Monday, 9 November 2015

Salah + Tawfik Diab arrested, rights activist Hossam Bahgat faces separate charges

TL;DR

Salah + Tawfik Diab arrested, rights activist Hossam Bahgat faces charges in two cases with deep implications (What We’re Tracking)

Cabinet leaves passage of the value-added tax to incoming parliament (Speed Round)

Industrial consumers report adequate gas supplies as of 1 November (Speed Round)

Amer taps EFG Hermes to join Tharwa for securitization offering (Speed Round)

Is Sahar Nasr hitting the road to build support for an IMF program? (Speed Round)

Apache back as Egypt’s largest producer (Energy)

No need for new cement factories for the next five years -Lafarge Egypt CEO (Manufacturing)

Metrojet disaster: What domestic and Arab commentators are saying (Egypt in the News)

Abbas says he rejected Morsi’s offer of 1,000 square km of Sinai (Diplomacy)

By the Numbers + NBE, Banque Misr term deposit rates: A prelude to a rate hike?

WHAT WE’RE TRACKING TODAY

Two high-profile arrests continue have national and international implications for Egypt today. The business community was stunned yesterday by the arrest of PICO group founder Salah Diab and his son Tawfik. The two men were taken into custody in an early-morning raid on their homes. While their arrest will dominate discussion among the business elite, many international journalists who cover Egypt are livid over the Military Prosecution Authority’s arrest of human rights researcher Hossam Bahgat amid allegations he published “false information.”

The facts of the Diab case so far: Salah and Tawfik Diab were arrested on charges of illegal possession of firearms after raids on their homes in Giza and New Cairo at c. 6:15 am Sunday morning, according to their defense team. Firearms were allegedly retrieved during the raids and both men were taken in for questioning by prosecutors. Tawfik was remanded to police custody for a four-day period, Youm7 reports. Prosecutors later met with the Diab family’s legal team, which includes prominent attorneys Farid Al Deeb, Mohamed Hamouda, and Tarek Saeed. The defense team described the allegations as “malicious” and “baseless,” AMAY reports.

Background: The Prosecutor General had on Friday ordered frozen the assets of Salah Diab, founder of both PICO group and the high-profile daily Al Masry Al Youm. Asset freezes were also imposed on his wife and business associates including Mahmoud El-Gammal, the prominent real estate developer. The case goes back to 2011, when Diab, El-Gammal and others were accused of acquiring state land at below-market prices for New Giza. According to Ahram Online, the Cairo Criminal Court will hold a session on the asset freeze tomorrow (Tuesday). There is no clarity as to what could have prompted the arrest of both men in dawn raids four years later.

Reactions: The business community has come out publically in support of the Diabs, Al Borsa reports. The Federation of Egyptian Industries (FEI) issued a press release criticizing the way the arrest was handled. The arrest reflects negatively on the Egyptian justice system and on the investment climate as a whole, the FEI added. Words of support also came from former Trade and Industry Minister Mounir Abdel Nour, who echoed the FEI’s sentiments, according to Al Borsa.

Hossam Bahgat arrived at the Military Intelligence Headquarters on Sunday morning and was later arrested and transferred to the military prosecution after a day of questioning. It’s unclear what prompted the arrest, but Bahgat’s 13 October article in independent media outlet Mada Masr about the military trial of 26 officers accused of plotting against the state is believed by international media and domestic observers alike to be the cause of investigation. Heba Morayef is associate director for the Egyptian Initiative for Personal Rights (EIPR) and arguably one of the country’s most internationally influential rights watchers. She tweeted that Bahgat could face charges under articles 102 and 188 of the penal code and expects prosecutors will make a formal decision on today (Monday) on whether to charge or release Bahgat. The Journalists’ Syndicate discussed ways to express solidarity with Bahgat, including sending a lawyer to represent the former EIPR director, syndicate member Mahmoud Kamal told Al Mal. Several activists launched the #in_solidarity_with_Hossam_Bahgat hashtag on Twitter on Sunday, and both the Committee to Protect Journalists and Amnesty International have issued statements condemning his arrest.

Meanwhile: Preliminary results of the Scan Pyramids project will be unveiled at a press conference will be held at 5:00 pm CLT in front of the Funerary Temple at the Eastern side of Khufu (Cheops) Pyramid.

The Egyptian Businessmen’s Association is holding a Chilean Egyptian Business Forum today at the organization’s headquarters in Giza, in partnership with the Chilean Embassy. On the agenda: investment opportunities here in agriculture, fishing, wood, and pesticides. The Chilean delegation is the first to visit Egypt in 20 years, Youm7 reports.

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WHAT WE’RE TRACKING THIS WEEK

The Partnership for Development Initiative’s Third “Leasing: A Catalyst promoting national projects and SMEs“ Conference will take place on Tuesday, 10 November.

Also on Tuesday: The Second Egyptian-Lebanese Business Forum.

The 37th Cairo International Film Festival will run between 11-20 November.

LAST NIGHT’S TALK SHOWS

Lamis El Hadidy cautiously defended Salah Diab last night and expressed “grave concern” over the manner in which he and his son Tawfik Diab were “ambushed by police in their homes at 5:00 am and taken away in handcuffs while photographers snapped photos for the sole purpose of humiliation.”

Said the host: “This is definitely not the image that we want to portray to the local and international business communities, particularly not now when Egypt is dire need of their investments and their support. It is still unclear why Salah Diab and his son were arrested and it is not our place to interfere with the judicial process; all we’re saying is that the situation was mishandled. The public humiliation was definitely uncalled for.”

El Hadidy took calls from Dr. Hala Elsaid, the dean of Cairo University’s Faculty of Economics and Political Science, and Federation of Egyptian Industries member Mohamed El Bahay, both of whom criticized the arrest.

Switching topics, El Hadidy noted: “Other countries have been affected by unprecedented levels of rainfall. We, however, have been suffering from outdated sewage networks for decades. I call on all Egyptians, businessmen and citizens, to donate to the Tahya Masr Fund. The situation in Egypt’s cities and villages is dire,” said the host.

Halfway through the episode an unnamed Egyptian businessman called-in to request that private companies take charge of security procedures at Egyptian airports. El Hadidy responded by stating that such a suggestion would have to gain the approval of the Tourism and Interior Ministries.

Meanwhile, Ibrahim Eissa opened his eponymous program with a tirade against the government for its “weak” and “ineffective” response to the British government’s decision to halt flights to Sharm El Sheikh.

Eissa: “The government has decided to limit the crash’s effect on the tourism sector by claiming hotel and flight bookings have not been affected. These claims not only fail to improve the situation, but are undoubtedly false. What is the point of these false claims? How will lying solve the crisis we find ourselves in?”

The host then made a request to President Abdel Fattah El Sisi, asking that he personally take charge of the tourism sector: “The only way the tourism sector will recover is if the president plays a central role. Unfortunately, nothing in this country happens without him… The president should not only meet with the minister of tourism, but more importantly, the heads of the industry. They need his support.”

Eissa then shifted his criticism to the government’s handling of the flooding crisis in Alexandria and Beheira. The host dismissed claims the Muslim Brotherhood were the reason behind the flooding, instead pointing the blame on decades of government inaction. He also brought up the charges against Brotherhood businessman Hassan Malek accusing him and others of being behind the country’s FX liquidity shortage. Eissa requested that the government prioritize the development of proper water and sewage system networks, adding that providing citizens with potable water was more important than the country’s nuclear program and the 1.5 mn acre reclamation project.

“They [the government] have been working on developing the new administrative capital. Unfortunately, our old capital drowned, in the meantime,” said Eissa.

Amr Adeeb, lead host of Alqahera Al Youm, devoted the beginning of Monday night’s program to coverage of El SIsi’s decision to earmark EGP 1 bn from the Tahya Masr fund to develop the sewage systems of Alexandria and Beheira governorates.

Adeeb: “I am happy the president decided to visit Alexandria and not Sharm El Sheikh. The poor elected President El Sisi, He is indebted to them… Egypt is moving in the right direction. Today, El Sisi took definitive steps to solve Beheira and Alexandria’s problems… It took Mubarak 15 years to address Agamy’s sewage problems… To hell with the plane, and to hell with tourism. Look at the villages that were destroyed by flooding in Beheira. Egypt’s businessmen and civil society organizations must stand by them [those affected by flooding].”

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SPEED ROUND

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Cabinet to put VAT to new parliament: The Ismail government will defer the passage of the amendments to the tax code creating a value-added tax to the incoming parliament, Tax Authority Head Abdel-Moneim Mattar told Al Mal. The original plan had been to implement the law before the swearing in of the new House of Representatives. Ahram Online has more.

Industry’s thirst for gas sated? The government is meeting industry’s demand for natural gas now that the second FSRU is operational and connected to gas grid, said EGAS chairman Khaled Abdel Badei. A number of steel manufacturers confirmed to Reuters Arabic that hey have been receiving their needs of gas since the first of November.

NBE and Banque Misr’s certificates of deposit paying an interest rate of 12.5% are likely a prelude to a CBE interest rate hike, bankers told Reuters Arabic. The rates paid, which are 50 bps higher than the interest paid on the Suez Canal expansion bonds last year, would most likely leave banks’ margins squeezed if the CBE does not take action, the sources added. There were widespread anecdotal reports yesterday of strong market demand for the products. Meanwhile, the financial press is reporting that at least five private-sector banks are mulling a rate hike on term deposits to match the new NBE and Banque Misr rates. Executives from the Union National Bank, SAIB, the Industrial Development & Workers Bank of Egypt, Misr Iran Development Bank, and the Arab African International Bank are reportedly studying the possibility.

Egypt is expecting a “ramp-up in oil volumes” through the SUMED pipeline once Iran re-renters the global energy market, Oil Minister Tarek El Molla told Reuters. “They used to work with us through SUMED. They used to store their crude there at Ain Sokhna (terminal) and Sidi Kerir … It will boost back again the activity of SUMED … Of course I have no problem. But currently we are not talking with them,” El Molla explained. He added that Egypt’s own crude production is expected to remain steady at 700k bbl per day for the next two years but could increase after that as new wells come on stream.

Citigroup is in talks with the Finance Ministry to market Egypt’s future USD bond issuances on international markets, said James Cowles, CEO of Citigroup EMEA. Cowles added that Citigroup’s participation in previous bond sales has helped pique interest in the bonds. He added that the group’s proceeds from marketing bonds and advising the Finance Ministry would be reinvested in Egypt, Al Borsa reports.

Amer Group tapped EFG Hermes to join Tharwa Capital in managing its planned EGP 500 mn securitization, the real estate developer disclosed yesterday (pdf, Arabic). Amer Group had announced in October that it was looking into another investment bank to join Tharwa Capital, and that EFG Hermes was a strong contender, Al Borsa reports.

Eighty percent of Beltone Financial shareholders have so far sold to the OTMT-ACT Financial consortium as part of the latter’s mandatory tender offer to buy out all outstanding shares of the investment bank. The consortium has acquired some 130 mn shares in five days. The MTO will continue until 12 November, according to Al Borsa.

International Cooperation Minister Sahar Nasr heads off to France and the US today, where she is expected to meet with the IMF, World Bank and the US State Department officials for talks on funding for major development projects, according to Al Borsa, quoting a statement by the ministry. The French leg of her trip will include meeting with the Organisation for Economic Co-operation and Development (OECD).

MOVES- Soha El-Turky was named head of Business Development at Barclays Egypt, returning to the bank after a three-year stint at the UK head office, where she was most recently Corporate Banking CFO at Barclays in London, reports Al Mal.

Russia is reportedly considering supplying air defence systems to Egypt, the CEO of Rostec is quoted as saying. Reuters reports that “Russia is in talks to supply Antey-2500 and BUK systems to Egypt.”Separately: Boeing says it is in talks with Egypt over a military product order including Apache helicopters and support for the existing fleet. The order could come as early as next year, Bloomberg quotes Paul Oliver, Boeing’s VP for international business development in the MENA region, as saying.

New Alexandria governor appointed; wider shuffle of governors in the works: Prime Minister Sherif Ismail issued a decision on Sunday to appoint Gen. Ahmed Al Adakory as Alexandria’s governor, according to AMAY. Al Adakory, who takes over from Hani El-Messeiry, who stepped down after the first of this season’s floods, is a veteran of local administration who was most recently head of East Alexandria municipal district. In related news, unnamed sources tell Youm7 that Ismail and Local Development Minister Zaik Badr are will announce a wider shuffle in the coming days. Among those said to be on their way out are the governors of Beni Suef, Beheira, Sohag, Giza, Assiut, Daqahleya and Aswan.

As noted in the talk show review above, President Abdel Fattah El Sisi allocated EGP 1 bn from the Tahya Masr Fund to developing the sewage system in Alexandria, following a surprise visit to the governorate yesterday morning, according to the presidency’s official Facebook page (Arabic) as reported by Ahram Online. El Sisi also ordered compensation to the farmers whose crops were destroyed by the flooding.

Zahi, Tut, Nefertiti, and Reeves. Egypt’s numerous and exponentially expanding plot threads put most television to shame. We want to say we think we’ve hit peak Egypt, but that would probably be tempting the fates. “Preliminary results from the northern wall of [the scans of King Tutankhamun’s] chamber show the presence of temperature differentials that could indicate the existence of additional hidden chambers,” Ahram Online reported, citing Minister of Antiquities Mamdouh Eldamaty on Saturday. The Guardian has coverage of the tentative findings. Meanwhile, former antiquities minister Zahi Hawass published an angry op-ed in AMAY last week titled ‘Nicholas Reeves did not discover tomb no. 63‘. From the translated version on Egypt Independent: “I could not believe my ears when I heard Antiquities Minister Mamdouh al-Damaty saying on television that Nicholas Reeves, who claims the tomb of Queen Nefertiti is behind the tomb of Tutankhamun, worked before in the Valley of the Kings and discovered tomb no. 63.”

Moroccan King King Mohammed VI made his third visit to the Western Sahara on Friday, where he promised that revenue extracted from the mineral-rich region would continue to be invested in the Western Sahara, the AFP reports. On Saturday, the king announced a EUR 7.2 bn development plan for the region.


UPDATE on the Metrojet Flight 9268 crash

Some 30 Sharm El Sheikh Airport employees in total have been questioned by the prosecutor general’s office so far. A source told Al Shorouk that any person involved in airport operations is being summoned for questioning and that the investigations are being held in secret in Sharm El Sheikh.

UK Foreign Secretary dismisses missile-dodging story: Foreign Secretary Philip Hammond sat down for an interview with BBC News with a heavy focus on the British government’s response to the crash and repatriating its nationals back home. At the end of the interview, Hammond is asked about the Daily Mail story claiming a British airliner barely dodged a missile while flying over Sinai in August. Hammond called the incident a “red herring” and said it was “not an attempt on the plane, the plane was not in danger at any time.” (Watch, running time: 3:48) The autoplay video that follows shows footage of British tourists returning home to the UK, complaining of receiving little assistance from the British Embassy.

The crash of KGL 9268 gets politicized in UK debate over airstrikes in Syria: British Defence Secretary Michael Fallon is calling on MPs to launch air strikes, Reuters reports. The Telegraph reports: ‘Russian plane crash could strengthen case for British bombings of Isil in Syria, says Michael Fallon,’ carrying a quote by Fallon as saying Asked if the air disaster strengthened the case for action in Syria, he said: “We don’t know whether it was Isil. If it turns out to be Isil, of course. Isil is a danger to us all, as we have seen in Tunisia, as we see in Syria, as we have seen in Iraq.”

Unnamed US officials made some potentially incendiary allegations that Israeli intelligence on the Sinai was used to buttress claims that the flight was downed by a bomb, CNN reported on Sunday. Israeli officials would not comment to CNN on the claims.

The crash is a “game changer” that would result in demand for more stringent aviation security for airports and countries around the world, Emirates Airlines’ President Tim Clark said. “What happened in Sharm al-Sheikh last week, and to a lesser extent with the … [Germanwings Flight 9525] aircraft, are game changers for our industry … They have to be addressed at industry level because no doubt the countries — U.S., Europe — I would think will make some fairly stringent, draconian demands on the way aviation works with security.”

Moscow said it has flown home 11,000 tourists from Egypt in a 24-hour period on Sunday, according to Russian Deputy Prime Minister Arkady Dvorkovich. According to Russian estimates, this would mean that c.70K Russian tourists remain in Egypt at the moment.

Tourism industry grapples with fallout from Flight KGL 9268 disaster: Tourism Minister Hisham Zaazou held crisis meetings on Sunday with the Tourism Development Authority to navigate through what’s widely expected to be a bad winter season, Al Borsa reports. As we discussed yesterday, the ministry is looking into three ways out: focusing on domestic tourism; expanding regional promotional campaigns; and lobbying European travel companies to continue flights to Egypt. Al Borsa notes that the government is also interested in luring both Chinese and Ukrainian visitors. Hotels in Hurghada might have to slash prices by 25% to entice that demographic, said Ahmed Medhat, head of sales at Sonesta resort in Hurghada. He adds that occupancy rates there have dropped to 50% from 70% as a result of cancellations. Meanwhile, the Red Sea Port Authority’s board held a meeting to discuss exempting cruises and yachts from paying customs dues, Al Mal reports. They will be charged for dock services fees.

EGYPT IN THE NEWS

In the spotlight this morning: domestic, regional and international media reaction to the ongoing investigation into the crash of Flight KGL 9268.

Reactions to the weekend’s developments in the opinion pages of Egypt’s newspapers ranged from non-existent to vociferously nationalistic:

On Friday morning, Emad Adeeb wrote arguably the most sensible take on the issue, urging public restraint and against rushing into accusing the foreigners of plotting against Egypt. He said all parties should await the results of the forensic investigation. Sensibly, Adeeb did not rule out the possibility of terrorism and urged transparency if this was the case. The key in that case, he suggested, would be to identify the security lapses and ensure this does not happen again. (Read in Arabic)

AUC professor Moataz Abdel Fattah offers no real insight in his “four lessons learnt,” but begins them with the somewhat noteworthy suggestion that no conspiracy ever succeeds without some degree of neglect, so we need to own up to our shortcomings as well as to the incompetency of the “weakest links” in public institutions. He then veers towards a more nationalistic tone and says that Egypt has been through tougher tests and that Egyptians should all be in support of the national institutions now. (Read in Arabic)

Columnists Mahmoud El Kardoussy and Hamdy Rizk dismiss the facts altogether and opt to address President Abdel Fattah El Sisi directly, asking him to “stay strong” and reminding him that “we’re all Abdel Fattah El Sisi.” Calling on El Sisi not to yield to the “English dog” that is subject to its “American master,” Rizk in Al Masry Al Youm likens the current plight to the Nasser era Tripartite Aggression (a.k.a. the Suez Crisis) before warning members of the Ikhwan not to take advantage of the situation. (Read in Arabic)

…El Kardoussy says his conspiracy theories have been vindicated (?) with the Russian plane crash only being an episode of the larger plot to weaken and split Egypt. Before putting his tin-foil hat back on, El Kardoussy puts out two calls: one for El Sisi to reopen the investigation into EgyptAir flight 990, which crashed in 1999, and another for Egyptians to stand in front of the mirror and pledge their allegiance to El Sisi — because criticising the state right now amounts to “treason.” (Read in Arabic)

Al Ahram’s Salah Montasser did not give a clear opinion on the crash or on the international reaction that followed. Instead, he urged the Tourism Ministry to respond to this crisis swiftly and effectively so that the effects of the blow to the sector are shortened. (Read in Arabic)

Regionally, coverage of the story was more pragmatic and less emotive:

Al Hayat’s Ilyas Harfoush writes that he understands the motives behind each country choosing its own narrative as to what might have caused the plane to crash. He says that no Western government would be willing to risk its people’s lives and that is why they are moving them out of Sinai and halting flights. Geopolitically, Harfoush fears that if Wilayat Sina’s claims are actually true, that Daesh is dragging Russia into war similar to what Al Qaeda did with the U.S. after 2001. He also raises questions about security in Sinai and the economic impact on tourism in Egypt. (Read in Arabic)

Asharq Al Awsat’s Adel Darwish refuses to take for granted the notion that the Daesh affiliate was responsible for the crash and calls for a wider range of investigation. He also suggests Egypt tap the expertise of allies in improving airport security — something he says could ultimately save the tourism industry in Egypt. (Read in Arabic)

Eyad Abu Shakra, also writing in Asharq Al Awsat, expresses his disappointment with the narrative surrounding the case. There is no conspiracy plotted against Egypt, Abu Shakra says, and that the UK’s actions were not designed to embarrass El Sisi during his trip to London. Instead, all countries involved are looking after their citizens’ well being. Egypt should be working to regain its domestic stability, he adds. (Read in Arabic)

International reaction: British tabloids reach consensus that British jihadis in Egypt were behind the crash.

The BBC’s Alex Morrison reviews the headlines in British tabloids on Sunday, with most offering their own various conspiracy theories as the cause of the crash.

The Independent’s top headline: ‘It’s 50-50 that CCTV was not being watched,’ pointing to a special report inside its covers that notes: “Experts ask why bringing tourists back is so slow as they’re told they’ll be home ‘in 10 days.’”

The Sunday Express screams across its front page: “Jet bombers spoke with British accents,” in a piece that alleges that analysts at the UK’s Government Communications Headquarters (GCHQ) heard people speaking with British accents celebrating the crash — although nowhere in the report does it mention where were these people who were allegedly doing the celebrating. The article goes on to allege that British jihadis who were trained in Syria have joined Daesh in Egypt.

The Daily Star Sunday is also running with the British jihadi angle in the unambiguously certain: “British jihadis made the bomb.”

AP is running a story titled Sharm el-Sheikh airport officials reveal porous security, claiming seven airport officials were interviewed about lax security. One source says “I can’t tell you how many times I have caught a bag full of drugs or weapons that they have let through for 10 euros,” while another says the scanning machines only work when senior officials are doing the rounds. “We only care about appearances,” he said. “Once they (higher-ups) hear something is coming, suddenly everything gets fixed.”

IMAGE OF THE DAY

A passageway in one of three tombs opened for the first time to the public in Luxor’s Valley of the Kings. (View image, photo credit: Mostafa Al Saghir, Ministry of Antiquities)

WORTH WATCHING

ICYMI: A little more than a week ago, this video emerged online showing that alleged Egyptian “comedian” Mohamed Sobhi has copied, nearly shot for shot, the promo for his show on CBC Egypt from Louis C.K.’s commercial for his HBO special. (Watch in Arabic and English, running time: 1:43)

DIPLOMACY

Abbas says he rejected Morsi’s offer to provide 1,000 square km of Sinai to Gaza
In a meeting with Egyptian media on Sunday during his visit to Cairo to meet President Abdel Fattah El Sisi and various other officials, Palestinian President Mahmoud Abbas said he outright rejected an alleged offer, endorsed by Hamas and Israel, to annex 1,000 square kilometers of Sinai for Gaza during the rule of Mohamed Morsi, Youm7 reports. Abbas also took shots at his Hamas counterparts, saying that they are in direct negotiations with the “occupying forces of Israel” until this moment. (Read in Arabic)

Greek delegation visits Cairo today to discuss investing in energy and canal zone
A Greek delegation headed by the of Infrastructure and Transport Minister Christos Spirtzis and the Foreign Ministry’s Secretary General for International Economic Relations, Giorgos Tsipras, will be in town today to explore strengthening bilateral trade and opportunities in energy and the Suez Canal Development Axis with Egyptian transport and foreign ministry officials. The delegation will attend a meeting of the Egyptian-Greek Business Council and the Federation of Egyptian Industries (FEI) on Tuesday. (Read in Arabic)

GERD talks to be extended another day says Irrigation Minister
The ninth round of talks on the Grand Ethiopian Renaissance Dam (GERD) might be extended for another day, said Irrigation Minister Hussam Moghazy. He reassured the press that the second day of talks was “going well” and that the extension works in Egypt’s favor as it will allow for more detailed discussions on moving forward. He failed to give details on where the tripartite committee stood on consultant reports, which will determine the next step in the negotiations, Al Masry Al Youm reports. On Saturday, MO ghazi said “There is an extreme delay in achieving the road map we agreed upon in August 2014, compared to the construction rates of the Grand Renaissance Dam,” Ahram Online reported. Nigerian news outlet TVC carries comments from Ethiopia’s minister of water and energy Motuma Mekasa, who reportedly said in his opening remarks at the summit that Ethiopia is not the party responsible for delays.

The MFA blog is back, this time with a post from Shawki Allam, the Grand Mufti of Egypt on ‘Shari’ah Law: What it is and what it is not.’ The post primarily serves to argue that with regard to shariah, “Interpretation is the endeavor of scholars in each generation. In other words, some rules can change with time and place,” and that the articulation of such law “be purpose-driven and considers the prevailing customary, social and political contexts of the time.” The Mufti does not go into further detail of how shariah might change to reflect current reality, but concludes that, “It is through adopting this attitude towards the Shari’ah that an authentic, contemporary, moderate, and tolerant Islam can provide solutions to the problems confronting the Muslim world today.”

ENERGY

Apache back as Egypt’s largest producer, looking to grow international production
Apache Corp is once again at the top of the league tables as Egypt’s largest oil and gas producer after having brought gross production levels back to the peaks of 2011 and 2012. The company is looking to grow its international production by 10-12% and raise output in the U.S (where it says it is expanding its portfolio) by 2% y-o-y. Even though Apache sees North America as its “primary growth engine for the future,” CEO John Christman said the company has been able to benefit during the downturn from its production in Egypt and the North Sea “largely due to the resiliency of those international markets during the crude slump and Apache’s extensive investments in infrastructure that allow the company to reap fast financial rewards.” (Read)

Caterpillar negotiating portable diesel generators with Ministry of Electricity
Caterpillar Inc. is in talks with the Ministry of Electricity over importing 65 mobile diesel generators, at an investment cost of EGP 1.4 bn, and a total output of 325 MW. The Ministry is studying the offer, sources told Al Mal, for its effectiveness in reaching areas the expansion of the national grid would currently be too expensive. The Ministry is also negotiating upgrading six of its older power stations to the combined cycle system, generation an additional 1,500 MW, the source added. (Read in Arabic)

MANUFACTURING

No need for new cement factories for the next five years -Lafarge Egypt CEO
LaFarge Egypt predicts no deficit in domestic cement supply will occur for the next five years, CEO Hussein Mansi said, according to Youm7. Total cement production in Egypt reaches 52 mn tons per year, 18 mn of which is surplus, the Lafarge Egypt CEO added. (Read in Arabic) The issuance of new cement licenses has been delayed a number of times.

Unilever Mashreq looking to build USD 50 mn food factory
Unilever Mashreq are looking to build a new food factory in the first half of 2016 with initial investments of around USD 50 mn, according to Managing Director Ashraf El Bakry. Half of the factory’s output will be allocated to export while the remaining half will hit the domestic market, he added. Unilever Mashreq also intend on building a soap factory with investments of over EGP 200 mn. (Read in Arabic)

REAL ESTATE + HOUSING

Magawish village development in Hurghada will cost EGP 3 bn, says Wadi Degla Chairman
Development of the Magawish Resort Village in Hurghada will cost EGP 3 bn, said Maged Helmy, Chairman of Wadi Degla Real Estate Development. The development is a partnership with state-owned Misr Travel. (Read in Arabic)

TOURISM

Marseilia to launch EGP 750 mn Blue Bay project in November
Marseilia Group announced it will launch its Blue Bay project in November to create the first “Asian” resort on the Red Sea. The project will cost EGP 750 mn to build out, chief financial officer Eslam Abdul Hamid said. In related news, Abdul Hamid announced the Marseilia will build both its EGP 130 mn Florence Al Montazah Mall project and its EGP 140 mn Marseilia Land project in about two years (Read in Arabic)

BANKING + FINANCE

Bahrain’s ABC looking for partners to join USD 500 mn syndicated loan to EEHC
The Arab Banking Corporation (ABC) is looking for domestic partners to issue a USD 500 mn syndicated loan to the Egyptian Electricity Holding Company (EEHC). The five-year term loan would used to develop power plants running on both conventional and renewable sources, Arab Finance reports. The Electricity Ministry has moved extensively over the last period to secure major loans to fund its subsidiaries including a USD 520 mn loan from a consortium headed by the National Bank of Abu Dhabi (NBAD), and EGP 1.8 bn loan from CIB and NBE. (Read in Arabic)

OTHER BUSINESS NEWS OF NOTE

Amer, Kabil meet to discuss economic growth
Trade and Industry Minister Tarek Kabil met with incoming central bank governor Tarek Amer on Sunday to discuss monetary policy as it pertains to imports and industry. During their meeting, CBE governor expressed his readiness to assist in any campaign to increase exports or expand the country’s industrial sector. For his part, Kabil provided Amer with an overview of the financial challenges facing the industrial sector, namely a lack foreign currency and the inability of SMEs to obtain bank loans due to government crowding-out. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

No government-imposed pricing or profit margin caps, Hanafy says
The working group created by the cabinet to oversee the price of good and their supplies on the market will not be setting prices or capping profit margins in the upcoming period, Supplies Minister Khaled Hanafy clarified. The committee will just be focused on ensuring adequate supplies across the country and will be part of an action plan to increase selling outlets nationally. (Read in Arabic)

IDA to build an industrial zone in Fayoum
The Industrial Development Authority (IDA) is looking build an industrial zone in Fayoum, Al Masry Al Youm reported. 33 mn sqm is allocated for the zone, the IDA said. In total, there are 126 industrial zones in Egypt now, 76 of which are directly run by governorates. (Read in Arabic)

Ashour claims victory in Lawyers’ Syndicate presidency poll ahead of results
Sameh Ashour is now the Lawyers’ Syndicate president, according to his verified Facebook page, as reported by Al Shorouk. No official word has been released by judicial officials supervising the elections, however. Ashour’s was up against Muslim Brotherhood counterpart Montasar Al Zayat in the elections. Ashour’s official page announced: “Sameh Ashour is the Lawyers’ Syndicate president in the biggest confrontation to the Muslim Brotherhood with an 8K vote difference over the MB candidate [Al Zayat].” There has been several challenges to the legality of the “judicially-supervised process” of the Lawyers’ Syndicate elections, however, Egypt Independent reported.

SPORTS

Mohamed Salah suffers ankle injury, will sit out WC qualifiers against Chad
AS Roma’s Mohamed Salah suffered a tear to his Achilles tendon in the game against rivals Lazio on Sunday and as result will miss the World Cup qualifying matches against Chad starting on 17 November, according to KingFut. Roma manager Rudy Garcia, according to FilGoal, told beIN Sports following the match: “It will be a miracle if his [Salah] injury is not a broken foot.” The Egyptian national team head coach Hector Cuper has selected Zamalek’s Mostafa Fathy as Salah’s replacement, FilGoal reports.

ON YOUR WAY OUT

Egypt will host the 2021 World Men’s Handball Championship, it was announced on Friday. The Prime Minister’s office said the tournament will be held in Cairo, Alexandria, Luxor, Hurghada, and Sharm El Sheikh. Egypt last hosted the tournament in 1999.

BY THE NUMBERS
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QUICK FACT: Egyptian steel factories sell rebar to wholesalers at around EGP 5,000 / ton (USD 622 / ton), including sales tax, whereas Chinese or Turkish steel can be imported and sold at around USD 400 / ton. That’s why the government imposed a temporary tariff on imported steel.


USD parallel market (Sunday, 08 November): 7.9301 (unchanged since Sunday, 18 October)
USD parallel market (Sunday, 08 November): 8.50 (-0.03 from Thursday, 05 November)

EGX30 (Sunday): 7347.22 (-2.58%)
Turnover: EGP 481.9 mn
EGX 30 year-to-date: -17.69%

Foreigners: Net Short | EGP -25.3 mn
Regional: Net Long | EGP +35.2 mn
Local: Net Short | EGP -9.9 mn

Retail: 75.0% of total trades | 80.6% of buyers | 69.4% of sellers
Institutions: 25.0% of total trades | 19.4% of buyers | 30.6% of sellers

Foreign: 12.9% of total | 10.2% of buyers | 15.6% of sellers
Regional: 8.6% of total | 12.4% of buyers | 4.8% of sellers
Domestic: 78.5% of total | 77.4% of buyers | 79.6% of sellers


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PHAROS VIEW

Facing the Moment of Truth 2

The National Bank of Egypt (NBE) and Banque Misr introduced 12.5%/annum 3Y deposits. The rate is almost 200 bps higher than the highest rates on the market up to last week. The hike on certificates of deposit is a typical prelude to a CBE interest rate hike. The surge in deposit rates at Egypt’s two largest banks will trigger corresponding moves by the larger commercial banks. The effect of this will be less liquidity but also a slightly higher value for the EGP. Given that most corporate debt is benchmarked to the corridor, the CBE may be forced to raise policy rates as early as December to maintain equilibrium in the rate structure.

Higher rates mean more pain to leveraged companies, higher required return rate, and lower equity valuations. If successful, investors may assign a higher weight to longer-term gain versus short-term pain. We are biased to conservatism and hence advise clients to remain cautious. Finally, if the ongoing interest rate defense is the opening scene of a meaningful devaluation (> 10%) or a full-fledged shift to a free float, then our bias towards EFG-Hermes Holding, Alex Containers, Oriental Weavers, South Valley Cement and Madinet Nasr Housing as top picks is maintained. Tap here for full background.

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WTI: USD 44.29 (-2.01%)
Brent: USD 47.42 (-0.56%)
Gold: USD 1,088.90 / troy ounce (+0.11%)

TASI: 6,922.96 (-0.55%)
ADX: 4,193.85 (-1.62%)
DFM: 3,347.23 (-3.00%)
KSE Weighted Index: 391.68 (+0.28%)
QE: 11,221.61 (-1.90%)
MSM: 5,915.43 (-0.05%)

 

 

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