FX WATCH

The EGP continued its slide against the greenback yesterday in the parallel market while staying unchanged at EGP 7.1401 as the Central Bank of Egypt auctioned USD 37.6 mn. On the black market, the rate dipped to EGP 7.75 from Tuesday’s EGP 7.70, still on fears of the potential impact of the USD 2.5 bn loan repayment to Qatar.

WHAT WE’RE TRACKING TODAY

The possibility that ex-president Mohamed Morsi could face the death penalty if convicted on espionage charges is making headlines across Europe and the United States after the Associated Press and other newswires picked up a report from state-run news agency MENA. The next hearing in the case is slated for this coming Wednesday (26 November), at which time the defense will present its closing arguments.

Egypt appears to have met Saudi Arabia’s call to begin reconciling with Qatar. King Abdullah asked yesterday that Egypt back the GCC reconciliation agreement that saw Qatar welcomed back into the fold earlier this week (see the National). Yesterday evening, Ittihadiya spokesman Alaa Youssef released a statement to foreign media that, while not mentioning Qatar by name, reads in part: “Egypt warmly welcomes the statement issued by the Saudi Royal Court … which aims to formulate a comprehensive framework to achieve unity and consensus among Arab brothers. … Egypt renews its pledge that it will remain, as always, ‘a home for all Arabs’ and spares no effort to support its brothers. Additionally, Egypt emphasizes that it is fully committed to this sincere call, which constitutes a major step forward in the march towards Arab solidarity.”

The Sisi administration is working on a plan to develop the mining industry in Upper Egypt. In notes tacked on at the end of a story on the proposed trilateral African trade bloc (see below), Trade and Industry Minister Mounir Abdelnour notes that he will announce “in a few days the result of a tender for drafting a master plan to develop a region in southeast Egypt, which the government considers rich in resources including gold, phosphate and quartz.” Reuters notes that “little is known about the quantity of mineral resources in the area between the southern city of Qena and the Red Sea towns of Safaga and Qoseir.” (Read)

President Abdelfattah El-Sisi heads to Paris and Rome next week, reportedly to drum up support for the March 2015 Sharm El-Sheikh economic summit, a development that suggests preparations for the gathering are now kicking into high gear.

LAST NIGHT’S TALK SHOWS

“Economic reform is easier than administrative reform,” said Dr. Safwat Al Nahas, the former Head of the Central Agency for Organization and Administration on Ibrahim Eissa’s show last night. “Administrative reform is all dependant on the quality of our human resources. With over 6 million civil servants in Egypt we have quantity rather than quality,” said Al Nahas. He went on to explain the daunting task of reforming Egypt’s public sector.

Khairy Ramadan joined forces with Amr Adeeb on the One Million Blanket fund raising drive. According to Ramadan, the campaign has so far collected funds for 800,000 blankets. NGOs have already started distributing the blankets in several governorates.

Ramadan also interviewed Yasseen, the remarkably composed young boy who was kidnapped last week. His father and grandfather also joined him in the studio as he retold his ordeal.

Wael El Ebrachi asked his viewers a very controversial question: Should Egypt reconcile with Qatar? Passionate responses from prominent viewers poured in.Mamdouh Hamza said we can’t take such a step without guarantees. “Qatar has to stop finding terrorism and stop the negative propaganda via Al Jazeera. Thus far this hasn’t happened.”

“Restoring diplomatic ties with a fellow Arab country is always a good thing, but Qatar is implementing an American strategy. They are nothing but a money machine. If we think that they won’t be funding the Ikhwan and the Salafi parties in the upcoming elections we are fooling ourselves,” said politician Rifaat El Saeed

“How can you transform from an enemy to a friend overnight? There is no country called Qatar, it is nothing but a base for Al Qaeda and the Mossad,” said politician Al Badry Farghali. “If they really mean well, why aren’t they handing over the exiled members of the Brotherhood?”

SPEED ROUND

The EGX extended its rally to a second day as the EGX30 climbed 0.5%to 9,220 on turnover of EGP 665 mn, c. 5% below the 90-day average. The Tadawul added 0.1% in KSA, Kuwait fell 0.6% on very light volumes, Qatar added 0.7%, ADX eased 0.1%, and DFM slide 0.9%.

The Nasdaq, Dow and S&P all closed in the red yesterday, with one analyst suggesting it had to do with the recently-strong USD weighing on exporters and commodities prices. Asian shares were lower this morning as we wrote, weighed down by mixed economic data: Japanese exports rose 9.6% on an annual basis, while Chinese manufacturing activity reportedly fell.

The USD gained yesterday and Treasury yields rose as the US Federal Reserve released the minutes of its 28-29 October FOMC meeting. Traders interpreted the minutes as suggesting the Fed will raise interest rates before either Europe or Japan. The Fed’s Open Market Committee will next meet 27-28 January 2015. (Read the WSJ’s take, check out Reuters, or check out theraw FOMC meeting minutes yourself).

Brent cride slid again, closing the day at USD 78.10 / barrel.

There will be no Disney-anything in Egypt, Mr. Minister. Picking up where we left off yesterday with Investment Minister Ashraf Salman’s suggestion that Egypt might become home to a Disney attraction, the Washington Post tells us: “Unfortunately, Disney have flat out denied any plans for a new park in Egypt. ‘At Walt Disney Parks and Resorts, we continually look for ways to grow our business and as part of that process, we have conversations with many different entities,’ a spokesperson for the company said in an e-mailed statement. ‘While Egypt is an attractive market, we have no plans for the region at this time.’” (Read)

The trilateral African trade bloc grouping together COMESA, the EAC and SADC on which we reported earlier this month is now making headlines in the West, with Trade Minister Mounir Abdelnour being tapped by Reuters to explain what the bloc could mean. Officials from 27 nations will be in Cairo next month to ink the free-trade deal, which would lower barriers between nations accounting for 58% of the continent’s economic activity. Says Reuters’ Stephen Kalin: “The Africa initiative will create ‘one huge free-trade union’ allowing foreign investors in Egypt to more easily reach 260 million consumers from South Africa to Ethiopia.” (Read)

The recent slowdown in emerging markets growth is here to stay, says a new IMF report. A mixture of poor government policies in response to cyclical factors and a moderation of capital accumulation — along with some natural constraints on labor — will prevent emerging market economies from reaching the growth rates experienced in 2000/12. While you’re there: Read the IMF’s recent blog post on growth as a major driver of reductions in unemployment. (Download the report in PDF, or read the blog post)

The economic toll of obesity now tops more than USD 2 tn globally, according to a Mckinsey Global Institute report released yesterday. Only smoking and armed violence (including war and terrorism) cost humanity more at USD 2.1 tn each, the consultants say, making fat one of the “top three social burdens generated by humans.” Notable is a stunning gender gap: In Egypt, women have a nearly 2x higher rate of obesity than men: fully 45% of women are obese, compared with “just” 21% of men. (Read the full report or theexecutive summary in PDF or check out how the FT is running with the story today as its lead item online at time of writing.)

An unlikely convert? Speaking at a seminar in London yesterday, ex-BP chief Lord Browne warned that energy and mining companies face an “existential threat” from climate change and must change the way they operate. The newUS-China climate change agreement on which we recently reported, Browne says, will forced to change their business models. He pointed to so-called “low-carbon energy systems” and noted that “the cost of a wind turbine had fallen more than 20 per cent in five years and the cost of a solar panel had fallen 80 per cent over the same time.” (Read)

Bulge bracket faces push-back from commodities activities: The US Senate released a report yesterday declaring that major Wall Street banks including Morgan Stanley, JP Morgan, Deutsche and Goldman Sachs had become “powerful they were able to influence prices, gain trading advantages and put the broader financial system at risk by entering volatile businesses such as uranium trading and coal production.” The report comes as the US Fed kicks off a two-day hearing today on whether to restrict the banks’ role in physical commodities markets. (Read in the WSJ, the FT or Reuters or download the report yourself in PDF)

EGYPT IN THE NEWS

The New York Times’ web edition carries this morning a report by Robert Mackey, using social media posts to tell the story of yesterday’s Mostafa Mahmoud anniversary protests. Nearly 50 were detained in confrontations with the police, who blanketed downtown and other gathering points nationwide. (Check out the NY Times piece, read Aswat Masriya in English, read Reuters‘ take, or check out the Daily News Egypt‘s report that “undercover agents weary Guy Fawkes masks infiltrated protests and suddenly began to arrest people.”)

Ten members of one family, including children, were killed in Sinai yesterday, the Times also reports this morning. The Army blames Islamists, with whom they say they were engaged in a fierce battle at the time; the Times also suggests others believe the deaths were the result of a military strike gone astray. (Read)

ENERGY, RENEWABLE ENERGY & SUBSIDY REFORM

Egyptian Company for Clean Electricity to invest EGP 1 bn to build renewable energy projects
Al Borsa | 18 Nov 2014
The Egyptian Company for Clean Electricity (ECCE) plans to invest EGP 1 bn to build renewable energy projects (solar and wind power plants) as well as a project to assemble solar cells, said the company’s managing director Emad Ghaly. Ghaly also revealed that his company was in the process of searching for a land parcel in Upper Egypt, particularly in Sohag or Aswan, to build a solar power plant as well another plot in Alamein for the same purpose.

Ministry of Electricity to issue tender for Kom Ombo solar power plant
Al Mal | 18 Nov 2014
The Ministry of Electricity will issue a tender for a 200 megawatt solar power plant in Kom Ombo, Aswan, according to a government official. The USD 400 mn (EGP 2.8 bn) will be offered to 15 companies, which were previously selected for another bidding round. The qualifying companies include an alliance between TAQA Arabia and Neon France as well as Électricité de France (EDF), Sunpower Systems and an alliance between Orascom Construction and a Qatari group, among others.

Electricity Ministry denies reports of delays to the Egyptian-Saudi electricity grid
Veto Gate | 18 Nov 2014
The spokesman for Egypt’s electricity ministry, Mohamed El Yamani, denied reports claiming that the project to connect the Egyptian-Saudi electricity grids is running into delays. In fact, El-Yamani said the two countries were racing against the clock to complete the project in 2017, a year earlier than the originally scheduled date of 2018. The spokesman for the electricity minister said the project will cost USD 1.6 billion, of which USD 570 million will paid by the Egyptian side. The project aims to exchange up to 3,000 megawatts of electricity between the two countries by taking advantage of different electricity peak times in each country.

OIL & GAS

EGP 1.2 bn budgeted for extension and upgrade of the gas network
Al Mal | 18 Nov 2014
EGAS is implementing several new projects to extend and upgrade the national gas network, with an eye on accommodating the anticipated increase in new gas projects. Among the more important projects covered by the EGAS budget are natural gas pipelines from Sadat City and Edfu, which will cost EGP 590 mn to build. The Edfu pipeline will help supply natural gas to a paper factor and a sugar refining plant nearby as well as to residents in the area. Most of the work is expected to be performed by GASCO.

Oil Ministry denies BG is postponing its Delta project until debts are paid off
Al Mal | 18 Nov 2014
An official with Egypt’s oil ministry denied claims that British Gas [BG] is postponing its Phase 9B project in the deep-waters off the Delta until its debts are repaid by the government. The government official also explained that BG was among the most active foreign energy companies in Egypt and had recently completed a project (Phase 9A), which will add between 400-450 MMcf of gas daily. Al Mal has learned that BG and Petronas, the two partners in the West Delta concession, plan to invest USD 1.3 billion this year, compared to USD 900 million last year, in order to increase total gas output from 1 bcf per day to 1.4 bcf daily.

Egypt to offer global tender for oil and gas exploration during 1Q2015
Al Quds Al Arabi | 18 Nov 2014
An EGAS official said Egypt will offer a global tender for oil and gas exploration during the first quarter of 2015, adding that 10-15 areas in the Delta, Mediterranean coast and the deep waters of the Mediterranean Sea, will be included in the tender. The unnamed official revealed that a minimum of 4 areas will be offered to global companies in the deep waters of the Mediterranean Sea, explaining that these areas have shown great promise for rewarding results.

CEO of South Africa’s SacOil says company will look to Egypt, Mozambique
Bloomberg via Moneyweb | 20 Nov 2014
South Africa’s SacOil Holding is looking to Egypt as part of its push to diversify its assets. Alongside a push into Mozambique, the company’s CEO tells Bloomberg it will look to develop Egyptian wells including the Lagia oil field in Sinai. (Read)

BASIC MATERIALS & COMMODITIES

Wood Prices up 15%
Amwal Al Ghad | 19 Nov 2014
The price of all types of wood has increased by 15% over the past few weeks said Mohamed El-Tagoury, the president of the Wood Importers Division, which is part of the General Chambers of Commerce. El-Tagoury attributed the price increase to a stronger US dollar as well as shipping difficulties associated with the winter season. El-Tagoury further revealed that the price of Swedish Wood rose from EGP 2,400 to EGP 2,900 per cubic meter, while short Beech Wood rose from EGP 2,600 to EGP 2,850 per cubic meter and long Beech Wood from EGP 7,300 to EGP 10,000 per cubic meter. As a result, the Wood Importers Division is asking the Customs Authority to not delay inspection of imported wood in order to spare importers to the extra cost of storage. (Read in Arabic)

HEALTHCARE

Finance Minister: USD 200 mn from the World Bank to upgrade public hospitals
Amwal Al Ghad | 19 Nov 2014
Finance Minister Hany Kadri Dimian said the World Bank has allocated USD 200 mn to help Egypt rehabilitate its public health facilities and medical equipment. In a speech to the Heliopolis Rotary Club, Dimian vowed that public spending on healthcare will reach 3% of GDP in accordance with social mandates spelled out in the Constitution. (Read in Arabic)

45% of AMECO shareholders favor TVM purchase offer
Al Mal | 19 Nov 2014
Al Mal has learned that shareholders who own 45% of AMECO Medical are in favor of a purchase offer from TVM Healthcare for 1.5 million company shares. The period of the tender offer is valid until 17 December. TVM had offered to buy 66.7% of AMECO at EGP 17 per share, however a core group of shareholders is holding onto their share. Meanwhile, AMECO Medical president Mohamed El-Hambouli said his company agreed with TVM to undertake an expansion plan, including a new factory in Nasr City and the updating of an existing factory in 10th of Ramadan, which will cost between EGP 25-30 mn. (Read in Arabic)

REAL ESTATE

Gov’t resolves land dispute with Dubai’s Al-Futtaim
Reuters | 19 Nov 2014
Egypt said on Wednesday it had resolved a long-standing dispute over a land sale with Dubai-based conglomerate Al Futtaim Group, as the government seeks to clear a backlog of such disputes in order to win back badly-needed foreign investors. A cabinet statement said the company would pay a fee to cover a renegotiated land price at the Cairo Festival City development, but it did not give details. (Read)

TOURISM

Upscale river cruise line to return to Egypt next fall
TTG Digital | 19 Nov 2014
Travel industry publication TTG reported yesterday that river cruise operator Uniworld will return to Egypt in October 2015. “We feel we have to make the move and support the country, and we have received assurances from the Egyptian authorities that it is safe. If we felt otherwise, or if there were indications that the situation was changing, we would pull out,” said Managing Director Kathryn Beadle. (Read)

OTHER BUSINESS NEWS OF NOTE

Egypt solicits global financial institutions for EGP 500 mn loan for Toshka aqueducts
Al Mal | 19 Nov 2014
Irrigation Minister Hussam Mughazi said the government will solicit global financial institutions for an EGP 500 mn loan to start work on building aqueducts in Toshka. The new aqueducts will help Egypt use and manage higher water volumes in the event of floods. Mughazi had previously told Al Mal that the government will create a single public agency to manage the Toshka project, explaining that many investors abandoned the project because too many bureaucratic entities were involved. (Read in Arabic)

The environmental impact of expanding the Suez Canal will be assessed
Al Mal | 18 Nov 2014
The environment ministry agreed on a protocol with the Suez Canal Authority to assess the permanent environmental impact of the expansion of the Suez Canal and future development projects around its banks. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Ramez: CBE will clear out black market with technical measures, ready to repay Qatar on 28 Nov.
Reuters | 19 Nov 2014
In response to the increased volatility surrounding the EGP, the CBE aims to address the informal foreign currency market in Egypt. “[CBE] will take technical measures in the coming period to control the currency black market and set the (currency) exchange market,” Hisham Ramez said without elaborating on what the measures might be. The story notes that part of this week’s surge in the USD on the black market could be related to a “a major surge in demand from a single large company.” Ramez, speaking in London, said Egypt is ready to repay a USD 2.5 bn deposit to Qatar on 28 November. (Read)

Egypt welcomes Saudi call to mend ties with Qatar
Reuters | 19 Nov 2014
Despite not mentioning Qatar by name, President Sisi welcomed the Saudi King’s call to mend ties with Qatar and called it “a big step towards Arab solidarity.” King Abdullah urged the leadership and people of Egypt to back an agreement among Gulf Arab states that ended an eight-month dispute with Qatar. (Read)

Egypt Prosecutor Asks for Death Sentence for Morsi
ABC News via AP | 19 Nov 2014
Egypt’s state news agency says prosecutors have asked for the death sentence for ousted Islamist President Mohammed Morsi and other Muslim Brotherhood leaders on trial on espionage charges. (Read)

Egypt: Millions to benefit from UAE development projects
Gulfnews.com | Egypt | 19 Nov 2014
Development projects worth $10 billion funded by the UAE, are currently under construction in Egypt — benefiting some eight million Egyptians and creating 600,000 new jobs. (Read)

Sisi to visit Rome, Paris next week as first stops in EU
ANSAmed | 18 Nov 2014
President Abdelfattah El-Sisi will be visiting Rome as an initial stop on his first trip to Europe since becoming president. Sisi will be in the Italian capital on November 24-25, flanked by a government delegation and businessmen. Sisi will leave for Paris after Rome and will be inviting both Italy and France to an international economic summit slated for March. (Read)

INTERNATIONAL

Fitch Affirms Apache’s Long-Term Ratings at ‘BBB+’; Revises Outlook to Stable
Business Wire | 18 Nov 2014
Fitch Ratings has affirmed the Issuer Default Rating and senior unsecured ratings of Apache Corporation at ‘BBB+’. In addition, Fitch has revised the company’s Rating Outlook to Stable from Positive. Approximately USD 10.92 billion in debt is impacted by today’s rating action. Earlier this year, Apache announced it was looking to reduce its exposure to international operations and refocus on North American onshore through either a sale or a complete spin-off of its international portfolio. Execution is expected mid-2015 following a period of study. APA’s international operations are substantial and include Egypt, North Sea, Australia, and interests in the Wheatstone LNG project. Earlier this year, Apache announced it was looking to reduce its exposure to international operations and refocus on North American onshore through either a sale or a complete spin-off of its international portfolio. Execution is expected mid-2015 following a period of study. APA’s international operations are substantial and include Egypt, North Sea, Australia, and interests in the Wheatstone LNG project. (Read)

Saudi Arabia expands buffer zone with Iraq, paratroopers conduct joint exercises with the British
Bloomberg | 19 Nov 2014
As potential threats emanating from Iraq continue to mount, Saudi Arabia widened a buffer zone along its northern border with Iraq to 20km. “The expansion of the northern security zone aims to prevent infiltration into the kingdom from the conflicts in Iraq and Syria,” Theodore Karasik, a senior adviser with Risk Insurance Management in Dubai, said. In addition, Saudi and British paratroopers are conducting joint exercises in Tabuk currently. (Read)

Airbus To Deliver First A350 Jetliner To Qatar Airways By Mid-December
Airbus will deliver its first A350 Jetliner to Qatar Airways between December 12 and 15, after the aircraft received its certification by the U.S. Federal Aviation Administration last week following European safety approval in September. (Readand in Arabic)

ON YOUR WAY OUT

Upper Egypt Contracting (UEGC) submitted a request to the EGX to increase its paid-in capital to EGP 471.875 mn from EGP 377.5 mn. (Read in Arabic)

In probably the most ambitious use of Kickstarter yet, British scientists are crowdfunding a mission to the moon. It will take £3 billion to get the project off the ground. (Read)

Britain’s three-time world squash champion faces a stern test against Egyptian world number-one Mohamed Elshorbagy for a place in world final. Read the pre-match posturing here.