Tuesday, 22 September 2020

NBE, Banque Misr scrap high-interest CDs


What We’re Tracking Today

Good morning, everyone, and welcome to yet another very busy newsday as we hit the midweek mark.

Want to sound smart when you talk to your finance nerd friend? Check out our first Enterprise Explains (after this morning’s Speed Round, below), which this week takes a look at Spacs. The obscure financial vehicle is once again all the rage in the west and will doubtless find its way to our region. The tl;dr: You really wish Enterprise was a public company. So you go raise money from the market by IPO’ing a shell company with a promise to your new investor pals that “I’ll use your money to go buy something cool. I’ll tell you what later.” Cash in hand — and maybe with a bit of extra private equity money on the side— you come and buy Enterprise and “Presto,” Enterprise is a public company.

Keep an eye on markets today as investors worry about everything from a second wave of corona to the US elections. Global stocks took a hit yesterday as the spectre of new lockdowns and concerns about the trajectory of the economic recovery took hold. US stocks fell sharply at the start of the session before a slight tech rebound saved the S&P 500 from slipping into correction territory. European shares were hit harder, with indices across the continent closing deep in the red and the German DAX slipping 4% to record its biggest single-day loss since June. Bank stocks fell as investors reacted to Sunday’s leaks allegedly exposing criminal activity in some of the world’s largest financial institutions.

Outside Egypt, the second wave is real:

  • European governments are likely to introduce new restrictions in the coming days as cases surge across the continent, CNBC reports.
  • The UK government is considering a new two-week lockdown to curb the recent rise in cases, per the BBC.
  • The covid death toll in the US is nearing 200k, as fears grow of a second wave of the virus, the Wall Street Journal reports.
  • Israel entered a second country-wide lockdown on Friday to force residents to stay home during the Jewish New Year holiday, reports Reuters.

What does our crystal ball say? Asian stocks are in the red in early trading this morning (Japan being the exception — by a nose) and futures point to lower opens later today on Wall Street and across much of Europe.

Our bid to become the region’s premier energy hug will get a big boost today when the EastMed Gas Forum’s seven founding states gather in Cairo to sign the organization’s charter, which will officially establish Cairo as its headquarters, Masrawy reports. The forum was created in 2019 to establish a regional gas market and coordinate the development of the eastern Mediterranean’s estimated 122 tcf of gas reserves. Who’s on board? In addition to Egypt, the founding member states are Greece, Cyprus, Italy, Israel, Jordan and Palestine.

It’s day two of EFG Hermes’ virtual investor conference, where more than 650 institutional investors with aggregate AUM north of USD 17 tn are connecting for discussions on the macroeconomic and industrial outlook for frontier and emerging markets. FEM markets are beginning to open up after enduring the worst of the economic fallout from covid-19, EFG CEO Karim Awad said, and investor appetite in these markets is still intact, as a rebound in equity and debt flows suggests, EFG Hermes Investment Banking Co-CEO Mohamed Ebeid said (pdf). The conference runs until next Thursday, 1 October. You can visit the conference website here.

President Abdel Fattah El Sisi is expected to join other world leaders delivering pre-recorded speeches today at the UN General Assembly. None of the world leaders will be travelling to New York this year due to the pandemic, making the assembly a largely virtual affair. Speeches will be given on the second day of the assembly, which kicked off yesterday with a commemorative event marking the UN’s fourth quarter-century. Only a few of the sideline sit-downs between heads of states will take place. Tap / click here for the full schedule.

It’s interest rate week: The Central Bank of Egypt’s Monetary Policy Committee meets to review interest rates this Thursday. All 11 analysts and economists we surveyed expect rates to be left unchanged for a fifth consecutive meeting.

The second annual CIB Egyptian Squash Open is set to take place 10-17 October. The week-long men’s and women’s competition will bring together 96 athletes from 19 countries to compete at the Pyramids and the New Giza Sporting Club, according to a CIB statement (pdf). The winners will receive a USD 540k cash prize.

More trade and investment with Spain: The Cairo rep office of Spanish lender CaixaBank is looking to boost ties between Egypt and Spain in the wake of its parent company’s acquisition of Bankia, another Spanish lender, to form that country’s biggest bank, local chief Luis Aspe tells us. The merged entity remains named CaixaBank. Spain remains one of Egypt’s top trade and investment partners, with some USD 1 bn invested here by 252 companies. UN figures show we exported about USD 1 bn in goods and services to Spain last year (petroleum products and garments lead the list) while importing about USD 1.83 bn (led by vehicles and electronic equipment).

The Health Ministry reported 126 new covid-19 infections yesterday, up from 115 the day before. Egypt has now disclosed a total of 102,141 confirmed cases of covid-19. The ministry also reported 17 new deaths, bringing the country’s total death toll to 5,787. We now have a total of 90,332 confirmed cases that have fully recovered.

Umrah-goers will be required to book a slot to perform the pilgrimage through a new app Saudi Arabia is introducing to help enforce social distancing, said Saudi Arabia’s Hajj and Umrah Minister Mohammad Saleh bin Taher Benten said yesterday, according to Al Arabiya. The Umrah and Hajj pilgrimages have been suspended to curb the spread of covid-19 since March but are expected to resume soon.


We want some of whatever Deutsche Bank is imbibing: The German investment bank said yesterday that global economic output will return to pre-covid levels by the middle of next year due to a stronger than expected rebound in recent months, Reuters reports. While Deutsche warned that soaring debt levels and shifting monetary policy stances may still provoke a financial crisis, it doesn’t seem to have factored in the potential for further economic disruption in the winter in the same way as the markets did yesterday, calling the development of the pandemic “difficult to predict.”

One thing the pandemic has really helped: Boosting China’s exports of electronics and medical supplies, which have pushed up the country’s share of global trade since April, according to data from Oxford Economics and Haver Analytics picked up by the Financial Times. The jump was partially driven by a higher demand for electronics as employees around the world moved to WFH, while China recovered from the pandemic-induced slowdown in production before most other major exporters.

Also worth knowing about this morning:

  • TikTok and Oracle are out with different versions of their newly-agreed takeover pact: TikTok and US tech firm Oracle have come out with conflicting statements on the recently-agreed pact to split the social media firm’s US operations, casting doubt on whether an agreement will be reached, suggests Reuters. Oracle claims the new entity will be majority owned by Americans, while ByteDance says it will own an 80% share in and have it as a subsidiary.
  • The Trump administration has unilaterally imposed new sanctions on Iran, finding itself isolated at the UN ahead of the General Assembly meeting this week, Bloomberg reports.
  • General Electric is moving to sell or shutdown its coal-fired power plants in a move to focus on sustainable electricity generation, reports the BBC.

enterpriseTake a moment to breath in and watch the beauty around. It’s time for your mind to wander to beautiful places at Somabay and let nature work it’s magic.

US ELECTION WATCH- Trump looks set to name a religious conservative as his next pick for the Supreme Court: US President Donald Trump could nominate US Court of Appeals circuit judge Amy Coney Barrett to replace Supreme Court Justice Ruth Bader Ginsburg, who died last on Friday only six weeks before the presidential elections, according to Bloomberg. Barrett is a dream pick for conservative Republicans, the New York Times suggests. Speaking at a campaign rally, Trump’s Democratic contender Joe Biden urged Republican senators not to vote on any proposed candidates before the November elections, calling Trump’s insistence on “an exercise in raw political power,” Reuters reports.

Enterprise+: Last Night’s Talk Shows

It was Education Minister Tarek Shawki’s turn to sit down for a marathon interview last night, during which he railed against people criticizing the ministry’s response to the SATs crisis and told parents to be patient while the ministry works out an agreement with private sector providers over the coming school year’s tuition fees. Here are the key takeaways from the two-hour exchange with 90 Minutes’ Osama Kamal (watch, runtime: 1:44:29):

  • Parents are going to have to wait at least three months before the dispute with private sector schools over tuition fees is resolved, Shawki said. Parents have been busy lobbying the government to defer installments on the coming year’s fees after private sector providers demanded that they begin paying early. Shawki said that parents are going to have to pay the fees as usual while the ministry works on the problem.
  • There’s no “Egyptianized” SAT coming, despite the ministry’s reservations about how the American education system operates in Egypt, Shawki said. Parents have raised fears that the ministry will introduce an Egyptianized test to replace the SATs exam, which caused chaos earlier this year when the questions were leaked ahead of the test. Shawki said that the ministry replaced the SAT with the internationally-recognized ACT exam, which is approved by an American institution as well as the Supreme Council of Universities.
  • Shawki dismissed talk about postponing studies or Egyptianizing foreign diplomas as nonsense and has no basis in truth, stressing that most international schools receive support from their home countries and are not controlled by the ministry.

Health expert gives mixed signals on covid: Al Hayah Al Youm’s Lobna Assal interviewed Ashraf Hatem, member of the Supreme Committee for Viruses, on how covid-19 will develop in the months ahead. Hatem voiced fears over what could happen with flu season approaching, and raised the prospect that a second wave could result in covid-19 and ordinary flu cases becoming confused in the coming months. In contrast, Hatem appeared optimistic that the country could soon bring the mortality rate down to zero, but admitted that it could be a while before the virus is fully eradicated from the country (watch, runtime: 44:59).

Flood warnings in El Beheira: El Hosary phoned Irrigation Ministry spokesperson Mohammad El Sibai, who said that the ministry had warned some of the residents in El Beheira to evacuate their homes in case of flooding (watch, runtime: 7:52), and talked to El Beheira Governor Hisham Amna who said that the governorate warned farmers that their crops are at risk of being flooded (watch, runtime: 4:59). Ala Mas’ouleety’s Ahmed Moussa also covered the story (watch, runtime: 6:04).

Development in Upper Egypt got some airtime: El Hosary phoned Local Development Ministry spokesperson Khaled Qassem, who discussed the World Bank’s involvement with the USD 1 bn Upper Egypt development program. He listed a number of current achievements, including a EGP 1.2 bn potable water project in Sohag, and a EGP 1.5 bn wastewater project in Qena (watch, runtime: 11:06). Meanwhile, Assal phoned Qena Governor Ashraf El Daoudi, who said that the government has begun to implement a plan that will see wastewater infrastructure extended to every urban area and 50% of villages in Upper Egypt (watch, runtime: 5:52).

Slum Development Fund head talks rehousing: El Hosary phoned Khaled Seddik, the head of the Slum Development Fund, who said that 175k families had been moved from slums to the new settlements such as Al Asmarat and Bashayer El Khair, , and that the government is aiming to increase this to 240k by the end of the year (watch, runtime: 10:47).

Speed Round

NBE, Banque Misr scrap high-interest CDs: State-owned National Bank of Egypt (NBE) and Banque Misr have stopped offering 15% fixed-rate savings certificates launched in mid-March, the institutions told the local press (here and here). The banks started selling the high-interest certificates in March to protect savers and ease pressure on the EGP after the central bank cut interest rates by 300 bps during the early days of the covid-19 pandemic. NBE sold some EGP 280 bn worth of the product during the six-month offering, Deputy Chairman Yehia Aboul Fotouh tells Al Mal, while Banque Misr reeled in EGP 103 bn, Deputy Chairman Akef El Maghraby tells Hapi Journal.

The two banks have been pulling liquidity out of the market with high interest rate products since the float of the EGP in late 2016 as the central bank guided the market away from dollarization. Both Banque Misr and NBE are now offering products more in line with rates offered by other players in the industry, with the highest yielding CDs in the banking system now in the 12-12.25% range, according to a survey by Masrawy.

Scrapping high-interest products could be another way for the central bank to support the economy without having to cut interest rates to keep the country attractive to the carry trade. “Cancelling the 12-month, 15% high-yielding certificates of deposits … [would] be supportive of growth, equities and banks’ net interest margins,” Renaissance Capital’s Ahmed Hafez suggested in a research note last week. EFG Hermes’ Mohamed Abu Basha, meanwhile, wrote yesterday that “the move indicates that monetary authorities are comfortable with the current FX liquidity in the market with a reduced risk of dollarization,” forecasting that the CBE will leave interest rates on hold this coming Thursday.

The National Investment Bank has also scrapped its high-interest certificates as it faces the prospect of compressed net interest margins after losing access to tax breaks on income from treasuries, NIB Managing Director Mahmoud Montasser told Al Masry Al Youm. The bank will instead offer certificates yielding 10-10.75%.

La Mancha, Centamin, Barrick Gold among bidders in Egypt’s gold mining tender: Canadian mining firm Barrick Gold, Naguib Sawiris’ La Mancha, and Egypt-focused Centamin are among the companies that have submitted bids in the gold and mineral exploration tender, which closed last week, Al Mal reports. The Egyptian Mineral Resources Authority’s (EMRA) had launched in March the bid for the rights to mine 56k sqkm in the Eastern Desert. Barrick, La Mancha, Centamin, and “several other” companies are bidding on exploration licenses for 320 blocks under the block-based concession system. Exploration licenses will be issued for two years and eligible for renewal for two more, with the possibility of a third renewal in the event of technical difficulties.

Some major players decided to sit out the bid: Aton Resources decided against participating in this tender and to focus on exploration and development projects already underway, including its exploration in the Eastern Desert’s Hamama, CEO Mark Campbell told Enterprise. “We did not bid this time, though we would have liked to and had identified areas that we would have gone for, but our decision not to bid was operational and not linked to the bid round itself,”he said.

Should we expect a new tender in January? Oil Minister Tarek El Molla said earlier this year that a new gold exploration tender would be launched every four months, putting us on track to see a new tender launched in January.

Background: The tender was launched on 15 March and was expected to conclude on 15 July but EMRA extended the deadline until 15 September in June due to the pandemic. The government announced its intention to issue gold mining tenders every four months earlier this year. This was the first gold tender since 2017, and the first since the Mineral Resources Act was amended last year to provide more investment-friendly terms. Gold mine operators now pay 5% royalty, EGP 25K in rent per sq km each year, income tax of 22.5%, and 1% of the value of annual production to the governorate where the mine is located.

IPO WATCH- Ebtikar taps EFG to quarterback EGX debut: Ebtikar — MM Group's non-banking financial services subsidiary — has hired EFG Hermes to advise on a potential IPO for Ebtikar or its e-payment subsidiaries, according to an EGX filing (pdf). The expected timeline and size of the offerings have not been determined. IR Director Ashraf Al Ghannam said in March that MM Group is eyeing an EGX debut for Ebtikar and one of its e-payments subsidiaries in 2021, while sources talking to the local press last month said that the company is looking to take the e-payments firm public in 1Q2021.

SIGN OF THE TIMES- Everyone is a fintech startup. Banque du Caire is looking to set up a new e-payments arm in the coming months after getting approval for a license from the Central Bank of Egypt, CEO Tarek Fayed says. In other news from the sector, e-payments startup PayMint was awarded a KYC licence license from the Central Bank of Egypt that will allow it to provide customer identification services for the National Bank of Egypt, says PayMint CEO Mohammad Rabie. PayMint is the second e-payment firm in Egypt to obtain the license after Fawry.

INVESTMENT WATCH- Raya Auto plans to invest EGP 200 mn in local EV assembly over the next three years: Raya Holding’s automotive arm, Raya Auto, is investing EGP 200 mn in the local production of electric vehicles in the next three years, CEO Mohamed El Naggar said in an emailed statement (pdf). The company now has an annual production target of 35k light transport golf cars as well as two and three-wheeler vehicles, which would give it a 10% share of the light transport market. So far, Raya Auto has made good on EGP 50 mn of these investments in 2020, El Naggar told the local press.

The increased investment comes as Egypt encourages a shift towards EVs. The government began working on incentives to promote the use of EVs last year. A cornerstone of this framework involves subsidies of around EGP 50k that will be doled out for the first 100k locally-produced EVs. We took a deep dive into this strategy and the problems manufacturers and consumers face in the shift to EVs in a recent Hardhat report.

CORRECTION- 22 September 2020
An earlier version of this story incorrectly stated that the size of the investment was USD 200 mn. The correct amount is EGP 200 mn.


M&A WATCH- Ahli United Bank gets regulatory clearance for bid to buy out minority investor: Ahli United Bank’s (AUB) full takeover of its Egypt arm moved a step closer yesterday after the Financial Regulatory Authority (FRA) approved its offer to purchase the remaining 14.52% stake in AUB Egypt alongside Misr Strategia, the authority said in a statement carried by Al Mal. The offer targets some 43.5 mn shares at EGP 29.783 apiece, giving the transaction a value EGP 1.29 bn. The acquisition would see the AUB purchase the International Finance Corporation’s 10% stake and Qatar National Bank’s 4.17% holding, while Misr Strategia would acquire the remaining 0.15% held by Egyptian shareholders. Naeem Holding will be the broker in charge of executing the offer on the EGX.

DEBT WATCH- World Bank mulls financing part of USD 640 mn railway upgrade: The World Bank is studying a loan to the government to partially fund a USD 641.2 mn project to improve safety provisions on the railway line connecting Alexandria to Upper Egypt, the local press reports. The proceeds will be used to upgrade signaling and tracks along the Alexandria-Cairo-Nagaa Hammadi line and install a safety and asset management system for Egyptian National Railways (ENR), the bank said. The government is slated to spend EGP 141 bn through 2022 to spend on a much-needed overhaul for the country’s railway system, which in past decades has suffered regular accidents due to underinvestment.

Better railway management, new rules for private sector participation: The project would help ENR recruit more qualified people and improve how the company manages the railway through introducing concepts familiar abroad. These include public service obligations (PSO), which aim to make it more profitable for private companies to manage or operate railways by introducing obligations on public authorities to make contracts work more efficiently. They could also see the government offer subsidies or incentives to the private sector to participate in railway tenders. The bank also said it would work to implement multi-annual contracts, without providing further details. Multi-annual contracts are long-term financing arrangements between transport authorities and private sector infrastructure managers that encourage stakeholders to take a long-term view when planning infrastructure investments.

The loan will be up for discussion by the WB board in a meeting on 29 January, but a preliminary decision should be made soon, says the local press.

Amendments to the Railway Act passed in 2018 allowed authorities to contract private companies to build, manage, and maintain rail infrastructure. Private-public partnerships in railway management have since been formed in new railway lines currently under construction, including a high-speed train linking Ain Sokhna and New Alamein and the monorails linking Sixth of October City to Giza and Nasr City to the new administrative capital.

STARTUP WATCH- Alex Angels is setting up an offshore vehicle to manage its EGP 100 mn startup fund. Alex Angels is in the process of setting up an offshore company to manage the portfolio of its planned EGP 100 mn fund, Chairman Tarek El Kady told Enterprise. The group has postponed the launch of the fund, which will invest in local startups, to November from September, El Kady tells Al Mal. The delay is a result of the procedures to set off the offshore vehicle, which appeared to be the “most economical” option for the fund, he told us. El Kady did not elaborate further on the group’s decision to opt for an offshore fund. Regulatory and tax constraints have previously been identified (pdf) as factors pushing post PE and VC players doing business in Egypt to transact via offshore vehicles. The poor enforceability of shareholder agreements that don’t hew closely to local law has also been cited by some pundits as a factor.

What will Alex Angels invest in? The fund is looking to provide early stage tech and communications startups with 30-50% of their capital requirements and expects to make its first round of investment worth some EGP 30 mn in late November, with plans to invest the full EGP 100 mn in early 2021. Alex Angels made its first investment in 2017 in the online delivery app VOO, and has since supported tech-powered startups such as Mumm, Mayday, El Gameya, and Ordera, among others.

EXCLUSIVE- MOVES- Ziad Mokhtar, Algebra Ventures’ co-founder and managing partner, is phasing out his involvement in the firm, announcing overnight that he will not continue as a general partner in future funds. Mokhtar will remain a partner in Algebra’s first fund alongside Tarek Assaad and Karim Hussein, but will not join them as a partner in future funds, where he will serve only as an advisor.

Where is Mokhtar going? He has an “urge to become a tech entrepreneur again” as he looks to build on a story that has already seen Algebra go from an idea on the drawing board to an industry leader. The firm’s USD 50 mn first fund, Mokhtar said, was “the first venture fund to be raised for the country since 2008, the first from regional and international investors, and the largest ever. … Our success has been part of a bigger story. One that saw the number of funds investing in tech in Egypt grow from no more than 2 in 2010 to over 20 in 2020. Egyptian startups are not just receiving investments from Cairo and neighboring capitals, but also from places as far as San Francisco and Beijing. The USD 100 mn exit of 2015 became a USD 1.2 bn public company, and today there is more than one startup story that is bigger than a USD 100M exit. Top talent from consulting firms, investment banks, telecos, and FMCGs, are back again booking their one-way ticket on the next rocketship that is about to take off.”

WORTH READING- Check out Ziad’s piece in full here on LinkedIn.

STARTUP WATCH- AI startup Elves is closing in on “substantial” series A funding as it gears up to move its HQ to El Gouna, where the entire team will be working from the Red Sea town’s G Space coworking tech hub, CEO Karim El Sahy told Enterprise. El Sahy did not specify the expected size of the funding round, nor the investors who are expected to participate. Elves raised USD 2 mn from Sawari Ventures and other unnamed investors this month, bringing its total pre-series A funding to nearly USD 5 mn. The high-profile concierge-based app has already set up shop in El Gouna at the Silicon Valley-esque G Space, according to a press release (pdf). According to El Sahy, seven employees have been relocated to G Space. Under its agreement with El Gouna, 10 developers will work out of a small office space as a first phase, before Elves moves its HQ to a seaside office and sets up 30-40 employees in its own apartment block.

Before you get too jealous of Elves’ planned work setup, take heart that most others in the business community are likely on the same boat as you: We’re talking to Cairo folk this week for a follow-up survey on who’s working from the office again, who’s still (mostly) working from their couches, and what the outlook is on the WFH vs. return-to-the-office dichotomy. Keep an eye out for the results in Thursday’s issue.

Enterprise Explains

2020 is the year of the SPAC,” MarketWatch declared last week — and they’re not wrong. The unusual financial vehicle has broken records in 2020, with 82 of the 223 SPACs launched since 2015 coming this year. The awkward-sounding acronym is becoming increasingly commonplace in the financial press as big names get in on the act. Hedge fund titan Bill Ackman has a SPAC. Baseball exec Billy Beane and Silicon Valley investor Kevin Hartz both have SPACs. Former House Speaker Paul Ryan also has SPAC. Reading the MarketWatch piece — incidentally about why you may want to think twice before investing in a SPAC (more on that later) — got us thinking: how many of our readers actually know what a SPAC is? Behold then, ladies and gentlemen, the catalyst for the launch of a new weekly section dedicated to decoding the arcane corners of the financial world.

So, what’s a SPAC already? Let’s say you’re an investor who is interested in acquiring a company. You could go the traditional route, entering into talks to purchase a stake of, or perhaps buyout, the firm. Another option, one that is increasingly being deployed by US investors, is to set up a SPAC. SPAC stands for special-purpose acquisition company: a listed entity dedicated solely to acquiring companies. Because of this, SPACs don’t actually have commercial operations — they exist just to allow the creator to raise money in an IPO on a stock exchange. The owners of the company will work to drum up interest among institutional investors as they would do ahead of an IPO and then float the SPAC on a stock exchange. After going public, the SPAC places the proceeds in a trust while it finds a company to acquire (this usually has to be done within two years or it faces liquidation).

You may have seen SPACs referred to in the press as blank-check companies — and this is crucial. To speed up the listing process, the founders rarely disclose what companies they will try to acquire post-IPO. Investors are effectively kept in the dark about how their money will be invested, tantamount to handing the owners a blank check.

So why the SPAC boom? Having existed since the 1980s, SPACs are becoming one of the hottest asset classes in the US markets as central bank stimulus floods markets with liquidity and investors search for growth companies. Business owners, too, are warming to the idea, attracted by the speedier listing process and increased certainty offered by the vehicles. The entry of well-known investors and higher-value companies has made SPACs — which have historically been associated with legally dubious strategies — a new air of credibility in the eyes of businesses and investors alike, says Bill Haddad, a partner in the corporate practice of law firm Venable LLP.

Thing is, SPACs don’t often make a great investment: That MarketWatch piece we mentioned earlier highlights recent research by Renaissance Capital that suggests the returns offered by SPACs pale in comparison to traditional IPOs. Of the 223 SPACs, just 89 have actually managed to acquire a company and take it public, and of those 89, common shareholders have faced average losses of almost 19% and a -36.1% median return, compared to a 37.2% average return delivered by traditional IPOs. Analysis by the Financial Times has also revealed the share prices of the bulk of SPACs launched between 2015 and 2019 are below USD 10 apiece, the price at which the vehicles usually debut on the market. “Overall, investing in a Spac is like flipping a coin, where only half of them are shown to be value creating,” Milos Vulanovic, finance professor at EDHEC Business School and SPAC expert, told the paper.

Egypt in the News

The discovery of 27 ancient coffins in Saqqara this month is still leading the conversation on Egypt this morning: Reuters | Associated Press | Daily Star.

Diplomacy + Foreign Trade

Topping diplomatic coverage this morning: Does Turkey want to kiss and make up? Turkey, which has been busy angering the rest of the region with its gas exploration efforts, has signalled that it is willing to make peace with its neighbours and become a member of the forum. In an interview with Turkish news agency Demirören, presidential spokesperson İbrahim Kalın said that the government is open to dialogue with Egypt and Israel and expanding energy cooperation in the region, Masrawy reports. Greek Energy Minister Kostis Hatzidakis told the forum earlier this year that its members should work to bring Turkey into the fold provided Ankara respects international law.

Meanwhile, Kenya will honor the Comesa trade agreement until June 2021, meaning it will continue to abide by the no-customs rule on goods imported from Comesa signatories, the Trade Ministry confirmed yesterday. Hapi Journal also picked up the memo from the Kenya Revenue Authority confirming the move to Comesa member states. The decision reverses Kenya’s threat of imposing a 25% customs duty on Egyptian imports. Egypt exported USD 416 mn-worth of goods to Kenya last year, according to head of the Egyptial Commercial Representation Authority Ahmed Maghawri.

Egypt will begin exporting chemical products to Spain and Argentina, Export Council for Chemical Industries and Fertilizers Chairman Khaled Abu Al Makarem told Al Masry Al Youm. He expects exports to amount to USD 5 bn by the end of the year. The lobby group is naturally pushing the government to give fresh incentives to Egyptian companies with a foreign presence, including subsidies with a declining rate to fund rent expenses for brick and mortar branches abroad, Abu El Makarem said.

Meanwhile in politics: Foreign Minister Sameh Shoukry talked business investment and exports with EU Commissioner for Neighborhood and Enlargement Oliver Varhelyi, and President Abdel Fattah El Sisi discussed regional events with Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan in a phone call.


Foreign companies invited to bid in tender for manufacturing tablets

International hardware manufacturers will get the chance to manufacture tablet computers in Egypt in a forthcoming government tender. Cabinet said in a statement that Prime Minister Moustafa Madbouly has presented several companies with the brochure, which requires them to source at least 60% of the content used in the manufacturing process from local sources.

Health + Education

New e-learning platform for universities launched

The Higher Education Ministry has launched a new distance learning platform for universities built by Microsoft and BlueCloud Technology, minister Khaled Abdel Ghaffar said. This will be the first digital platform to provide online educational services and launches as part of the hybrid system that will be in place when students across the country return to schools and universities on 17 October.


Hotel occupancy in Egypt to rise next year -Colliers

Hotel occupancy rates in Cairo, Sharm El Sheikh, Hurghada, and Alexandria could rise 43-56% y-o-y in 2021, Colliers International says in its latest MENA hotel forecasts report (pdf). Colliers expects hotel occupancy in the capital to hit 65% next year (up 56% y-o-y), while Sharm El Sheikh occupancy is forecast at 43% in 2021 (up 52% y-o-y), Hurghada is expected to see a 48% hotel occupancy rate (up 53% y-o-y), and Alexandria could see its hotels 62% full (up 44% y-o-y).

Automotive + Transportation

Three int’l companies, consortium bid for EGP 20 bn electric train

The Aviation Industry Corporation of China, a consortium of French companies, and an unnamed Japanese consortium have submitted bids in the National Tunnels Authority’s tender to implement the EGP 20 bn Damietta-Gamasa-Mansoura electric train line, Al Mal reports, citing unnamed Transport Ministry sources.

Banking + Finance

Edita Food Industries to receive EGP 105 mn loan from Arab Bank

Edita Food Industries signed a medium-term loan worth EGP 105 mn with Arab Bank to finance a new production line, according to an EGX filing (pdf). The loan will carry a seven-year tenor and will be issued at the 8% discount interest rate afforded to factories under the Central Bank of Egypt’s initiative to support manufacturers through the pandemic.

On Your Way Out

Saudi Arabia is putting its first Ancient Egypt exhibit on display at Ithra Museum in Riyadh starting November, according to a Tourism Ministry statement. The exhibit, which will display 84 artifacts, will run for two years.

The Market Yesterday

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EGP / USD CBE market average: Buy 15.68 | Sell 15.78
EGP / USD at CIB: Buy 15.68 | Sell 15.78
EGP / USD at NBE: Buy 15.70 | Sell 15.80

EGX30 (Monday): 10,910 (-0.5%)
Turnover: EGP 1.6 bn (42% above the 90-day average)
EGX 30 year-to-date: -21.9%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session down 0.5%. CIB, the index’s heaviest constituent, ended up 0.4%. EGX30’s top performing constituents were KIMA up 2.4%, Dice up 0.9%, and CIB up 0.4%. Yesterday’s worst performing stocks were GB Auto down 4.8%, Pioneers Holding down 3.6% and Ibnsina Pharma down 3.2%. The market turnover was EGP 1.6 bn, and foreign investors were the sole net sellers.

Foreigners: Net short | EGP -29.9 mn
Regional: Net long | EGP +15.3 mn
Domestic: Net long | EGP +14.6 mn

Retail: 77.7% of total trades | 76.2% of buyers | 79.2% of sellers
Institutions: 22.3% of total trades | 23.8% of buyers | 20.8% of sellers

WTI: USD 39.72 (+1.04%)
Brent: USD 41.44 (-3.96%)

Natural Gas: (Nymex, futures prices) USD 1.87 MMBtu, (+1.69%, October 2020 contract)
Gold: USD 1,919.30 / troy ounce (+0.46%)

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September: The Egyptian Federation for Securities will hold elections for its board of directors after they were postponed in March due to the lockdown.

September: The General Authority for Investment (GAFI) will host a virtual meeting with the Arab-German Chamber of Commerce and Industry and some 120 German companies to discuss investment prospects in Egypt.

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.

21 September-1 October (Monday-Thursday): EFG Hermes’ second Virtual Investors Conference.

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

24-25 September (Thursday-Friday): The European Union will discuss imposing sanctions on Turkey to limit the country’s ability to expand its search for oil and gas in contested eastern Mediterranean waters.

27 September (Sunday): Former Finance Minister Youssef Boutros Ghali to be retried on charges he squandered public funds in a case related to the printing of coupons for butane canisters.

28 September-3 October (Monday-Saturday): CIB PSA World Tour Finals, Cairo, Egypt.

End of September: Last chance to settle building code violations for illegal buildings.

1 October (Thursday): House of Representatives reconvenes for its sixth and final legislative session before elections for the house later in October or November.

1-10 October (Thursday-Saturday): Alexandria Book Fair, Kouta, Alexandria.

4 October (Sunday): Senate convenes for its first session.

6 October (Tuesday): Armed Forces Day.

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

12 October (Monday): The Egyptian Iron and Steel company general assembly would discuss demerging its mining and quarrying unit and restructure the company’s board of directors

10-17 October (Saturday-Saturday): CIB Egyptian Squash Open, New Giza Sporting Club/ Pyramids of Giza

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

18-22 October (Sunday-Thursday): The annual Cairo Water Week event — which will be semi- virtual this year — will be held under the slogan “Water Security for Peace and Development in Arid Regions”

21-23 October (Wednesday-Friday): Polls open to international voters for first round of Parliamentary elections in Giza, Fayoum, Beni Suef, Minya, Assiut, New Valley, Sohag, Qena, Luxor, Aswan, Red Sea, Alexandria, Beheira, Matrouh.

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

24-25 October (Saturday – Sunday) Polls open for first round of Parliamentary elections in Giza, Fayoum, Beni Suef, Minya, Assiut, New Valley, Sohag, Qena, Luxor, Aswan, Red Sea, Alexandria, Beheira, Matrouh.

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.

November: An Egyptian-Russian ministerial committee will meet to discuss trade and investment in Moscow.

2 November: Former Civil Aviation Minister Ahmed Shafik faces retrial at Cairo Court of Appeals in the so-called Aviation Ministry corruption case.

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

4-6 November (Wednesday-Friday): Polls open to international voters for first round of Parliamentary elections in Cairo, Qalyubia, Menofia, Gharbia, Kafr El Sheikh, Sharqia, Damietta, Port Said, Ismailia, Suez, North Sinai and South Sinai.

4-7 November (Wednesday-Saturday): Cityscape Egypt Expo, International Exhibition Center, Cairo

7-8 November (Saturday-Sunday): Polls open for first round of Parliamentary elections in Cairo, Qalyubia, Menofia, Gharbia, Kafr El Sheikh, Sharqia, Damietta, Port Said, Ismailia, Suez, North Sinai and South Sinai.

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

15 November (Sunday): Egyptian Tax Authority’s online intro seminar on new electronic invoice system for first tranche of companies transitioning to e-filing program.

19-28 November (Thursday-Sunday): Cairo International Film Festival, Cairo Opera House, Egypt.

23-24 November (Monday-Tuesday): Reruns for Parliamentary elections in Giza, Fayoum, Beni Suef, Minya, Assiut, New Valley, Sohag, Qena, Luxor, Aswan, Red Sea, Alexandria, Beheira, Matrouh.

30 November (Monday): Final results will be announced for Parliamentary elections held in Giza, Fayoum, Beni Suef, Minya, Assiut, New Valley, Sohag, Qena, Luxor, Aswan, Red Sea, Alexandria, Beheira, Matrouh.

December: The 110th regular session of the Egyptian-Iraqi Joint Higher Committee will be held under the chairmanship of the prime ministers of the two countries

1 December (Tuesday): The IMF will conduct a first review of targets set under the USD 5.2 bn standby loan approved in June (proposed date).

7-8 December (Monday-Tuesday): Reruns for Parliamentary elections in Cairo, Qalyubia, Menofia, Gharbia, Kafr El Sheikh, Sharqia, Damietta, Port Said, Ismailia, Suez, North Sinai and South Sinai.

9-10 December (Wednesday-Thursday): BiznEx, the international business expo in Egypt, venue TBD.

14 December (Monday): Final results will be announced for Parliamentary elections held in Cairo, Qalyubia, Menofia, Gharbia, Kafr El Sheikh, Sharqia, Damietta, Port Said, Ismailia, Suez, North Sinai and South Sinai.

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.

13-31 January (Wednesday-Sunday): Egypt will host the 2021 Men’s Handball World Championship at the Giza Pyramids

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

26-28 January (Tuesday-Thursday): Future Investment Initiative, Riyadh, Saudi Arabia

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 2021 (Monday): Sham El Nessim.

6 May 2021 (Thursday): National holiday in observance of Sham El Nessim.

12-15 May 2021 (Wednesday-Saturday): Eid El Fitr (TBC).

31 May-2 June 2021 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, Nasr City, Cairo.

1 June 2021 (Tuesday): The IMF will conduct a second review of targets set under the USD 5.2 bn standby loan approved in June 2020 (proposed date).

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

26-29 June 2021 (Saturday-Tuesday): The Big 5 Construct Egypt, Cairo International Convention Center

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

30 July-3 August 2021 (Thursday-Monday): Eid Al Adha, national holiday (TBC).

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