Egypt placed under curfew as gov’t ramps up response to covid-19

The biggest news of the day: A daily curfew from 7pm-6am goes into effect this evening for at least two weeks. The Madbouly government has also extended both the closure of schools and universities and the suspension of international flights, and has shut all but a handful of government services. We have chapter and verse on everything you need to know in this morning’s Speed Round, below.

PSA- You’re going to hear a lot about social distancing measures being “worse than the disease” in the days ahead, including from The Donald, who wants the US open for business by Easter. And there may prove to be smarter ways to do it. But in the meantime, it’s the best the world can muster. Doubt it? Read this thread by Tom Inglesby of Johns Hopkins.

COVID 19 IN EGYPT-

The Health Ministry yesterday reported thirty-six new cases of covid-19, all but one of them Egyptian citizens, taking the overall total to 402. A woman from Alexandria, aged 54, became the latest victim of the outbreak, bringing the country’s death toll to 20. Twelve people — nine Egyptians and three foreigners — were discharged from hospital, meaning 80 people have now made full recoveries.

Cleopatra Hospitals and medical diagnostics outfit IDH have laid out how they’re handling covid-19, as has snackmaker Edita. Give them a read to see how they’re protecting patients and consumers from the virus that’s preoccupying us all — they’re both reassuring to read as consumers and models of what to do if you’re in a critical industry. Read (pdf): Cleopatra Hospitals | IDH (which owns diagnostics chains Al Borg and Al Mokhtabar) | Edita.

“Okay, so my company needs to put out a covid-19 statement, right?” No, as we suggested recently in a note to friends and clients, unless you’re in a critical or regulated industry.

The other obvious exception: If you’re closing shop for the duration or otherwise have an, uhm, adverse outcome to report. Just make sure you aim your communication directly at your core audience, whether that’s investors or consumers, for example.

The German-Arab Chamber of Industry and Commerce did this when it told us that it has closed for an indefinite period due to ongoing events. The chamber’s staff members are accessible via email.

Air freight costs have more than doubled since the suspension of air traffic at Egypt’s airports, an industry official is quoted as saying by the local press reports. Both Emirates and EgyptAir have had to hike prices.

Farmers receive debt relief: The Central Bank of Egypt has agreed to postpone loan repayments for farmers and breeders for six months, the Agriculture Minister El Sayed El Qusair said yesterday. This after the central bank last week extended the tenor of all bank loans by six months to provide relief to businesses.

Afreximbank has announced a USD 3 bn package to assist member countries, including Egypt, manage the economic and health impacts of the covid-19 outbreak, Al Mal reports. It will support member states and other financial institutions in meeting their commercial loan obligations, as well as support foreign exchange reserves in the states’ central banks.

FOOD FOR THOUGHT- What the global pandemic means for Egypt’s informal economy: A side effect of the covid-19 pandemic is that it may push the government to reconsider its view of informal labor — be it seasonal labor, self-employed workers, or household enterprises that depend on daily transactions, Amr Adly writes for Bloomberg Opinion. Some 30% of labor in Egypt is informal, making it a major obstacle in imposing curfews or self-isolation given the lack of communication channels. It’s also a chance for the government to improve its regulation of the informal economy — and give incentives to the informal economy to go legit to capitalize on formal safety nets. The draft SMEs Act, which is currently making its way through the House of Representatives, will introduce tax and non-tax incentives to encourage informal businesses to join the formal economy.

ON THE GLOBAL FRONT-

G7 officials pledge to do whatever it takes to save the global economy: G7 finance minister and central bank governors yesterday vowed to ramp up emergency fiscal and monetary stimulus measures as long as the global economy is threatened by the covid-19 pandemic. “We will do whatever is necessary to restore confidence and economic growth and to protect jobs, businesses, and the resilience of the financial system. We also pledge to promote global trade and investment to underpin prosperity,” the group said in a statement.

Is the US the next epicenter of corona? The World Health Organization suggested yesterday that the US could become the next epicenter as the country sees a “very large acceleration” of cases, Reuters reports.

India has imposed a nationwide lockdown for 21 days to prevent the spread of covid-19, reports Reuters. It has reported 482 cases and 10 deaths so far, but the world’s second most populous country could see over a mn cases by May, health researchers warn.

The UAE is unblocking apps that use voice over IP, including Microsoft Teams, Skype for Business, Google Hangout, Zoom, and Blackboard to help employees work remotely, according to Bloomberg.

The 2020 Summer Olympics have been postponed until 2021, the International Olympic Committee confirmed, according to the Associated Press.

US presidential hopeful Joe Biden’s campaign is struggling to capture attention and funds amid the covid-19 crisis, pushing what would normally be a presidential campaign in full gear to relative obscurity, Reuters reports. Heightened restrictions and the economic fallout of the covid-19 outbreak are challenging the campaign’s fundraising effort and large public events are effectively off limits, meaning no campaign events. Meanwhile, big ticket donors are more focused on corona-related support — simply staying afloat.

Oh, and the rest of the world is getting a taste of Egyptian internet as Microsoft, Zoom, Google and other work-from-home tool providers struggle to keep up with demand — and as Youtube moves the whole world today to standard definition (480p) video by default. Google says the Youtube downshift will last a month. Regulators in Europe had already asked Netflix and Amazon Prime Video to do the same, Bloomberg notes. Use the time to watch Metallica in concert as the band releases a concert a week for the world to watch without charge.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, urban development and even social infrastructure such as health and education.

In today’s issue: Our exclusive sitdown with Osama Bishai, CEO of Orascom Construction, the first in a two-part series on how the construction industry is managing the covid-19 crisis. Bishai spoke with us on the state of the sector during covid today, what can we expect on the long term, and what lessons or positive outcomes we can draw in a post-covid-19 world. Part two next week features a sit-down with Hassan Allam Holding co-CEOs Amr and Hassan Allam.

The government’s decision to introduce a nighttime curfew got top billing on the talk shows last night: Al Hayah Al Youm's Lobna Assal (watch, runtime: 3:00) and Masaa DMC’s Ramy Radwan (watch, runtime: 5:14) both covered Prime Minister Moustafa Madbouly's decision to impose a curfew from 7PM to 6AM. The move is the latest in a string of increasingly far-reaching decisions taken to halt the spread of the virus, which at the moment shows no sign of slowing down. Cabinet spokesman Nader Saad told Min Masr's Amr Khalil that people found to be violating the curfew will either be fined EGP 4k or imprisoned, and repeat offenders will receive both punishments (watch, runtime: 9:33). We have full coverage of the announcement in this morning’s Speed Round, below.

Targeted support for the private sector: The government will assist the private sector through sector-specific measures rather than a broader economic rescue program, Manpower Minister Mohamed Saafan told Al Hayah Al Youm’s Lobna Assal. He said assessments on support will be made based on the severity of impact on each sector. He called on irregular workers to record their information on the ministry’s website so that they can collect their exceptional EGP 500 stipend, adding that some 130k workers have registered so far and are being authenticated.

He said that he’s seen a marked difference in the private sector over the past week, with companies taking the pandemic more seriously and reducing capacity and shifts. He added that safety inspectors have been instructed to ensure that private companies are abiding by the state's precautionary measures (watch, runtime: 6:40).

Schools could be turned into hospitals if cases top 1k: The government may be forced to convert some schools into hospitals if the number of cases rises above 1k, Information Minister Osama Heikal told Yahduth Fi Misr’s Sherif Amer. He also implied that ministers wouldn’t move to impose a full curfew, suggesting that preventing people from buying their necessities would not be a logical policy choice (watch, runtime: 10:55).

The daily covid-19 update: Another person died and 36 new confirmed cases were discovered yesterday, taking the country’s covid-19 case total to 402 and the overall death toll to 20, the Health Ministry said in its daily statement yesterday. Twelve people made full recoveries and were discharged from hospital, and the number of cases to turn from positive to negative — indicating that they are on the road to recovery — reached 100. Masaa DMC’s Ramy Radwan (watch, runtime: 2:13) and Min Masr’s Reham Ibrahim (watch, runtime: 16:26:) covered the statement.

Egypt officially imposes 11-hour curfew, extends for two weeks the flight ban and suspension of schools and universities: A strict 7pm to 6am curfew goes into effect this evening for a period of two weeks, Prime Minister Moustafa Madbouly said at a press conference yesterday (watch, runtime: 20:31). Citizens will not be permitted to leave their homes during curfew hours and all forms of public and private mass transportation are prohibited. This includes taxis, rideshare services such as Uber and Careem, and tuk-tuks. While it will not be explicitly banned, Madbouly called on citizens to limit as much as possible traveling between governorates for the coming period.

Schools and universities will remain closed for an additional 15 days, after the initial two-week closure period announced earlier this month elapses. That means that, instead of resuming classes on 29 March, these institutions will now be closed until 13 April.

The suspension of all inbound and outbound international flights will be extended for an additional two weeks. Flights were suspended from last Thursday until the end of the month. The suspension will now be extended until mid-April. Cargo flights are still permitted.

Just about all public-facing government services will be suspended for the entirety of the two weeks. This includes civil registry offices, real estate registry offices, as well as the issuance of all official documents including (but not limited to) car and drivers licenses, passports, national ID cards, work permits, and construction permits. The only exception to this rule will be Health Ministry-affiliated services to allow for the registry of new births and deaths during this period.

What if your driver’s license / work permit / whatever is set to expire? Quite sensibly, the Interior Ministry will extend the validity of all licenses and official documents that are set to expire during the two-week period.

How is the curfew going to impact business? Read on:

Shops and retail stores, including malls, will be closed between 5pm and 6am on weekdays. They will be required to remain closed all day Friday and Saturday.

Cafes, bars, casinos, and nightclubs will be shut down completely for the two-week period. All gyms and sporting clubs are also to close.

Restaurants and other food services will only be allowed to run delivery service from 6am-7pm, but can’t open for table service.

Who’s exempt? Supermarkets, grocers, bakeries, and pharmacies (except for those inside malls).

Hospitals and all medical facilities will likewise be exempt from the curfew and will remain open around the clock. Journalists and media professionals will also be allowed to move freely during the curfew, Information Minister Osama Heikal said, according to the local press.

Petrol stations look like they’ll be allowed to continue operating during curfew to receive deliveries as tankers delivering petroleum products are exempt from the ban on movement.

Banks are moving to shorter hours starting today, the Central Bank of Egyp (CBE) said in a statement (pdf). Employee working hours will run between 9am and 2pm, and banks will open their doors to customers from 9:30am until 1:30pm. The FRA says the same work hours are in effect now for the insurance industry.

The EGX is also shortening the trading day to run from 10am until 1:30 pm, according to a statement (pdf). Price discovery will begin at 9:30am.

The government will also extend for 15 days its previous decision to cut down on the number of civil servants and employees at public sector companies and institutions. This extension will be applied as of 1 April, when the initial decision was set to expire.

The Customs Authority will operate from 8am-4:30pm, prioritizing the release of food, medical supplies and other strategic products, and running two shifts at airports.

Sporting clubs and facilities, youth centers, and gyms will be completely closed for the next two weeks. The Football Association will suspend matches and all other activities until 14 April.

Food manufacturers are allowed to continue operating at full capacity despite the curfew in order to make sure the demand for food commodities is met, said Ashraf El Gazayerly, chairman of the Federation of Egyptian Industries' food industries division, according to Youm7.

What happens if you break curfew? You’re goin’ to jail and will be slapped with an EGP 4k fine. At least if you’re a repeat offender. Cabinet spokesman Nader Saad said last night (watch, runtime: 9:33) that repeat offenders will face both fines and jails, while first-time offenders could get off with a fine alone.

You’re still allowed to leave the house for emergency medical treatment but need to head straight to a treatment facility.

The story is leading coverage of Egypt in the foreign press: Reuters | Associated Press | Bloomberg | AFP | The National | Gulf News

Gov’t covid-19 measures could threaten 30% of Egypt’s nominal GDP -RenCap: Around one third of private consumption in Egypt “could be hit hard” by the government’s measures to curb the spread of the covid-19 virus in the country, including the partial curfew, suspension of air travel, and closure of restaurants to in-house customers, Renaissance Capital said in a research note yesterday. Private consumption accounts for around 80% of Egypt’s nominal GDP, and non-food retailers are already hurting from these measures which has slowed down customer traffic, RenCap says. The investment bank points to travel receipts and Suez Canal revenues — which together account for 5% of nominal GDP — as also being vulnerable to a slowdown.

REGULATION WATCH- CBE extends its support to the tourism sector with two-year soft loans: The Central Bank of Egypt (CBE) will provide soft loans to tourism companies to pay wages, commitments to suppliers, and maintenance as part of the EGP 50 bn tourism initiative it launched last year, according to an official statement (pdf). Hotels, tour operators, restaurants, and tourism transport companies will be able to access loans with a tenor of two years and a six-month grace period at an interest rate of 8%.

Background: The CBE last year increased funding to support the tourism sector to EGP 50 bn, allowing more companies in the sector to access soft loans to renovate and upgrade tourism infrastructure then reduced the interest rate on this initiative along with two others earlier this month following its emergency 300 bps rate cut to help struggling businesses cope with the repercussions of the covid-19 outbreak.

In related news: The Hotels chamber is in negotiations with the Manpower Ministry to access the emergency fund to pay six months’ of salaries to hotel staff from April. A senior official in the sector said that some 500k employees are entitled to receive support from the fund but that there was disagreement with the ministry about whether it should cover the salaries of around 200k seasonal workers. The labor emergency fund was set up in 2002 to provide assistance to workers in businesses that have closed.

The EGX is back in the red again after three days of gains: The EGX30’s three-day bull run came to an end yesterday after investors exited shares on the government’s announcement of a partial curfew. The benchmark index finished 2.76% in the red having surged 14% during the three previous sessions. The market was down 2.23% by mid-day before stabilizing briefly, but eventually slid further during afternoon trading on news that a nighttime curfew would be going into immediate effect. The pressure was partially driven by index heavyweight CIB, which had shed 3.43% by the end of the day. Juhayna closed down 5.78% and GB Auto fell more than 5%.

Don’t forget that the CBE still has a EGP 20 bn bullet in its chamber — we just don’t know what the target is: Analysts are still largely uncertain about how the Central Bank of Egypt (CBE) will deploy the EGP 20 bn in EGX support announced earlier this week.

One potential scenario: New funds under the CBE’s purview: Prime Securities Managing Director Shawkat El Maraghy tells Al Mal the CBE could purchase equities through its newly established funds. Fund managers will likely do this over a medium- to long-term period, rather than all at once, he said.

The CBE could also go the traditional route and rely on the investment arms of state-owned banks like the National Bank of Egypt (NBE), the National Investment Bank, or NI Capital, HC Securities Managing Director Hassan Shoukry said. The National Investment Bank, in particular, is already deeply involved in the market and can easily raise its stakes in companies it is invested in or buy new shares from the market. NBE and Banque Misr already pumped EGP 3 bn into the market last week which has contributed to the recent recovery.

Dow has best day since 1933 as US, European markets soar on Fed bond buying and prospect of massive US bailout: Global stock markets soared yesterday as investors shrugged off dire economic data and regained confidence on a mammoth stimulus package from the Federal Reserve and hopes that US lawmakers would soon agree a USD 2 tn economic rescue plan. We have more on yesterday’s data releases in this morning’s Macro Picture, below.

US stocks collectively saw their biggest single-day gains since October 2008: The S&P 500 was up 9.38% at the closing bell yesterday while the Dow Jones surged at a rate not seen since 1933, finishing the day 11.37% in the green.

European stocks also posted big gains: Most of the region’s indices were at least 7% up at the close of play, with Germany’s DAX surging 11.5%, the Euro Stoxx 50 up 10% and the FTSE 100 gaining 9.35%.

So how does today look? Asian markets are soaring as we trudge toward dispatch time this morning, but futures now point to slightly lower opens for the Dow, S&P and Nasdaq, while Europe looks mixed.

One JPMorgan strategist is calling the return to a bull market already: Top JPMorgan strategist Marko Kolanovic has predicted that the US economy will rebound in a “number of weeks” causing stocks to surge 40% and return to record highs by the beginning of 2021, CNBC says. We want some of whatever Marko had with his breakfast / ingested before talking to CNBC. Make it a double.

Gains in the oil market were more muted: A rally Brent and WTI prices faltered in late trading after posting strong gains early in the session as the slump in demand continued to spook investors. Both crude benchmarks were up more than 5% before falling back, with WTI up 2.8% at USD 24.01/bbl and Brent 0.4% higher at USD 27.14/bbl. Reuters has more.

Pressure on the USD is easing after Fed’s ‘QE unlimited’: The massive shot of liquidity announced by the Federal Reserve two days ago seems, for the moment at least, to be doing the trick. A buying frenzy by fearful investors and businesses caused the greenback to surge almost 9% in 11 days, threatening to drain liquidity and freeze the funding markets. But the Fed’s pledge to buy unlimited amounts of government and mortgage-backed securities brought an end to the rally yesterday, which saw at one point the USD index fall back to its lowest point since 19 March, Reuters reports.

Goldman predicts direct intervention if the rally continues: “Should USD appreciation continue, we would see a reasonably strong case for targeted intervention, and think there is a rising probability that authorities will take this step,” Zach Pandl, currency analyst at Goldman Sachs, wrote in a note on Monday, according to the FT. “If swap lines and [bond purchases] prove insufficient, we think Fed and Treasury should and will consider traditional FX intervention to stabilise the USD.”

But the Fed hasn’t halted the corporate bond sell-off: Yields on corporate bonds are continuing to climb despite the Fed announcing that it would for the first time in history start buying investment-grade corporate debt, the FT reports. Corporate bond ETFs and derivatives have responded well to the measures but the prices of cash bonds have continued to fall — a trend that is now being caused more by poor trading conditions than fears over the economy, investors have said.

The Sovereign Fund of Egypt (SFE) is preparing a list of potential low-risk investments to present to investors after the covid-19 outbreak has been contained to restore confidence in the Egyptian economy, SFE CEO Ayman Soliman tells Al Mal. The negative impact of the pandemic on the economy will push investors towards low-risk ventures, Soliman said, without signaling what these potential investments could include.

Background: The SFE had offered to investors a 70% stake in the three Siemens-built combined-cycle power plants, and had said it expects to complete the acquisition of the first of the three plants this year. The fund will acquire the remaining 30%. The SFE also signed early last month an agreement with the military’s National Service Products Organization to market some of its subsidiaries to private investors.

DEBT WATCH- Market regulator expected to approve TMG’s planned EGP 2 bn corporate sukuk issuance this week: The Financial Regulatory Authority (FRA) is expected to approve this week Talaat Moustafa Group’s (TMG) planned EGP 2 bn corporate sukuk issuance, the head of the FRA’s central administration for finance department tells Hapi Journal. TMG announced plans earlier this year to launch a three-year EGP 4.5-5 bn sukuk program in April to finance the company’s real estate leasing projects. EFG Hermes is reportedly on board to lead the initial EGP 1 bn issuance after securing an FRA license.

EARNINGS WATCH- Dice profits grew 2.7% in 2019: Dice net profits rose to EGP 81.4 mn in 2019, up 2.7% from EGP 79.3 mn in 2018, the company said in a regulatory filing (pdf). Revenues increased 3.2% to EGP 1.35 bn, up from EGP 1.31 bn the previous year. Dice is looking to invest EGP 150 mn in the coming year, including its EGP 120 mn acquisition of Cairo Cotton which was agreed last month.

MOVES- CI Capital has appointed Tarek Tantawy (Linkedin) as co-CEO alongside Hazem Badran as of yesterday, according to a bourse filing (pdf). Tantawy will retain his position as managing director of the company, which he has held since 2017. Tantawy was CFO of IDJ-Beyti and CEO of Telecom Egypt prior to joining CI Capital in 2015.

The government’s decision to introduce a nightly curfew to slow the spread of covid-19 is dominating the conversation in the foreign press this morning: We have the full story in this morning’s Speed Round, above.