Monday, 9 August 2021

It’s a big day for tourism as the Red Sea awaits first direct Russian flights in six years

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, wonderful people, and welcome to a fairly typical Monday on this holiday-shortened week.

IT’S A BIG DAY FOR: The tourism industry, as Russian flights return to the Red Sea. The first flights from Moscow to Egypt’s Red Sea coast in six years are set to land in Hurghada and Sharm El Sheikh, bringing to an end a six-year ban.

The first direct EgyptAir flight from Moscow to the Red Sea will land in Hurghada today at 9am CLT, according to a cabinet statement, with the national flag carrier expected to run seven weekly flights from Moscow — three to Sharm El Sheikh and four to Hurghada.

Could that number be even higher? Egypt’s ambassador to Moscow, Ehab Nasr, told Sada El Balad that EgyptAir will run 10 direct flights a week divided equally between the two Red Sea resorts (watch, runtime: 22:37). The EgyptAir flight to Hurghada this morning will bring as many as 320 Russian tourists the Red Sea resort Nasr told Al Hayah Al Youm (watch, runtime: 18:32), adding that Rossiya Airlines will also run 10 direct flights a week divided between Hurghada and Sharm El Sheikh.

Inflation figures for July should be out tomorrow. Inflation bucked the global trend in June, remaining effectively flat even as countries around the world see prices rise at a pace not seen in years. Price growth in Egypt ticked up to 4.9% in June, from 4.8% the month previously thanks to a favorable base effect and a deceleration of food prices.

PSA- We’re feeling a bit European this morning, so our popular weekly verticals are on hiatus. Each week, we take deep dives into infrastructure, education and the green economy in weekly verticals brought to you in association with some of the biggest names in each field. (Orascom Construction, CIRA and Infinity, if you’re keeping track at home.) Just as many European publications put special sections on hiatus in August (and as many offices there close for extended breaks), we’re giving our people the chance to catch a breather while so many of us are in Sahel. Hardhat, Blackboard and Going Green will be back soon. 🙂


** CATCH UP QUICK on the top stories from yesterday’s edition of EnterprisePM:

  • Corps-Solutions bond sale in 4Q2021: EFG Hermes Corp-Solutions plans to raise EGP 500-700 mn from a securitized bond issuance in 4Q2021
  • Taaleem could be in the market for an acquisition: Higher education outfit Taaleem could potentially acquire an unnamed local education provider, Managing Director Mohamed El Rashidi reportedly said.
  • New EGX closing price mechanism: The EGX’s new mechanism for calculating closing share prices will come into effect on 2 September.

THE BIG STORY ABROAD- Covid-19 and China (as two separate stories) dominate the headlines in the international business press on a typically slow Monday morning. The delta variant of the virus that causes covid-19 is delaying plans in the US to send workers back to the office and forcing the cancellation of events, the Wall Street Journal reports. It’s a sign that the pandemic is “not coming to an end soon” because so little of the world is vaccinated, CNBC quotes renowned epidemiologist Larry Brilliant as saying in its lead story this morning.

Meanwhile, the Financial Times is still focused on Xi Jinping’s capitalist smackdown, writing that Chinese tech tycoons have lost a combined USD 87 bn in wealth in the wake of the crackdown.

MARKET WATCH- Global investors head for safety on delta fears: Inflows into global bond and money market funds rose last week as investors sought safer assets in response to rising concerns about the economic impact of the delta covid variant, Reuters reported citing data from Lipper. Money market funds saw inflows of USD 36.68 bn, their highest in 10 weeks, while global bond fund inflows doubled in a week to hit USD 14.6 bn. US 10-year treasury-bond yields hit a six-month low as bonds rallied in the US, Europe, and to a lesser extent Asia.

Global equity funds, meanwhile, saw modest inflows of USD 9.4 bn, marking a 47% weekly drop, as optimism over strong earnings reports was tempered by covid concerns.

Emerging markets bucked the trend: EM equity funds saw net inflows of USD 2.8 bn last week, the biggest weekly inflow in more than four months, according to an analysis of nearly 24k EM funds. Conversely, EM bond funds saw USD 190 mn in net outflows.


MORNING MUST READ- Huawei — a leader in 5G tech — isn’t offering 5G in its newest smartphones: The Chinese telecom giant’s latest flagship models P50 and P50 Pro may be much slower than potential buyers anticipate as they operate on 4G, not 5G, the Financial Times reports. Blame it on US sanctions as well as supply chain disruptions that have denied the P50 the components needed for ultrafast 5G connections. In turnabout for a company that just a year ago claimed a global leadership position in high-speed tech, the product’s 4G launch shows Huawei has so far failed to find viable alternative parts and workarounds from its domestic suppliers.

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INFRASTRUCTURE

World’s biggest wastewater plant gets more financing

Emirates NBD will provide EGP 2 bn in financing to a consortium of four construction firms to build the largest agricultural wastewater treatment plant in El Hamam, according to a statement (pdf).

The consortium includes Orascom Construction, Hassan Allam Construction, Arab Contractors and Metito. The group was awarded the construction back in March and will build an agricultural wastewater treatment plant that’s being billed as the largest of its kind in the world. Construction began in mid-February prior to the announcement of the companies that were to be involved, a cabinet statement had said at the time.

More details on the plant: The plant has a capacity of 6 mn cubic meters of water per day and will also include the construction of a 120 km waterway to carry drainage water from Delta governorates to the plant in El Hamam along the North Coast. The plant will provide water to irrigate up to 500k feddans in the western desert.

Agricultural wastewater projects have been top priority to the government as per its USD 50 bn multi-year water-saving plan. Other than El Hamam, there’s the Al Mahsama 1 mn cubic meter a day agriculture wastewater treatment plant, which Hassan Allam and Metito inaugurated back in April.

TOURISM

Sahel is getting 1.3k new hotel rooms

Some 1.3k new hotel rooms are expected to be built in the North Coast, bringing the total number of hotel rooms in the North Coast to 3k, Deputy Tourism Minister Ghada Shalaby told Hapi Journal, without specifying an estimated timeframe. Shalaby didn’t break down how many of the rooms would be as expansions of existing hotels vs. how many would be at new properties.

Egypt wants to add 10k hotel rooms nationwide by the end of 2021 alone, a Tourism Ministry source previously said. The additional 10k rooms will give us a total national stock of 215k hotel rooms, the source added. This comes as new projects put on ice during the pandemic look to resume activity, which is expected to grow the number of hotel rooms in Alexandria by 12% and those in Cairo by some 4%, according to Collier’s International.

Hotels in Cairo, Alexandria and the North Coast are now allowed to operate at 70% capacity — the highest level they've seen since the pandemic began, courtesy of the new rules the government imposed last month in light of the improving epidemiological situation. A 50% cap on hotels had previously been in place for more than a year, after being raised from 25% in June 2020. Red Sea resorts in Hurghada and South Sinai — currently foreign tourists’ go-to place for holidaymaking in Egypt — witnessed a 48% occupancy rate, according to Shalaby.

COVID WATCH

Egypt received its first 260.6k batch of Johnson & Johnson vaccines through the African Union overnight, the Health Minister Hala Zayed announced in a statement. The shots will be distributed among the 126 vaccination centers dedicated to travelers, where individuals can also obtain QR code-bearing vaccination certificates.

We’re expecting to receive more batches of J&J in the near future, the minister said, without specifying a time frame. The African Union is providing us with 25 mn doses of the single-shot vaccine while the government reportedly placed an order directly with the company earlier this year for 4 mn doses, though these are not expected to arrive until the fourth quarter. We had originally been expecting to receive the first J&J shots in July.

Remember, if you’ve already been jabbed, you’re unlikely to be able to get J&J just yet: No program is in place right now to allow people who have already been jabbed to request a second course of a vaccine they may need to travel without quarantining, Mohamed Al Nadi — a member of the government’s covid-19 committee — told us last week.

But you might be able to if you’ve only had one dose: In response to questions from the public, the health ministry’s Facebook page admins wrote that people could get a different second dose than their first, provided that they sign a waiver.

Then again, maybe not? Health Ministry spokesperson Khaled Megahed told Al Hayah Al Youm that individuals must take the same vaccine for their second dose as they did for their first (watch, runtime: 5:07).

So the bottom line: Wait and see. Or show up and take your chances.

We’re also due to receive this week the final 1.9 mn doses of Oxford / AstraZeneca Egypt has been allocated under the Gavi / Covax program.

And our first 2.5 mn-dose shipment of the Pfizer mRNA vaccine is also expected to land here at home within days, Health Ministry spokesperson Khaled Megahed told Al Hayah Al Youm (watch, runtime: 5:07) last night. The ministry is prepared for the safe storage of jabs that require subzero temperatures such as Pfizer’s, having recently received ultra-cold biomedical refrigerators, Megahed told Al Masry Al Youm. We were also originally also set to receive these shots in mid-July, but the shipment was delayed.

ON THE HOMEMADE FRONT- Made-in-Egypt Sinovac shots will be distributed to vaccination centers next Saturday 14 August, Megahed added. Megahed did not specify how many doses would be made available, though he said last week that 1 mn doses of the locally-manufactured jab would be distributed in the coming two weeks.

The Health Ministry reported 65 new covid-19 infections yesterday, up from 61 the day before. Egypt has now disclosed a total of 284,706 confirmed cases of covid-19. The ministry also reported 9 new deaths, bringing the country’s total death toll to 16,575.

That makes it (nearly) the 13th day in a row that the daily new case count has risen according to our in-house covid tracker. The number of new reported covid-19 infections has been steadily inching up since 27 July, with the exception of a brief drop on 5 August.

STARTUP WATCH

UAE “super app” Rizek launches in Egypt

UAE-based services “super app” Rizek is rolling out in Egypt, providing users with access under one umbrella to a number of third-party mobile apps that offer a raft of one-stop-shop home services, Al Mal reports. The app is designed to allow you to do everything from getting your car washed to booking medical appointments for yourself and your pets. Rizek had raised USD 10 mn to finance its Egypt expansion plans earlier this year in a round led by Abu Dhabi wealth fund ADQ and US-based financial investment company Peak Investments.

About Rizek: Established in 2020, Rizek is deemed the UAE’s first local “super app” for on-demand services. In June 2020, the startup raised USD 3.5 mn in a seed funding round from Abu Dhabi Investment Office, E-Tech Investments, Rozana Investments and some other stakeholders — the largest seed round ever to be raised in the MENA region.

MOVES

Financial Regulatory Authority (FRA) Chairman Mohamed Omran and Suez Canal Authority (SCA) Chairman Osama Rabie have both been reappointed for one-year terms by President Abdel Fattah El Sisi, according to an announcement in Sunday’s Official Gazette. Omran was first appointed to run the FRA, then known as the EFSA, on an interim basis in 2017, and was made the full-time chairman in 2018. Rabie has been head of the SCA for two years.

The news comes one day after Mohamed Farid was reappointed for a second four-year term as chairman of the Egytpian Exchange.

EARNINGS WATCH

Madinet Nasr Housing and Development’s (MNHD) consolidated net income fell 53% y-o-y in 1H2021 to EGP 228.6 mn, down from EGP 481.9 mn the year before, according to the company’s unaudited financials (pdf). Revenues declined 27% y-o-y to EGP 954.5 mn during the six-month period, compared to the EGP 1.3 bn recorded in H12020. The decline is in part due to an unfavorable base effect caused by a one-time land sale that resulted in EGP 1.15 bn in proceeds in the comparable period last year. The company did not release adjusted figures to allow an apples-to-apples comparison, and the release does not include an update on new sales in 1H.

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ALSO ON OUR RADAR

Exporters have 90 days to comply with requirements set by Saudi Arabia for Egyptian agricultural exports, after the Agricultural Export Council extended the previous deadline of 10 August, according to a statement (pdf). The Saudi Food and Drug Authority said in May it would introduce new controls on crops imported from Egypt from July, requiring all fresh foods, crops and spices to acquire a certificate of conformity proving they comply with Saudi food safety regulations.

Other things we’re keeping an eye on this morning:

  • The Environment Ministry is in talks with US energy firm 3i Energy to set up a new biofuel waste-to-energy plant in Fayoum.
  • The government is planning to expand urban areas to 8% of Egypt’s land surface, up from the current 7%, through establishing new cities and settlements that will accommodate an additional 10 mn people by 2022, Planning Minister Hala El Said said.

LAST NIGHT’S TALK SHOWS

The highlight of last night’s talk shows: President Abdel Fattah El Sisi’s phone-in to Channel One to laud Feryal Ashraf’s historic Olympic achievement as she won Egypt's only gold medal in Tokyo (watch, runtime: 16:11). El Sisi vowed to name one of the highways currently under construction after the karate champion — who is also the first Egyptian woman ever to claim an Olympic gold — while instructing the concerned authorities to pay particular attention to developing martial arts in Egypt.

EGYPT IN THE NEWS

It’s a quiet morning for Egypt in the international press: Egypt’s Olympic performance is still getting coverage from Xinhua, while this charming piece in The Guardian takes a fruit basket found among the wreckage of Thonis-Heracleion as a starting point to reflect on the joys and wonders of archaeology. Elsewhere, the Washington Post is running a letter to the editor questioning the provision of US funding to Egypt.

PLANET FINANCE

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Kuwait in trouble after oil price drop: Kuwait’s budget deficit almost tripled last year as the 2020 oil price crash and the covid-19 pandemic squeezed the oil-dependent nation’s finances. The deficit climbed by 175% y-o-y reaching USD 36 bn during the fiscal year that ended in March, according to official figures released yesterday by the country’s finance ministry. The figures come less than a month after Kuwait had its credit rating downgraded by S&P for the second time in less than two years.

Nike and Adidas’ supply chains are under threat amid factory closures in major supplier Vietnam due to rising covid-19 infections. Two big footwear suppliers for the companies suspended operations last month, putting the footwear brands at risk of running out of Vietnam-made sneakers, where almost half of the two manufacturers' stocks were sourced last year, the Financial Times reports. Only 1% of the country’s population has been vaccinated, and covid-19 restrictions and flare ups have also hampered supply chains in the electronics and garments sectors.

Up

EGX30

10,739

+0.14% (YTD: -1.0%)

None

USD (CBE)

Buy 15.65

Sell 15.75

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USD at CIB

Buy 15.65

Sell 15.75

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

11,215

+0.1% (YTD: +29.1%)

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ADX

7,501

+1.1% (YTD: +48.7%)

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DFM

2,823

+0.1% (YTD: +13.3%)

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S&P 500

4,437

+0.2% (YTD: +18.1%)

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FTSE 100

7,123

+0.04% (YTD: +10.3%)

Down

Brent crude

USD 69.49

-1.7%

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Natural gas (Nymex)

USD 4.16

+0.6%

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Gold

USD 1,728.10

-2.0%

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BTC

USD 44,211

+2.5% (as of midnight)

THE CLOSING BELL-

The EGX30 rose 0.14% at yesterday’s close on turnover of EGP 1.76 bn (26.7% above the 90-day average). Foreign investors were net sellers. The index is down 0.98% YTD.

In the green: Qalaa Holdings (+3.4%), Rameda Pharma (+3%), and MM Group (+2.7%).

In the red: Pioneers Holding (-2.3%), Cleopatra Hospitals Group (-1.9%) and Egyptian Resorts Company (-1.4%).

It’s green as far as the eye can see in Asia this morning, with all major indexes holding their own. Futures, meanwhile, suggest stocks on Wall Street will come under pressure at the opening bell, but that Bay Street will see the TSX Composite start the morning in the green when it opens later today.

IN DIPLOMACY

President Abdel Fattah El Sisi is inviting Bahraini King Hamad bin Isa Al Khalifa to Cairo for talks in a letter passed along by Foreign Minister Sameh Shoukry during his meeting yesterday with King Hamad in Manama, according to a Foreign Ministry statement. Shoukry has been in Bahrain since Saturday and met with Bahraini Foreign Minister Abdullatif bin Rashid Alzayani in the Bahraini capital to discuss further improving bilateral ties.

Algeria (of all countries) says its GERD intervention has elicited a positive response from Egypt, Sudan, and Ethiopia, with Algerian president Abdelmadjid Tebboune telling the Algerian press Sunday that diplomats have urged the countries to refrain from launching “heated responses” so as not to escalate the ongoing dispute, Al Masry Al Youm reports. The local press had picked up reports of Algeria’s potential involvement in resolving the GERD dispute earlier this month, after Ethiopia called on the country to play a role in correcting misconceptions by the Arab League over GERD. Ethiopia completed the second filling of GERD last month, despite protests from Egypt and Sudan.

Egyptian intelligence chief Abbas Kamel met yesterday with Israeli National Security Advisor-designate Eyal Hulata, who was here in town for a “quick visit,” Israeli news site YNet News reported. Details of the content of the talks remains scant, but it’s likely discussions included the past weekend’s rocket attacks between Lebanon’s Hezbollah and Israel, the row between Israel and Iran over last week’s Gulf tanker attack, as well as the resumption of peace talks between Israel and the Palestinians.

AROUND THE WORLD

Amid rising tension, Khartoum recalls its ambassador to Addis Ababa: Sudan has recalled its ambassador to Ethiopia over disagreements about how to resolve the nine-month conflict between Tigray separatists and the Ethiopian government, according to state news agency SUNA. The Sudanese foreign ministry said that it had taken the decision after Addis Ababa rejected its offer to mediate between the two sides, and that the ambassador would return upon the “completion of consultations.” The move comes amid escalating tensions between the neighbouring countries, driven by the dispute over the Grand Ethiopian Renaissance Dam and recent border clashes in the disputed Al Fashqa region.

Taliban militants captured two provincial capitals in Afghanistan over the weekend, prompting criticism of the US’ plan to withdraw its troops from the country at the end of the month, the Financial Times reports. The Taliban also assassinated the government’s head of media and attempted an attack on the defence minister, and observers have voiced concern over the further deterioration of human rights and a possible civil war if violence continues to escalate.

CALENDAR

9 August (Monday): Islamic New Year.

9 August (Monday): Russian flights to Sharm El Sheikh, Hurghada resume.

12 August (Thursday): National holiday in observance of the Islamic New Year.

26-28 August (Thursday-Saturday): Jackson Hole Economic Symposium.

September: Delegation of Russian companies to visit Russian Industrial Zone.

2 September (Thursday): The new EGX mechanism for calculating closing share prices will come into effect.

3-5 September (Friday-Sunday): The World Karate Federation will hold the third competition of the 2021 Karate 1-Premier League in Cairo.

7-8 September (Tuesday-Wednesday): Euromoney Conferences will host the GlobalCapital Sustainable and Responsible Capital Markets Forum 2021, featuring Vice Minister of Finance Minister Ahmed Kouchouk.

12-15 September (Sunday-Wednesday): Sahara Expo: the 33rd International Agricultural Exhibition for Africa and the Middle East.

15 September (Wednesday): The CFO Leadership & Strategy Summit is taking place in Egypt.

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

21-22 September (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

30 September-2 October (Thursday-Saturday): Egypt Projects 2021 expo, Egypt International Exhibition Center, Cairo, Egypt.

30 September-8 October (Thursday-Friday): The Cairo International Fair, Cairo International Conference Center, Cairo, Egypt.

30 September: Closing of 2021’s first oil and gas tender in the Gulf of Suez, Western Desert, and the Mediterranean.

October: New legislative session begins.

1 October (Friday): Businesses importing goods at seaports will need to file shipping documents and cargo data digitally to the Advance Cargo Information (ACI) system.

1 October (Friday): Expo 2020 Dubai opens.

1 October (Friday): State-owned companies and government service bodies selling goods and services to customers that have not yet signed on to the e-invoicing platform will suffer a host of penalties, including removal from large taxpayer classification, losing access to government services and business, and losing subsidies.

6 October (Wednesday): Armed Forces Day.

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

11-17 October (Monday-Sunday): IMF + World Bank Annual Meetings.

12-14 October (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

18 October (Monday): Prophet’s Birthday.

21 October (Thursday): National holiday in observance of the Prophet’s Birthday.

24-28 October (Sunday-Thursday) Cairo Water Week, Cairo, Egypt.

27-28 October (Wednesday-Thursday) Intelligent Cities Exhibition & Conference, Royal Maxim Palace Kempinski, Cairo, Egypt.

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

30 October – 4 November (Saturday-Thursday): The first edition of Race The Legends, Egypt.

31 October – 12 November (Sunday-Friday): The 26th UN Climate Change Conference, Glasgow, UK.

November: The French-Egyptian Business Forum is set to take place in the Suez Canal Economic Zone.

November: Egypt will host another round of talks to reach a potential Egyptian-Eurasian trade agreement, which can significantly contribute to increasing the volume of Egyptian exports to the Russia-led bloc that includes Armenia, Belarus, Kazakhstan and Kyrgyzstan.

1-3 November (Monday-Wednesday): Egypt Energy exhibition on power and renewable energy, Egypt International Exhibition Center, Cairo, Egypt.

2-3 November (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

1-12 November (Monday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

29 November-2 December (Monday-Thursday): Egypt Defense Expo.

12-14 December (Sunday-Tuesday): Food Africa Cairo trade exhibition, Egypt International Exhibition Center, Cairo, Egypt.

13-17 December: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

14-19 December (Tuesday-Sunday): The Cairo International Festival for Experimental Theater.

14-15 December (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

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

14-16 February 2022 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

1H2022: The World Economic Forum annual meeting, location TBD.

May 2022: Investment in Logistics Conference, Cairo, Egypt.

27 June-3 July 2022 (Monday-Sunday): World University Squash Championships, New Giza.

**Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish below between the actual holiday and its observance.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2021 Enterprise Ventures LLC.

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