WHAT WE’RE TRACKING TODAY

What news there has been in a slow news day is significant: Cabinet is scrapping daylight savings time (yes, again; it’s like we’re living in a Bill Murray movie); Edita is introducing new brands and new territories; EFG Hermes is hiking its capital; Qalaa Holdings may be in the enviable position of presiding over a bidding war for its agrifoods investments.

Making news later today: A verdict is expected in the trial against Mohamed Morsi for inciting the killing of protesters in the Ittihadiya clashes of December 2012. Morsi could receive the death penalty in this and two other cases against him, with the latter verdicts on 16 May.

The two-day Al Mal-GTM Money and Finance Conference begins today at the Four Seasons Nile Plaza Hotel in Garden City, Cairo, ensuring will have a few policy stories and lots of complaining to report on tomorrow.

The new WSJ redesign is live, and it’s a little overly dense (white space, folks?), but very nice.

WHAT WE’RE TRACKING THIS WEEK

The World Green Economy Summit will take place from Wednesday to Thursday in Dubai. Visit the official website here.

On Thursday, the CBE will hold its Monetary Policy Committee meeting.

WHAT WE’RE TRACKING THIS MONTH

The Middle East Solar Industry Association (MESIA) is organizing what it’s billing as a Renewable Energy Trade Mission to Egypt from 28-29 April at the Marriott Palace Hotel in Zamalek, Cairo. Prime Minister Ibrahim Mahlab will be attendance, along with the ministers of electricity, finance and the head of the NREA. The event will feature roundtable discussions with government officials and industry leaders. The agenda of the two-day event may be found here, and the registration form here.

LAST NIGHT’S TALK SHOWS

“The government has just announced that daylight savings time will be cancelled this year because a national opinion poll has revealed that 70% of Egyptians feel inconvenienced by it,” said Lamees El Hadidy. “I’m a bit baffled. Is this a new strategy that the government has adopted? Will we be asking the opinion of our citizens before taking any major decision? If the majority of Egyptians do not want to see the removal of energy subsidies, will we continue with the subsidy program?”

El Hadidy asked these questions to Hossam Al Kaweesh, the Spokesman for the Cabinet of Ministers, who offered no clear answers: “I guess we don’t really need the 1-1.5% reduction in energy consumption that results from daylight savings time during the summer months. I guess we have a surplus of energy so this small reduction is insignificant,” El Hadidy growled.

El Hadidy’s studio guest was Minister of Trade and Industry Mounir Fakhry Abdel Nour, who discussed the new efforts to protect local industry by imposing import taxes on sugar and steel.

“Protecting industry at this critical juncture is crucial because it is industry that provides jobs. We have to strike the delicate balance between the protection of industry and the protection of the consumer,” said Abdel Nour. The Minister confirmed that there will be no increase in price of sugar and steel.

Naguib Sawiris, who owns the Nile Company for Sugar, the only private-sector sugar factory currently in operation in Egypt, called in to vote in favor of the protectionist tariffs on sugar imports. “The cheap imported sugar that has been flooding the market is threatening the livelihood of not only the hundreds of thousands of factory workers who are employed by this industry, but also the 600,000 farmers who supply beets and sugar cane to the factories,” said Sawiris. “We understand that the country is going through a critical time right now, so will not raise prices, but it is important to note that our production costs are higher here than they are abroad. The price of gas has gone up, transport costs are higher, we have labor unrest, we pay a very high customs rate on the trucks that we import, and we have a high rate of taxation.”

Youssef El Housseiny hosted liberal journalist Farida El Shoubashi, who vehemently supported the right of journalist Sherif El Choubachi to publicly voice his opinion against the veil. El Choubachi is calling for a mass protest against the veil to take place in Tahrir Square during the first week of May.

“The attacks against Sherif are completely unwarranted. All he has done is simply voice a very valid opinion and put the phenomena of veiling into a historical context. I graduated from the faculty of law, which means that I have studied sharia extensively. The first time I have ever heard of hijab was 1973. It was only after President Anwar El Sadat started referring to himself as ‘the faithful President’ and began importing a foreign culture from the Gulf that these ideas entered our country. Veiling is completely foreign to Egypt. Even in rural Egypt the veil as we know it today was unheard of. Yes, they covered their hair but it was a different type of head cover, half the head was exposed, even the Copts in Upper Egypt dressed like this,” said El Shoubashi.

“Issues like hijab need to be discussed as a part of a broader dialogue on reforming the religious discourse. It’s important for journalists on both sides of the debate to write about this and discuss it. Debate is a good thing as long as both sides respect one another,” said El Housseiny.

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SPEED ROUND

Prime Minister Ibrahim Mahlab’s Council of Ministers met yesterday in place of their standard Wednesday meeting. Key decisions taken included:

• Rescinding its earlier decision to switch to daylight savings time on 1 May and conducting studies on its economic benefits before any future decision to implement it. (Read in Arabic or in English)
• Approving a Yen 5.854 bn loan from JICA to construct water barrages in new Dairut. (Read in Arabic)
• Approving the decisions and recommendations made by the Cabinet’s engineering committee during their meeting on the 8 April 2015.

Hohos in Dubai, Sno Balls in Cairo: Foodmaker Edita signed two contracts worth USD 12 mn with Hostess Brands LLC buying the manufacturing rights to 11 new products and expanding its ownership of its current portfolio of Hostess products to 12 new countries. “Extending ownership of our Hoho, Twinkie and Tiger Tail brands beyond the existing four markets, and the roll-out of new Hostess Brands products at home and abroad, will help Edita further consolidate its position as the leader in the packaged snack food market both locally and regionally,” said CEO Hani Berzi in a company statement (pdf). New markets include Morocco, Algeria, Tunisia, Syria, Lebanon, Iraq, Bahrain, Oman, the UAE, Kuwait, Qatar and Saudi Arabia. National Bank of Kuwait is lending Edita EGP 90 mn to finance the contract, Reuters says. The loan is repayable over seven years.

EFG Hermes to raise EGP 391 mn in capital hike: Leading regional investment bank EFG-Hermes is seeking to raise its capital by EGP 391.83 mn through the issuance of shares, according to a regulatory filing with the EGX on Monday and as reported by Reuters. EFG will distribute 1.46 of its shares for every 10 shares presently in the market, it said.

CBE will hold rates on inflation pickup –Reuters poll. Five economists surveyed by the newswire say the Central Bank of Egypt’s Monetary Policy will “keep interest rates on hold on Thursday, choosing not to cut borrowing costs to boost a slowing economy after inflation hit a five-month high in March.” The poll comes ahead of the CBE’s Monetary Policy Committee Meeting expected Thursday. Overnight rates stand at 9.75% for lending and 8.75% for deposits.

CIB to submit offer for Citigroup’s retail portfolio: CIB will submit a binding offer to acquire Citigroup’s retail portfolio in Egypt. No details were given about the timing or details of the offer with CIB not certain the deal would result in a transaction. Reuters reports that “Citigroup said last year it was pulling out of consumer banking in 11 markets, including Japan and Egypt” in order to cut costs. (Read)

100% of the Ministry of Electricity’s needs for natural gas will be supplied in August, EGAS’ Khaled Abdel Badie said, according to Al Masry Al Youm. EGAS will provide the electricity ministry with 105 mcf per day that will grow to 150 mcf per day in August. The news comes as EGAS chief Khaled Badie said yesterday that LNG imports will be directed to the benefit of electricity generation, not industrial users such as fertilizer producers, noting that the Oil Ministry is still looking to commission an FSRU to dock at Al-Adabiya Port. The reminder of the nation’s ongoing energy crisis brings into sharper relief a piece from Cypriot publication In Cyprus, which points to what it calls Shell’s “coolness” on Egypt as indicating Cyprus should focus on Europe as a potential customer for its offshore gas reserves. The calls on policymakers in Nicosia for a policy shift, urging “the development of a Plan B for Cyprus’ gas exports focusing on Europe.”

Ten companies express interest in Qalaa Holdings’ stake in Enjoy, El-Misriyeen: An unnamed source tells Al-Mal that three of the 10 companies that took out the info memo on Qalaa’s flagship agrifoods companies will begin due diligence in May. Earlier this year, Qalaa Holdings’ announced its intention to divest Enjoy and El-Misriyeen as part of its bid to focus on energy and infrastructure. (Read in Arabic)

VAT will be a flat-rate 15% levy, says Tax Authority source: An unnamed source tells Al-Shorouk the authority reached that figure as a halfway point between the highest value of the sales tax of 25% and the lowest rate of 10%. The 45% tax on vehicles will remain an exception under the new law, the newspaper claims. The 15% rate was the one used to estimate the EGP 32 bn in revenues expected to be generated from the tax regime change.

President Abdelfattah El Sisi met with Greek Defense Minister Panos Kammenos in Cairo on Monday, according to according to a defense ministry statement. Efforts to combat the proliferation of terrorism in the Middle East, particularly in Libya, were discussed. In a related statement from Ittihadiya, the President took the opportunity to condemn the murder of 30 Ethiopian Christians in Libya by Daesh, and called for immediate action in Libya. The President said that the incomplete NATO mission in Libya has left the country vulnerable to be exploited by terrorists, and once again reiterated that the arms embargo on Libya be lifted in order for the legitimate government to be able to receive support.

The EBRD held a roundtable discussion yesterday with the Egyptian Private Equity Association (EPEA) to discuss the Bank’s approach and activities with regard to investing in Egypt’s private equity funds, according to an emailed release. Hassan el Khatib, EBRD Managing Director for Equity, is quoted as saying: “This roundtable is part of our strategy to encourage new fund managers as they attract investors and to pave the way for further investments in equity funds, reaching various sectors of the Egyptian economy.” The EBRD has committed over EUR 762 mn since beginning its activities in Egypt in 2012. In other EBRD news, bank president Sir Suma Chakrabarti, who distinguished himself on stage at the EEDC, has reportedly held meetings with Investment Minister Ashraf Salman and International Cooperation Minister Naglaa Al-Ahwany ahead of Egypt’s participation at the EBRD’s annual meeting next month. The meetings were focused on the Bank’s programs and studies from which Egypt might benefit as well as the Sisi administration’s ongoing economic reform program.

Jeb Bush retweeted an article from BuzzFeed yesterday composed solely of photographs of him from the 1970s, saying: “I think Ron Burgundy took inspiration from these pics“

A bomb exploded in front of the vacant Spanish embassy in Islamist-rebel held Tripoli on Monday, the AFP reports, with Daesh later claiming responsibility for the attack. Spanish newspaper El Mundo reports no injuries.

Yemen Updates: Saudi-led coalition airstrikes killed at least 25 people in a single strike, causing an explosion that residents initially thought was an earthquake, leading to speculation that the strike had hit a munitions depot, according to the New York Times. Meanwhile, the United States Navy dispatched an aircraft carrier accompanied a guided missile cruiser to the Arabian Sea on Sunday, citing the need to protect shipping lanes. The Washington Post notes that while USA Today, quoting an anonymous official, stated that the ships were being sent to prevent Iran from re-supplying Houthi rebels, Reuters later carried a denial from the Army spokesperson.

CORRECTION: In yesterday’s issue in a story on preparations for an upcoming tripartite summit between Egypt, Greece, Cyprus, we incorrectly stated that Alexis Tsipras is the President of Greece, (who would be Prokopis Pavlopoulos) whereas Tsipras is the Prime Minister. We regret the error and H/t Hani B.

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A MESSAGE FROM PHAROS HOLDING

Data Suggests CBE is Moving to Cut Rates Further, Bring on another Round of Depreciation

Current research from Pharos Holding suggests that the Central Bank of Egypt is close to executing another round of interest rate cuts of around 50bps during one of two upcoming MPC meetings, either on 23 April or 11 June this year. The cut is expected to be followed by depreciation in the EGP against the USD, bringing the exchange rate closer to the EGP 7.90-8.00 per USD mark from c. EGP 7.60-7.63 after the January 2015 cuts, which Pharos had predicted against the odds.

The success of a USD 1.5 bn Eurobond issuance slated for mid-2015 seems to be contingent upon further policy changes; with the USD-index trading near a 12-year high, the EGP appreciating nearly 17% against the EUR since mid-2014, and uncertainty clouding the immediate future of Turkey and the Eurozone (which together represent nearly half of Egypt’s non-oil imports), circumstances seem optimum for these policy moves. Read the full report here.

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WORTH WATCHING

Parents anxious to get their children into good schools may be able to relate to the following clip from comedy sketch show Portlandia, in the fourth episode of the second season where a pair of overbearing parents try to get their son into an elite private preschool. (Watch, running time: 2:39)

Evil Boss by SNL, featuring Will Ferrell, Pierce Brosnan and Tina Fey. (Watch, running time: 5:53)

EGYPT IN THE NEWS

The lead story on Egypt in the foreign press this morning is news of the sentencing of 22 members of the Ikhwan to death for the Kerdasa massacre. Reuters states that one policeman was killed, when it actuality, 14 police officers were killed, in a siege of the Kerdasa police station which lasted for five hours and involved RPG fire. The bodies of some of the slain officers were found with evidence that they had been tortured.

Reuters’ account of the Kerdasa siege with the statement that one police officer was killed was picked up byVoice of America, the official external state media outlet of the US federal government.

Another widely-reported story on Egypt going into Tuesday morning is the expected verdict in Mohamed Morsi’s trial for incitement of murder of protesters in the Ittihadiya clashes of 2012. Ikhwan mouthpiece Middle East Eye quotes Toby Cadman as saying: “Although, the trials we have seen so far are devoid any proper standards and the [President Abdel Fattah al-] Sisi rhetoric of fighting a war on terror [against Morsi’s Muslim Brotherhood] is running thin on facts, I believe that there is a real risk that the court could impose such a sentence [the death penalty].” The article simply introduces Toby Cadman as an “international law specialist” without making any mention of the fact that he has been hired by the Ikhwan in the UK as their legal representation. An editorial oversight on the part of Middle East Eye, we’re sure.

BBC News does a roundup of several Egyptians from various walks of life on their opinion regarding the verdict. A niqabi woman identifying herself only as “Om Yusuf” has a great quote: “Morsi hasn’t even influenced life in Egypt when he was a president. A verdict against him won’t affect the country now. Morsi wasn’t the best person for his post. He was a tool.”

Video guru Ahmed Naguib is quoted as saying “I support a prison sentence against Morsi, but not his execution. Those of the Muslim Brotherhood leaders, who incited the killing of protesters, should be the ones executed.” (Read)

German media outlet DW sums it best with their headline: ‘Morsi’s fate leaves many Egyptians indifferent.’

ENERGY, RENEWABLE ENERGY & SUBSIDY REFORM

Works to refurbish gas pipelines supporting electricity production complete
Youm7 | 20 April 2015
Refurbishing works for the gas pipelines to support the Ministry of Electricity’s plan to produce an addition 3,632 MW of electricity in the summer are complete, an unnamed source announced. The source said completing the connections of the gas network and electricity lines was most critical step to ensure the electricity production targets are met. 65% of the works to add the extra production capacity have been completed and is expected to be ready before the end of August. (Read in Arabic)

Archirodon awarded West Damietta power station EPC contract
Al Mal | 20 April 2015
Archirodon was awarded the EPC contract for the West Damietta power station that aims to generate 250 MW. The contract has a value of EGP 250 mn and the East Delta Electricity Production Company (EDEPCO) had sent the details of the contract to the Islamic Development Bank, the project’s financier. (Read in Arabic)

OIL & GAS

Eni doubles output in Egypt’s Western Desert, reaching 70,000 bpd
World Oil | 20 April 2015
Italian IOC Eni reached a record level of production of 70,000 bopd in Egypt’s Western Desert, doubling its output in the area in three years. The increase is mainly due to the Melehia development lease, located 290 km west of Alexandria. Eni, through its subsidiary International Egyptian Oil Company (IEOC), holds a 76% stake in the Melehia concession. (Read)

Industry owes EGAS EGP 8 bn in 1Q2015
Al Shorouk | 20 April 2015
EGAS is owed EGP 8 bn from the industrial sector in 1Q2015, according to statements made by the head of the authority, Khaled Abdel Badie. EGAS has presented an initiative to reschedule payments over two years while receiving payment for current consumption, but factories called for arrears to be paid over a longer period of time. Although negotiations are still ongoing, Abdel Badie threatened legal action against companies that refuse to pay for their gas consumption. (Read in Arabic)

EPROM chief says new refinery will end diesel and butane shortage
El Watan | 19 April 2015
The shortage of diesel and butane domestically will end once the new refinery in Mostorod begins operations next year, EPROM’s chairman said. The new refinery will have a production capacity of 35 mn bbl and requires a USD 4 bn investment with an extra USD 2 bn to expand the production lines. 54% of the construction and mechanical works of the project are complete and EPROM is cooperating with UOP in inspection, instrumentation and control, operation during stages of Pre-commissioning, commissioning, and start up until unit handover, according to the company’s website. (Read in Arabic)

BASIC MATERIALS & COMMODITIES

Dollar shortage beckons further shortage in fertilisers
Al Shorouk | 20 April 2015
Fertilisers are expected to remain in short supply as potential importers are struggling to allocate the necessary hard currency. Domestic fertilizer production had decreased significantly as energy inputs to factories were reduced. The agriculture ministry had issued a tender to import fertilizer but remains concerned with the credibility of the bids presented due to the wide variation in prices by the bidders. (Read in Arabic)

Government pledges to maintain current sugar prices
Al Mal | 20 April 2015
Prime Minister Ibrahim Mahlab has requested that domestic sugar producers not raise the price of the commodity. Mahlab’s remarks come on the back of a recent government decision to impose a temporary tariff on foreign sugar imports. According to the prime minister, the decision to impose the tariff was taken in order to protect the domestic sugar industry from low global prices. (Read in Arabic). In that same vein, the Minister of Commerce and Industry has pledged that consumers will not see a rise in steel and sugar prices, after tariffs were imposed on both commodities.

MANUFACTURING

Jushi Egypt to increase investments to USD 550 mn over three years
Al Borsa | 20 April 2015
Jushi Egypt for Fibreglass Industry said it aims to expand its investments to Egypt to USD 550 mn by 2018. The company is planning to increase its production capacity to 200 thousand tons of fibreglass in the next three years from 80 thousand tons currently. A USD 188 mn production line will be added in 2016, doubling Jushi’s fibreglass output to 160 thousand tons. 60% of the expansion’s cost is financed by facilities from the China Development Bank with the rest coming from Jushi’s parent company. (Read in Arabic)

REAL ESTATE & HOUSING

MoH mulls reducing minimum limit on residential units developed with the private sector
Al Mal | 20 April 2015
In response to a number of calls by real estate developers and in an attempt to accommodate small-scale developers, the Ministry of Housing is studying the possibility of lowering the minimum limit on residential units developed under Public-Private Partnership (PPP) agreements from 10,000 to 5,000. While the minister of housing initiated the investigation, he did defend the original policy which would encourage the formation of consortiums to accommodate small-scale developers. (Read in Arabic)

New executive regulations of Real Estate Law to be presented at NUCA by end of April
Al Mal | 19 April 2015
Minister of housing, Moustafa Madbouli, announced that the final draft of amendments to the executive regulations of the Real Estate Law had been completed and will be presented to the New Urban Communities Authority (NUCA) meeting at the end of April. He added that the delay in the announcement of the draft came as a result of high level consultations with members of the private sector. (Read in Arabic)

TOURISM

Ministry of Tourism to form ecotourism committee
Al Mal | 20 April 2015
The ministry of tourism will form an ecotourism committee to explore the potential opportunities and possibilities of developing this sector of tourism in Egypt, in addition to investigating means of implementing ecotourism. The move comes as the ministry seeks to promote Egypt as a nation developing sustainably in addition to providing an economic incentive to other business sectors and gov’t bodies of to enshrine environmental sustainability in their operations. (Read in Arabic)

TELECOMS & ICT

Ministry of Telecom looks to improve internet speed and quality
Al Shorouk | 12 April 2015
The National Telecommunications Regulatory Authority, part of the Ministry of Telecom, announced its intention to decrease the price of 2 Mbps internet speed for consumers from EGP 220 per month to EGP 110 per month, a 50% reduction. In parallel, the Ministry of Telecommunication aims to increase Egypt’s broadband internet penetration from 34% to 50%, by the end of 2015. Lastly, the ministry has issued an additional list of rules and regulations for internet providers. Violations of these rules may result in fines ranging from EGP 20,000 to EGP 1 mn for internet providers. (Read in Arabic)

Etisalat-Egypt revenues drop fractionally to EGP 2.2 bn in Q1 2015
Al Borsa | 20 April 2015
Etisalat-Egypt announced its first quarter earnings, which saw drop slightly year on year from EGP 2.23 bn in 1Q14 to EGP 2.23 bn in 1Q15. Despite the drop, which the company attributes to stringent regulations regarding unregistered users by the ministry of the interior sector-wide, the company’s profits were EGP 800 mn, contributing 16% of Etisalat group’s overall net profit for the quarter, making it the group’s most profitable overseas subsidiary. (Read in Arabic)

BANKING & FINANCE

CIB’s Arabic online banking boom
Al Mal | 20 April 2015
CIB’s decision to provide it customers with an Arabic version of its e-Banking services has resulted in a 500% rise in users, said a source from the bank. Prior to offering its Arabic e-Banking services, users stood at a mere 20,000. Since the introduction of Arabic, however, the number of users has skyrocketed to 140,000. Following the success of CIB, many banks, unsurprisingly, will be introducing Arabic e-banking services for their users. (Read in Arabic)

OTHER BUSINESS NEWS OF NOTE

USAID to start a USD 19 mn export support programme for SMEs
Al Borsa | 20 April 2015
USAID will disburse a USD 19 mn export support grant for SMEs in Egypt over the next four years. The first export support programme, which aimed to support 100 SMEs and had a total value of USD 15 mn, end this year. USAID is also collaborating with the education ministry to provide vocational training. The programme aims to provide business development services, help SMEs expand domestically, and increase exports. Business eligible for the programme are ones with sales revenues under USD 100 mn per annum and employ less than 200 people. (Read in Arabic)

Egyptian National Railways sees rise in revenue in March 2015
Al Borsa | 20 April 2015
The Egyptian National Railway Company generated EGP 42.3 mn in March of this year, a 37% rise on the same period last year. An official from the Ministry of Transportation attributed the rise to improving security conditions and operations. (Read in Arabic)

REGIONAL

Algerian gas discovery made near Libya
UPI | 20 April 2015
Spanish energy firm Repsol announced on Monday a natural gas discovery in Algeria near the border with Libya. Repsol is the operator in a consortium that includes French energy company GDF Suez and Algeria’s state-owned Sonatrach. (Read)

ON YOUR WAY OUT

The CIT and Electricity ministers inaugurated the first solar power station in Cairo’s Smart Village, Al Masry Al Youm reported.

BY THE NUMBERS

USD CBE auction (Monday, 20 April): 7.5301 (unchanged since Monday, 02 Feb)
USD parallel market (Monday, 20 April): 7.65 (unchanged from Wednesday, 15 April)

EGX30 (Monday): 8,595.78 (-1.93%)
Turnover: EGP 344.6 mn (39% below the 90-day average)

WTI: USD 56.18 (-0.35%)
Brent: USD 63.31 (-0.22%)

TASI: 9,589.4 (-0.3%)
ADX: 4,657.2 (+0.7%)
DFM: 4,095.0 (+1.8%)
KSE Weighted Index: 435.0 (-0.5%)
QE: 11,915.8 (+0.2%)
MSM: 6,325.3 (+0.6%)