Tuesday, 28 July 2020

Egypt’s current account deficit narrows in 3Q — and it’s mostly thanks to remittances

TL;DR

What We’re Tracking Today

It’s almost official, folks: The cabinet confirmed yesterday that Eid Al Adha will run from Thursday to Monday, 3 August , meaning that we should all be getting five days’ holiday. We are however yet to hear anything from the EGX and the central bank, and the Manpower Ministry hasn’t yet confirmed the holiday for the private sector.

FRA committee to meet for first time since the onset of corona next week: The Financial Regulatory Authority’s (FRA) advisory committee will discuss “the most important” files when it holds its first meeting since the start of the covid-19 pandemic next week, committee member and industry lobby group the Egyptian Capital Markets Association (ECMA) Chair Mohamed Maher said, according to Al Mal.

We’re not sure yet what is on the agenda, but we expect proposals to stimulate the local bond market to get some attention. Maher said earlier this month that the regulator was close to finalizing a set of measures to encourage trading in the local bond market, including tax exemptions, reducing trading fees, and increasing the range of tradable securities.

On a related note: The ECMA is pushing for more clarity on plans by the Central Bank of Egypt to pump EGP 20 bn into the stock market, Maher said. The CBE announced the stimulus plan during the height of the corona-induced market instability in March, but Maher suggested yesterday that the bank is yet to provide any support. The ECMA is also lobbying the CBE to give brokerage firms access to soft loans it provides to other industries to help them cope with low trading volumes.

The Mostaqbal Watan Party looks set to dominate next month’s Senate elections, with 95 of its members vying for the 100 individual seats up for grabs in the 300-member chamber. The National Elections Authority (NEA) announced on Sunday that bids from 787 candidates have been accepted. Continued restrictions on public gatherings mean that no public rallies can be held, but candidates can hold closed sessions or campaign door-to-door.

The US Federal Reserve begins its two-day meeting today to review interest rates. No major policy adjustments are expected, but officials have been making noises about ramping up bond-buying to hold down interest rates in what’s known as yield-curve control.


COVID-19 IN EGYPT-

Covid-19 cases continue to fall: The Health Ministry yesterday confirmed 420 new cases of covid-19, down from 479 on Sunday. This brings the nation’s total confirmed cases to 92,482. The ministry also reported 46 new deaths yesterday, increasing the overall death toll to 4,652. We now have a total of 34,838 cases who have fully recovered.

Russian flag carrier Aeroflot is expected to start taking bookings to Cairo from 8-9 August, after Moscow announced it would resume international air travel from next month, Mubasher reports, citing MENA.

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ON THE GLOBAL FRONT-

The surge in cases in the US sunbelt is showing signs of abating, with Florida, California and Arizona all reporting slightly lower cases yesterday, the Financial Times reports. Nationwide, yesterday saw the smallest daily increase in three weeks, with 55,134 people testing positive for the virus.

The World Health Organization warned countries that they cannot leave travel suspensions in place indefinitely, and urged governments to do more to tackle the virus within their borders, Reuters reports.

Keeping your company safe in the age of WFH: Companies are looking to AI-powered software, cloud solutions, and privacy screens to protect their data from hackers as WFH forces them to search for new ways to keep workforces and their company secrets safe, reports CNBC. Other companies are introducing more stringent background checks on new hires, and are more closely monitoring employees.

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GLOBAL MACRO-

Republicans unveil USD 1 tn stimulus package: Republican lawmakers in the US Senate have proposed cutting jobless benefits as part of a USD 1 tn stimulus package, setting up a confrontation with congressional Democrats staunchly opposed to reducing support for the unemployed. The proposals would send another round of USD 1.2k checks to most citizens, but slash the weekly USD 600 unemployment benefit to just USD 200 until September, after which workers would be paid 70% of their previous wages. Democrats want to maintain the current unemployment benefit until January (New York Times | Wall Street Journal | Financial Times | Bloomberg | Washington Post).

Gold prices hit a new record high yesterday as increasing fears for the US economic recovery sent investors piling into the safe haven asset, the FT says. The price of the precious metal reached new highs of USD 1,945.16 per ounce during trading, surpassing the previous high of USD 1,921 set in September 2011.

The rally isn’t done yet, according to analysts who told CNBC that prices could surge past USD 2k per ounce this year.

The spike in gold prices coincided with a drop in the USD, which fell to a two-year low yesterday. The FT reports that the USD index, which tracks the greenback against a basket of currencies, fell 0.9% to lows not seen since May 2018.

And US treasury yields were driven lower: The yield on the benchmark 10-year note fell to 0.5815% and the 30-year bond to 1.2215% as investors bought into safe haven assets, CNBC reports.

Bitcoin rallied above USD 10k for the first time since early June, rising nearly 11% over the last week, as large investors continued to buy into the market in a bid to push the price past USD 10.5k, according to CNBC.

AND THE REST OF THE WORLD-

Germany-based software developer SAP will IPO its American subsidiary Qualtrics, which specializes in gathering and analysing customer experience data, according to the Financial Times. SAP acquired Qualtrics two years ago for USD 8 bn, in what was one of SAP’s largest transactions. The company’s CFO hasn’t disclosed how much of the company will be listed but said that floating a 10-15% stake would be a “regular size.”

Lebanon’s credit rating has been cut to ‘Venezuela’: Moody’s has downgraded Lebanon’s credit rating further into junk as the country continues to reel from a severe financial crisis, Bloomberg reports. The country’s rating was cut to Ca from C, reflecting the agency’s expectation that investors are likely to take losses of more than 65% on their holdings of Lebanese debt.

Heads are rolling at Intel: The US chipmaker has fired its chief engineering officer less than a week after the company revealed that it had fallen a year behind on its next generation of chips, threatening its position as the world’s premier manufacturer of semiconductors, Bloomberg reports.

Enterprise+: Last Night’s Talk Shows

Summer break for Lamees and Amr: Media power couple (Al Kahera Alaan’s) Lamees El Hadidi and (El Hekaya’s) Amr Adib will taking the entire month of August off (watch, runtime: 1:14) (watch, runtime: 3:01). It’s alright for some…

Egypt, Sudan criticize Ethiopia as new round of GERD talks commence: Ala Mas'ouleety's Ahmed Moussa spoke with Alaa Al Zawahiri, the member of Egypt's technical team in the Grand Ethiopian Renaissance Dam (GERD) talks, who discussed the details of yesterday's first meeting in the new round of African Union-sponsored talks. He said that the teams of both Egypt and Sudan found Ethiopia’s unilateral move in filling the dam’s reservoir unacceptable, but that they remained committed to the talks to reach an agreement. He also noted that Ethiopia requested a week to conduct internal consultations before resuming the talks (watch, runtime: 26:16). Al Kahera Alaan’s Lamees El Hadidi spoke with Irrigation Ministry spokesperson Mohamed El Sebaei to discuss the meeting (watch, runtime: 10:52). Masaa DMC’s Eman El Hosary also covered the new round of talks (watch, runtime: 5:16).

Transport minister inspects Zamalek building damage: Moussa spoke with Transport Minister Kamel El Wazir, who discussed his visit to the Zamalek properties damaged by metro works, a building on Brazil street and the outer wall of the Bahraini embassy. He said that the repairs will take two weeks and will be carried out by Arab Contractors and Orascom, in cooperation with the French company Vinci (watch, runtime: 5:51). El Hadidi (watch, runtime: 3:38) and El Hekaya’s Amr Adib also covered El Wazir’s visit (watch, runtime: 5:36).

“Magical” covid-19 treatment? Moussa spoke with Mohei Hafiz, the head of the Investors and Health Committee of the Investors Union, who said that a local vaccine, Ivermectin, was having a “magical” effect on covid-19 patients, and its price will cost no more than EGP 15. Hafiz added that the Egyptian vaccine would also be trialled on 500 healthy people in the coming period, and the results will be announced in mid-September. (watch, runtime: 4:20). Adib spoke Ahmed El Kilani, Managing Director of EIPICO Pharmaceutical Industries, who said that the covid-19 treatment medicine Enfluvir will be made widely available in hospitals soon. He added that his company was waiting for the Health MInistry to greenlight the production of local variants of Avigan and Remdesivir (watch, runtime: 4:56).

Speed Round

Rising remittances curb current account deficit in 3Q2019-2020: A rise in foreign remittances helped Egypt’s current account shrug off the effects of the covid-19 pandemic during 3Q FY2019-2020, narrowing the deficit markedly to USD 2.8 bn from USD 4.5 bn a year earlier, according to official data (pdf) released by the Central Bank of Egypt yesterday. Remittances, a key source of hard currency for the country, increased by USD 1.7 bn to USD 7.9 bn during 3Q2019-2020 despite the global headwinds in March. This helped the current account deficit for the first nine months of the fiscal year shrink to USD 7.3 bn, compared to USD 9.8 bn a year earlier.

Non-oil trade deficit falls: The non-oil trade deficit fell by USD 2.2 bn to USD 27.3 bn during the first three quarters of FY2019-2020, from USD 29.5 bn in the same period a year earlier. A key contributor was merchandise exports such as gold, radio and TV transmitters and pharma products, which rose by USD 1.2 bn to USD 13.6 bn. Imports of iron, coal, spare parts for cars, and pharma products dropped, contributing to the reduced deficit. In 3Q, non-oil merchandise exports rose almost USD 300 mn to USD 4.4 bn while imports fell 3.2% to USD 13.7 bn.

But oil exports continued to decline: The oil trade deficit widened to USD 773.3 mn in 9M2019-2020 (from a USD 294.3 mn deficit last year), driven by a decline in oil exports, which fell by USD 1.2 bn to USD 7.3 bn. The deficit would have been wider had it not been for the slump in oil prices in 3Q, which caused a 21.3% decline in oil imports to USD 2.3 bn during the three-month period.

Foreign direct investment inflows more than halved during 3Q to USD 970.5 mn from USD 2.3 bn in 3Q2018-2019, amid heightened uncertainty because of the pandemic.

Tourism revenues decline in 3Q: Tourism revenues, another key source of currency, came under pressure during the third quarter, falling 11.4% to USD 2.3 bn (against USD 2.6 bn the year before) as the government suspended international flights towards the end of March. The overall travel balance fell to USD 1.5 bn from USD 1.9 bn, exacerbated by an 11.4% rise in travel payments.

Other key metrics:

  • Suez Canal receipts rose by USD 84.4 mn to USD 1.4 bn in the third quarter.
  • Portfolio investments recorded net outflows of USD 8.2 bn in 3Q, compared to net inflows of USD 6.9 bn.

The tides are turning for foreign portfolio investment in Egypt as investors return to “favorite” carry trade: Foreign holdings of Egyptian sovereign debt rose to USD 10.6 bn by the end of June, and the first two weeks of July saw another USD 3 bn of inflows to local debt, Bloomberg reports, citing an unnamed Egyptian officials. The reversal of the massive capital outflows Egypt witnessed during the earlier months of the pandemic comes as the hunt for an attractive carry trade has brought investors back to Egypt, a longtime “favorite,” Bloomberg says.

At 6.8%, Egypt’s bonds have the fourth-highest returns in USD terms across 25 emerging markets, the business information service tracks, and EGP-denominated bonds have “one of the world’s highest” inflation-adjusted returns at 8.4%. Compared to other similar EMs like El Salvador and Sri Lanka, Egyptian bonds have seen better performance since March, Reuters says.

Egypt now has higher short-term yield and is looking at a potential rally in the EGP, making “the carry trade the most lucrative in Egypt at the moment,” Goldman Sachs Middle East and North Africa Senior Economic Farouk Soussa tells the newswire. This has been driving “significant flows” back into the country, he says.

On the downside, analysts suggest that the rally is at risk of “flatlining” due to geopolitical concerns over a potential conflict in Libya and stalled negotiations on the Grand Ethiopian Renaissance Dam threatening Egypt’s water security, as well as a labored recovery of the tourism industry, Reuters says. The “yield bonanza” is not necessarily translating into improved economic performance and “masks” weak fundamentals, says Arqaam Capital executive fixed income director Zeina Rizk.

Fitch Ratings affirmed yesterday Egypt’s long-term foreign-currency issuer default rating at ‘B+’ with a ‘stable’ outlook. The ratings agency said that Egypt’s “recent track record of fiscal and economic reforms, policy commitment to furthering the reform program and ready availability of fiscal and external financing in the face of the covid-19 pandemic” supported the rating affirmation. On the flipside, Egypt’s rating is weighed down by the country’s fiscal deficit, which is “still large,” as well as high general government debt / GDP and weak governance scores as measured by the World Bank governance indicators.” These are broadly the same reasons the ratings agency gave back in November, when it last affirmed the same rating and outlook.

Also weighing on our rating: Public finances, including our debt-to-GDP and debt-to-revenue levels, which Fitch says are “significantly higher” than the “B” median of 65%. The upside of Egypt’s debt is that half of it is from multilateral institutions the country has warm relations with, and we have “considerable domestic financing flexibility” thanks to a robust banking sector. Fitch also cites “weak governance” and political / security risks as other factors weighing against Egypt.

Egypt’s GDP is expected to grow 2.5% in FY2020-2021, which is “well below” the average 5.5% growth Egypt recorded in FY2017-2018 and FY2018-2019. However, the ratings agency expects growth to bounce back to 5.5% in the next fiscal year and average at a little above 5% over the medium term. The accelerated growth will come on the back of a recovery in the tourism industry, as well as an expansion in the energy and manufacturing industries, underpinned by further reforms to improve the business climate. Inflation is expected to hover at an average of 6% this calendar year and 7.5% in 2021.

Fitch sees Egypt’s budget deficit widening to 9.5% of GDP in FY2020-2021, from 8.8% in the fiscal year that ended on 30 June, and sees a “small budget sector primary deficit of 0.4% of GDP.” This is a “more cautious” forecast than that contained in the state budget, which targets a 0.5% primary surplus — revised downward from an initial 2.0% primary surplus target. The ratings agency also sees this indicator recovering in FY2021-2022, when it expects the primary surplus to “reemerge” and the budget deficit to narrow again to 8.8%.

PE giant Actis to make new renewables acquisition this year, likes fintech, healthcare: Leading emerging-market private equity firm Actis expects to close a new investment in Egypt’s renewables sector by the end of the year, Sherif El Kholy, head of the firm’s Middle East & North Africa business, told Hapi Journal without revealing the project or the size of the investment. The firm, which last year invested in a 250 MW wind farm in the Gulf of Suez through its renewable energy company Lekela, is interested in getting involved in “all new projects” in the sector and is currently considering several prospects, he said.

Potential acquisitions in the fintech and healthcare sectors are also on Actis’ radar, El Kholy said, noting that both have proven themselves to be solid defensive sectors in the face of the pandemic. The firm has investments in both sectors, through its 7.2% stake in Egyptian e-payments firm Fawry and its ownership of Cleopatra Hospitals and Al Borg Laboratories, and is focused on helping these companies expand in their respective spaces, he said.

Actis’ bid for Siemens’ plant moving forward: El Kholy gave little updates on its bid to acquire a stake in one of the three, 4.8-GW Siemens-built combined-cycle power plants that the Sovereign Fund of Egypt is marketing to private investors. He noted only that officials have been working with the anointed financial advisor on the tender process and that Actis has been actively responding to improve its chances. The firm submitted the bid late last year, and is competing with France’s Engie, China Datang Overseas, Blackstone Group’s Zarou, and Edra Holdings. Electricity Ministry sources said previously that Zarou had submitted the best financial offer, making it the top contender.

Plans to invest alongside SFE underway: Alongside its bid to acquire the plants, Actis is also planning to invest with the Sovereign Fund of Egypt (SFE) in several key sectors including infrastructure, energy, and healthcare under an MoU signed with the fund earlier this year, El Kholy said. The plans were said then to involve channelling some GBP 3 bn worth of investments into Egypt over the next three years.

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M&A WATCH- Cleopatra eyes majority stake in fertility-specialist Bedaya Hospital: Cleopatra Hospital Group is in late-stage negotiations to buy a 60% stake in Bedaya Hospital, which specializes in fertility and IVF treatments, the local press reports, citing unnamed sources. The sources did not provide details on the value of the transaction, but said the two sides have reached an agreement on the financials. Bedaya Hospital owner Ismail Aboul Fotouh will retain his holding of the remaining 40% stake and will continue to manage the hospital once the transaction is completed.

M&A WATCH- Beltone Financial is waiting on US regulatory approval to complete the sale of its 60% stake in New York-based brokerage Auerbach Grayson, according to a bourse filing (pdf). Beltone signed the stake over to an unnamed group of investors in April and expected the regulatory approvals to be completed within three months. The filing mentioned that the postponement is due to “current circumstances,” which we’re taking as a reference to covid-19.

In other company news, Beltone expects to launch its consumer finance arm within a “few weeks, Shehab Marzban, the newly appointed CEO of Beltone’s VC arm, told Al Mal. The new company, named Bel Cash, is expected to be up and running as soon as Beltone completes a few remaining steps and the Financial Regulatory Authority gives the all-clear. Beltone submitted a request to the authority to obtain the license earlier this week, it said in a regulatory filing (pdf).

DEMERGER WATCH- OIH board signs off on demerger to delineate between its investments in financial services + other industries: Orascom Investment Holding (OIH) is planning to implement a “horizontal demerger” as part of its plans to restructure the company, according to a bourse disclosure (pdf). The plan, already approved by the board of directors, will split OIH into two companies — OIH and Orascom Financial Holding (OFH). Following the demerger, OIH will remain listed on the EGX and will retain all of its investments in its nine subsidiaries and sister companies apart from those in financial services, which will be transferred to OFH. These investments include stakes in Beltone Financial, Sarwa Capital, and “the current account due to Orascom Investment Holding from Victoire Investment.” The demerger is meant to more clearly delineate between the company’s operations in the financial services industry and other sectors to allow shareholders with a specific interest in one industry to target their investments.

LEGISLATION WATCH- Real estate developers oppose VAT on non-residential properties: Real estate developers have pushed back on proposed legislative amendments that would impose a 14% value-added tax (VAT) on the sale and rental of non-residential properties, the local press reports. The Federation of Egyptian Industries’ real estate division is currently petitioning the Finance Ministry to cancel the planned levy, which they say will raise costs for businesses already struggling to cope with muted consumer demand caused by the coronavirus pandemic.

Government sources say the change will iron out inconsistencies in the VAT law, which impose the tax on some non-residential properties but not others. The law currently subjects stores and office spaces rented within malls to VAT, but grants exemptions to non-residential properties outside of malls.

Background: The cabinet’s economic group last month signed off on proposed changes to the 2016 VAT Tax Act that would amend the list of goods and services on which VAT is remitted. The amendments would subject most commercial advertising to the tax but scrap the 20% stamp tax on ads, and allow tourists to claim VAT rebates. Special economic zones would enjoy the same VAT treatment as freezones, and the Health Ministry would be given the authority to issue decrees exempting pharma components from the tax.

Egypt’s Sumed oil pipeline is feeling the effects of the global demand slump: Egypt’s Sumed pipeline has recently been operating at only a quarter of its capacity due to a historic slump in global demand for oil and the subsequent production cuts that were introduced in May, data compiled by Bloomberg shows. Flows through the pipeline, which is designed to transport up to 2.5 mn barrels of crude per day to the Mediterranean from the Red Sea, have slowed as European countries saw consumption drop by as much as 90%, prompting oil producers to cut output by 10%. As a result, crude flows into Sumed fell almost 50% to 700k bbl/d in June and July from nearly 1.3 mn in April.

Signs of recovery in July: Lifting from the pipeline reached a nadir in June, but since then there has been a slight recovery as a pick up in demand from European refineries draws more crude. Despite this, flows entering the pipeline have failed to rebound, hurt most of all by Saudi Arabia’s continued production cuts. Opec+ is due to start easing the cuts in August, but as most of the new supply is expected to be used domestically, Sumed and other pipelines around the world may have to wait longer before flows pick up.

Why Sumed? Giant crude tankers carrying shipments that mostly come from Saudi Arabia are too big to navigate through the Suez Canal fully loaded to reach their destinations in Europe and North America. Offloading some of their cargo into one end of the pipeline in Ain Sokhna allows the carriers to cross the Suez Canal (without sitting too deep in the water) and then refill in Sidi Kerir. They can also fully offload their cargo to westbound tankers stationed on the other side and move to their next consignment.

LEGISLATION WATCH- The Financial Regulatory Authority (FRA) has finished the first draft of a law that will govern the fintech space, and expects to draw up a final version within one month, Abdelhamid Ibrahim, FRA board member and head of the committee drafting the law, tells Al Mal. The bill would regulate the broad use of financial technology to deliver non-bank financial services, covering areas including crowdfunding, robo-advisory, nano-finance, and insurtech.

The authority is looking to refine the technical aspects of the legislation with the help of an international agency, Ibrahim said, without naming the institution. The European Bank for Reconstruction & Development is a likely candidate, given FRA boss Mohamed Omran said in January that the multilateral lender would work with the regulator on the legislation.

Meanwhile, seven microfinance companies have applied to the FRA for nano lending licenses. The market watchdog gave the greenlight for micro lenders to offer nano loans in November of last year. So far, only one micro lender has been granted a license: Pharos-backed application Kashat, which was launched back in February.

MOVES- Mona Nasser has been appointed as assistant to the finance minister, according to a ministry statement. Nasser will continue her role leading the digital one-stop shop project for trade and customs procedures. She was previously a financial observer for the Social Health Insurance Authority and ِAin Shams University, as well as serving as the executive director of the governmental insurance fund for custodians of charges.

*** WE’RE HIRING: We’re looking for smart and talented people to join our team at Enterprise, which produces the newsletter you’re reading right now and Making It, our very first podcast. We offer the chance to work in a unique and casual work environment that promises to be intellectually challenging and rewarding. Enterprise is currently in the market for:

A senior editorial leader, who will work on this product and help launch new products. You have at least five years of experience in journalism and a minimum of two of those should have been spent in an editor’s slot. Strong knowledge of Egypt, a demonstrated interest in business / finance, and a desire to lead a team are musts. Candidates must also be bilingual.

A seasoned reporter to join our team and create stories and packages that fascinate and inform our readers. Applicants should have serious English-language writing chops, a strong interest — and preferably some professional experience — in business / finance or business journalism, and solid analytical skills. You’ll be expected to pitch stories and take assignments, develop leads into full-blown stories, and should be fluently bilingual.

Interested in applying? To apply for the editor / reporter positions, please submit your CV along with 2-3 writing samples and a solid cover letter telling us a bit about who you are and why you’re a good fit for our team. The CV is nice, but we’re much more interested in your clips and cover letter. Please submit all applications to jobs@enterprisemea.com.

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Egypt in the News

The jailing of five female social media influencers is dominating the conversation on Egypt in the foreign press this morning: A court yesterday sentenced five female TikTok personalities to two years’ in prison for posting “indecent” content on the video-sharing app. The women were also handed fines of EGP 300k each (AFP | Reuters | BBC).

Elsewhere: Haaretz looks at a proposed law that would make Dar Al Ifta independent of Al Azhar and report directly to the government, while Egypt’s MeToo moment is also getting more attention from the Financial Times.

Diplomacy + Foreign Trade

Saudi foreign minister shows support for Egypt on Libya during talks with El Sisi: Saudi Foreign Minister Prince Faisal Bin Farhan expressed support for Egypt’s position on Libya during talks with President Abdel Fattah El Sisi in Cairo yesterday, according to an Ittihadiya statement. Farhan said that Saudi Arabia’s position is “identical to the current Egyptian efforts to settle various disputes in the region” during the meeting that discussed a host of regional issues including the crises in Libya, Yemen, Syria and Iraq, the statement said.

Bin Farhan also met with Foreign Minister Sameh Shoukry to discuss regional developments, a Foreign Ministry statement said.

Egypt is aiming to increase its agricultural exports by 5-10% to reach USD 2.7 bn this fiscal year, compared to EGP 2.4 bn exported last year, the local press reports, citing an unnamed official. Egypt is seeking to increase its production and exports of sugar cane, citrus fruit, soybeans, sunflowers and peanuts this year, and expand wheat cultivation by 200k feddans to reach a total area of 3.6 mn feddans, the official said.

Egypt is the world’s top producer of dates, accounting for 21% of the global market, said Agriculture Ministry spokesman Mohamed El Kersh, the local press reports. It’s also the top exporter of frozen strawberries and the third largest exporter of dried onions, he said.

Infrastructure

Kharafi National lands EGP 775 mn maintenance contract with Cairo Airport

Kharafi National has signed a EGP 775 mn contract with Cairo International Airport to provide maintenance and operational checks at the Terminal 2 building, Executive Manager Elia Saber said, according to Al Shorouk. Kharafi National is a Kuwait-based subsidiary of Saudi Al Kharafi Group.

Basic Materials + Commodities

Egypt to increase sugar production to 2.5-2.6 mn tonnes this year

Egypt will increase sugar production to 2.5-2.6 mn tonnes in FY2020-2021, up from 2.48 mn tonnes last year, Mustafa Abdel Gawad, head of the Agriculture Ministry's Sugar Crops Council, told Reuters. This is sufficient to cover 80% of domestic consumption, with the remainder to be covered through imports, he said.

Banking + Finance

National Railways Authority to borrow EUR 100 mn for Siemens signaling project

The National Railways Authority will in the coming weeks sign a EUR 100 mn syndicated loan agreement with a consortium of unnamed local banks to pay Siemens for its work to install electrical signaling systems and develop railway lines and crossings, Al Mal reports, citing unnamed sources. The loan will carry a tenor of 3-5 years and will be guaranteed by the Finance Ministry.

BdC studies license to accept POS payments

Banque du Caire may apply for a license to accept POS payments as part of its strategy to expand its digital services, Chairman Tarek Fayed said, according to Hapi Journal. The state-owned bank, which is lined up to IPO in the stalled state privatization program, has recently rolled out mobile and internet banking platforms for its corporate clients, Fayed said.

Other Business News of Note

LuLu opens EGP 180 mn hypermarket in Sheraton

India’s LuLu Group has opened its second EGP 180 mn hypermarket branch in the District Mall in Cairo’s Sheraton neighborhood, Chairman Youssef Abdel Qadir said at a presser, according to Al Mal. The group signed a USD 500 mn investment pact with the government last year to open four new retail outlets. Abdel Qadir said yesterday that the group plans to invest USD 500 mn over the next three years to open 11 hypermarkets, four mini markets and an advanced logistics center. It was originally scheduled to open two malls in the first half of 2020 at a cost of USD 400 mn.

Egypt’s CIB earns ISO/IEC 27001 certification

CIB obtained the ISO/IEC 27001 information security management certification from the British Standards Institution (BSI) following an audit, according to Youm7.

Germany lends Slum Development Fund EUR 24 mn

The Slum Development Fund is negotiating a EUR 24 mn grant from an unspecified German government donor to “eliminate unsafe areas,” fund head Khaled Seddik told Al Mal. Seddik added that the fund recently received a EUR 31 mn grant from the European Investment Bank.

On Your Way Out

Ancient artifacts will soon be going on display in Cairo Airport: A team from the Supreme Council of Antiquities has begun installing ancient artifacts in Cairo International Airport’s Terminal 3, the Tourism Ministry said in a statement yesterday. Seventy items will be put on display at the terminal, said Mostafa Waziri, secretary-general of the council.

The Market Yesterday

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EGP / USD CBE market average: Buy 15.93 | Sell 16.03
EGP / USD at CIB: Buy 15.93 | Sell 16.03
EGP / USD at NBE: Buy 15.92 | Sell 16.02

EGX30 (Monday): 10,575 (+0.5%)
Turnover: EGP 1.1 bn (18% above the 90-day average)
EGX 30 year-to-date: -24.3%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session up 0.5%. CIB, the index’s heaviest constituent, ended up 1.3%. EGX30’s top performing constituents were Orascom Investment Holding up 8.1%, Cleopatra Hospital up 2.4%, and Qalaa Holdings up 2.4%. Yesterday’s worst performing stocks were Ibnsina Pharma down 3.4%, EFG Hermes down 1.8% and Sodic down 1.5%. The market turnover was EGP 1.1 bn, and foreign investors were the sole net sellers.

Foreigners: Net short | EGP -96.0 mn
Regional: Net long | EGP +12.7 mn
Domestic: Net long | EGP +83.2 mn

Retail: 60.8% of total trades | 55.9% of buyers | 65.7% of sellers
Institutions: 39.2% of total trades | 44.1% of buyers | 34.3% of sellers

WTI: USD 41.65 (+0.87%)
Brent: USD 43.50 (+0.37%)

Natural Gas (Nymex, futures prices) USD 1.73 MMBtu, (-4.31%, August 2020 contract)
Gold: USD 1,963.50 / troy ounce (+1.99%)

TASI: 7,455 (+0.29%) (YTD: -11.13%)
ADX: 4,330 (+1.06%) (YTD: -14.68%)
DFM: 2,061 (+0.11%) (YTD: -25.45%)
KSE Premier Market: 5,352 (+1.69%)
QE: 9,351 (-0.26%) (YTD: -10.30%)
MSM: 3,556 (-0.03%) (YTD: -10.66%)
BB: 1,281 (-0.13%) (YTD: -20.39%)

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Calendar

28-29 July (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

30 July-3 August (Thursday-Monday): Eid El Adha (TBC), national holiday.

3 August (Monday): Churches in Cairo and Alexandria reopen.

5 August (Wednesday): IHS Markit PMI for Egypt released.

9-10 August (Sunday-Monday): Egyptian expats vote by post in Senate elections.

11-12 August (Tuesday-Wednesday): Senate elections take place.

13 August (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

13-15 August (Thursday-Saturday): RiseUp from Home digital event. Pre-registration available here.

16 August (Sunday): House of Representatives reconvenes after a brief recess.

20 August (Thursday): Islamic New Year (TBC), national holiday.

8-9 September (Tuesday-Wednesday): Run-off Senate elections.

12 September (Saturday): Court session for Egyptian Resorts Company lawsuit against The Tourism Development Authority

15 September (Tuesday): 2019-2020 academic year ends for Egyptian universities.

15-16 September (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

20 September (Sunday): A Cairo administrative court is due to issue a ruling in a third-party lawsuit demanding the government block YouTube in Egypt for carrying an allegedly sacreligious video. The case is an infamous 2012-vintage lawsuit still wending its way through the courts.

24 September (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

6 October (Tuesday): Armed Forces Day.

8 October (Thursday): National holiday in observance of Armed Forces Day.

16 September (Wednesday): The last day for the final results of the senate elections to be announced.

17 October (Saturday): 2020-2021 academic year begins for K-12 students at state schools and students in public universities

23-31 October (Friday-Saturday): El Gouna Film Festival, El Gouna, Egypt.

29 October (Thursday): Prophet Mohamed’s birthday (TBC), national holiday.

November: Egypt will host simultaneously the International Capital Market Association’s emerging market, and Africa and Middle East meetings.

4-5 November (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

12 November (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

15-16 December (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

24 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

25 December (Friday): Western Christmas.

1 January 2021 (Friday): New Year’s Day, national holiday.

7 January 2021 (Thursday): Coptic Christmas, national holiday.

25 January 2021 (Monday): 25 January revolution anniversary / Police Day.

28 January 2021 (Thursday): National holiday in observance of 25 January revolution anniversary / Police Day.

4 February 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

18 March 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

12 April 2021 (Monday): First day of Ramadan (TBC).

25 April 2021 (Sunday): Sinai Liberation Day.

29 April 2021 (Thursday): National holiday in observance of Sinai Liberation Day.

29 April 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

3 May (Monday): Sham El Nessim.

6 May (Thursday): National holiday in observance of Sham El Nessim.

12-15 May (Wednesday-Saturday): Eid El Fitr (TBC).

10 June (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

22 July (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

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