Sunday, 17 November 2019

CBE to halt easing cycle after making third consecutive rate cut -analysts.

TL;DR

What We’re Tracking Today

*** We’re very excited to announce that season one of Making It — our first podcast — launches this coming Friday. Making It is a weekly discussion with CEOs and founders who are building great businesses right here in Egypt. You’ll hear the origin story of hot startups, how family-owned businesses are institutionalizing, and the strategies publicly traded giants are using to transform themselves into the next generation of Egyptian multinationals. The goal: We want each season to be a masterclass on how visionary CEOs are building strategy, dealing with conflict, figuring out how to scale up, and staying ahead of the competition.

Season one of Making It launches on Friday, 22 November and will be available wherever you get your favourite shows, from Apple Podcasts to Google, Overcast, Spotify and Stitcher. You’ll also be able to listen from the new podcast tab on our website. Season one runs eight episodes, with a new episode each Friday morning.

You’ll know when each episode is released when we send you a short email on Friday morning with a quick introduction to that week’s guest and a link.

Want a sneak peek? Listen to our trailer here (listen, runtime: 2:02). You can also subscribe now on Apple Podcast.


President Abdel Fattah El Sisi flies to Berlin today ahead of the G20 Compact with Africa High-Level Conference on Tuesday. El Sisi will represent the African Union during the event, which will also see Egypt’s Investment Ministry sign a EUR 154 mn loan to support renewable energy, water management, waste recycling, and technical education. German Ambassador to Cairo Cyrill Nunn said last week that the second EUR 80 mn tranche of the EUR 240 mn four-tranche debt exchange agreement is due to be completed soon.

Our friends at AmCham are hosting the US-Egypt Future Prosperity Forum tomorrow, with Prime Minister Moustafa Madbouly, US Deputy Assistant Secretary of Commerce for Manufacturing Ian Steff, and several Egyptian ministers scheduled to speak. You can check out the full agenda here.

Bidding for what could be the largest initial public offering in history gets underway today, with both retail subscription and institution book-building beginning in the IPO of Aramaco. Retail investors have until 28 November to subscribe to the offering, while the book-building period will wrap up on 4 December. Bloomberg has more.

Foreign appetite for Aramco stock disappoints Saudis: Saudi officials have “expressed high levels of dissatisfaction” to bankers advising on the long-delayed IPO about the lack of interest among foreign institutions, sources told the Financial Times. Demand among local investors is thought to be robust amid an intense domestic marketing campaign encouraging citizens to make bids at the high end of the price spectrum. This is raising optimism that the company could still be valued at USD 1.8 tn or higher. Institutional investors, though, have been less sanguine about the offering, insisting that the company is only worth USD 1.2-1.5 tn.

In other global IPO news with a local angle: Orange could IPO its Africa, Middle East business: French telecom giant Orange has reportedly begun preparations to IPO its Africa and Middle East arm, sources told Bloomberg. The company is yet to choose the advisers for the offering or select a listing venue, but it is said to be conducting interviews with potential advisers and considering to list in either Paris or London. Nothing is set in stone, though, and Orange may yet decide to abandon its IPO plans, according to the sources. If it goes ahead with the listing, the company could sell shares as soon as 2020.


There’s officially proof to back up the claims: Google tampers with its search results. Engineers manipulate the algorithm that goes into Google’s search results, a Wall Street Journal investigation found after over 100 interviews and extensive testing of the internet giant’s search results. The journal claims Google formulated its algorithms to favor big businesses over smaller ones, blacklisting certain legal sites, and even filtering out inflammatory results on controversial topics through curating the autocomplete results.


PSA- Fall weather is finally here. Expect a daytime high in Cairo today of 26°C as fog descends on the north of the country and rain hits parts of the Mediterranean coast, according to Ahram Gate. Our favourite weather app shows daytime highs in the 25-26°C band for the coming 10 days and overnight lows of 12-15°C.

Enterprise+: Last Night’s Talk Shows

A familiar mix of stories made an appearance on the airwaves last night: Our review at the UN Human Rights Council, the Grand Ethiopian Renaissance Dam (GERD) negotiations, and President Abdel Fattah El Sisi’s trip to Germany were among the topics that kept the nation’s talking heads chattering well into the evening.

UNHRC adopts 372 recommendations for Egypt after periodic review: The United Nations Human Rights Council (UNHRC) has adopted 372 recommendations presented by member states during Egypt’s Universal Periodic Review, which took place in Geneva last week. A total of 136 handed their recommendations, of which 39 criticized the government’s human rights run and 97 “expressed appreciation” for Egypt’s efforts and called for more proactive action. Ahram Online reported at the weekend that 14 countries asked Egypt to abolish the death penalty, others wanted the government to go further to lifting restrictions on the country’s NGO sector, and a number raised concerns about the treatment of the LGBTQ community. Hona Al Asema’s Reham Ibrahim covered the story (watch, runtime: 3:14).

The human rights situation is improving in Egypt, Ibrahim claimed, because some recommendations overlapped. The Egyptian delegation didn’t express any early objections during the meeting on the recommendations, and said that authorities will take time to review them and respond before 22 February.

GERD talks get some airtime: The irrigation ministers of Egypt, Sudan, and Ethiopia held the first round of talks in Addis Ababa to negotiate the timetable for filling and operating the GERD, Al Hayah Al Youm’s Lobna Assal reports (watch, runtime: 1:44). We have the full story in Diplomacy + Foreign Trade, below.

El Sisi in Berlin: Both Masaa DMC’s Eman El Hosary and Hona Al Asema’s Ibrahim took note of El Sisi’s planned visit today to Berlin for the G20 Compact with Afridca conference (watch, runtime: 1:40) and (runtime: 2:47).

Speed Round

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CBE cuts rates by 100 bps, in line with market expectations: The Central Bank of Egypt’s Monetary Policy (MPC) cut interest rates by 100 bps on Thursday, the CBE said in a statement (pdf). The central bank cited inflation’s continued deceleration in October, with annual headline inflation hitting its lowest since December 2005, as well as employment dipping in 2Q2019 and stabilizing real GDP growth. The MPC also factored in accelerated global monetary easing as a result of the weakening expansion of economic activity. This is the third consecutive rate cut in an easing cycle that has seen the central bank cut rates by 350 bps since August, and 450 bps over the course of the year.

The move was not a surprise to most: Five of the six economists surveyed in our Enterprise poll ahead of the meeting had anticipated a 50-100 bps cut. Renaissance Capital was the only research house we surveyed that expected the CBE to keep rates on hold. Polls by Reuters and Bloomberg had similar results.

Where rates now stand: The CBE’s overnight deposit rate now stands at 12.25% and its lending rate is at 13.25%. The main operation and discount rates are now 12.75%.

Analysts are divided on whether the MPC have afforded to be more aggressive in its penultimate meeting this year: Signet’s Angus Blair tells Reuters he believes the CBE could have gotten away with a “more aggressive” rate cut in light of Egypt’s inflation cooling quickly, while Naeem Brokerage’s Allen Sandeep tells the newswire he sees the 100 bps cut as more “prudent” and “sustainable.” Blair had also been hoping for a deeper cut at the MPC’s last meeting in September.

Is corporate borrowing for capex finally going to be unlocked? 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. Lending rates are currently just 25 bps shy of the upper limit of that range. Rates dropping to almost where they were before Egypt’s IMF-backed economic program will “provide support for a gradual recovery in private investments,” EFG Hermes’ Mohamed Abu Basha tells Bloomberg. Beltone, meanwhile, sees a “moderate recovery” in capex borrowing as private demand growth gradually picks up.

The CBE probably won’t squeeze in one more rate cut when it meets again next month, Goldman Sachs said in a report, according to Bloomberg. The investment bank says it expects the CBE to resume its easing cycle next year “barring any material changes to inflation expectations.” Prime Holding is also forecasting this will be the final cut of the year. The CBE will likely pause to see how the easing affects inflation and capital inflows into Egyptian debt before it moves forward with further cuts.

The carry trade isn’t losing its luster just yet: Yields on Egyptian debt will remain attractive to investors even after last week’s rate cut, particularly as the US Federal Reserve cut interest rates one week earlier, Pharos Holdings’ head of research Radwa El Swaify tells Reuters. Swaify also cites the EGP’s YTD strength against the greenback as another reason for foreign investments in fixed income to remain unaffected. At the same time, the rate cut will help to alleviate the burden of the government’s debt service costs, Swaify says. “With a global move toward easing, Egypt has leeway to cut while keeping its debt yields attractive,” Bloomberg says. Egypt’s steep inflation slowdown has kept our real interest rates among the most attractive in the world, outmatched only by Argentina, Bloomberg said last week.

Tharaa, Egypt’s sovereign wealth fund, to establish a USD 20 bn investment platform with Abu Dhabi Holding Company: Egypt and the UAE agreed on Thursday to establish a USD 20 bn joint investment fund to invest in a variety of sectors and transaction structures through Abu Dhabi Development Holding Company and Egypt's sovereign wealth fund (Tharaa), according to an Ittihadiya statement. The agreement came during President Abdel Fattah El Sisi’s trip to Abu Dhabi . The platform invest using a variety of structures in manufacturing, traditional and renewable energy, and technology and other sectors. Tharaa CEO Ayman Soliman had told us last week that the fund plans to establish sub-funds in several sectors, including energy.

This is the start of more investment, cooperation with the region: Soliman said last week that the fund is in talks with three counterparts in the region to set up joint funds. The CEO had not provided any hints as to who the other points of contact are.

In other Tharaa news: The state-owned National Investment Bank has put Tharaa in charge of drumming up foreign and domestic investor interest in seven of its portfolio companies and two of its assets, the bank’s CEO Mahmoud Montasser tells Masrawy. Montasser did not name the companies in which the bank is looking sell stakes.

Egypt successfully closes USD 2 bn triple-tranche eurobond issuance in first int’l debt auction for FY2019-2020: Egypt sold USD 2 bn-worth of four-, 12-, and 40-year USD-denominated eurobonds in an issuance that went to market on the Luxembourg Stock Exchange on Thursday, the Finance Ministry said. The offering was more than 7x oversubscribed, attracting USD 14.5 bn in requests, driving down the final yields by 45 bps from the initial price guidance. The triple-tranche issuance saw the government selling USD 500 mn of four-year bonds with a yield of 4.55% yields, USD 1 bn of 12-year notes carrying a yield of 7.05%, and USD 500 mn of 40-year notes carrying a yield of 8.15%. Reuters also had the story.

The 40-year bonds Egypt sold are the longest maturity bonds in the Middle East and North Africa, the ministry said. Moving towards longer-term debt is a key component of the government’s comprehensive debt reduction strategy, which it began implementing in March. Egypt’s foreign debt stood at USD 108.7 bn at the end of FY2018-2019.

We could see another USD 3 bn-worth of eurobond issuances between now and July. The ministry had previously received cabinet approval to issue USD 5 bn-worth of eurobonds this fiscal year, which ends in June.

Advisors: Citibank, JPMorgan, BNP Paribas, Natixis, and Standard Chartered acted as joint bookrunners for the offering. Al Tamimi & Company acted as local legal advisor, while Dechert was international counsel.

Hassan Allam signs USD 20 mn loan with EBRD for water, wastewater investments: The European Bank for Reconstruction and Development (EBRD) and Hassan Allam Holding signed on Thursday a USD 20 mn loan agreement for the construction firm to expand its investments in Egypt’s water and wastewater treatment sector, according to an EBRD statement. The loan will support Hassan Allam’s plans to acquire “specialised companies in engineering and water desalination,” the statement says. The funding will also be used to accelerate its youth employment and train existing employees. “Hassan Allam Holding is a construction and engineering company that is making a commitment to do better by the environment. Yes, we’re adopting principles of sustainability. But we’re also expanding our business offering by adding green utilities to our core activities,” said Hassan Allam CEO Amr Allam.

M&A WATCH- Royal Dutch Shell has tapped investment bank Citi to manage the upcoming sale of its onshore upstream assets in Egypt’s Western Desert, sources close to the matter said, according to Reuters. The process for the sale, which could net as much as USD 1 bn for the company, is set to kick off officially at the end of the month. Both Shell and Citi declined the newswire’s request for official comment. Shell had said last month it is planning the divestment “in order to fully concentrate on growing its Egyptian offshore exploration and integrated gas business.”

What’s for sale? Shell’s portfolio in the Western Desert includes stakes in 19 oil and gas assets including the Badr El Din and Obaiyed area, as well as the North East Abu El Gharadig, West Sitra, Bed 1 gas, and West Alam El Shawish concessions, according to the company website.

Not for sale: Shell’s offshore assets, downstream lubricants, and its share in Egyptian LNG are not up for grabs as part of the transaction, the company said last month. Shell had also said prior to its divestment announcement that it has applied for the upcoming Red Sea bid round and is interested in future tenders for Mediterranean concessions.

M&A WATCH- FRA begins review of Adeptio MTO for Americana acquisition: The Financial Regulatory Authority (FRA) is reviewing the mandatory tender offer (MTO) Adeptio has submitted to buy out minority shareholders in the Egyptian International Tourism Projects Company (Americana), according to an FRA statement (pdf). The MTO covers the 9.563% of Americana that would give Adeptio 100% ownership of the company, with Adeptio offering EGP 3.9 per share. This price is much lower than the EGP 24 per share range that the minority shareholders have asked for, prompting the FRA to issue a separate statement (pdf) noting that it is looking into the fair value report with Adeptio’s financial advisor.

Background: Adeptio acquired 67% in Kuwait Food Company (Americana) in June 2016 following a two-year process, giving it indirect ownership of the majority of Americana Egypt. The FRA then ordered Adeptio to submit an MTO to buy the remaining shares in Americana Egypt earlier this year, but Adeptio had argued that its indirect ownership in the company is less than 90% of its total capital and therefore does not require an MTO submission. Adeptio submitted an appeal against the order, which the FRA promptly rejected. The company then filed a suit with an economic court challenging the FRA’s rejection, but the court also dismissed the appeal. A 15-day grace period was set for Adeptio to submit the MTO after Adeptio had requested a 30-day extension on the initial deadline that expired on 21 October on the grounds that it has yet to complete its fair share evaluation on Americana, which the FRA approved.

CBE greenlights establishment of USD 600 mn export credit risk guarantee company: The Central Bank of Egypt (CBE) has approved the establishment of a USD 600 mn export credit risk guarantee company to boost Egyptian exports to the rest of Africa, the CBE said in a statement on Thursday (pdf). Afreximbank, which acted as the technical advisor on the project, conducted an in-depth study that concluded that a lack of financial services and adequate information, coupled with high levels of risk and high financing costs, are hindering investors and banks from tapping trade with Africa, President Benedict Oramah said. Afreximbank will also provide financing for projects the export credit risk company will cover “where necessary,” Oramah said. Reuters also had the story.

INVESTMENT WATCH- Hong Kong-based textiles manufacturer Handa Enterprise in planning to invest USD 100 mn in an idle jute products factory it leased from the Cotton and Textiles Holding Company, Handa’s president said, according to Al Mal. The company will spend USD 10 mn in an initial first phase to renovate the 34k sqm facility, which has been closed for years. Handa leased the factory for 10 years and has the option to renew the contract.

The Cotton and Textiles Holding Company telegraphed this in September, when it announced plans to lease 16 unused plots to textiles and garments investors. The move is part of a larger plan to privatize non-operating state assets in the textiles sector, for which President Abdel Fattah El Sisi’s administration has a EGP 21 bn plan.

In related news, the holding company is in talks to acquire a EUR 540 mn facility to finance the purchase of new equipment, company President Ahmed Moustafa told the press. Offers from Italian and Swiss financiers, which Moustafa did not name, are currently on the table.

Gov’t cuts prices of some core subsidized foodstuffs: The Supply Ministry will reduce the prices of subsidized food commodities starting December, state news agency MENA quoted Supply Minister Aly El Moselhy as saying, according to Reuters. The price cuts include:

  • Cooking oil: By EGP 1 to EGP 8.5 per bottle;
  • Sugar: By EGP 0.5 to EGP 8.5 per kilogram;
  • Rice: By EGP 1 to EGP 8 per kilogram;
  • Flour: By EGP 0.25 to EGP 6.50 per bag.

Background: The government reinstated last month some 1.8 mn people to the food subsidy rolls after they had been removed earlier this year under the Great Subsidy Rolls Purge and a general reform drive to reduce the budget deficit. President Abdel Fattah El Sisi’s tweet about measures to shore up the social safety nets and help “protect the rights” of low-income citizens prompted the move. The tweet came after small protests broke out around the country in late September, signalling discontent with austerity measures. Investors voiced concerns at the time that subsidy reversal could derail progress on economic reform and lead to the government failing to meet its fiscal targets.

Unemployment rises unexpectedly for first time in a year: Egypt’s unemployment rate rose for the first time in a year in 3Q2019 after it ticked up to 7.8% from 7.5% in 2Q2019, Capmas figures showed on Thursday. Unemployment was down 2.2% on an annual basis, the state statistics agency showed. The last time unemployment rose was in 3Q2018, when the rate rose slightly to 10% from 9.9%. Unemployment has been falling consistently in recent years, reaching multi-decade lows of 7.5% in 2Q2019. Planning Minister Hala El Said attributed this to non-oil business activity growing and increasing optimism expressed by businesses.

Egypt risks US sanctions with potential purchase of Russian arms: The US could move to impose sanctions on Egypt over an agreement that would see Cairo purchase Russian warplanes in a USD 2 bn transaction, according to a letter seen by the Wall Street Journal. “Major new arms [agreements] with Russia could — at a minimum — complicate future US defense transactions with and security assistance to Egypt,” Secretary of State Mike Pompeo and Defense Secretary Mark Esper said in the letter. The warning comes after Russian Defense Minister Sergey Shoygu met with President Abdel Fattah El Sisi and Defense Minister Mohamed Zaki here in Cairo, calling for “closer” military ties between Egypt and Russia.

Background: In August 2017, the US had decided to withhold USD 95.7 mn in aid and delayed another USD 195 mn in military assistance, citing human rights concerns. Analysts speculated at the time that move was aimed more at curbing Egypt’s alleged ties to North Korea, especially considering the improvement in US-Egypt ties following Donald Trump’s election. The US government decided last July to release the USD 195 mn it had delayed, saying that Egypt had taken steps to address US concerns.

EARNINGS WATCH- SODIC’s 3Q2019 net profits came in at EGP 168 mn, with a profit margin of 12%, the company said in an earnings statement (pdf) on Thursday. Revenues for the quarter more than doubled y-o-y to EGP 1.4 bn with net contracted sales recording EGP 614 mn, dropping y-o-y due to the postponed launch of Malaaz as a result of “permitting delays across most new developments on the North Coast.” Revenue growth was driven mainly by deliveries in the Villette project, which contributed to 47% of the delivered value during the quarter. On a nine-month basis, SODIC’s net profits recorded EGP 504 mn, with revenues soaring 74% y-o-y to EGP 1.4 bn. Net contracted sales dipped to EGP 2.9 bn from EGP 3.8 bn during 9M2018.

Sarwa Capital’s net income fell 3% y-o-y in 3Q2019 to EGP 97 mn, down from EGP 100.4 mn in 2018, the company announced last week (pdf). Net profit was up 13% to EGP 280 mn during the first three quarters of 2019, up from EGP 248 mn in the same period last year. The company expects a strong final quarter of the year and enter 2020 with “robust momentum,” the management said.

Telecom Egypt’s net profits dropped 25% y-o-y in 3Q2019 to EGP 1.09 bn, down from EGP 1.45 bn a year earlier, the state-owned carrier said in its earnings statement (pdf). Profits were “weighed down by the [early retirement program] costs and the base effect of the ,” Telecom Egypt said. Revenues during the quarter came in at EGP 6.3 bn, down 13% y-o-y. On a nine-month basis, net profits recorded EGP 3.2 bn, dropping 8% y-o-y.

Real estate developer Talaat Moustafa Group’s 9M2019 net consolidated profit rose 11% y-o-y to EGP 1.31 bn, the company said in a bourse filing (pdf). Revenues came at EGP 7.7 bn, a 14% increase compared to last year.

Amer Group’s net profits plunged 44% y-o-y in 9M2019 to EGP 39.4 mn, from EGP 70.9 mn during the same period last year, according to the company’s bourse filing.

MOVES- Hisham Wasfy (LinkedIn) has been tapped as chief operating officer of cosmeceuticals producer Macro Pharma, according to a company statement. Wasfy has over 20 years of experience in pharma and cosmetics, including 17 years at Sanofi-Aventis. Wasfy joins a C-suite team that was recently bolstered with the addition of Ashraf Hamdy as CFO and Sherine Mostafa as HR director.

KUDOS- Helmy, Hamza & Partners was awarded the inaugural Chambers Middle East Award for Law Firm of the Year in corporate & finance in Egypt, while Zulficar & Partners also received the accolade in dispute resolution.

CORRECTION- In our Thursday issue, we incorrectly said that MM Group holds a 52.9% stake in Ebtikar for Financial Investment. The correct figure is 49.9%. The entry has since been amended on our website.

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The Macro Picture

Surging debt levels in emerging markets hit record USD 71.4 tn in 2Q2019 -IIF: Total debt owed by emerging market businesses, governments and households reached a record USD 71.4 tn in 2Q2019, amounting to around 220% of EM GDP, according to the Institute of International Finance (IIF). The Global Debt Monitor finds that EM debt has risen by USD 4.6 tn in the year to 2Q2019, having measured USD 66.8 tn in 2Q2018.

Sovereigns driving debt growth in EMs: Rising EM debt levels over the previous decade have been driven in large part by state-owned enterprises, which now account for more than half of all non-financial corporate debt. Bonds now make up 47% of all EM debt, up from 43% a decade ago.

Global debt levels to surpass USD 255 tn this year: The total amount of global debt surged by USD 7.5 tn in the first half of 2019, spurred by a wave of monetary easing by central banks across the world. Current levels are close to breaking a new record of USD 250 tn (or 320% of GDP), and are on track to exceed USD 255 tn by the end of 2019.

Soaring debt to limit fiscal stimulus options: “With diminishing scope for further monetary easing in many parts of the world, countries with high levels of government debt (Italy, Lebanon) — as well as those where government debt is growing rapidly (Argentina, Brazil, South Africa, and Greece) — may find it harder to turn to fiscal stimulus,” the IIF wrote.

Egypt in the News

How the government is salvaging El Mahalla El Kobra: The Public Enterprises Ministry is pushing ahead with a USD 1.3 bn, 30-month plan to transform the country’s state-owned textiles industry by merging companies, selling assets, and adding management incentives for improved performance, Mahmoud Mourad and Patrick Werr write for Reuters. The plan shows that the current government is working to “double down” on bringing state-owned companies back to life in a “reversal” of former president Hosni Mubarak’s trend of handing over these companies to the private sector, they write.

Other headlines to keep on your radar this morning:

  • Postcard from the GEM: The Financial Times’ Ruaridh Nicoll tells of his private tour inside the Grand Egyptian Museum, which is set to open next year.
  • De-escalating GERD tensions: “Influential friends” of Egypt and Ethiopia must use a combination of carrots and sticks to help the two countries de-escalate their spat over the Grand Ethiopian Renaissance Dam to avoid a military confrontation, Imad K. Harb writes for Foreign Policy.
  • Weighing the pros and cons of Egypt’s IMF-backed reforms: Egypt’s reforms under an IMF-backed program have improved the macro economy while weighing on citizens’ quality of life, Amr Khafagy writes for OpenDemocracy, claiming that the same outcomes would not be described as a “success” in the global North.
  • Fighting for equal inheritance: The Associated Press interviews Huda Nasrallah, a Christian woman fighting Egypt’s inheritance laws which sees men inherit double that of women.
  • Woman arrested over critical videos: A woman named Radwa Mohamed has reportedly been arrested after posting a series of videos criticizing President Abdel Fattah El Sisi, with authorities saying she has been detained on charges of spreading false news, the Associated Press reports.
  • Narcotics bust: A French citizen of Egyptian origins was arrested at Cairo International Airport for carrying “hundreds” of banned narcotics, according to the Associated Press.

Worth Watching

Imagine being able to carry your entire medical history on a card. The idea is probably not groundbreaking in many countries around the world, but in Egypt, where the concept of a health card that includes basic medical information such as blood type is, it’s a rather significant offering. Egyptian healthcare startup Bypa-ss is developing a “health tag” that compiles patients’ medical information, including prescriptions, allergies, and medical test results, into a scannable card, this Waya Media video shows (watch, runtime: 0:57).

Diplomacy + Foreign Trade

Egypt, Sudan, Ethiopia kick off US, World Bank-sponsored GERD talks: Negotiations over the Grand Ethiopian Renaissance Dam (GERD) resumed yesterday after the irrigation ministers of Egypt, Sudan, and Ethiopia began the first round of technical talks agreed earlier this month with the US and the World Bank, the Irrigation Ministry . US and World Bank representatives were both present at the meeting, during which the sides are trying to reach an agreement on the timetable for filling and operating the dam. The meeting was the first of four rounds of talks, the second of which will take place in Cairo on 2 and 3 December. Two subsequent meetings will then be held in Washington D.C. on 9 December and 13 January. The three countries agreed on 6 November to set a deadline of 15 January by which to reach an agreement. If there is still no agreement by this date, other countries will be asked to step in and formally mediate the dispute.

El Sisi, Merkel discuss Libya in phone call: President Abdel Fattah El Sisi discussed Libya with German Chancellor Angel Merkel in a phone call, days before the leaders meet in Berlin to bilateral talks, Ittihadiya said in a statement. Germany has repeatedly called on all external actors to end their interference in Libya, including Egypt which is backing Libyan General Khalifa Haftar’s eastern forces. El Sisi will meet Merkel for diplomatic talks this week ahead of the G20 Compact with Africa High-Level Conference in Berlin.

Energy

EETC awards three contracts for overhead Benban-Toshka transmission line

The Egyptian Electricity Transmission Company (EETC) has signed three contracts for the implementation of 500 kV Benban 3-Toshka 2 transmission line, according to the local press. The first contract signed was with a High Dam Electrical & Industrial Projects Co / Giza Systems consortium for EGP 118.8 mn. EETC also signed a EGP 1.1 bn contract with Elsewedy Electric for two other parts of the line, while a third contract was signed with Misr For Mechanical & Electrical Projects (Kahromika) worth EGP 493.6 mn.

Eni begins test operations on 14th well at Egypt’s Zohr field

Italy’s Eni has begun test operations on the Zohr natural gas field’s 14th well, an unnamed industry source tells the local press. The well will bring the field’s overall output to 3.2 bcf/d, the source says. Eni has reduced output from other wells in the field to avoid a supply glut, but expects demand to ramp up next year.

Infrastructure

Cairo Airport terminal 4 building to cost EGP 5 bn

A planned fourth passenger terminal at the Cairo International Airport is expected to cost EGP 5 bn, Cairo Airport Company chairman Ahmed Fawzy tells Al Shorouk. The expansion will increase the airport’s capacity to 40 mn passengers a year. Fawzy announced the project earlier this year, saying that studies are underway as the airport is nearing 75% of its capacity.

Tourism

Hurghada to open new museum in coming months

A new museum in Hurghada is set to open at the end of the year or early next year, state news agency MENA quoted Antiquities Minister Moustafa Waziri as saying. The project is a public-private partnership, El Waziri said, without mentioning the construction cost. Earlier press reports indicate that the facility will be the Red Sea town’s first major museum, with a collection of 1000 cultural artifacts.

Automotive + Transportation

Egypt signs new contracts with US train maker PRL worth USD 466.3 mn

The Railways Authority has signed four contracts worth a combined USD 466.3 mn with American Progress Rail Locomotive (PRL) to supply 50 new locomotives, upgrade 50 others, completely overhaul 41 old locomotives, and provide maintenance for all 141 for a 15-year period, according to a cabinet statement. This brings the total new locomotives expected to enter service to 260 along with overhauling 172 others. PRL agreed to lower the price by USD 20 mn following a meeting with President Abdel Fattah El Sisi, company executive Osama Hegab told Al Shorouk. A similar contract was recently signed with PRL to supply 70 locomotives by the end of June 2020.

Chinese company bids to establish Aswan – Marsa Alam railway

An unnamed Chinese company is bidding to establish a railway connecting Aswan to Marsa Alam, head of the Marsa Alam Investors Association Tarek Shalaby told Al Shorouk. The proposal for the new 300 km line was submitted to the cabinet for review, he said. No details were provided on the expected cost or timeline for the railway.

On Your Way Out

CIB awarded certificate for supporting child healthcare: Egypt’s largest private bank CIB has received a presidential certificate of appreciation for helping to fund 306 special nurseries for babies born prematurely, reports Al Mal. The bank has set aside 1.5% of its yearly income to support babies younger than 18 months. The bank is also financing a partnership between London’s Great Ormond Street Hospital, one of the world’s most distinguished children's hospitals, and Ain Shams University’s new pediatrics hospital, CIB Chairman Hisham Ezz El Arab said.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.05 | Sell 16.18
EGP / USD at CIB: Buy 16.06 | Sell 16.16
EGP / USD at NBE: Buy 16.07 | Sell 16.17

EGX30 (Thursday): 14,545 (-0.4%)
Turnover: EGP 629 mn (14% below the 90-day average)
EGX 30 year-to-date: +11.6%

THE MARKET ON THURSDAY: The EGX30 ended Thursday’s session down 0.4%. CIB, the index’s heaviest constituent, ended down 0.6%. EGX30’s top performing constituents were Juhayna up 2.7%, Ibnsina Pharma up 1.9%, and Pioneers Holding up 1.3%. Thursday’s worst performing stocks were AMOC down 4.0%, Sidi Kerir Petrochemicals down 2.9% and Telecom Egypt down 2.2%. The market turnover was EGP 629 mn, and local investors were the sole net buyers.

Foreigners: Net short | EGP -70.1 mn
Regional: Net short | EGP -6.2 mn
Domestic: Net long | EGP +76.2 mn

Retail: 60.8% of total trades | 65.0% of buyers | 56.6% of sellers
Institutions: 39.2% of total trades | 35.0% of buyers | 43.4% of sellers

WTI: USD 57.72 (+1.7%)
Brent: USD 63.30 (+1.6%)

Natural Gas (Nymex, futures prices) USD 2.69 MMBtu, (+1.6%, December 2019 contract)
Gold: USD 1,468 / troy ounce (-0.3%)

TASI: 7,924 (-0.1%) (YTD: +1.3%)
ADX: 5,137 (+1.3%) (YTD: +4.5%)
DFM: 2,701 (+1.9%) (YTD: +6.8%)
KSE Premier Market: 6,254 (-0.2%)
QE: 10,363 (+0.8%) (YTD: +0.6%)
MSM: 4,083 (+0.4%) (YTD: -5.6%)
BB: 1,504 (-0.4%) (YTD: +12.5%)

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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.

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.

19 November (Tuesday): President Abdel Fattah El Sisi attends the G20 Compact with Africa High-Level Conference in Berlin.

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: 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

1-6 December: Vietnamese trade delegation visits Egypt.

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

2-3 December (Monday-Tuesday): The irrigation ministers of Egypt, Sudan, and Ethiopia the second round of Grand Ethiopian Renaissance Dam negotiations in Washington, DC.

3 December (Tuesday): Emirates NBD / Markit PMI for Egypt released.

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.

February 2020: A delegation of Swiss businesses will visit Egypt to discuss investment.

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.

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