Merry Christmas, everybody.

Merry Christmas, everybody. We hope you’re spending it with plenty of family, friends and gifts (even if you do have to come in to work today). If you’re not planning a fun day out, let Netflix (Hulu or Amazon Prime) help keep the family celebrating, with the platforms coming out with a host of shows and movies for the holiday season. The Independent has a list of films you can catch on the streaming platform.

And let the countdown to NYE begin. We go on our annual publication holiday on Wednesday, 1 January and will be back the following Wednesday (8 January).

Let’s hope the CBE ends the year on a high note, as the central bank’s Monetary Policy Committee meets tomorrow for the final time in 2019 to decide on interest rates. Seven of 10 economists we surveyed expect the committee to hold off on delivering the fifth rate cut of the year on the back of a slight uptick in inflation in November and uncertainty over December’s figures. Most respondents say the CBE will adopt a wait-and-see approach as it gauges the impact of the previous cuts. A Reuters poll of economists had similar results, with nine out of 14 expecting the central bank to keep rates on hold.

The minority expecting a rate cut on Thursday see it in the 50-100 bps range. Among the reasons they cite are an already “exceptionally low inflation rate” and high real interest rates to continue attracting carry traders.

Expect low trading volumes on the EGX to continue until after the holidays, Naeem Brokerage’s Tarek Abazza says. The EGX30’s turnover yesterday was EGP 382 mn, or around 40% below the trailing 90-day average. Analysts told Reuters’ Arabic service earlier this month that volumes have fallen a little over 40% since 2017, attributing the fall to low trading volumes and a lack of new listings weighing heavily on the Egyptian exchange’s ability to attract investors.

PSA- The national weather service is still warning of cool, windy weather from now through Friday morning. Look for daytime highs of 19°C plunging to 9°C overnight on Thursday with winds of more than 30 km/h.

Take a step into our phenomenal world & celebrate 2020 with The Lemon Tree & Co. at Somabay. Family & Friends Reunion IV, Music Festival is happening on the 29th & 30th of December and the celebration extends to NYE, December 31st where GALERIE presents a full night of elegance, admiration & laughter. For reservations: http://nye2020tlt.com/

So what, exactly, is happening with the Investment Ministry and GAFI? Prime Minister Moustafa Madbouly clarified to the press on Tuesday just what exactly is happening with the Investment Ministry and the General Authority for Freezones and Investments (GAFI). He made it clear that, as of Sunday’s cabinet shuffle, there is no Investment Ministry, and that GAFI will operate under the jurisdiction of the cabinet, according to Al Mal. The cabinet shuffle that took place on Sunday saw Sahar Nasr exiting as an investment minister, with Madbouly taking over the portfolio. He said then the decision was to help untangle the bureaucracy of investment and streamline policy.

Egyptian-Greek-Cypriot alliance leans on France to scare off Turkey: Our fair capital will play host to a summit between Cairo, Athens, Nicosia, and Paris on 4 or 5 January, Greek Foreign Minister Nikos Dendias announced yesterday in an interview. While no details are yet out about the purpose or agenda of this meeting, you have to figure it has something to do with Turkey’s recent signing and ratification of a military accord with Libya’s Government of National Accord, which is led by Tripoli-based Prime Minister Fayez Al Serraj. France and Egypt are leading supporters of Gen. Khalifa Haftar, Al Serraj’s rival in the east.

Meanwhile, President Abdel Fattah El Sisi had a discussion about issues of “common interest” with Greek Prime Minister Kyriakos Mitsotakis, according to an Ittihadiya statement. The two also talked trilateral cooperation with Cyprus.

Greece and Cyprus also have a bone to pick with Turkey over the East Mediterrannean gas fields, as Turkey opposes the regional cooperation of East Mediterrannean countries without the inclusion of Turkish Cyprus.

We have other friends, too: Foreign Minister Sameh Shoukry discussed the Libya issue with his Russian counterpart Sergey Lavrov in a phone call yesterday, according to a Cabinet statement. Shoukry also had a chat with the UN special envoy to Libya, the statement says without providing further details.

Get into the holiday spirit: The EGX is only up 6% heading into the final trading days of the year, but global stock markets are now worth nearly USD 90 tn, having gained USD 17 tn in value this year, CNBC says, citing figures from Deutsche Bank. Get your fix of nostalgia with the FT’s The big market moments of 2019, which recaps the “central bankers, politicians and companies with grand ideas” this past year.

Celebrations of the global equity and debt rally continue, with the Wall Street Journal proclaiming that stocks and bonds haven’t grown this much since 1998, despite the US-China trade war and Brexit fears. The S&P 500 has soared 28.6% this year, while a bond rally has pushed the yield on the benchmark 10-year US treasury note down 75 bps.

A touch of irrational exuberance? But as the market rally continues, warnings are sounding that US corporate debt is rising to unsustainable levels. This time, it’s coming from Bloomberg Opinion’s John Authors (the former FT hand), who warns that the number of “intangible” US-listed companies — outfits with “negative tangible book value, meaning that their tangible assets aren’t worth enough to repay all their debt” — have grown to 40% of US stocks, up from 15% 20 years ago. He blames “rapacious financial engineers and private equity investors” who have taken over companies, sold their physical assets and / or extensively leveraged them rather than invest in new assets that make something.

Santa’s 2019 naughty list:

• Did BMW lie about sales figures? The US Securities and Exchange Commission (SEC) started an investigation into whether Germany’s BMW has manipulated sales figures by engaging in “sales punching” in the US, according to the Wall Street Journal. The practice, which is not new to the automotive industry, is when dealers book cars as sold while in reality they are being used as test or loan vehicles, or are still parked in the dealer’s lot.
• Boeing Co. ousts CEO after crashes of 737 Max jetliner: Dennis Muilenburg was removed as CEO and president of Boeing and will be replaced by the company’s chairman and General Electric Co. veteran David Calhoun on 13 January, according to Bloomberg. The move comes after two deadly crashes of the company’s most important airliner and a botched test of a vehicle for NASA.

In other news, the US has scrapped a short-lived trade agreement with the fictional nation of Wakanda: Due to a clerical error, Marvel Universe’s fictional African country of Wakanda was briefly added to the US Department of Agriculture’s (USDA) online list of nations that have trade agreements with the US, according to Reuters. Wakanda was listed as trading live animals, dairy goods, and tobacco, among other products, with the US before it was removed from the USDA’s registry.

Making It is on hiatus until January 9, but want to catch up on season one? Previous guests on our show about how to build a great business right here in Egypt have included:

• Jalal Abugazaleh, founder of Gourmet Egypt
• Karim El Sahy and Abeer El Sisi from high-profile AI startup Elves
• Karim Awad, group CEO of EFG Hermes
• Fatma Ghali, Managing Director of Azza Fahmy
• Hazem Moussa, co-founder and CEO of Sarwa Capital

The episodes are available on our website | Apple Podcast | Google Podcast.

Egypt tops African countries in disclosed VC transactions in 2019: Egyptian startups received the biggest number and funding value of venture capital (VC) transactions that went to early-stage African startups in 2019, according to Venture Burn. Egypt accounted for 27% of disclosed transactions by volume and 25% by value.

The breakdown: Out of a total of 88 disclosed VC transactions with a total value of USD 290 mn raised by African startups this year, Egyptian startups closed 24 transactions worth USD 73.3 mn. Last year, Egypt was the fastest-growing startup market in MENA as well as the second-largest, according to start-up platform Magnitt’s 2018 MENA Venture Investment Report. Egypt’s share of the total number of seed funding agreements grew 7% y-o-y to USD 196.5 mn, representing 22% of all MENA closes in 2018.

Swvl tops funding transactions in Africa: Egyptian ride-hailing app Swvl’s USD 42 mn series B-2 funding round was the top VC transaction in African startups for the year, accounting for more than 57% of the total funding amount in Egyptian startups. The round was co-led by Swedish VC Vostok Ventures and Dubai-based BECO Capital.

Egypt’s Adzily came sixth in the list: Cairo-based indoor advertising platform Adzily enjoyed the sixth top VC transaction in Africa for the year with its USD 12.2 mn funding round from Saudi-based Al Tharawat Private Investment Holding Company.

The transport and mobility sector received the largest share of funding in Africa this year, followed by fintech and the distribution sector. Out of eight transport startups that closed transactions in Africa this year, three were Egyptian. Meanwhile, fintech saw 25 companies close on funding across the continent, with only two of these being Egyptian startups.

The CBE has signaled it wants to make it easier for consumers to borrow. Will corporate appetite pick up in tandem? The CBE’s monetary easing policy and four interest rate cuts this year were simply the opening salvo to a series of decisions and policies designed to expand lending. The most recent of these is the central bank decision earlier this week to effectively raise the ceiling on consumer borrowing limits. The decision allows individual consumers to carry monthly payments for unsecured borrowing equivalent to up to 50% of their after-tax income, up from 35% previously. While this is expected to spur consumer spending throughout the economy, a number of key industries are particularly well-poised to benefit from this era.

Retail banking: The decision is expected to positively impact lending portfolio growth at publicly traded banks CIB, QNB, and Credit Agricole, Beltone said in a research note on Sunday. It is also expected to significantly benefit listed players with NBFI arms including GB Auto, EFG Hermes and CI Capital. The research note does warn, however, that the new ceiling could raise the credit risk at lenders with a large base of retail clients. It could make it harder for the retail operations of banks to maintain their same asset and loan quality as before if net incomes grow at a slow pace.

Automotive industry also stands to benefit from higher credit ceiling: Automotive sales could increase by as much as 30% on the back of the CBE’s decision, head of the car traders’ federation Osama Abou El Magd said, according to Al Masry Al Youm. Some 80% of car purchases in the country are paid in installments, Abou El Magd added. He also attributes growth in sales to a lower interest rate environment.

The era of easy consumer credit will be accompanied by regulation: This comes as the FInancial Regulatory Authority is pushing the Consumer Credit Act through the House of Representatives. The legislation will regulate consumer finance companies who have a portfolio of at least EGP 25 mn in outstanding loans, reports Al Mal. This stipulation was criticized by members of the House Economic Committee but was left unchanged after the committee wrapped up its discussions of the proposed act yesterday. The committee also decided to reduce the violations within the draft law before it wrapped up its talks.

Either way, headline figures suggest there’s plenty of room to grow in a nation in which the ratio of consumer debt to GDP stands at below 10%.

Things aren’t looking too bad for corporate and securitized debt, either: This comes as monetary easing throughout the year has uplifted Egypt’s securitized debt market, with our friends at Madinet Nasr Housing (MNHD) being the latest to close a EGP 370 mn issuance last week. EFG Hermes subsidiary Hermes Securities Brokerage is also set to break a 10-year-long dry spell for non-securitized corporate bond issuances when it sells short-term corporate bonds before the end of the year.

The big question: Have rates hit the point that corporates will start tapping banks for capex funding? Corporate earnings have caught up in USD terms to pre-devaluation levels and interest rates are down in an easing cycle. That gives corporate Egypt a “direction” — most companies borrow at floating rates and now know, thanks to consecutive rate cuts, the directionality of interest rates. We won’t have to wait much longer to see if corporate demand for borrowing is back: The first half of the year is “high season” for medium-term borrowing to support capex — so watch this space, folks.

THIRST WATCH- Egypt isn’t backing down from its GERD timeline proposal: Egypt has not withdrawn its proposal on the timeline for the filling of the Grand Ethiopian Renaissance Dam’s (GERD) reservoirs and is holding its ground on its stance in the ongoing negotiations over the matter, according to an Irrigation Ministry statement. Egypt’s main sticking point is ensuring that a minimum of 40 bcm of Nile water flows into the country per annum, which would require Ethiopia to fill the dam’s reservoirs at a slower pace than it wants. Despite it being central to the protracted negotiations between Cairo and Addis Ababa, this issue is not one Egypt has budged on, ministry spokesman Mohamed El Sebaie told ‘Ala Mas’ouleety (watch, runtime 12:16). El Sebaie vehemently denied reports that Ethiopian Irrigation Minister Seleshi Bekele said Egypt had dropped this requirement.

The clock is ticking, as Ethiopia plans to begin filling the dam in July 2020, Bekele reportedly said during Egypt-Sudan-Ethiopia technical talks that wrapped up in Khartoum on Sunday. Bekele had also described the outcome of the talks as “disappointing.” The foreign ministers of Egypt, Ethiopia, and Sudan vowed after a get-together in Washington, DC, last month to hash out their differences by no later than mid-January. The ministers scheduled three rounds of technical talks, the last of which was the Khartoum sit-down before convening again in Washington. As the three countries appear to have struggled to reach a resolution, the ministers are squeezing in a bonus round of talks in Addis Ababa on 9-10 January before the 13 January meeting in the US capital.

The foreign press seems optimistic enough: The National’s Hamza Hendawi says that a long-awaited resolution for the standoff might be imminent in light of “recent breakthroughs in the negotiations,” namely Sudanese Irrigation and Water Resources Minister Yasser Abbas, saying that the three nations have come closer to aligning their views.

Israeli gas exports to Egypt face possible delays — again: The Israeli Environmental Protection Ministry has briefly delayed the start of production from the offshore giant Leviathan natural gas field until it receives more data from energy companies on the field’s greenhouse gas emissions, according to a ministry statement cited by Reuters. The field was due to go online yesterday, but the ministry told field operators Noble Energy and Delek Drilling that it still needs further validation that the emissions analysis is accurate. The companies said they remained “ready and prepared” to kick off production. Bloomberg also took note of the story.

Background: Egypt is due to start receiving Israeli gas under a landmark agreement signed by Alaa Arafa’s Dolphinus with Texas-based Noble Energy and Israel’s Delek Drilling in mid-January. News earlier this month that an Israeli court imposed a temporary injunction on the Leviathan field, which will produce most of the Egypt-bound natgas, threatened to delay the first shipments. The court injunction was lifted shortly after, and Israel’s Energy Ministry gave a final approval that would have seen the field start production earlier this week. Now, the environment ministry’s watchdog is threatening further delays.

IPO WATCH- Emerald expects to raise EGP 203 mn from upcoming IPO: Real estate investment firm Emerald is expecting to raise EGP 203 mn from the upcoming sale of 28% of its shares on the EGX, which is slated for the last week of January 2020, unnamed sources told the local press. The IPO will see the company selling up to 70 mn shares, with 95% of these earmarked for institutional investors. The fair value assessment, which was conducted by Professionals for Investment Banking, has set the share price at EGP 2.90 apiece. Lead manager and major shareholder Odin Investments reviewed the IPO prospectus with the Financial Regulatory Authority earlier this week and is hoping to receive the market regulator’s approval for the IPO before the year is out.

LEGISLATION WATCH- House grants final approval to temporary law settling building code violations: The House of Representatives’ general assembly voted yesterday in favor of proposals that would extend a temporary law to settle building code violations and clarify some of its stipulations, Masrawy reports. The approval means authorities will continue receiving violation settlement requests for six months after amended executive regulations are issued. The recently-passed legislation had apparently fallen short of attracting the desired number of requests as a result of “vague articles” and lengthy processes.

LEGISLATION WATCH- House passes amendments to law regulating who should be on the nation’s terrorist watchlist: The House of Representatives passed yesterday amendments to the Terrorist Entities Act, which regulates the country’s terror watchlist, according to Egypt Today. Under the amendments, the general prosecution will be required to announce any new additions or removals of groups or individuals from the terror watchlist in the Official Gazette.

Parliament also approved a bill to protect architectural heritage by preventing the unlicensed razing of dilapidated, but historic buildings, according to Masrawy. The amendments included protecting buildings of special architectural nature or linked to national history or to a historic figure, as well as buildings that are considered a tourist attraction.

Egypt’s alleged maltreatment of security dogs from the US leads coverage: The top story on Egypt in the foreign press this morning is that the US Department of State is no longer sending us explosive-detecting dogs after three of 10 dogs sent to Egypt died from maltreatment. One dog reportedly suffered from lung cancer, while one died from a ruptured gallbladder and the third from heat stroke. Jordan, too, will no longer be sent bomb-sniffing dogs under the program. (Reuters | The National | Business Insider | Wall Street Journal)

Diversity of our tourism offerings get props from Conde Nast: On a more positive note, influential travel magazine Conde Nast’s Anthony Sattin highlights the destinations and experiences Egypt has to offer beyond the capital city. Sattin also gives credit where it’s due to former Tourism Minister Rania Al Mashat’s ambitious Egyptian Tourism Reform Program.

How recent social trends might seep into travel habits in 2020: The increased importance of concerns about the environment and a desire for luxury, socializing, and high-tech experiences in our daily lives have made these some of the factors that travelers consider when booking their trips. Bloomberg outlines eight trends that will reshape travel in 2020 with these considerations in mind and how the players in the travel industry are adjusting to match. For example, hotels are catering to a hunger for luxury by offering top-notch services and delivering a “pre-arrival experience.” And there are those who create elite communities for people willing to pay for them, with travel and hotel clubs making a comeback with elite cult-like membership that offer extravagant settings, destinations, and exclusive outings under a subscription basis.

Environment is playing into how people travel and where they go: Cruises and airlines are making sure to keep track of their carbon emissions and develop new ways to lower them and travel booking companies are creating zero-emission trip itineraries. Many travel companies are aiming to be carbon neutral, while others are even attempting to be carbon negative such as Intrepid Travel.

How Egypt measures up on these new trends: Egypt is seeing the potential in staying environmentally friendly, with “green tourism” being proposed as part of the Tourism Reform Program. Meanwhile, tourist destinations such as Hurghada and Dahab are doing their part to create zero-plastic environments, but we still have a long way to go until we can think of being carbon negative. As for our bustling capital, Cairo, electric cars and buses are a high priority initiative from the government going forward as they attempt to create a greener Egypt. On the tech and luxury side, developers are creating smart homes and new hotels to offer to visitors.

FAO develops risk-based imported food control system in Egypt: The Food and Agriculture Organization of the United Nations (FAO) held a series of training workshops and a program to develop a risk-based imported food control system for Egypt, according to an organization statement. The workshops include a focus on the structure of the Codex Alimentarius, a collection of standards, guidelines and codes of practice, in Egypt in order to facilitate trade and ensure food safety.

The Damietta Furniture City Company signed its first export agreement worth EGP 100 mn with unnamed US investors, according to the local press. The first four shipments will start from next month. The Damietta Furniture City Company is a 331-feddan furniture manufacturing complex that will be completed by 2022. The project will include 150 furniture factories, some 1500 smaller workshops, exposition halls, banks, hotels and other facilities.

Russian state-owned energy company Zarubezhneft has joined two offshore oil concessions in Egypt under a production-sharing agreement, Reuters’ Arabic service reports, without disclosing the value of the agreement or the other party. The report indicates that one of the blocks is in southeast Ras El Ush and the other is East of Gabal El Zeit with combined resources estimated at 200 mn barrels. During the Russia-Africa summit in October, Zarubezhneft said it will sign two agreements with Pacific Oil and South Valley Egyptian Petroleum Holding Company (Ganope), which had just been licensed for oil E&P operations in Ras El Ush in November. Zarubezhneft also plans to drill two exploration wells in the two blocks.

EGAS aims to increase Egypt’s natural gas production by 3.2 bcf/d by mid-2022 to offset natural production decline and maintain total output at 7.5 bcf/d, an EGAS official told the local press. Egypt’s current production of natgas amounts to 7 bcf/day and is projected to rise to 7.5 bcf/d by the end of the current fiscal year in June, raising surplus production to 1.5 bcf/d.

Phosphate Misr signed an agreement with a consortium of the Chinese State Construction Engineering Corporation (CSCEC) and China’s Wengfu Group to set up a USD 842 mn phosphoric acid complex in Abu Tartoor, according to an Oil Ministry statement (pdf) The total cost of the project is estimated at USD 1 bn and would produce some 1 mn tonne of phosphoric acid per year — a key ingredient in manufacturing phosphate fertilizers. Wengfu will sign a long-term purchasing agreement for 500k tonnes per year.

Consumer and structured finance player Sarwa Capital is changing the commercial name of its 99.99%-owned subsidiary Plus Leasing to Contact Leasing, according to an EGX disclosure (pdf). Sarwa is also changing its subsidiary Plus Factoring to Contact Factoring. The company owns 74.99% of Contact Factoring.

Bank Audi Egypt has signed a cooperation protocol with the Sovereign Fund of Egypt that could see it provide all the banking services needed by the EGP 1 tn fund, Audi Managing Director Mohamed Bedeir told Al Mal. Bedeir was short on details, saying only that Audi hopes to be the fund’s exclusive banking partner. We noted last week that the bank is in talks with the fund about potential investments.

As if Egyptian weddings weren’t exorbitant enough, we now have the world’s most expensive wedding dress: Egyptian fashion designer Hany El-Behairy presented his design of the world’s most expensive wedding dress, costing USD 15 mn, at a fashion show earlier this week, according to Arab News. The diamond and gemstone-encrusted dress was modeled by Egyptian actress, Mai Omar, and features a matching star covered veil.