Hospitals capped at EGP 10k/day for covid treatment

We don’t remember the last time we were this happy it was “hump day,” as we around here think of Tuesday — get over it, and it’s a downhill slide into the weekend. Perhaps it’s the “jetlag” from Eid — or maybe it’s just the glut of bad news at home and abroad.

We’re going easy on ourselves this week — trying to remember who we are, what our job descriptions are and what we were working on before the break. But next week, we’re giving long, hard thought to what’s next. That was the theme of a note we sent out a few weeks back. And if you need more in that vein to get you through this week so that you can do the same, go read Six businesses finding an upside in the coronavirus crisis in the Financial Times.

Key news triggers coming up in the weeks ahead:

• PMI figures for Egypt, Saudi Arabia and the UAE will land tomorrow at around 6:15am CLT, according to IHS Markit’s calendar.
• Foreign reserves figures for May should be out early next week.
• Inflation data for May will land on Wednesday, 10 June.
• The Central Bank of Egypt will meet to review interest rates on Thursday, 25 June.
• Founding members of the EastMed Gas Forum will meet in June to ink the Cairo-based energy organization’s charter.

The market today: Global stocks are still trading at a three-month high. Asian markets are mixed in early trading this morning with Shanghai down, Australia flat and both the Nikkei and Kospi edging into the green. European shares look set to open in the green later this morning, while futures suggest US stocks look set to dip at the opening bell after posting gains yesterday despite six nights of nationwide protests against racial injustice and economic disparities. Protests and violence haven’t yet convinced investors to recalibrate their long-term views, the Financial Times writes. The EGX30 was essentially flat in heavy trading yesterday, closing the day up 0.1%.

COVID-19 IN EGYPT-

The Health Ministry confirmed 46 new deaths from covid-19 yesterday, bringing the country’s total death toll to 1,005. Egypt has now disclosed a total of 26,348 confirmed cases of covid-19, after the ministry reported 1,399 new infections yesterday, which Reuters noted is the first decline of daily new cases in a week. We now have a total of 7,149 confirmed cases that have since tested negative for the virus after being hospitalized or isolated, of whom 6,447 have fully recovered.

Egypt could hit the 30k case mark by the end of this week and add another 10k cases next week, Higher Education Minister Khaled Abdel Gaffar said yesterday, Hapi Journal reports. Abdel Ghaffar also floated the idea that we could see 1 mn cases in total under one of the government’s less likely projected infection scenarios — where we wind up, he said, depends largely on people’s behavior (watch, runtime 1:29).

The total number of covid-19 fatalities among Egyptian physicians rose to 32 on Monday while infections hit 372, Youm7 reports The syndicate has been calling on the Health Ministry to better protect frontline medical workers.

Hospitals and pharmacies remain well-stocked with medical equipment across the country, said Health Minister Hala Zayed, who urged people to refrain from panic buying immune-modifying medicine to avoid shortages, according to a ministry statement.

Grocery stores and retail operators have a new set of guidelines to follow that puts the onus on them to ensure the safety of their shoppers, according to Al Masry Al Youm. The rules include: Barring anyone without a mask from entry; providing plastic gloves, disinfectants and masks to patrons at cost; routine surface cleaning; enforcing social distancing throughout, including in checkout aisles; and limiting traffic to 25% of a store’s maximum occupancy, among others.

The EGP is back to where it stood in mid-January against the USD, easing four piasters yesterday against the greenback to 15.87, according to data from the Central Bank of Egypt (pdf). The EGP had rallied more than 3% against the greenback during the first seven weeks of 2020 and had held steady since the onset of the pandemic before easing in the past two weeks. The EGP, NRN and KES have all held their value as other African currencies have slumped under pandemic pressure.

Citizens living abroad will get a six-month extension on the validity of their passports to help them renew their residence status wherever they’re living now while overseas passport services are suspended, according to Al Masry Al Youm.

Hotels will now be able to operate at a 50% occupancy rate if they meet the necessary safety requirements, the Tourism Ministry announced yesterday. Some 78 properties, mostly along the Red Sea, were open starting in Eid With a 25% cap on occupancy under new rules designed to prevent the spread of covid-19.

Irrigation Minister Mohamed Abdel Ati has concluded his time in self-isolation after having come in contact with Daqahlia Governor Ayman Mokhtar, who last month tested positive for the virus, according to state-owned Ahram Gate. Abdel Ati is expected back in the office today.

A new curfew means a new metro timetable: The Cairo Metro is now running from 5:15 am, with last trains departing at 7:15-7:45 pm depending on the line, according to the Transport Ministry. This comes as the new curfew hours (8 pm-5am) came into effect yesterday.

DONATIONS-

Do you want to help the UNDP? The UN Development Program Egypt has launched the Kemama campaign to fund the production of medical masks in Upper Egypt, in partnership with its AltFinLab and the Neya Foundation. You can make a contribution in EGP or USD.

Covid aid to Africa: Egypt’s Armed Forces sent a military plane containing medical supplies and protective gear to DR Congo and Zambia yesterday, according to a statement from the military spokesperson.

Banks backing hospital in Upper Egypt: NBE and Banque Misr are donating EGP 130 mn to develop an extension to Minya University’s hospital according to Hapi Journal. The new branch is set to include two operating rooms, an intensive care unit, a recovery room, a communications hub and outpatient clinics.

Somabay is naturally shifting its mindset to adapt to a new course of direction, paving the way for what’s yet to come. A new perspective is just over the horizon.

ON THE GLOBAL FRONT-

More people are dying of heart disease, diabetes and respiratory diseases since the pandemic kicked off, the New York Times writes, saying, “Public health experts have said that many of these additional deaths from other causes may be undercounts or misdiagnoses of Covid-19, or indirectly linked to the pandemic otherwise.”

The global reopening continues as the UK allows some primary school students to return to classrooms and Turkey lifts travel restrictions between major cities and reopened cafes and restaurants

GLOBAL MACRO-

It could take the US economy as much as a decade to recover from the effects of the coronavirus, the Wall Street Journal reports, citing a report by a US budget agency and calling it a long swoosh recovery.

European manufacturers fared slightly better last month — but that’s not saying much: Manufacturing activity in the eurozone rebounded slightly in May but remained in deep contraction as output and new orders continued to feel the suffocating effects of lockdown, according to fresh IHS Markit PMI data (pdf).

China, meanwhile, is in recovery mode: Manufacturing activity in China expanded as the country exited its lockdown restrictions. PMI data (pdf) edged up to 50.7 in May from 49.4 in April despite new export orders continuing to contract sharply on weak external demand.

Saudi Arabia’s central bank has provided banks with USD 13.3 bn in fresh liquidity to keep credit flowing to the private sector, as the country’s economy reels from the global pandemic and low oil prices, the Saudi Arabian Monetary Authority announced on Monday.

Goldman Sachs is going short on the USD in anticipation that “steady reopening process, limited evidence of a pickup in Covid infection rates, and encouraging policy actions” will lower demand for greenbacks as investors move out of safe havens in search of returns, CNBC reports, citing a note written by strategists over the weekend.

Woman-led hedge funds did better in the insanity of covid-19 than did their male counterparts: A small sample of hedge funds managed by women has outperformed male-led counterparts through the pandemic, the Financial Times reported, citing data by Hedge Fund Research’s (HFR) Women Access index. The cluster of funds lost only 3.5% in the first four months of 2020, compared with the 5.5% drop in the broader HFRI 500 Fund Weighted index.

THE REST OF THE WORLD BEYOND COVID-

King Cheeto has threatened to deploy the military to quell protests over racial and economic inequality in America and is demanding that governors get tough on what he called “domestic acts of terror” as protests raged on for a seventh night. Peaceful daytime protests gave way to clashes with police in New York, Washington and Los Angeles and New York imposed an 11pm-5am curfew last night. The story dominates front pages around the world: FT | WSJ | NYT | WaPo | Bloomberg | CNBC.

Business leaders across the US are speaking out against racism and police violence, the Wall Street Journal notes, and watchdogs have now documented more than 100 deliberate acts of police violence against journalists (here and here). Egyptian readers who lived through 2011 will relate to reports that police are shooting targeting the faces of media and protesters alike with “non-lethal” rounds, including at least one photojournalist who has lost the sight in one eye after being hit.

Required reading for those among us trying to get our heads around what’s going on: How the war on terror has militarized the police. It’s from back in 2011 — and no less relevant a decade later.

The US-China trade agreement is hanging by a thread after China instructed major state companies to indefinitely halt purchases of US soybeans and other farm goods as tensions ratchet up between Beijing and Washingnton over Hong Kong and the covid-19 pandemic, Bloomberg reports, citing unnamed sources.

The robot takeover of journalism begins: Microsoft is laying off dozens of its contract news producers working at MSN and will instead rely on AI to produce some of its news coverage, sources told the Seattle Times.

PSA- We’re in for a spell of warmer weather, with the mercury in the capital city set to gradually rise from 32°C today to 39°C at the start of next week, according to our favourite weather app.

The biggest piece of news to emerge from the airwaves last night was the Health Ministry’s release of its mandatory pricing scheme for hospitals treating covid-19 patients, which El Hekaya’s Amr Adib broke down for viewers. We have the full story in this morning’s Speed Round, below.

Al Kahera Alaan’s Lamees El Hadidi zoned in on the trajectory of covid-19 cases and deaths in Egypt, taking note of Higher Education Minister Khaled Abdel Ghaffar’s suggestion that the real number of cases is significantly higher than those detected and confirmed by the Health Ministry. We have the story in What We’re Tracking Today, above (watch, runtime: 3:01).

It remains “difficult to predict” when the government will decide to entirely lift its covid-19 lockdown measures, including the nighttime curfew and ban on international flights, Cabinet spokesman Nader Saad told El Hadidi. However, restaurants will likely be open to the public again soon under specific regulations, he said. Once they do open, mosques will also have a set of precautionary measures, including requiring all worshipers to bring their own prayer mats and maintain a safe physical distance from each other during prayer, Saad said. He also remained tight-lipped on the international flight ban, saying that Cabinet will decide on the matter at its meeting this week (watch, runtime: 19:40).

Health Ministry imposes EGP 10k / day price cap on covid-19 treatment at Egypt’s hospitals; no private-sector covid tests yet: The Health Ministry released yesterday a mandatory pricing scheme for all hospitals, including private-sector operators, treating covid-19 patients, according to a statement carried by El Hekaya’s Amr Adib (watch, runtime: 4:13). The daily cost of treatment, which is inclusive of all tests, scans, meds, and other fees, have been set as follows:

• EGP 1.5k-3k per day for lower-level “isolation” services, which are meant for patients with mild symptoms;
• EGP 5k-7k per day for ICU patients who do not require ventilators;
• EGP 7.5k-10k per day for ICU patients who need ventilators.

The mandatory pricing scheme comes amid claims some providers had allegedly been “overcharging” patients for services, and follows an increasing number of calls from MPs to regulate pricing at private hospitals. The Health Ministry recently allowed the private sector to begin treating covid-19 cases, after having initially limited treatment to one facility in Matrouh. There are currently 367 state facilities — including university hospitals — authorized to treat covid patients.

Will the government allow private labs to provide covid-19 testing under government supervision soon? Health Ministry spokesman Khaled Megahed told Adib that the government has sufficiently expanded the network of state-owned labs providing covid-19 testing, particularly outside central governorates such as Cairo (watch, runtime: 5:35). Megahed did not rule out a scenario in which the government could allow the private sector to also begin offering these tests, but said that health officials continue to take new decisions as the situation develops on the ground.

Egypt’s GDP to end current fiscal year with 2.5% growth, record 3.7% in FY2020-2021 -FocusEconomics: Egypt’s GDP growth is expected to clock in at 2.5% this fiscal year, which wraps on 31 June, according to revised forecasts from Spain-based FocusEconomics picked up by the local press. The research firm expects growth to rebound in FY2020-2021 to 3.7%, suggesting a faster recovery from covid-19 than the one the Madbouly government is currently forecasting. “Going forward, forecasts from both the government and FocusEconomics Consensus Forecast panellists point to a clear economic deterioration, most notably from March, when Egyptian authorities began imposing containment measures,” and beyond April, which was the first full month with measures in place.

FocusEconomics is more optimistic about the next fiscal year than the government is. State planners expect the economy to expand by 4% this fiscal year and are pricing in a sharper slowdown FY2020-2021 which could see the economy growing at only 2% if the pandemic continues into December.

Either way, there is consensus (so far) that the recovery will begin in the second half of the year, a point stressed by Planning and Economic Development Minister Hala El Said in a recent webinar with AmCham and EBRD lead economist Bassem Kamar.

Egypt and Pakistan are EFG’s top frontier and emerging markets picks after sell-off and earnings downgrade: Egypt and Pakistan’s equity markets “offer good value” in the medium-term after the covid-19 sell-off and a downgrade in earnings projections, EFG Hermes said in a note yesterday. EFG’s price-earnings ratio for Egypt this year is currently at 8.9, while Pakistan’s is at 6.6, leading the investment bank to maintain an overweight position for both markets.

Pre-pandemic macro adjustments in both markets “have given them the basis for recovery,” Simon Kitchen and Farah Hamza write. Although Egypt is more vulnerable to global conditions, which will affect tourism and remittance inflows, the country has “built up space for fiscal and monetary stimulus.” Egptian stocks could also be propped up by more monetary easing and a bit of FX weakness, which Kitchen and Hamza say Egypt “has more room for” than Pakistan.

While the EGX and PSX’s YTD performance are “among the worst,” they have also seen a strong rebound that indicates greater resilience than markets that haven’t seen “a proper sell-off,” EFG says. The firm notes it prefers markets that have tumbled in line with the global sell-off but are seeing some macro adjustments. “We do not think that relative performance accurately reflects the relative resilience of markets in our coverage.”

Interest rate cuts have helped “force local liquidity into stock markets” in Egypt, Pakistan, and the GCC after the first four months of the year saw heavy foreign outflows in MENA and FM markets, EFG notes. The Central Bank of Egypt cut interest rates by an unprecedented 300 bps at an emergency meeting in March, but has since left rates on hold.

Retail investors are edging back into the market as interest rates have been cut, and “high real yields in Egypt mean that we may see further rate cuts this year, and the market may also see further inflows if state-owned banks reduce rates on certificates of deposit.”

IPO WATCH- Mediterrania Capital Partners will merge its newly acquired diagnostics network MetaMed with Cairo Scan with an eye on IPOing the new company, the Spanish private equity firm’s Senior Country Advisor Khaled Sabaa said, according to Al Mal. Mediterrania plans to create a 45-branch regional diagnostics firm to be helmed by Cairo Scan director Hatem El Gabaly. The firm will move to list on the EGX “within a few years,” Sabaa said. MetaMed operates in Egypt, Jordan and Saudi Arabia.

Background: Ray Lab, owned by a consortium of investors led by Spain’s Mediterrania Capital Partners, last week acquired diagnostics imaging network MetaMed from Gulf Capital in an agreement Sabaa said was worth over EUR 100 mn. The consortium includes Cairo Scan, Germany’s DEG, Dutch development bank FMO, France’s Proparco, and the EBRD. Mediterrania Capital acquired a 40% stake in Cairo Scan in 2018, in a transaction Al Mal reported was worth EUR 286 mn.

GASC is tapping the international wheat market again: State grain buyer GASC issued yesterday a global wheat tender as the country looks to secure its reserves of basic commodities amid the global pandemic, Reuters’ Arabic service reports. Egypt is looking to import 800k tonnes of wheat, and expects to harvest 3.6 mn tonnes locally, which would together give the country enough of the grain to cover 7-8 months of consumption. As of last month, GASC had only imported 240k tonnes of wheat, and its last tender had only attracted five offers.

The international wheat market has seen its share of disruptions as major exporters, including Russia and Romania, have imposed export bans as they look to secure their own supplies. Romania later lifted its ban under pressure from the European Commission, while Russia expects to follow suit next month. UK-based grains trader Gemcorp Commodities said last month it is ready to increase the quantities of Russian wheat it ships to African clients, including Egypt, if rainfall helps the new harvest rise to quality requirements.

Sovereign Fund of Egypt enters SWF global rankings at # 43: The Sovereign Fund of Egypt (SFE) ranks 43rd out of the world's 93 sovereign wealth funds in the Sovereign Wealth Fund Institute’s (SWFI) latest rankings. The fund currently owns assets worth almost USD 12 bn, accounting for 0.14% of the holdings of state-owned funds around the world, Al Arabiya reported. This is the first time that the fund has been included in the SWFI’s rankings, having launched last November. The SFE is expected to increase its capital to USD 63 bn (EGP 1 tn) within three years.

Norway’s sovereign fund is currently the world’s largest with USD 1.18 tn in assets, followed by the China Investment Corporation (USD 940 bn), Abu Dhabi Investment Authority (USD 579 bn), and the Kuwait Investment Authority (533 bn). Saudi’s Public Investment Fund (PIF) ranks ninth with assets of USD 360 bn.

STARTUP WATCH- Egyptian fintech startups land contract for online tuition fee payment service: Local fintech startups Klickit and Paymob have signed an agreement with private sector education provider GEMS to provide online tuition fee payments for the parents and guardians of over 6k students, according to a statement (pdf). The agreement covers GEMS’ network of 20 schools in 13 countries, including four in Egypt: The British School Al-Rehab, Madinaty Language School, Madinaty Integrated Language Schools (MILS) and the British International School Madinaty.

EARNINGS WATCH- Domty profits up 11% in 1Q: Arabian Food Industries (Domty) recorded EGP 32.1 mn in net profit in 1Q2020, up 11% from EGP 28.8 mn in the same period last year, according to its latest financials (pdf). Revenues rose 13.7% on an annual basis to hit EGP 745 mn from EGP 655 mn in 1Q2019.

MOVES- Mohamed Aboulghait (Linkedin) was named chief investment officer (CIO) of Amer Group as of 1 May 2020. Aboulghait previously ran investment banking at Pioneers. He started his career at EFG Hermes and went on to hold positions at Beltone and Pharos.

On the good news front: Asia is showing that EM are not being shut out of the global debt markets. Asian companies are leading what’s looking like a revival in risk appetite among debt investors, says Bloomberg. Corporate USD bond sales, particularly by high-yielding Asian borrowers, hit fresh highs in May as investors became more confident that the worst of the pandemic is behind us. The situation is still different in emerging Europe and elsewhere, but, if anything, Asia’s story means that as economies reopen, so will debt markets.

Beyond Asia, the USD debt market has been “more hesitant.” This is because Asian economies were hit earlier by the outbreak and are ahead of the curve in reopening their economies. Despite this, some investors are still buying high-yield debt, even in Latin America, where some countries are yet to see the infection rate peak. Brazil’s state-owned Petrobras sold USD 3.25 bn-worth of bonds last week, in a sign perhaps that junk-rated Latam corporate borrowers will start tapping the market soon.

This wave of optimism applies to the risky sovereign debt market too, the business information service notes, citing Egypt’s successful USD 5 bn eurobond sale last month as an example. South Africa, Brazil and Ukraine are likely to follow suit if risk appetite continues to increase.

But we haven’t yet returned to normality: Investor sentiment remains in a fragile state due to the continuing spread of the virus and the increasing trade tensions between the US and China, Trieu Pham , EM credit strategy analyst at ING, wrote in a blog post. “Not all issuers will find it as easy as Egypt which has gained a lot of investor recognition … We believe that investors will remain highly selective when it comes to non-investment grade issuers,” he wrote.

It’s another blessedly quiet morning for Egypt in the foreign press. A couple of headlines to keep on your radar:

• Low-income Egyptians are struggling with the added financial burden of face-masks required by the government in public spaces and transport, reports Reuters.
• Former detainee sues caretaker PM Beblawi over alleged torture: Former Islamist detainee turned rights advocate Mohamed Soltan has filed a federal lawsuit in the US against former interim prime minister and current IMF executive board member Hazem El Beblawi, age 83, over alleged torture and abuse during his detention in Egypt between 2013 and 2015, the Washington Post reports.

Italy’s Edison has completed drilling a 5670.5 meter gas well at its North Theqa concession in the East Mediterranean, according to Amwal Al Ghad. The company had contracted Maersk Drilling for a deepwater semi-submersible drilling rig to drill an exploration well in the gas field last year.

The government is implementing EGP 7.3 bn-worth of development and maintenance works on the Ring Road, including a 106 km extension from El Mariouteya to the Autostrad and a 30% expansion of the Autostrad Bridge, the Transport Ministry said.

The Egyptian Holding Company for Water and Wastewater has tapped Canadian design and consulting services firm Stantec to lead the EUR 456 mn upgrade and expansion of sewage and wastewater systems in Fayoum, according to a company statement. The project is set to expand sewage access to 86% from 32.6% in Fayoum through the construction of four new wastewater treatment plants, the expansion of seven, and repair of 10. Financing for the project will be provided through a EUR 186 mn contribution from the European Bank for Reconstruction and Development and co-financed by the European Investment Bank, which will contribute EUR 172 mn, the European Union’s Neighbourhood Investment Facility, and the Egyptian government.

Domty Food Industries is investing EGP 25 mn to set up a new mozzarella cheese production line by the end of 2Q2020, and another EGP 50 mn in a bakery production line that will come online before the start of the upcoming academic year, according to the local press. The combined EGP 75 mn investment comes after the company reportedly reached maximum production capacity on its baked goods production lines in January and saw an uptick in demand for cheese products at the start of the covid-19 crisis.

Telecom Egypt (TE) and Etisalat Misr have signed two agreements to cooperate on transmission and mobile-to-fixed interconnection, according to an EGX filing (pdf). The first EGP 2 bn agreement will see TE’s transmission and infrastructure services' commercial model developed with Etisalat on an annual basis for the next three and a half years. The second, a mobile-to-fixed termination agreement, is the first commercial arrangement between the two companies.

Zaitoun Green Shipping’s renovation works on the Damietta Port and its commercial fleet, including potentially setting up an LNG refueling station and the purchase of eight new ships, have been postponed indefinitely due to the covid-19 pandemic, Al Mal reports, citing an unnamed Transport Ministry official.

Orange Egypt is giving seven tech-based startups in the Middle East and Africa a chance to compete for GBP 50k-150k apiece in seed funding through its Orange Ventures MEA Seed Challenge, according to a statement (pdf). The challenge is geared towards seed stage startups “with high growth potential and new technologies at the core of their business,” including clean tech, e-commerce, digital inclusion, gaming, fintech, and cyber security, among others. The challenge is open to startups in Egypt, Jordan, Morocco, Tunisia, Cameroon, Cote d’Ivoire, and Senegal.

Get ready for Siri to speak Arabic? A team of programmers at New York University Abu Dhabi (NYUAD) will release text prediction software for Gulf Arabic this year, saying it would allow Siri, Alexa, and our other AI friends to begin speaking in Arabic, reports the National. Nizar Habash, head of the program at NYUAD, says that the programmers opted against using the fusha (classical Arabic) dialect, which is not commonly used in daily life — and would also probably make Siri sound like your high school Arabic teacher. The team opted instead for a more common Gulf Arabic dialect, which will remain impenetrable to all of us here in Egypt.