Tuesday, 13 October 2020

Maait promises no tax hikes + the race to buy Egypt’s BMW distributor

TL;DR

What We’re Tracking Today

Good morning, friends. It’s hump day, and we have plenty of news to get you through the morning — and the promise of an Apple event tonight, wherein the faithful will be rewarded for their patience with a glimpse of the next iPhone. You can stream the show here starting at 7pm CLT. Expectations are high: Apple shares are up the most since July as traders expect big news.

PSA- You now have until 21 November to get your electronic car stickers after the Interior Ministry decided to extend the deadline. The stickers — which are required for all vehicles — are attached to the windshield near the rearview mirror and include an RFID chip that allows authorities to read vehicle license information from a distance (and catch you if you run a red light or break the speed limit). All moroor units will now be open until 8pm, Ala Mas’ouleety’s Ahmed Moussa noted (watch, runtime: 6:21).

The IMF and World Bank’s (virtual) annual meetings continue this morning and will likely make headlines, if only for the release later today of the IMF’s World Economic Outlook.

The G20 could agree this week to a six-month extension of its debt relief initiative as a “compromise” with the World Bank and IMF, which are pushing for a one-year extension, World Bank President David Malpass told reporters at the institutions’ virtual annual meetings, which kicked off yesterday. Lender countries earlier this year allowed 73 of their poorest debtors to postpone payment of 2020 dues, but only 43 of the countries have applied for debt suspension, delaying only half of a USD 11.5 bn collectively owed. The debt service relief initiative also doesn’t cover private sector creditors such as banks, and only three countries have applied for debt relief, which has not yet been granted, from their private lenders, the IMF says, according to the Financial Times. Egypt is not on the list of countries eligible for debt relief.

The IMF is also pushing for the World Bank and bilateral donors to hand out grants to struggling African economies, IMF Managing Director Kristalina Georgieva said at the FT Africa summit yesterday, according to Reuters.

Are you ready to say goodbye to your share of USD 100 bn-worth of international tax loopholes? Tax authorities around the world could reel in an additional USD 100 bn in revenues if a draft of a new corporate taxation system proposed by the Organisation for Economic Cooperation and Development sees the light, the Financial Times reports. The system, which can be implemented as early as next year if a political agreement is reached, would require companies to pay taxes on profits where they operate instead of shifting them to low tax jurisdictions. It would also include the implementation of a minimum corporate tax rate, and would oblige companies to pay a portion of their tax in the locations where their customers are located, even if they sell remotely.


The Health Ministry reported 132 new covid-19 infections yesterday, up from 129 the day before. Egypt has now disclosed a total of 104,648 confirmed cases of covid-19. The ministry also reported 10 new deaths, bringing the country’s total death toll to 6,062. We now have a total of 97,743 confirmed cases that have fully recovered.

Egyptians are a bit less worried about their financial futures and are less reliant on charity to help them get through tough times brought on by the great covid-19 lockdown, according to a national survey by state statistics agency Capmas. The agency found that more than 45% of respondents were “optimistic about their incomes” as they believe the “crisis is over.” Nearly 32% of respondents expect their incomes will decline in the next three months, down from more than 48% when the results from the last survey were published in June. A bit under 14% said they were relying on charity to help make ends meet, compared with more than 17% in June.

Human trials of Russia’s Sputnik V covid-19 vaccine have begun in the UAE amid continuing concerns over its efficacy and safety, CNBC reports. The UAE is the second foreign country after Belarus to trial the vaccine, which was the first worldwide to receive regulatory approval last August. Russia’s sovereign wealth fund last month agreed with local distributor Pharco to provide a quarter of the Egyptian population with the vaccine. The news comes as Johnson & Johnson paused its vaccine trials after a participant developed an unexplained illness.

Covid-19 vaccines should be available to low-income countries at no charge and at reduced prices for middle-income countries once a vaccine candidate proves effective, Health Minister Hala Zayed said while chairing a meeting of the World Health Organization Regional Committee for the Eastern Mediterranean. The committee’s ongoing session is underway in Cairo and due to wrap up today.

enterprise

The UK is shutting down pubs and bars in some parts of England as of tomorrow to curb a second wave of covid-19 — a measure that Prime Minister Boris Johnson’s top medical advisor thinks won’t be enough to stop the rise in case numbers, according to Bloomberg. The UK has reported more cases (160k+) between 27 September and 11 October than it did between March and September, Google’s data compilation shows.

The first confirmed US case of reinfection with covid-19 could represent a “blow to herd immunity,” the Financial Times suggests this morning.

Auction theory thinkers win Nobel in economics: Stanford University professors Paul Milgrom and Robert Wilson were awarded the 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel “for improvements to auction theory and inventions of new auction formats.” Milgrom and Wilson studied the behavior of auction participants and used those findings to design better auction formats for goods and services that are tricky to sell in a conventional way. They designed the US’ Federal Communications Commission auction for radio frequencies which raised USD 120 bn when previously they were given away without charge. Auction outcomes affect daily life essentials such as electricity prices or the quality of mobile phone coverage, and the duo’s theory will allow regulators and governments to maximize revenues, the Financial Times says.

ICYMI — check out this year’s other Nobel laureates in Physics | Chemistry |

Physiology or Medicine | Literature | Peace.

Turkey is stoking tensions with new EastMed seismic surveys: Turkish exploration vessel Oruc Reis has again set to sea to carry out seismic studies in a contested area of the Mediterranean in Greek waters, according to Bloomberg. The Greek Foreign Ministry denounced Turkey’s move as “a major escalation and a direct threat to peace and security.” The seismic survey is expected to run through 22 October and Turkey is also conducting separate seismic work off Cyprus through 9 November as the country pushes for a regional conference to discuss a fair divide of resources found in the EastMed.

US ELECTION WATCH- US President Donald Trump has tested negative for covid-19 and is back on the campaign trail in the final rush to shore up support before the elections in three weeks, Reuters reports. Democratic nominee Joe Biden is widening his lead over the incumbent in national opinion polls and some state polls, the newswire notes.

Trade your USD for EUR as a Biden victory becomes more likely: Goldman Sachs strategists believe that the USD might weaken to 2018 levels if Biden comes out on top in the upcoming presidential election, according to Bloomberg. A win by The Donald and a vaccine delay could see the most USD-positive outcome, writes strategist Zach Pandl.

Enterprise+: Last Night’s Talk Shows

The talking heads had a busy evening yesterday as they covered everything from Finance Minister Mohamed Maait’s latest update on state coffers, to the Education Ministry’s efforts to resolve parents’ concerns on hybrid learning models, and updates on the new electric railway.

The government still has no intention to increase taxes, despite a shortfall in revenues last fiscal year as a result of a dip in tax collection, Maait said at the Regional Forum for Medical Insurance and Healthcare yesterday. Kelma Akhira’s Lamees El Hadidi took note of the key figures Maait recapped from the current fiscal year’s budget, including healthcare expenditures (watch, runtime: 2:07). We have more on the story in this morning’s Speed Round, below.

The Education Ministry plans to have a new system in place before the end of 2020 to address issues with private and international schools, including the extent of the ministry’s authority over their policies and decisions, Minister Tarek Shawki told Lamees. The ministry is also still working to address parent and teacher concerns about the government’s decision to move towards distance and hybrid learning models amid the pandemic (watch, runtime: 18:33).

The high-speed electric rail should be complete within 24 months, with work set to begin as of next month, Transport Minister Kamel El Wazeer told Lamees. The first phase of the rail will connect Ain Sokhna to New Alamein, the minister noted (watch, runtime: 14:46).

In other transport news, Egypt’s first locally assembled electric vehicle is expected to hit the market by the end of 2021 and retail at EGP 350k, Public Enterprises Minister Hisham Tawfik told El Hekaya’s Amr Adib. The vehicle — a Chinese version of the Nissan Leaf EV — will have a 45% local component quota to start with, which is set to increase to 55% within two years, Tawfik said (watch, runtime: 15:43).

Citizens will have online access to 72 government services before the year is out, Deputy CIT Minister Khaled El Attar told Al Hayah Al Youm’s Lobna Assal. These include real estate registration, personal status services, and submitting inquiries about other services, El Attar said (watch, runtime: 9:07)

Elsewhere on the airwaves last night: Social Housing Fund boss Mai Abdelhamid laid out the details of the fund’s social housing development plans, which are focused primarily in Upper Egypt, in separate conversations with Al Hayah Al Youm’s Lobna Assal (watch, runtime: 10:47) and Ala Mas’ouleety’s Ahmed Moussa (watch, runtime: 11:48).

Speed Round

CIB, EFG Hermes make it onto Refinitiv, AFE’s new regional green index: CIB and EFG Hermes are among 30 regional companies included in the new Low Carbon Select Index brought to market by the Arab Federation of Exchanges (AFE) and market data provider Refinitiv, according to a list of constituents on Refinitiv’s website. Launched yesterday, the index provides investors with access to low-carbon equities across the Middle East and North Africa, according to a joint press release. Egyptian issuers make up 4.5% of the index, while Saudi Arabia leads the weighting with 39.5%, followed by Kuwait (22.3%), the UAE (16.6%), Qatar (13.4%) and other MENA markets (3.8%).

An ESG-led approach to investing in MENA would have outperformed in the past five years: Over a five-year period (pdf), the Refinitiv AFE Low Carbon index has outperformed Refinitiv’s freefloat MENA index, generating a 19.75% return in 2019 compared to 12.52% for the same year by the freefloat. “During the covid-19 pandemic, the regional [environmental, social and governance (ESG)] portfolio showed a promising potential for Arab companies that are looking at consolidating their positions in this area globally,” said AFE Secretary-General Rami El Dokany,

Minimum index criteria: Constituents must maintain a 10% minimum freefloat, have a minimum trading history of three months, and be part of the top 99.5% of the freefloat market cap on their exchanges. The index stipulates companies have a minimum unadjusted market cap of USD 150 mn and a minimum freefloat adjusted market cap of USD 75 mn.

M&A WATCH- Rival groups are competing to acquire a majority stake in BMW’s Egypt dealership, Bavarian Auto Group (BAG), sources with knowledge of the matter told Enterprise. Kuwaiti outfit Al Ghanim Group and Bavarian chairman Farid El Tobgui have both submitted bids for the 99% stake held by a group of Qatari investors, the sources said, adding that Al Ghanim has offered USD 300 mn. The value of the offer submitted by El Tobgui, who owns the remaining 1% of the company, was not disclosed. Two other offers have already been rejected.

The competition for Bavarian is strong: The Kuwaiti group is BMW’s distributor in Kuwait, while El Tobgui has led BAG in Egypt since the company was established in 2003. We’re told that BMW’s partnership agreement with BAG gives it the final say in who acquires the Qatari stake, with a decision expected as early as the end of November.

The transaction includes the BMW assembly and distribution business in Egypt as well as the local rights to Brilliance Auto, the Chinese brand for which Bavarian is local agent and assembler.

Advisors: The Qatari side has appointed Arqaam Capital as financial advisor and Matouk Bassiouny & Hennawy as legal counsel for the restructuring and the stake sale.

M&A WATCH- The race to acquire Blom Bank Egypt could be nearing its final stages: Two of the banks interested in bidding for Blom Bank’s Egypt arm are reaching the end of the due diligence process and may start preparing offers as soon as next week, Hapi Journal reports, citing sources familiar with the transaction. Emirates NBD finished due diligence on the Lebanese bank last week, and rival Arab Banking Corporation (Bank ABC) is on track to finish as early as the end of next week, the sources said.

The state of the race: Emirates NBD was the first to express interest after Blom confirmed in August that it is looking to sell its Egypt assets in response to the economic crisis in Lebanon. NBD reportedly values Blom Egypt at EGP 6.5-7 bn, around 1.5x the bank’s total shareholder equity. Bank ABC began due diligence late September but warned that there is “no certainty” it would go ahead with the transaction. An unnamed non-banking financial services provider could still enter the race, but it is becoming increasingly unlikely they do so ahead of Blom’s end of year exit plans.

Advisors: Bank ABC has tapped HSBC to advise on the sale while Blom has hired CI Capital as its financial advisor and Baker Mackenzie to cover legal.

enterprise

STARTUP WATCH- Plus Venture Capital looks to invest USD 60 mn in 120 MENA tech startups with new fund: Plus Venture Capital, a new VC firm set up by former 500 Falcons managing partners Sharif El Badawi and Hasan Haider, will invest USD 60 mn in 120 early-stage startups across the Middle East and North Africa over the next three years through its inaugural VC+ fund, according to a statement (pdf). The fund, which will target seed to series A companies, has received some commitments from public and private sector investors, El Badawi and Haider told Menabytes, without disclosing further details.

About the fund: VC+ will put USD 200-250k into seed-stage companies followed by up to USD 2 mn in follow-on funding, while series A funding will be geared towards developing companies already in its portfolio, El Badawi and Haider told Enterprise. The fund, which plans to focus on giving more funding and focused support to a smaller number of companies, will target tech and tech-enabled startups. Particular focus will be given to those operating in the education, healthcare and finance sectors — that have existing products and have been up and running for at least three months. The fund plans to reach its first close in 4Q2020, El Badawi and Haider said. The duo announced their exit from 500 Falcons last month, and will continue to support the firm over the next 18 months.

M&A WATCH- South African investment firm Tana Africa Capital has doubled its stake in Alexandria Medical Investments Company to 49% from 25%, the local press reports, citing sources familiar with the transaction. Tana acquired its stake in the company earlier this year for an undisclosed price in a transaction that included minority ownership of Mabaret El Asfara Hospitals Group, which in turn is majority-owned by Alexandria Medical. Tana and Alexandria Medical are looking to set up a joint healthcare investment firm to expand the company’s footprint nationwide.

PRIVATIZATION WATCH- HHD plans to rely on private sector partnerships in its new development strategy: State-owned Heliopolis Housing and Development (HHD) has unveiled a new five-pillar strategy that will see the company develop EGP 100 bn-worth of assets autonomously and through partnerships with private developers after scrapping plans to sell a stake with management rights, according to a regulatory disclosure (pdf). HHD has already received offers and “considerable interest” from prospective partners, Hesham Aboul Atta, the chairman of HHD’s parent company, told Enterprise. Aboul Atta declined to get into specifics of the offers.

New Heliopolis to lead the company’s development: HHD will focus on developing New Heliopolis city, where it will review the project’s current blueprints and put in place a marketing plan before mid-2021. HHD will develop some 400 feddans on its own but will offer 500 feddans to private sector players through partnerships. Meanwhile, the buildings that have been completed will be evaluated to ensure they meet the company’s contractual obligations, while infrastructure development for the area is set to be complete before mid-2021.

The Heliopark project will be evaluated by an international team of consultancy firms that the company will hire next year. Similarly, the company will offer 1000-1200 feddans for partnership with private developers while it would develop 200 feddans on its own. Assets in Old Heliopolis, including Maryland park, will also be assessed to find the best ways to put them to use next year.

Where is the money coming from? HHD is exploring several options to finance its pipeline of projects in the strategy’s first year and is eyeing a capital increase of as much as EGP 1.2 bn in tandem to finance the projects in the remaining four years of the strategy, Aboul Atta said. The company could also sell some land and assets it owns to finance the capital increase, he added. HHD’s net profits inched up by 2.88% in FY2019-20 to EGP 376 mn from EGP 366 mn in the previous year, driven by land sales, according to a bourse disclosure (pdf).

In tandem, the company will undergo a restructuring process and is in the market for additional management talent.

Background: HHD had amended its mission statement last month to give it a mandate to run its new development plan. The shift came shortly after the company’s plan to offer a stake of up to 25% with management rights as part of the government’s privatization program failed. The company abandoned the privatization plan entirely in July and started drafting a new strategy. HHD is 72%-owned by the government’s Holding Company for Construction and Development,, with the remainder split between insurance companies, banks, and a free-float on the stock exchange.

In other public enterprise news, Egyptian Iron and Steel will spin off its mining operations into a separate company that could potentially list on the EGX, Public Enterprise Minister Hisham Tawfik said, according to Masrawy. The decision, which was greenlit by the company’s EGM yesterday, comes after talks on whether to liquidate the loss-making company, which saw its losses rise 44% y-o-y to EGP 1.3 bn in 3Q2019 last fiscal year.

Ghazl El Mahalla could go public: The ministry is also looking to set up a joint-stock company as part of a plan to list state-affiliated football club Ghazl El Mahalla on the EGX, making it the first sports club to float shares, the minister also said.

State revenues took a EGP 220 bn hit in FY2019-2020 due to the pandemic, Finance Minister Mohamed Maait told Hapi Journal at the Regional Forum for Medical Insurance and Healthcare yesterday. The virus outbreak has placed government finances under pressure as the three-month lockdown in the second quarter hit tax revenues, the suspension of flights brought the tourism sector to a standstill, and trade disruptions caused Suez Canal revenues to dip. The government’s EGP 100 bn emergency fiscal package provided tax relief to companies in vulnerable sectors that allowed them to defer payments over three installments. By mid-May, the public purse was already facing a EGP 75 bn shortfall, most of which was due to lower-than-expected tax receipts.

What’s being done to plug the gap? The Finance Ministry has enacted several measures to prevent the budget deficit from widening significantly. The government has been able to borrow from international institutions, such as the USD 8 bn in IMF funding and a USD 2 bn loan from regional and international banks, and has taken to the credit markets, holding a record USD 5 bn eurobond issuance in May, to patch up some of the short-term funding pressures. The 1% tax on salaries and the 0.5% levy on state pensions through FY2020-2021 is providing an additional source of income, while efforts to standardize state spending and collections are hoped to increase financial efficiency.

Egypt’s external debt grew 14.9% in 2019 to USD 115.1, from USD 100.1 bn the previous year, according to the World Bank’s International Debt Statistics 2021 report (pdf). The breakdown: USD 13.1 bn in IMF loans, USD 90.7 bn worth of long-term obligations, and USD 11.3 from short-term debt, World Bank data shows. Egypt’s USD 8 bn worth of eurobond issuances and the final USD 4 bn tranche of the 2016 IMF Extended Fund Facility account for the lion’s share of the new debt the country took on board in 2019. Early this year, the Finance Ministry said it would press pause on further eurobond issuances, but tapped the market in May to cover revenue shortfalls caused by the covid-19 pandemic.

Silver linings: Net financial inflows fell only marginally in 2019 to USD 24.6 bn from USD 24.8 bn the previous year. The figure benefited from an increase in FDI and in net short-term debt. By way of comparison, net financial inflows to low- and middle-income countries fell 14% y-o-y to USD 0.9 tn.

What are we talking about here? Net financial inflows adds money we received from FDI and equity investments to funds borrowed from lenders (net debt inflows). Net debt inflows are, in turn, calculated as the total amount from lenders in a given year minus repayments we’ve made on the principal of loans in the same period.

Egypt was “a bright spot” in Africa for FDI, with inflows growing 11% y-o-y despite falling 13% on average across the continent. This was owed to “economic reforms [in Egypt] that improved macroeconomic stability and bolstered investor confidence,” the report said. According to recent official figures, FDI was on the rise pre-pandemic, growing 16% y-o-y in 2Q2019-2020 (between 1 October and 31 December 2019), head of the General Authority For Investment and Freezones (GAFI) Mohamed Abdel Wahab said in March.

Egypt was also MENA’s biggest borrower in 2019, accounting for nearly 34% of the region’s total debt. Our growing debt stock “propelled” a 5.3% increase in the region’s overall burden, the largest jump since 2009, the World Bank said. The MENA region’s external debt pile stood at USD 340 bn in 2019, up from USD 323 in 2018.

Four more companies are looking to enter the insurance market and have license applications under review at the Financial Regulatory Authority (FRA), deputy head of the authority Reda Abdel Moaty told Hapi Journal on the sidelines of the Regional Forum for Medical Insurance and Healthcare. Under the universal healthcare act, new medical insurance companies can launch starting capital of EGP 60 mn, while healthcare management companies require at least EGP 15 mn, Abdel Moaty said.

We’re still waiting for details on how private sector insurers will fit into the universal health insurance system: A Health Ministry official last month revealed that forthcoming legislative amendments will clarify the role of the private sector in the system, almost three years after the Universal Healthcare Act was voted through parliament. No further details on what we can expect from the amendments were revealed at the conference yesterday.

Background: FRA head Mohamed Omran urged insurance companies to submit proposals that outline how they could contribute to the system, while Finance Minister Mohamed Maait reiterated that the changes would allow private sector healthcare players to be involved in both providing medical services and managing the government’s system of universal health coverage. The system, launched in Port Said last year and will soon roll out in Luxor and Ismailia. All governorates should be covered under the system within 12 years.

Elsewedy Capital, Gulf Cryo partner on new air separation unit in Egypt: Elsewedy Capital has set up a JV with Kuwait’s industrial gas manufacturer Gulf Cryo to build a new air separation project in Cairo, according to an emailed statement from deNovo Corporate Advisors, the UAE-based investment bank which advised Gulf Cryo on the transaction. The new unit aims to become a leading market player in Egypt, deNovo said without providing further details on the plan.

DeNovo is currently advising on EGP 3 bn-worth of transactions in the Egyptian market “and continues to be optimistic about the long term prospects of the Egyptian economy,” said Karim Amin, who heads deNovo’s Egypt branch.

Advisors: DeNovo Corporate Advisors advised Gulf Cryo on the transaction, while Matouk Bassiouny & Hennawy covered legal.

CLARIFICATION – 13 October 2020

El Sewedy Capital Holding is not part of El Sewedy Electric, which is listed on the EGX. El Sewedy Capital was established in 2018 and provides portfolio management services.

Ericsson releases Egypt-made AI software worldwide: Telecom giant Ericsson has released AI software worldwide that was developed by researchers at its hub in Egypt, the company said in a statement. The software will be used by its clients to improve customer experience, increase revenues, optimize capital and operating expenses, and reduce carbon emissions. The company called it a “key milestone” for its Egypt hub, which uses local scientists and engineers to design and build data-driven software and AI products. “Establishing such a hub in Egypt reaffirms the country’s pioneering position and unique capabilities as a regional leader in ICT services,” said Country Manager at Ericsson Egypt Sameh Shoukry.

Pos-secondary enrolment soars at EGX-listed schools operator CIRA: Private sector education outfit CIRA has more than 40k students enrolled in its K-12 and higher education segments in the 2020-2021 academic year, according to a statement (pdf). Enrolment in its flagship Badr University soared 23.1% y-o-y, with four new faculties seeing “strong traction” in admission rates for the academic year. CIRA also reported a 5.3% y-o-y uptick in K-12 enrolment.

** SHARE ENTERPRISE WITH A FRIEND ** Enterprise is available without charge — just visit our English or Arabic subscription page, depending on which edition you would like to receive. We give you just about everything you need to know about Egypt, in your inbox Sunday through Thursday before 7am CLT (8am for Arabic), and all we ask for is your name, email address and where you hang your hat during business hours.

Enterprise Explains

Enterprise Explains: The VIX. Cast your mind back to March of this year. Global markets were spiraling the drain as investors freaked out over the coronavirus. Equities suffered one of the most rapid descents in history, yields on US treasuries collapsed to record lows, and the short-term funding markets seized up. Amid the chaos, the VIX — one of the leading indicators of risk in the US equity markets — surged to a record high, eclipsing the previous peak seen during the post-Lehman phase of the 2007/08 financial crisis.

What is it? The so-called “fear index” measures expectations of volatility of shares on the S&P 500 over a forward-looking 30-day period. The higher the number, the more volatile the market, while a low number indicates a low-risk environment. It’s worth emphasizing this important caveat: the index does not mention actual volatility and doesn’t claim to know what will happen in the future. It is based purely on the expectations of market participants and isn’t necessarily a watertight indicator of risk.

Reading the index: For the better part of the decade, the index traded at low levels ranging between 10 and 20 — but what does this actually mean in practice? Although the VIX measures volatility over a 30-day period, the figure you see on the chart is annualized. A reading of 25 tells you that prices can be expected to move up or down by 25% over the next 12 months, but what we’re really interested in is what happens in the short term, 30-day period. To do this we divide the number by 12. Take the example of what happened in March, when the index closed at a record high of 82.69. By doing the calculation we see the index is telling us to expect share prices to fall around 6.9% over the coming 30 days.

Going a bit deeper: The index arrives at these figures by looking at the market prices of stock options. Essentially, these are contracts traded by investors that allow them to buy and sell shares at a certain time in the future at a certain price. Options prices are higher for volatile shares (think of this like insurance) and lower for companies trading at a more stable price. Using these premiums as a benchmark for risk, the VIX calculates a weighted average through the day as contracts are bought and sold by traders. As options prices rise, so does the index (and vice versa).

Want more?

Worth Listening

Hawawshi really is the breakfast of champions: When Chris Khalifa started Zooba in 2012, the mission was to improve on local street food and build a brand around how it was Egyptian and not Middle Eastern. Hanging up his suit as an investment banker, Khalifa has successfully launched seven branches in Cairo, with plans to franchise 20 more in the GCC, and is currently teaching New Yorkers how to pronounce taamiya.

You already have a podcast player on your iPhone, or you can listen to the episode through our website (no download required). We’re also on Google Podcast | Anghami | Omny. Making It is on Spotify, but only for non-MENA accounts.

Egypt in the News

On an otherwise very quiet morning in the foreign press, CBC Canada picks up on the social media campaign led by women to expose [redacted] assault and harassment.

Diplomacy + Foreign Trade

On the diplomatic front this morning: President Abdel Fattah El Sisi discussed Arab and regional issues and bilateral cooperation in a meeting yesterday with Iraqi Foreign Minister Fuad Hussein, according to an Ittihadiya statement. Hussein and his Jordanian counterpart Ayman Safadi are in town for tripartite talks. Prime Minister Moustafa Madbouly, meanwhile, is due in Baghdad at the end of the month, Iraqi News Agency quoted Hussein as saying.

El Sisi also looked at Eni’s operations in Egypt with the Italian company’s CEO Claudio Descalzi, according to a separate statement. Descalzi recently told the president that Eni is looking to increase its exploration and production activity in the Western Desert and Red Sea regions.

Infrastructure

SCZone granted license to develop electricity distribution networks

The Suez Canal Economic Zone (SCZone) has been granted a license to develop electricity distribution networks by state regulator Electric Utility and Consumer Protection Regulatory Agency, the local press reports. The authorization permits SCZone to contract a third party to implement the network that the authority would then oversee.

Basic Materials + Commodities

Egypt’s ESIIC taps German-Saudi consortium to overhaul sugar business

A consortium of four consultancies will work with state-owned sugar manufacturer ESIIC on a restructuring and factory upgrade plan under an agreement signed earlier this week, cabinet said in a statement. The consortium includes local firm Consulting Engineering Group (Cegman), Germany’s Roland Berger and Main Capital, and Saudi-based BMA Engineering.

Manufacturing

Monginis to open Sadat City factory in coming 3 months

Indian sweet maker Monginis will open a EGP 150 mn factory in Sadat City in the next three months, as sales recover from a 70% plunge during the pandemic, commercial director Ahmed Helmy told Hapi Journal. The facility will be the company’s second in Egypt.

Tourism

Egyptian archaeologists discover scarabs, amulets in recently unearthed sarcophagus

A team of Egyptian archaeologists discovered several amulets and scarabs yesterday in the newly-discovered coffin of a high priest of ancient Egyptian god Djehuti at the El Ghoreifa archaeological site in Minya, the Tourism Ministry said in a statement.

Automotive + Transportation

French company to supply ticket vending machines for Cairo Metro

Revenue Collection Systems France was awarded a contract by the National Authority For Tunnels to supply and install ticket vending machines in Cairo Metro stations, the local press reports. The contract will cost NAT EUR 3.5 mn for a foreign-demoninatned component and a EGP 5.8 bn local component.

Other Business News of Note

Who’s in the market for debt?

Arabia Investments leasing subsidiary UE Finance is negotiating with the Saudi Development Fund on the terms of a EGP 50 mn loan to on-lend to SMEs and micro businesses, the local press reports. The company is targeting EGP 300 mn in financing for the coming period.

On Your Way Out

Gal Gadot’s casting as Cleopatra in an upcoming Paramount film is sparking controversy online, with some claiming that an Arab or African should have been handed the role, according to the Times of Israel. Others, including the screenplay author, argued that the Queen of Egypt was neither Arab nor Black, but rather of Macedonian Greek ancestry.

The Market Yesterday

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EGP / USD CBE market average: Buy 15.64 | Sell 15.74
EGP / USD at CIB: Buy 15.63 | Sell 15.73
EGP / USD at NBE: Buy 15.65 | Sell 15.75

EGX30 (Monday): 11,398 (+0.3%)
Turnover: EGP 1.5 bn (33% above the 90-day average)
EGX 30 year-to-date: -18.4%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session up 0.3%. CIB, the index’s heaviest constituent was flat. EGX30’s top performing constituents were Heliopolis Housing up 3.6%, CIRA up 2.7%, and Elsewedy Electric up 2.7%. Yesterday’s worst performing stocks were Madinet Nasr Housing down 3.1%, Ezz Steel down 1.3% and Orascom Development down 1.2%. The market turnover was EGP 1.5 bn, and domestic investors were the sole net sellers.

Foreigners: Net Long | EGP +33.9 mn
Regional: Net Long | EGP +23.9 mn
Domestic: Net Short | EGP -57.8 mn

Retail: 72.3% of total trades | 74.0% of buyers | 70.6% of sellers
Institutions: 27.7% of total trades | 26.0% of buyers | 29.4% of sellers

WTI: USD 39.50 (+0.18%)
Brent: USD 41.72 (-2.64%)

Natural Gas: (Nymex, futures prices) USD 2.85 MMBtu (-1.18%, November 2020 contract)
Gold: USD 1,928.60 / troy ounce (-0.02%)

TASI: 8,544.94 (+0.37%) (YTD: +1.86%)
ADX: 4,532.82 (+0.89%) (YTD: -10.70%)
DFM: 2,234.83 (+0.51%) (YTD: -19.17%)
KSE Premier Market: 6,439.04 (+0.08%)
QE: 10,056.95 (+0.56%) (YTD: -3.54%)
MSM: 3,584.22 (-0.18%) (YTD: -9.97%)
BB: 1,478.51 (+0.40%) (YTD: -8.18%)

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Calendar

October: Trade and Industry Ministry allocates SMEs seven industrial complexes.

10-15 October (Saturday-Thursday): Turathna 2020 exhibition for traditional handicrafts, Egypt International Exhibition Center, Nasr City, Cairo.

11-12 October (Sunday-Monday): Regional Forum for Medical Insurance and Healthcare, Cairo, Egypt.

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.

12-18 October (Monday-Sunday): 2020 Virtual Annual Meetings of the International Monetary Fund and the World Bank Group.

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 October (Sunday): A court will hold a postponed hearing to look into an unpaid claims lawsuit by Syria’s Antradous against Mansour Amer’s Amer Group and Porto Group.

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.

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

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.

December: IMF delegation visits Egypt in first of two reviews ahead of disbursement of second tranche of USD 5.2 bn SBA.

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).

5 December (Saturday): A court will hold a postponed hearing to look into an appeal by Syria’s Anataradous against an arbitration ruling in favor of Amer Group and Amer Syria.

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.

25-29 January 2021 (Monday-Friday): The World Economic Forum’s “Davos Dialogues” will take place virtually.

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.

6-18 February (Saturday-Thursday): Mid-year school break.

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).

18-21 May 2021 (Tuesday-Friday): The World Economic Forum’s annual meeting will be held under the theme of “The Great Reset” in Lucerne-Bürgenstock, Switzerland

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.

24 June 2021 (Thursday): End of the 2020-2021 academic year.

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).

1 October 2021-31 March 2022 (Friday-Thursday): Postponed Expo 2020 Dubai.

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