Sunday, 12 September 2021

Our poll sees CBE leaving rates on hold this week as Egypt + Maait says Egypt is ready for US Fed’s taper

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, wonderful people, and welcome to an incredibly busy news day. It’s a fitting way to begin a week that will include the central bank’s review on Thursday of interest rates — and that could see a big announcement on the manufacturing in Egypt of Moderna’s mRNA jab against covid-19.

Also happening this week: new iPhones, EFG Hermes’ latest virtual investor conference, and a potential visit to Cairo by Israel’s PM. We have all of this and more below.

MEANWHILE- Income tax and VAT offices will begin to be merged nationwide this month as the government begins to streamline its physical outposts alongside the rollout of the new digital tax system, the Finance Ministry said in a statement. Fourteen tax offices in Greater Cairo will be merged into 10 in a first phase, said Egyptian Tax Authority head Reda Abdelkader, urging taxpayers to check the authority’s Facebook page for updates.

This month companies in a limited number of tax jurisdictions in Cairo will be able to pay income tax and VAT via the digital tax portal ahead of a nationwide rollout by the end of the current fiscal year next June.

Ever Given 2.0 averted: Panamanian bulk carrier Coral Crystal was briefly grounded in the Suez Canal on Thursday, but was quickly refloated using the canal’s tugboats, Suez Canal Authority (SCA) head Osama Rabie said in a statement. Traffic in the canal was uninterrupted, and the Coral Crystal was redirected to the El-Ballah bypass, where it resumed its journey. The SCA has said it will expand the southern section of the canal after the Ever Given became lodged for a week earlier this year.

WHAT’S HAPPENING TODAY-

Your commute is probably going to suck — schools are back in session. International schools regulated by the Education Ministry are set to start the 2021-2022 academic year today.

Sahara Expo: The four-day agricultural conference, the Sahara Expo, starts today at the Egypt International Exhibition Center.

FOR TOMORROW-

EFG Hermes’ fourth Virtual Investor Conference kicks off tomorrow and runs through to 21 September with the theme of “After Reflation — FEMs in 2022.”

Environment minister at AmCham: Environment Minister Yasmine Fouad will give a speech on strategies for generating green, private sector-led growth at AmCham’s virtual monthly event tomorrow. Register here.

THIS WEEK-

iSheep rejoice: Apple is holding a virtual event on Tuesday where we can expect a new iPhone, new AirPods and probably a new watch. Apple has scheduled the event for 7pm CLT and shows it running for two hours. You can stream it here.

Also on Tuesday: Canon is expected to announce its EOS R3, a hotly anticipated “pro” body aimed primarily at sports and wildlife photographers.

Interest rates: The Central Bank of Egypt will meet to review interest rates on Thursday, 16 September.

Israeli PM to visit Cairo this week? Axios’ Barak Ravid reports that Naftali Bennett will make an official diplomatic visit to Egypt for talks with President Abdel Fattah El Sisi, which would be the first official visit to Egypt by an Israeli leader in more than a decade, and a first for El Sisi. The last Egyptian president to host an Israeli prime minister was Hosni Mubarak, who met Benjamin Netanyahu in January 2011.

The rumored visit comes amid reports that Egypt is preparing a new roadmap to restart Israel-Palestine peace talks, while cordial bilateral relations have recently been on public display. The Egyptian president in August extended the invitation to Bennett to visit, before earlier this week calling Israeli President Isaac Herzog to wish him a happy Rosh Hashanah.

The UN General Assembly kicks off later this week, opening on Tuesday 14 September and running through to 30 September.

The UN chief has a dire warning ahead of this year’s meetings: UN Secretary-General Antonio Guterres has urged world leaders to choose “the breakthrough scenario” to avert a future of back-to-back global catastrophes. In a special report presented to the UN General Assembly on Friday, Guterres warned that the world is facing a “pivotal moment” and called for a radical rethink to address the “enormous stress” facing societies across the world from the pandemic, rampant wealth inequality, and the destruction of the environment.


THE BIG STORIES ABROAD-

There are two competing narratives on where the global economy is heading. Bloomberg sounds an optimistic note, writing that “global companies from noodle makers to semiconductor giants are spending on new plants and machinery in ways they haven’t done for years,” signaling optimism about pent-up demand despite looming economic and supply-side challenges. The Financial Times takes the opposite tack, writing that the mood is “darkening” in the United States as the delta variant of covid-19 “upends forecasts” and changes “expectations of a quick economic recovery.”

ALSO BIG- The 20-year anniversary of the 9/11 attacks on the United States was yesterday. The FT notes that US “leaders lament [a] lost sense of unity” on the anniversary, while the WSJ looks at memorial ceremonies yesterday as well as “why there hasn’t been another 9/11.” The anniversary dominates the front page of the New York Times, which also has a strong gallery of photography from the day.


***IN CASE YOU MISSED IT-

  • Banque Misr is backing out of selling its 15% stake in Fawry Plus to Fawry, as it sees value in its stake in the company, sources from the bank told Enterprise. The move comes a few days after Fawry announced in a bourse filing that it will buy Banque Misr’s 15% stake and CIB’s 15% stake in Fawy Plus at EGP 1.15 per share, for a total of EGP 16.2 mn per acquisition.
  • Overdue subsidies to be paid out this and next month: Exporters who are eligible for overdue subsidy payments under the latest incarnation of the subsidy program that launched in July will receive payouts on 30 September and on 28 October, Finance Minister Mohamed Maait said in a statement.
  • Record high natgas prices are threatening the global recovery, with an uptick in prices of sugar, ceramics, steel and almost everything in between leaving European countries increasingly unable to refill depleted storage supplies, and leaving end consumers with a higher bill to foot.

OBITUARY- Veteran businessman Mahmoud El Araby died on Thursday at age 89, El Araby Group announced. Since founding El Araby Industrial Group in 1964, El Araby had been a fixture in the Egyptian business community for decades, growing his company to become one of the largest in the country and becoming the chair of the Federation of the Chambers of Commerce. Thousands of people attended his funeral on Friday, which was held at his village Abu Raqaba in Menoufia. El Araby is best known for its long association with Toshiba and controls a portfolio of consumer brands that also includes Sharp, Tornado, Sony and Dynabook.

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POLL

ENTERPRISE POLL- CBE to keep rates on hold in September meeting

ENTERPRISE POLL- The Central Bank of Egypt will likely leave interest rates unchanged at its meeting this Thursday as it looks to keep inflation in check, according to a poll conducted by Enterprise. All 10 analysts surveyed said they expected the CBE to maintain its cautious approach for its seventh consecutive meeting and hold rates as it monitors the uptick in local and global inflation — as well as the effect of possible US tapering on the appeal of Egyptian debt to global investors who have been a key source of foreign currency.

Where rates currently stand: The overnight deposit rate is at 8.25%, the lending rate at 9.25% and the main operation and discount rates are at 8.75%. The central bank slashed rates by 400 bps last year, including an emergency 300 bps cut in March, to protect the economy from the fallout from covid-19. It has since maintained rates for six consecutive meetings, including its most recent in August, amid concerns about an increase in inflation

Higher inflation here at home means the CBE can afford to delay a cut: Egypt recorded its highest rate of headline inflation since November, with the rate rising to 5.7% in August from 5.4% in July. The overall rate in both urban and rural areas rose to 6.4% in August from 6.1% a month earlier.

And the global uptick in commodity prices is keeping policymakers cautious: Global food prices resumed their climb in August after witnessing a retreat in June and July, while factory closures and supply chain issues off the back of the delta variant have driven up commodity prices, putting the CBE on guard over stimulating inflation through a policy cut, said Prime Holding’s Mona Bedeir.

Inflation transitory? Speaking to Bloomberg last week, Finance Minister Mohamed Maait said he expected the pickup in inflation to be “transitory.” “I’m expecting inflation to start coming down and things will move to normal,” he said, attributing the recent upward trend to the global markets.

Foreign investors continue to buy Egyptian debt, attracted by some of the highest effective interest rates in the world, a fact that has kept foreign inflows high and contributed to stability in the EGP : USD exchange rate. Foreign holdings of Egyptian domestic debt increased to a record USD 33 bn at the beginning of August as the country’s real interest rate kept yield-hungry investors buying into the local market. Inflows have surged by some USD 23 bn since the emerging-market sell-off triggered by the pandemic last year, during which holdings of EGP bonds slumped.

But US tapering is still a downside risk: The tapering of US Federal Reserve’s bond buying program — expected as early as the end of this year — could weigh on emerging markets, said Pharos’ Esraa Ahmed, who sees a case for a hold by the CBE at this meeting and “in the near future.” The CBE will likely leave rates on hold to maintain the attractiveness to investors of Egyptian debt in the face of a possible hike in US interest rates soon after, independent analyst Hany Aboul Fotouh tells us. HC Securities’ Monette Doss says the Fed’s repeated assurances that US interest rate hikes are unlikely in the imminent future has relieved pressure on EM treasuries and maintained the appeal of the carry trade — for now.

A cooling of the US economy could work in our favor: The Fed may delay hiking interest rates after payroll figures showed that only a third of the expected number of new jobs were added to the economy in August, indicating that the rate of recovery is slowing, said head of research at Mubasher Trade Hesham El Shebeini.

Also helping matters: an expected growth in tourism receipts: “A rebound in foreign currency receipts from tourism following the resumption of Russian flights to Egypt's Red Sea resorts released some interest rate pressure on the EGP,” said HC Securities’ Monette Doss.

Interest rates could be kept on ice through the end of the year: The CBE is likely to leave interest rates untouched until the end of 2021, said Bedeir, citing a need to maintain stable inflation within the CBE’s target range. Meanwhile, Arqaam Capital analyst Noaman Khalid has revised his expectation for a rate cut from the end of 2021 to the beginning of 2022 due to inflation and the global spread of the delta variant.

And what happens in other EMs could reverberate here at home: Returns on Egyptian debt in relation to other EMs will also influence the CBE’s decision. A number of emerging market central banks have already moved to tighten monetary policy in recent months, with Russia hiking its interest rates by 100 basis points in July — its biggest jump since 2014 — in a bid to curb rising inflation. Central banks in Latin America, South Korea, and in emerging Europe are likely to follow suit, Bedeir said.

ECONOMY

Egypt can withstand a US taper, says Maait

Egypt should be able to cope if US interest rates rise as the Federal Reserve begins unwinding its covid stimulus programme, Finance Minister Mohamed Maait told Bloomberg last week in a TV appearance (watch, runtime: 18:47). Policymakers are “closely monitoring” the potential effects of rising US rates on Egypt’s borrowing costs, he said. “We have to be ready, always.”

Egypt has plenty of experience with emerging-market volatility: “We are taking into consideration our experience with such a situation,” the minister said, telling the business information service that more than USD 20 bn has left the country during volatile moments in global markets over the past three years. Egypt, like other emerging markets, saw sell-downs prompted by the Taper Tantrum of 2013, the EM Zombie Apocalypse of 2018, and last year’s risk-off in global EM in March through May as the covid-19 pandemic unfolded.

All eyes on the Fed: Fed chair Jerome Powell suggested last month that the bank could begin to scale back its USD 120 bn per month bond-buying programme before the end of the year should it see further improvements in the labor market. A unexpectedly poor jobs report last month has since cast doubt on when the Fed will actually start tapering, but 70% of economists recently surveyed by the Financial Times still expect an announcement either in November or December, while more than 70% think the central bank will have to start hiking interest rates far earlier than currently expected, in 2022 rather than in 2023.

Egypt’s high real interest rate will provide an extra buffer against rising US rates, S&P Global Ratings said in a recent report. “Compared with some other emerging markets, we think Egypt may fare somewhat better in the event of US interest rate hikes, mainly due to high real interest rate,” the ratings agency wrote.

But Egypt is still at risk of seeing outflows if countries with lower risk profiles start tightening policy, particularly given its cost of borrowing, which is among one of the highest in the world, S&P warned. The ratings agency said that the government will need to draw more of its funding from equity sources and lessen its dependence on the debt markets to lower these risks.

The government is currently working to lower its debt costs by decreasing reliance on short-term debt in favour of longer-term debt, and diversifying its funding sources to include eurobonds, sovereign sukuk and green bonds.

Debt service accounted for 36% of budget spending as of June, down from 40% last year, Maait told Bloomberg, saying that the government aims to cut that figure to 32% by the end of June 2022. Debt service will account for almost a third of government spending according to the FY 2021-2022 budget, rising more than 2% to EGP 579 bn.

More debt issuance coming: Maait said that the country could issue USD or euro-denominated bonds — and could sell more green bonds before the end of the fiscal year. Egypt also hopes to issue its first sovereign sukuk bond in the first half of 2022, according to Maait, who said the size of the issuance could range between USD 500 mn and USD 700 mn.

The IMF has warned about the possible effects of a Fed taper on emerging markets: Chief economist Gita Gopinath said last month that EMs whose balance sheets are stretched due to covid-19 could see significant damage to their economies. “[Emerging markets] are facing much harder headwinds,” she said. “They are getting hit in many different ways, which is why they just cannot afford a situation where you have some sort of a tantrum of financial markets originating from the major central banks.”

ECONOMY

Inflation continues upwards trend in August, hitting 5.7%

Annual urban inflation hit its highest level in nine months in August on the back of rising food, fuel and transportation costs, according to figures released on Thursday. Headline urban inflation rose slightly to 5.7% in August, up from 5.4% in July, according to state statistics agency Capmas. That’s the highest annual inflation rate since November. On a monthly basis, headline inflation fell by 0.1% after July’s 0.9% increase.

Housing and utilities prices continued to accelerate last month after the government hiked fuel and electricity prices at the beginning of July. Prices in the segment rose 4.4% during the month after climbing 4.1% in July. Food and beverages prices saw a 7.6% rise off the back of a 17.9% increase in the price of oils and fats. Vegetable prices saw the second-biggest increase in the food and drink category at 13.8%, while tobacco and alcoholic beverages saw a 2.3% rise.

Inflation remains comfortably within the Central Bank of Egypt’s target range, which is currently set at 7% (+/-2%).

Annual core inflation was virtually unchanged, falling 0.1 percentage points to 4.5% in August, central bank figures (pdf) show. Monthly core prices fell 0.3% after accelerating at a 0.6% clip in July. Core inflation strips out volatile items such as food and fuel.

The overall rate in both urban and rural areas rose to 6.4% in August from 6.1% a month earlier, Capmas figures (pdf) showed. Reuters also has the story.

Inflation will weigh on the minds of central bank officials as they prepare to discuss interest rates on Thursday. All 10 analysts surveyed this month in Enterprise’s customary interest rate poll (above) said the CBE was likely to leave rates on hold, citing the importance of maintaining the appeal of Egypt’s carry trade. They also pointed to the expectation that inflation will continue to rise through 2H2022.

COVID WATCH

Health Ministry in talks to produce Moderna covid vaccines locally

Made-in-Egypt Moderna? Egyptian officials are in talks with US pharma giant Moderna to manufacture its mRNA covid vaccine locally, the Health Ministry said in a statement Friday. Talks were held last week between Health Minister Hala Zayed and company representatives about permitting Egypt’s state-owned vaccinemaker Vacsera to produce shots for export to the rest of Africa at its new facility in Sixth of October, according to the statement. The new plant is expected to open in November and has the capacity to produce up to 3 mn vaccine doses per day (in total, across multiple types). The Sinovac covid-19 jab will be the first to come off the production line.

The minister also discussed plans to import Moderna jabs for local distribution: We’re expecting our first batch of Moderna vaccines to arrive in the country any day now, while some 3.2 mn doses of the Pfizer shot are set to arrive on 16 September, Health Ministry Spokesperson Megahed said last week.

An agreement coming before the end of the year? The government could secure an agreement with one European or Western pharma company to produce vaccines in Egypt before the end of the year, Prime Minister Moustafa Madbouly told Bloomberg last week (watch, runtime: 16:33). The government is in “very serious negotiations” with several companies to produce “huge amounts” of vaccines for export to the region and to Africa, he said, without disclosing which companies are involved in the talks.

The Health Ministry reported 458 new covid-19 infections yesterday, up from 433 on Friday and 413 the day before. Egypt has now disclosed a total of 292,476 confirmed cases of covid-19. The ministry also reported 13 new deaths, bringing the country’s total death toll to 16,860.

GREEN ECONOMY

NBK Egypt to receive USD 25 mn from EBRD to fund green energy projects

The National Bank of Kuwait in Egypt (NBKE) is set to receive a USD 25 mn loan to fund green energy projects from the European Bank for Reconstruction and Development (EBRD), the bank announced in a statement. The funds will be lent on to Egyptian SMEs and individual households to finance investments that will help mitigate the impacts of climate change. The loan, which had been approved in April, will also see the Green Climate Fund contribute 15% of funds.

The EBRD has been upping its funding to Egyptian institutions for green projects. Last month the bank — along with the GCF and the European Union (EU) — approved a USD 50 mn loan to QNB Al Ahli for green projects to help the transition to a greener economy through the use of “high performance technologies.” Prior to that it had provided the National Bank of Egypt with USD 100 mn for on-lending to green projects. Ahli United Bank Egypt is also reportedly in line for up to USD 22 mn from the European lender and the GCF for on-lending to green projects and SMEs in agribusiness, manufacturing and services, and IT.

For more on EBRD’s plans for a greener Egyptian economy, check out our recent interview with EBRD President Odile Renaud-Basso + Southern and Easten Mediterranean Managing Director Heike Harmgart.


OTHER GREEN FINANCE NEWS- EBRD allocates more funding for greening cities: The EBRD has added an additional EUR 2 bn to its Green Cities Framework 2 Window 2, bringing the program’s total funds to EUR 3.65 bn. The project aims to help overcome environmental challenges in cities through its Green City Action Plans.

Will Egypt get a piece of the pie? Earlier this summer, the EBRD kicked off its Green City Action Plan with the New Urban Communities Authority for West Cairo through an inaugural USD 29.6 mn loan to partially finance the development of the Sixth of October Dry Port (DP6), which will cost a total of USD 60 mn.

CABINET WATCH

Pension Act exec regs gets a thumbs up from cabinet

Cabinet has greenlit executive regulations for the Social Security and Pensions Act passed in 2019, which formalized a tithe on salaries for both public and private sector workers to fund pensions. The act went into effect after being passed by the House of Representatives and ratified by President Abdel Fattah El Sisi. The base rate for contributions stands today at 21% (with employers required to contribute 12% and employees the remaining 9%). It will rise 1 percentage point every seven years until it hits 26%.

Also approved at the meeting:

  • A six-month extension of austerity measures brought in to streamline public finances last year in the wake of covid-19 economic pressures on our balance sheets.
  • A draft bill on the rights of senior citizens, which aims to provide protection and care for the elderly and ensure that they enjoy their full rights and freedoms.
  • A presidential decision approving the treaty to establish the African Medicines Agency, which will unify medical regulations among African countries and improve access to medicines.

DEBT WATCH

Evergrow to receive loan to restructure debts + Arkan Palm gets EGP 1.5 bn for Sheikh Zayed development

Evergrow is getting a loan to restructure its debts: A consortium of 12 banks led by Mashreq Bank and the National Bank of Egypt (NBE) has began to disburse the USD 400 mn loan agreed with Evergrow earlier this year, which the Egyptian fertilizer firm will use to restructure its debts and fund the construction of a new plant, according to Hapi Journal. Some USD 326 mn covers restructuring debt Evergrow already owes to the same banks, while the remaining USD 74 mn will finance the construction of the third phase of the company’s fertilizer plant in Sadat City.

ALSO: A syndicate of five banks has signed a long-term EGP 1.5 bn loan agreement to finance Arkan Palm’s mixed-use development in Sheikh Zayed, according to a statement (pdf). The syndicate was led by the Export Development Bank of Egypt, which provided EGP 650 mn. Also participating: Housing and Development Bank (EGP 350 mn), United Bank of Egypt (EGP 250 mn), the Suez Canal Bank (EGP 150 mn) and Midbank (EGP 150 mn).

DIPLOMACY

Egypt and Turkey may normalize their relationship before the end of the year if the two sides manage to overcome a number of outstanding issues, Prime Minister Moustafa Madbouly told Bloomberg last week (watch, runtime: 16:33). Officials held a second round of talks in Ankara last week to discuss ways to restoring diplomatic ties, which have been severed since the Ikhwan government was removed from office in the 2013 Revolution. “Definitely, if we agree on these [outstanding] issues,” Madbouly replied when asked whether ties could be restored later this year.

Madbouly cited “foreign interference” and the situation in Libya as key issues that the two countries still need to overcome before the relationship can improve. Until UN-backed negotiations brokered an interim government earlier this year, Egypt and Turkey had backed opposite sides in a civil war that pitted the government in Tripoli against General Khalifa Haftar’s rival forces in the east of the country.

On Afghanistan: The Taliban needs to back up its words with actions before the Egyptian government can cooperate with its administration, Madbouly said. The government has so far made good statements but it will need to demonstrate that it is refraining from fundamentalism before the two countries can begin developing a relationship.


IN OTHER DIPLOMATIC NEWS- Egypt welcomed the formation of a new government in Lebanon on Friday, which came following more than a year of fraught negotiations taking place amid an economic collapse. Sunni businessman Najib Mikati reached an agreement with president Michel Aoun to form a cabinet which must now try to steer the country out of economic paralysis that has caused shortages of everything from fuel and electricity to food and medical supplies. In a statement Friday, Foreign Ministry Spokesperson Ahmed Hafez welcomed the new cabinet as an “important step” to solving Lebanon’s problems and pledged Egypt’s support. Egypt, Lebanon, Jordan and Syria last week agreed a plan to supply Egyptian gas to the crisis-stricken country in a step that should help relieve crippling electricity shortages and lessen the blackouts.

EARNINGS WATCH

Qalaa losses ease in 2Q2021 on stronger revenues

Qalaa Holdings’ losses eased to EGP 401.5 mn in 2Q2021 from EGP 712.1 mn in the same period last year, according to the company’s earnings release (pdf). Revenues were up 37% y-o-y to hit EGP 10.2 bn in the April-June period, extending pandemic-era growth that saw the company’s top line almost double y-o-y in 2Q2020 to hit EGP 7.4 bn. The company saw a smaller net loss of EGP 224.5 mn in 2Q2019, before the pandemic hit.

The improved result came as Qalaa companies recorded growth in revenues across the board, including the Egyptian Refining Company (ERC), which saw a 52% y-o-y increase in revenue despite a 22-day halt for scheduled maintenance. “Despite the lingering impact of covid-19 across our markets, our platforms were able to capitalize on slowly improving market conditions and a gradually easing trade environment,” said Qalaa chairman and founder Ahmed Heikal.

Heikal said that the revenue growth was largely driven by “solid performances” from Qalaa companies including Taqa Arabia, which capitalized on demand for natural gas to grow its revenue by 27% y-o-y. National Printing and ASCOM saw exports increase as international trade picked up and port restrictions eased.

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ENTERPRISE+: LAST NIGHT’S TALK SHOWS

At the top of the agenda last night: The launch of Egypt’s National Strategy for Human Rights by President Abdel Fattah El Sisi. In his speech, El Sisi spoke on human rights issues including divorce certification, womens’ rights and freedom of belief. El Hekaya (watch, runtime: 4:27) had the story, as did Kelma Akhira (watch, runtime: 4:51).

Time to remove religion from national IDs? Justice Minister Omar Marwan said that there must be some form of official documentation of citizens’ religion, after journalist Ibrahim Eissa called for religion to be removed from citizens’ ID cards during a roundtable discussion on the new human rights strategy. Marwan said that while it was not important that religious affiliation be recorded on ID cards, an official record of religion in the national system ensures that the government protects each person’s right to be governed by their own religion’s laws in matters of personal status. El Hekaya (watch, runtime: 6:36) and Kelma Akhira (watch, runtime: 3:30) both had coverage.

Egypt + Russian tourism officials meet: The impression was positive in a first meeting between Egyptian and Russian officials since the resumption of direct flights between Russia and Egypt’s Red Sea resorts last month, Tourism Minister Khaled El Enany told El Hekaya’s Amr Adib in a phone interview (watch, runtime: 3:22). He added that he had spoken with Russian tourism officials, business owners and the media, including on precautionary measures being taken in Egypt to contain the spread of the coronavirus.

Also getting coverage last night:

EGYPT IN THE NEWS

It’s a quiet morning as far as Egypt is concerned in the pages of the foreign press: The Associated Press picks up the news that at least three people died on Wednesday when an apartment building collapsed in Shoubra El Kheima, Qalyubia.

ALSO ON OUR RADAR

Snackfood maker Edita has fully rolled out its e-invoicing system, coming in compliance with the Tax Authority’s requirement that all invoices be logged with the Finance Ministry’s online platform, according to a company press release (pdf). The requirements were introduced last year in a bid to crack down on tax evasion and ensure companies register with the authority.

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

  • Vodafone is in talks with Telecom Egypt to use part of the state telecom operator’s network to provide its own landline services, Al Borsa reports (pdf).
  • We’ve received the first two of 70 trains for the monorail project from French rolling stock manufacturer Alstom, according to a company press release (pdf).
  • Talabat’s customers will be able to pay for their orders using digital wallets next year, CEO Hadeer Shalaby said according to Al Mal.

PLANET FINANCE

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Have US equities peaked? Some analysts are beginning to think so, after US stocks last week saw their worst performance since June, according to the Financial Times. The S&P 500 closed down 1.7% over the week on Friday and the tech-heavy Nasdaq lost 1.6% as investors started to take heed of rising inflation and high costs caused by global supply chain disruptions as the delta variant stymies production.

Not helping matters: The majority of economists surveyed by the Financial Times think that the Federal Reserve will raise interest rates earlier than expected, with 70% pencilling in a minimum 0.25% increase in 2022 and nearly a fifth thinking it will come in the first six months of the year. The Fed still maintains that it will not move to raise rates until 2023 to avoid jeopardizing the economic recovery and protect the markets.

We’ll explore this in more depth in a Macro Picture in today’s EnterprisePM. Stay tuned.

IN OTHER NEWS FROM THE REGION-

Saudi Aramco is splitting its gas operations into two separate divisions, the Southern Area Gas Operations and Northern Area Gas Operations, as the company looks to prepare itself for the transition away from oil, unnamed sources tell Bloomberg. This is the same structure currently used by the company’s oil operations, and could help it focus on developing its gas assets and operations in the chemicals sector.

Asset manager Al Dhabi Capital (ADC) has launched a MENA-focused equities fund, seeded with USD 100 mn from its UAE-based parent company Al Dhabi Investment. ADC said that the new fund “follows a bottom-up process and seeks to invest in liquid equities with a long-term, buy-and-manage approach,” Reuters reported. The asset manager already manages over USD 600 mn in public equities on behalf of institutional investors.

Down EGX30 11,056 -0.7% (YTD: +2.0%)
None USD (CBE) Buy 15.66 Sell 15.76
None USD at CIB Buy 15.66 Sell 15.76
None Interest rates CBE 8.25% deposit 9.25% lending
Down Tadawul 11,417 -0.3% (YTD: +31.4%)
Up ADX 7,860 +1.2% (YTD: +55.8%)
None DFM 2,907 0.0% (YTD: +16.7%)
Down S&P 500 4,458 -0.8% (YTD: +18.7%)
Up FTSE 100 7,029 +0.1% (YTD: +8.8%)
Up Brent crude USD 72.92 +2.1%
Down Natural gas (Nymex) USD 4.94 -1.9%
Down Gold USD 1,792.10 -0.4%
Up BTC USD 45,343 +1.7% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 0.7% at Thursday’s close on turnover of EGP 1.20 bn (21.6% below the 90-day average). Local investors were net sellers. The index is up 2.0% YTD.

In the green: Eatern Company (+6.8%), Rameda (+3.5%), and Oriental Weavers (+2.3%).

In the red: Raya Holding (-6.8%), GB Auto (-4.4%), and Egyptian Resorts Company (-3.1%).

IN OTHER MARKET NEWS-

The National Printing Company has raised its bid to fully acquire Shorouk Modern Printing, the Financial Regulatory Authority announced in a statement (pdf). The FRA approved the amendments to the deal, which raised the share price from EGP 52-54 to EGP 74.5 per share. The National Printing Company currently owns 89.9% of Modern Shorouk.

CALENDAR

5-12 September (Sunday-Sunday): Arab Labor Conference, the InterContinental CityStars Hotel, Cairo, Egypt.

11-12 September (Saturday-Sunday): International Conferences on Economics and Social Sciences, Cairo

12 September (Sunday): International schools begin 2021-2022 academic year.

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

13 September (Monday): Environment Minister Yasmine Fouad will give a guest speech at AmCham’s monthly virtual event,

13-21 September (Monday-Tuesday): EFG Hermes’ fourth Virtual Investor Conference.

14-30 September (Tuesday-Thursday): 76th session of the UN General Assembly, New York.

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.

18 September (Saturday): Expiration of United Nations Investigative Team to Promote Accountability for Crimes Committed by Daesh/ISIL

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

22-25 September (Wednesday-Saturday): Cityscape Egypt, Egypt International Exhibition Center, Cairo, Egypt.

29 September (Wednesday): DevOpsDays Cairo 2021 is being organized by ITIDA and the Software Engineering Competence Center in cooperation with DXC Technology, IBM Egypt and Orange Labs.

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.

30 September (Thursday): First tranche of overdue subsidy payouts will be handed to eligible exporters.

October: New legislative session begins — must be held by the first Thursday of October.

October: Romanian President Klaus Iohannis could visit Egypt in mid this month to discuss ways to boost tourism cooperation between the two countries.

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.

9 October (Saturday): Public schools begin 2021-2022 academic year

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.

28 October (Thursday): Second tranche of overdue subsidy payouts will be handed to eligible exporters.

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

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.

16-17 November (Tuesday-Wednesday): Africa fintech summit, Cairo.

26 November-5 December (Friday-Sunday): The 43rd Cairo International Film Festival.

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

7-8 December (Tuesday-Wednesday): North Africa Trade Finance Summit.

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.

22-24 April 2022: World Bank-IMF spring meeting, Washington D.C.

May 2022: Investment in Logistics Conference, Cairo, Egypt

16 June 2022 (Thursday): End of 2021-2022 academic year for public schools

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.