry for a USD 700 mn loan to contribute to the financing of the Assiut National Oil Processing Company’s hydrofracking complex, according to Al Mal.

CBE grants HSBC, Emirates NBD license to use QR codes for e-payments

The Central Bank of Egypt has granted HSBC and Emirates NBD the e-admission license that uses QR Codes for enhanced electronic payment, according to Al Mal. There are now nine banks in Egypt using this new technology, including the National Bank of Egypt, Banque Misr, CIB, Arab African International Bank, QNB, Banque du Caire, and Bank of Alexandria. The rapid payment technology will make it easier and cheaper for users to pay electronically. The CBE intends to introduce 1 mn POS across Egypt by 2021, according to CBE Sub-Governor for payment systems and business technology Ayman Hussein.

Ora Developers looking to borrow EGP 1 bn from six banks

Ora Developers is negotiating with six banks to borrow over EGP 1 bn to finance the first phase of its EGP 8 bn Zed project in Sheikh Zayed, CEO Haitham Abdel Azim tells Al Mal. The banks include CIB, the National Bank of Egypt, and Banque Misr.

Egypt Politics + Economics

Egypt’s parliament approves new three-month state of emergency

The House of Representatives voted yesterday in favor of a presidential decree imposing a new three-month state of emergency, according to Ahram Online. The state of emergency, which has been in place for more than two years, began its latest term on 27 October.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.07 | Sell 16.20
EGP / USD at CIB:
Buy 16.07 | Sell 16.17
EGP / USD at NBE: Buy 16.09 | Sell 16.19

EGX30 (Monday): 14,626 (+0.02%)
Turnover: EGP 712 mn (1% below the 90-day average)
EGX 30 year-to-date: +12.2%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session up 0.02%. CIB, the index’s heaviest constituent, ended up 1.1%. EGX30’s top performing constituents were Orascom Construction up 3.8%, Egyptian Iron & Steel up 3.7%, and Kima up 2.8%. Yesterday’s worst performing stocks were AMOC down 3.6%, Egyptian Resorts down 2.9% and Sidi Kerir Petrochemicals down 2.6%. The market turnover was EGP 712 mn, and foreign investors were the sole net buyers.

Foreigners: Net long | EGP +23.6 mn
Regional: Net short | EGP -23.3 mn
Domestic: Net short | EGP -0.3 mn

Retail: 64.9% of total trades | 63.9% of buyers | 65.9% of sellers
Institutions: 35.1% of total trades | 36.1% of buyers | 34.1% of sellers

WTI: USD 56.56 (+0.0%)
Brent: USD 62.13 (0.7%)

Natural Gas (Nymex, futures prices) USD 2.82 MMBtu, (+0.1%, December 2019 contract)
Gold: USD 1,509 / troy ounce (-0.1%)

TASI: 7,653 (+0.8%) (YTD: -2.2%)
ADX: 5,110 (-0.1%) (YTD: +4.0%)
DFM: 2,706 (+0.0%) (YTD: +7.0%)
KSE Premier Market: 6,176 (-0.3%)
QE: 10,200 (+2.1%) (YTD: -1.0%)
MSM: 4,020 (+0.3%) (YTD: -7.0%)
BB: 1,520 (+0.0%) (YTD: +13.7%)

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Calendar

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

November: The government will host the Egypt Economic Summit with 40 speakers and experts across all economic fields to discuss the country’s vision post the IMF program.

November: British Egyptian Business Association’s Annual door knock mission, United Kingdom.

November: ITIDA to announce the winning bid in a tender to manage three new innovation centers.

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

3-7 November (Sunday- Thursday): Employment Creation in The Arab Countries, Cairo, Egypt

4 November (Monday): Narrative PR Summit, Hilton Heliopolis, Cairo.

4-6 November (Monday-Wednesday): Egypt’s Chamber of Tourism Establishments will participate in the UK’s World Travel Market (WTM) event in London.

7 November (Thursday): AmCham will hold the Prosper Africa Event.

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

8-9 November (Friday-Saturday): Startups Without Borders Summit, The American University in Cairo Downtown, Tahrir, Egypt

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.

17 November (Sunday): The share price for the Aramco IPO will be announced (expected).

18 November (Monday): AmCham’s US-Egypt Proposer Forum in Cairo. US trade delegation visits Cairo to discuss investments in health, energy and information technology as part of the gathering.

20-29 November (Wednesday-Friday): Cairo International Film Festival, Cairo Opera House, Egypt, Cairo, Egypt.

20 November (Wednesday): The Investment Ministry and the Islamic Development Bank will organize the “leaders for change” startup competition as part of the Fekretak Sherketak initiative, location TBD, Cairo, Egypt.

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

23 November (Saturday): HHD extraordinary general assembly to approve the 10% stake + management request for proposal

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: A Chinese automotive company delegation will visit Egypt to sign an agreement with El Nasr Automotive Manufacturing Company

December: Indian automotive delegation to visit Egypt

1-4 December (Sunday-Wednesday): E-payment and Innovative Financial Inclusion Expo and Forum (PAFIX), Egypt International Exhibition Center, Nasr City, Cairo.

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

4 December (Wednesday): Subscription to the Aramco IPO will begin (expected).

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 December (Tuesday): Egypt Automotive summit, Nile Ritz Carlton, Cairo.

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

11 December (Wednesday): First day of trading on the Aramco IPO (expected)

12-14 December (Thursday-Saturday): 16 Egyptian real estate development companies will showcase their products at IPS Riyadh, Riyadh, Saudi Arabia

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

17-21 December (Tuesday-Saturday): 2019 Automech Formula car expo, Egypt International Exhibition Center, Cairo.

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.

February 2020: An Italian business delegation will visit Egypt to discuss investments in the Port Said industrial zone.

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 2020: 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.

4-5 March 2020 (Wednesday-Thursday): Women Economic Forum, Cairo.

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

23 April 2020 (Thursday): First day of Ramadan (TBC).

23-26 May 2020 (Saturday-Tuesday): Eid El Fitr (TBC).

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

30 June 2020 (Sunday): June 2013 protests anniversary, national holiday.

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

30 July 2020-3 August 2020 (Thursday-Monday): Eid El Adha (TBC), national holiday.

19-20 August 2020 (Wednesday-Thursday): Islamic New Year (TBC), national holiday.

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. © 2022 Enterprise Ventures LLC.

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