Thursday, 26 December 2019

Central bank won’t decide on interest rates until January

TL;DR

What We’re Tracking Today

It’s NOT interest rate day: The dearth of news at the end of the year looks set to continue, as the central bank’s Monetary Policy Committee has postponed last meeting of this year to Thursday, 16 January 2020, according to a CBE press release yesterday (pdf). The meeting was initially scheduled for today and will now be held after the CBE constitutes a board to server during governor Tarek Amer’s second term.

What to expect: Seven of 10 economists we surveyed expected the committee to leave rates on hold on the back of a slight uptick in inflation in November and uncertainty over December’s figures. A Reuters poll of economists had similar results, with nine out of 14 expecting the central bank to leave rates unchanged.

Also pushed back: Local district elections, which will take place in 2021, President Abdel Fattah El Sisi suggested yesterday in remarks at the opening of a project. With voters heading to the polls in 2020 to elect both members of the House of Representatives and of the newly-reconstituted Senate, it would be challenging to also hold district polls, El Sisi was quoted as saying. Chatter began last month that elections for municipal officers are likely to be pushed to 2021 from 2020.

The role and responsibilities of the recently re-established Information Ministry will be made clear “soon” via presidential decree, Al Ahram reports, citing unnamed sources. Rep. Mohamed Fouad sent an inquiry to Prime Minister Mostafa Madbouly on the role of the ministry and of minister Osama Heikal given the country already has a Supreme Media Council and other media regulatory bodies. Heikal was appointed minister, a post he previously held in the early 2010s prior to the ministry being disbanded in 2014, during last Sunday’s cabinet shuffle.

Prime Minister Moustafa Madbouly offered a similar explainer on the state of the now-defunct Investment Ministry on Tuesday. Madbouly clarified that the General Authority for Freezones and Investments (GAFI) will operate under the jurisdiction of the cabinet.

PSA- There’s a 40% chance of rain in the capital city early this morning, according to our favourite weather app, with gusts of wind continuing intermittently until mid-afternoon. Look for a daytime high of 19°C and overnight low of 9°C. Look also for another day of rain in Alexandria, where schools and universities shut down yesterday thanks to bad weather.


*** Tell us what you think will happen in 2020 and maybe we’ll send you an Enterprise mug and our very own coffee, sourced from our friends at 30 North. Every year we ask you, our readers, to weigh in on what you expect for the year ahead: Are you investing? Do you plan to hire new staff in 2020? How do you think the EGP will perform? What’s your take on interest rates? Tell us, and we’ll share the results with the entire community in early January to help you shape your view of the year. The survey is quick, we promise.

You can take the Enterprise Reader Poll here.


There’s changes in the C-suite as we approach the end of 2019:

  • As we noted yesterday, David Calhoun will be taking over the helm at Boeing, replacing Dennis Muilenburg. Calhoun had headed up GE’s infrastructure unit.
  • Longtime Emirates Airlines boss Tim Clark is set to retire next year, reports the FT.
  • Warren Buffett had installed his protégé Todd Combs as head of major car insurer Geico, according to the FT.

enterpriseTake 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/

The end of 2019 lists are in full swing, in case you are suffering from a serious case of FOMO. You have another top pictures for the year, this time courtesy of Reuters. Meanwhile, Entertainment Weekly has the list of best and worst reviewed films of 2019, and we’re happy the best of list includes Enterprise favorites The Irishman and Marriage Story (both on Netflix). Wired has come out with its list of the best gadgets in 2019, while the Wall Street Journal has 2019 in photos.

Want to go deeper? The Financial Times has a rundown of the 50 people who shaped the decade now ending as its Big Read for today

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Santa moonlighting as Robin Hood? In the (slightly warped) spirit of Christmas, a 65-year-old man in Colorado robbed a bank while dressed as Santa Claus — and started tossing bills in the air while repeatedly declaring, “Merry Christmas,” according to Reuters. The man also gave cash to passersby outside the bank before stopping for a cup of coffee at a nearby Starbucks, where he simply waited for the police to come arrest him. While some recipients of the morally shady Christmas gift returned the money to the bank, thousands of USD remain unaccounted for.

Enterprise+: Last Night’s Talk Shows

These are not the talk shows you’re looking for. Our daily talk show roundup is taking a break until the end of the year and will be back once we return from our publication holiday in January.

Speed Round

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Current account deficit narrows, FDI more than doubles in 1Q2019-2020: The current account deficit decreased 31% y-oy in the first quarter of the government’s new fiscal year to USD 1.382 bn from USD 2.012 bn the previous year, according to a central bank report (pdf). The non-oil trade deficit also narrowed to USD 8.177 bn from USD 9.207 bn during the quarter, with non-oil exports rising 17% y-o-y. Balance of payments (BoP) generated a surplus of USD 227.3 mn, down from USD 284.1 mn in 1Q2018-2019.

FDI rises after lagging for years: Meanwhile, net foreign direct investment (FDI) jumped 67.7% y-o-y during the quarter to USD 2.35 bn from USD 1.415 bn. “The jump ‘was led by higher non-oil investments … a long awaited development, which is also a key performance indicator post-implementation of the tough economic reforms,” said Naeem Brokerage’s Allen Sandeep, according to Reuters.

The narrowed current account deficit and rising FDI have helped the EGP rallying in recent weeks, Sandeep said. The EGP is up more than 10% against the greenback in 2019, Reuters notes. The USD was trading hands at EGP 15.99 yesterday.

Tourism revenues rose to USD 4.194 bn during the quarter from USD 3.931 bn in 1Q2018-2019, marking a “significant” increase that could lead to “another record year” if revenues remain on an upwards trajectory, Sandeep said. Remittances also grew to USD 6.713 bn from USD 5.909 bn, while revenues from the Suez Canal inched up marginally to USD 1.507 bn from USD 1.441 bn.

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El Sisi signals that military companies on the EGX more than just an idea: Military-owned companies and assets will be listed on the EGX, President Abdel Fattah El Sisi said yesterday, bringing up the idea for the second time in less than two months. Military-owned companies going public would ensure the participation of all sectors of the economy, El Sisi said while speaking at the inauguration of a project to set up a livestock farm in Fayoum. The president said many investments by military-owned companies, including large infrastructure developments, are already open to private sector participation.

Background: The prospect of selling shares in military-owned companies was first brought up by the president in November. El Sisi stressed at the time that the army doesn’t undertake projects at the expense of the private sector and noted that the military and civilian businesses are actively working together on a series of strategic initiatives.

INVESTMENT WATCH- Shanghai Electric’s USD 4.4 bn “clean coal” power plant could be scrapped or postponed: The Electricity Ministry is looking into potentially postponing or scrapping altogether the USD 4.4 bn, 6 GW-capacity “clean coal” power plant a Shanghai Electric-Hassan Allam-Dongfeng Electric consortium was set to construct in Hamrawein, unnamed sources tell the local press. According to the sources, the ministry sees no need for the plant at the current moment since there is already a surplus in Egypt’s energy production. The ministry is also mulling having the consortium mimic the UAE’s Al Nowais, whose USD 4 bn contract for another clean coal power plant was withdrawn in October. Al Nowais then bid on and was awarded contracts to construct 700 MW-worth of wind and solar power plants instead of the coal plant.

PRIVATIZATION WATCH- HHD secondary offering to be completed before May 2020: Heliopolis Housing & Development (HHD) will take its secondary stake sale to market before May 2020, at which time it will have handed over the 10% stake + management rights of the company to a strategic investor, the local press reports, citing sources close to the matter. The company has begun responding to inquiries submitted by investors interested in the stake and management rights.

How will the shares be valued? The 10% stake will be valued at ±10% from the previous month’s average trading price, while the 11-15% stake that will be sold in the secondary offering will be offered to both institutional and retail investors on the EGX.

Other tidbits of information about the company’s plans: A new board to be formed under the new management will include nine members. The party with management rights will name the chairman and a managing director with a potentially wider mandate. The company plans to sell 190 feddans in New Heliopolis worth EGP 1.995 bn, which will mainly be used to repay a long-term debt of EGP 1.7 bn.

Background: SODIC, BPE Partners, Palm Hills and Arkan are among those in the running for the management rights and the 10% stake. The door for bids will remain open until 14 January. State-owned investment bank NI Capital will announce the winning bid by the end of January, Public Enterprises Minister Hisham Tawfik told us earlier.

Egypt signs USD 155 mn-worth of oil and gas agreements: The Egyptian General Petroleum Company (EGPC) and Ganope have signed four oil and gas exploration and production agreements that will see companies invest at least USD 155 mn to develop concessions in the Gulf of Suez, Nile Valley, and the westert desert, according to an Oil Ministry statement. The agreements also include USD 10.5 mn-worth of grants to drill 30 wells.

Who’s working on the concessions? Under two agreements with a minimum planned investment of USD 51 mn, IEOC — the EGPC’s JV with Italy’s Eni — will explore in the western desert’s South East Siwa and West Razek concessions. USD 6.2 mn of those investments will come in the form of grants that will go toward the cost of drilling 17 wells, but it isn’t immediately clear where they’re coming from. Merlon El Fayum will also invest at least USD 36 mn to explore in northern Beni Suef in the Nile Valley, while Pacific Oil and ZNP will invest at least USD 68 mn for exploration in the Gulf of Suez’s Ras El Ush. Similarly, these agreements will involve USD 4.3 mn in grants to drill 13 wells.

Background: The House of Representatives had authorized the ministry earlier this month to sign nine oil and gas agreements that were said to cover areas in the Mediterranean, the Nile Delta, and the Western Desert. Other agreements that are likely to be announced soon include a go-ahead for Neptune Energy to explore in the Gulf of Suez, and for Shell to do the same in western desert.

Would they be under the new production sharing terms? It remains unclear whether the agreements will be subject to the friendlier oil and gas sharing terms rolled out by the ministry earlier this year. The new terms, which will be applied in a tender Ganope launched for 10 oil and gas exploration blocks off the Red Sea coast back in March, give producers larger portions of output in a bid to cut the time it takes for them to hit profitability on any one concession, as well as raise the cost-recovery ceiling on contracts

REGULATION WATCH- FRA arbitrator holds its first meeting: The board of the Financial Regulatory Authority’s (FRA) newly-established arbitration committee held its first meeting yesterday, the FRA said in a statement yesterday. The panel was set up by a presidential decree earlier this year to resolve disputes between companies, shareholders, investors and their clients in the non-banking financial sector. An unnamed panel member to manage its day-to-day operations was nominated during yesterday’s meeting, where the members also discussed setting up a system to receive arbitration requests electronically.

Turkey has allegedly been trying to block Egypt and Israel from NATO cooperation exercises, leaked documents cited by Nordic Monitor suggest. The Turkish documents, if genuine, show that Ankara effectively tried to exercise a veto on Egypt or Israel joining joint exercises under NATO’s Mediterranean Dialogue (MD) framework. MD is a political dialogue and cooperation protocol with seven non-NATO countries in the Mediterranean region including Egypt, Israel, Algeria, Jordan, Mauritania, Morocco and Tunisia.

Continuing to stir the pot, Turkey is looking to Tunis to back it up on Libya: Turkish President Tayyip Erdogan arrived in Tunis early yesterday in a surprise visit to discuss with his Tunisian counterpart, Kais Saied, potential coordinated measures the two countries can take to establish a ceasefire in Libya, according to Reuters. Erdogan reaffirmed his willingness to deploy Turkish troops in Libya should it receive a formal request from Fayez Al Serraj’s Government of National Accord (GNA). Turkey’s involvement in Libya has created tension with several countries, including Egypt, where Libya shut down its embassy earlier this month.

Background: Egypt has been vocal about its disapproval of the two military cooperation and border demarcation memoranda signed last month between the GNA and Turkey, saying they are in violation of the Shkirat peace agreement. In response, the GNA said Egypt is the one violating international law for its support of Haftar. A future outlook is not that clear but Reuters has a detailed background.

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Image of the Day

Santa’s (rather haggard-looking) understudy at Hurghada airport celebrates Christmas with travelers: Santa Claus apparently couldn’t make it to Egypt this year due to the sand storm, so he sent out his Egyptian protege to meet travelers at the Hurghada International Airport. The Egyptian Santa, who apparently was so caught off guard by getting a gig that he didn’t have time to hire a babysitter, brought his son along to hand out gifts to tourists and pose for photos (probably hoping the entire time that nobody noticed his belly didn’t look quite the same).

Egypt in the News

The foreign press appears to have taken a break from talking about Egypt on Christmas, giving us the gift of a rather quiet morning, save for a handful of headlines to skim:

  • Egypt’s attempt to keep extremist religious ideology out of schools earned some ink in the Modern Tokyo Times, which writes of teachers with Ikhwan or Salafi affiliations being sacked after forcing hijabs as part of the uniform, making prayers mandatory, or otherwise pushing extremist ideology.
  • Egyptian book publisher gets five years behind bars after translating Israeli book: Khaled Lutfi, an Egyptian book publisher, has been sentenced to five years in prison after translating the Israeli book "The Angel: The Egyptian Spy Who Saved Israel" by Uri Bar-Joseph under the accusation that the book divulged military secrets, according to The Jerusalem Post.

Worth Watching

If your new Christmas clothes are a little snug, holiday weight might actually not be the culprit: Clothing brands’ sizing charts are not standardized, which can lead consumers to be confused about their “real size,” but this is apparently not an oversight in the clothing industry. Brands consciously try to create distinct sizing charts to give them a competitive advantage as they treat the size of their clothes as intellectual property. It makes the brand special and lets them focus on a certain customer base, according to Vox.

Luckily, there are apps to fix the problem: This Wall Street Journal video (watch, runtime: 02:35) highlights a few applications are trying to find solutions for both the consumers that are getting too-small jeans and for the stores (especially online) that are losing money due to customer returns. MySize and True Fit both take customer measurements to be able to recommend the ideal size for different brands. Shima Saki, a Japanese company that uses 3D printing machines to create clothes with very little variation in sizing. And finally, MTailor, an app that uses smartphones to take measurements using the camera and then creates custom made clothing based on the data.

Diplomacy + Foreign Trade

Danish fruit concentrate manufacturer Orana is planning to expand its business in Egypt, according to Jeppe Søndergaard Pedersen, a public relations advisor at Denmark’s Ministry of Food, Agriculture and Fisheries, Al Mal writes The company will invest in its factory in Badr City, which is one of five facilities it owns around the world, said Orana Egypt General Manager Ashraf Wagdy Nasr. The factory produces some 2k tonnes of fruit-based products a year and employs 65 workers. News came as a delegation of eight Danish food and agriculture companies were in town sometime this month.

Iraq halts imports of 23 Egyptian crops, but it’s not because of anything we did wrong: Iraqi authorities have notified the Egyptian Quarantine Authority that it is suspending imports of 23 agricultural products from Egypt and other countries as of yesterday because Iraq has reached self-sufficiency in these products, according to the local press.

Energy

Iskraemeco Egypt signs USD 36.7 mn contract to supply Madagascar’s Jirama with smart meters

Elsewedy Cables subsidiary Iskraemeco Egypt has signed a USD 36.7 mn contract with Madagascar's Electricity and Water Company (Jirama) that will see Iskraemeco supplying 485k smart prepaid meters over the next three years, the company said in a statement to the EGX (pdf).

Health + Education

Egyptian schools to begin teaching “respect” as a subject

The state of Egyptian manners has apparently reached the point where schools will begin introducing a subject dedicated to teaching students to respect others. President Abdel Fattah El Sisi said yesterday that the “respect” subject will be taught at schools without providing further details, according to Egypt Independent.

Real Estate + Housing

SODIC, NUCA sign escrow with Banque Misr for 500 acre Zayed development

SODIC and the New Urban Communities Authority (NUCA) signed on Tuesday the escrow contract for SODIC’s 500 acre development in New Zayed, according to an emailed statement (pdf). The upscale real estate developer had signed a partnership with NUCA for the development in March. The first phase of the project is Vye, which we noted earlier this week saw SODIC sell EGP 1 bn-worth of units in the neighborhood two days after the phase was launched.

Automotive + Transportation

Egypt’s National Authority for Tunnels launches tender for fourth metro line works

The National Authority for Tunnels (NAT) has launched an international tender for Egyptian and/or Japanese companies to serve as a primary contractor for the implementation of Cairo Metro Line Four, according to an official announcement (pdf). The project’s first phase, extending from Hadaek EI Ashgar through the Grand Egyptian Museum (GEM) to Mesaha Square, is funded by a loan from the Japan International Cooperation Agency (JICA).

On Your Way Out

The Egyptian woman who became a DJ at the ripe age of 40: Meet Dina Ghareeb, who kicked off her career as a DJ 14 years ago at the age of 40. Ghareeb tells El Saha about how the career started by chance and what it’s like being a women in the profession (watch, runtime: 02:30).

The Market Yesterday

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EGP / USD CBE market average: Buy 15.99 | Sell 16.09
EGP / USD at CIB: Buy 15.99 | Sell 16.09
EGP / USD at NBE: Buy 15.99 | Sell 16.09

EGX30 (Wednesday): 13,748 (-0.4%)
Turnover: EGP 228 mn (68% below the 90-day average)
EGX 30 year-to-date: +5.5%

THE MARKET ON WEDNESDAY: The EGX30 ended Wednesday’s session down 0.4%. CIB, the index’s heaviest constituent, ended down 0.9%. EGX30’s top performing constituents were Ibnsina Pharma up 6.4%, Cleopatra Hospitals up 3.2%, and Credit Agricole up 2.1%. Yesterday’s worst performing stocks were Eastern Co down 3.3%, CIRA down 1.3% and CIB down 0.9%. The market turnover was EGP 228 mn, and regional investors were the sole net buyers.

Foreigners: Net Short | EGP -2.6 mn
Regional: Net Long | EGP +12.2 mn
Domestic: Net Short | EGP -9.7 mn

Retail: 66.8% of total trades | 68.0% of buyers | 65.7% of sellers
Institutions: 33.2% of total trades | 32.0% of buyers | 34.3% of sellers

WTI: USD 61.23 (+0.20%)
Brent: USD 67.20 (+1.22%)

Natural Gas (Nymex, futures prices) USD 2.19 MMBtu (+1.06%, January 2020 contract)
Gold: USD 1,504.00 / troy ounce (-0.05%)

TASI: 8,342.79 (-0.92%) (YTD: +6.59%)
ADX: 5,103.10 (+0.39%) (YTD: +3.83%)
DFM: 2,773.11 (-0.16%) (YTD: +9.62%)
KSE Premier Market: 6,955.86 (-0.32%)
QE: 10,444.52 (+0.14%) (YTD: +1.41%)
MSM: 3,874.87 (-0.63%) (YTD: -10.38%)
BB: 1,063.00 (+0.18%) (YTD: +19.87%)

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Calendar

December: Belarus Industry Minister Pavel Utiupin will visit Egypt to discuss means of cooperation in the SCZone and plan for the seventh Egypt-Belarus Trade Meeting.

December: Indian automotive delegation to visit Egypt.

29-30 December (Sunday-Monday) Al Ahram’s Energy, Investment Horizons and Development Opportunities, where energy, petroleum, and natural gas officials and experts will set an integrated vision about the energy sector.

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

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

5 January (Sunday): Postponed lawsuit hearing against Peugeot Automobile filed by Cairo for Development and Cars Manufacturing.

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

9-10 January 2020 (Thursday-Friday): Egypt, Ethiopia and Sudan will hold talks in Addis Ababa on GERD.

13 January 2020 (Monday): Egypt, Sudan, and Ethiopia move to Washington, DC, for a fourth (and final?) round of negotiations on GERD.

16 January 2020 (Thursday): Central Bank of Egypt’s monetary policy committee will meet to review interest rates.

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.

February 2020: Higher Education Minister Khaled Abdel-Ghaffar will visit Minsk, Belarus.

February 2020: Egypt Super Cup match between Al Ahly and Zamalek sporting clubs, Abu Dhabi, UAE

1 February 2020 (Saturday): The administrative court will look into an appeal by Adeptio AD Investments against a Financial Regulatory Authority to submit a mandatory tender offer (MTO) for Americana Egypt.

3-5 February 2020: The Arab-African International Forum, Jeddah, Saudi Arabia

4 February (Tuesday): Court hearing for PTT Energy Resources’ USD 1 bn lawsuit against Egyptian government

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.

1 March 2020: A conference on “logistics and its impact on the movement of goods and industry,” venue TBD, Alexandria.

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.

17-20 June 2020 (Wednesday-Saturday): 2019 Automech Formula car expo, Egypt International Exhibition Center, Cairo.

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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