Tuesday, 15 December 2015

Global giant Archer Daniels Midland Company buying 50% of Cairo-based Medsofts Group


Global giant Archer Daniels Midland Company buying 50% of Cairo-based Medsofts Group (Speed Round)

Prime minister backs off plan to eliminate subsidies by 2020, says spending will fall to 30% of “mid-2014” level. (Speed Round)

The CBE injected only USD 660 mn in Sunday’s FX auction aimed at medium-sized businesses (Speed Round)

Egypt finds no evidence of terrorist action in the crash of Metrojet flight (Speed Round)

Leviathan partners could be to cut development plans in half if Egyptian exports are off the table (Speed Round)

Cairo-suburb tram negotiations with China stalled (Automotive + Transportation)

Ahmed Zayat feels “robbed” by Sports Illustrated (Speed Round)

By the Numbers + CBE will face The Moment of Truth


Prime Minister Sherif Ismail will meet today with Saudi Arabia’s Deputy Crown Prince, Mohammad bin Salman. On the agenda is another Saudi deposit in the CBE and potential energy, tourism, agriculture, and education projects, according to Reuters.

The U.S. Federal Reserve’s open market committee kicks-off its two-day meeting. It’s widely expected to raise interest rates for the first time since June 2006.

The African Development Bank’s board should sign off on a USD 500 mn loan to Egypt.

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Thursday: The Central Bank of Egypt’s Monetary Policy Committee will meet to review interest rates. The meeting will be preceded by a meeting of the Coordinating Committee meant to allow cabinet members to coordinate fiscal and economic policies with the central bank’s monetary policy. Analysts largely say the outcome of the MPC meeting is too close to call.

On Saturday, Egypt expects to sign USD 1.5 bn in loan agreements, including the USD 500 mn facility the AfDB is expected to approve on Tuesday and USD 1 bn from the World Bank. Egypt will look to draw as much as USD 1 bn before year’s end.


President Abdel Fattah El Sisi will launch the 1.5 mn feddans reclamation project in Farafra Oasis by the end of this month. Also expected before year’s end: The House of Representatives is expected to convene; the final runoff election for a total of 13 seats will wrap this week.


Lamis El Hadidy kicked off last night with a discussion of violence against women, citing the current outdoor campaign in Cairo asking women to speak out about domestic violence. El Hadidy concluded her segment telling Egyptian and Arab women to speak up: “Never allow anyone to lay a hand on you. If he did, especially in front of your children, then you’ll be a walkover.”

This segment was fairly long and was actually kind of remarkable for Egyptian television. The livestream online also generated an unusual amount of likes and dislikes from viewers numbering in thousands, with a solid third expressing a negative opinion. Social Solidarity Minister Ghada Waly called in and said the best remedy to domestic violence was the education of girls and the employment of women, which would help leaving an abusive relationship be a realistic option for women. The program also noted the outdoor ad against domestic violence funded by UN Women and USAID — the same campaign responsible for the billboard on 6 October bridge that we noted in our 3 December issue, as well as the PSA video campaign (Watch in Arabic with English subtitles, running time: 1:04).

El Hadidy moved on to address news that the CBE has supplied on Sunday USD 1 bn to the market for the second time, asserting that it will “eliminate the parallel market, enable exports and reduce prices.” Lamis jokingly said: “I just want to ask CBE Governor Tarek Amer: Where did you get the money from? I’d like to meet up and ask: From where, Mr. Amer?”

El Hadidy said she wouldn’t comment on the news that Egypt has found no evidence that a terror attack brought down Metrojet Flight 9268. “I didn’t see any information in the statement, so we will not comment on it.” The installation of surveillance cameras in downtown Cairo? That’s another matter entirely. El Hadidy says the cameras are necessary to “enhance Egypt’s security.” General Abo Bakr Abdel Kareem, deputy Interior Minister for media and public relations, reminded Lamis that the system would be designed primarily to monitor Cairo traffic, particularly during rush hours.

On Al Kahera Wel Nas, Ibrahim Eissa hinted that he thinks Egypt’s diplomatic offensive on the Grand Ethiopian Renaissance Dam is failing. “President El Sisi is approaching this issue as he usually does: With goodwill and honesty. He wishes that the other party would do the same. So did this work on the Dam issue in particular?” Eissa stopped short of answering.

Eissa went on to tackle the complex bureaucratic process involved in allocating industrial land in Egypt, featuring it on one of his main segments, “The Other Side of the Story.” Eissa said the Industrial Development Authority (IDA) in 10 Ramadan has released 623 pieces of land, while there are 1,900 investors waiting for property on which to build plants or expansions. Eissa waded squarely into the debate on who allocates what land, to whom, when he said the problem is essentially that the IDA doesn’t own land — the New Urban Communities Authority (NUCA) does, and it’s part of the Housing Ministry.

“Is there a lack of industrial land supply?” Eissa asked. “All these economic conferences we’ve had are a complaint that we don’t have enough industrial land supply.” Eissa said that former Trade and Industry Minister Rashid Mohamed Rashid was a “very smart minister” because he challenged the status quo. “Did we solve the red tape?” Eissa asked. “Rashid solved this by applying a one-developer system — in which a sole developer controls the land and then sells it off to best buyer. This kind of bureaucracy will remain the black hole that sucks Egypt in.”

Amr Adeeb and co-host Rania Badawy devoted the majority of their show to the allegations of a married woman that movie director and newly-elected parliament member Khalid Youssef [redacted] harassed her. Adeeb said that most of the pictures circulating the internet in the past few hours of Youssef are with younger women and “it seems consensual, not harassment. I don’t know, but is this related to his recent election to the parliament? Is this a coincidence?”


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Global giant Archer Daniels Midland Company (ADM) reached an agreement to buy 50% of Cairo-based Medsofts Group in a transaction that is getting wide attention from the global trade press. According to a statement from ADM, the new joint venture will own and manage merchandising and supply chain operations, including: an international merchandising operation that handles more than 1.5 mn tonnes of grains, oilseeds, and soft commodities annually, a local grain distribution operation, serving customers in Egypt, and an inland logistics network that links port operations to customers throughout Egypt. The joint venture will also own a 50% stake in Nile Stevedoring & Storage Co. (NSSC). The transaction is subject to regulatory approval, but ADM is targeting closing the agreement in early 2016. EFG Hermes Investment Banking was sole financial advisor to Medsofts; Zaki Hashem & Partners acted as the group’s legal advisors. ADM did not disclose its advisors on the transaction.

EFG Hermes confirmed yesterday that it has closed its advisory on the sale of Qalaa Holdings’ Rashidi El Mizan to Saudi Arabia’s Olayan. The firm did not specify the value of the transaction, which Qalaa had previously put at EGP 518 mn. EFG Hermes acted as financial advisor and Arab Legal Consultants as legal advisor to Qalaa Holdings. CI Capital acted as financial advisor and Helmy, Hamza & Partners as legal advisor to Olayan Financing Company. EFG Hermes said in a statement that, “Despite market headwinds, Egyptian M&A opportunities attracted significant global interest this year.” EFG Hermes Investment Banking head Ahmed El-Guindy noted that in addition to Medsofts and Rashidi, its international M&A practice this year advised on the acquisition of Fawry by a consortium of investors led by London’s Helios Investment Partners, and the sale of Schweppes’ Egyptian assets to the Coca-Cola Co. EFG also raised more than USD 1.4 bn in equity for clients over seven capital market transactions this year, with more than 70% of the capital raised having been sourced from international investors.

In remarks yesterday, Prime Minister Sherif Ismail backed off the state’s pledge to completely eliminate fuel subsidies by 2020. The PM said the government will cut subsidies to 30% of their mid-2014 level, but coverage in both the domestic and international media fail to make clear what the base for the cut is — i.e.: whether the mid-2014 level is before or after the early July 2014 subsidy cuts. Ismail said that while the government is committed to its previous decisions, changed circumstance — including persistently low oil prices and new energy discoveries in Egypt — have prompted cabinet to revisit its calculations.


Egypt finds no evidence of terrorist action in the crash of Metrojet flight 9268: The Civil Aviation Ministry completed its preliminary report on the crash of Russian Metrojet flight 9268 in Sinai and has not found evidence of a terrorist act. “The technical investigative committee has so far not found anything indicating any illegal intervention or terrorist action,” the Ministry said in a statement, according to Reuters. “Eyes wide shut“ is Russia’s Sputnik’s preferred title for the report, in which the Investigator in Charge, Captain Ayman El Mokaddem, said “the committee did not receive up till now any information indicating unlawful interference, consequently the committee continues its work regarding the technical investigation.” The statement did however say the committee was “continuing its work,” the AP noted.

The Kremlin’s response: “No, [I cannot comment on the statement] of the Egyptian authorities,” said Russian presidential spokesperson Dmitry Peskov to reporters, according to Russian state news agency TASS. “I can recall the conclusion of our experts from the relevant agencies who arrived to the conclusion that it was a terrorist attack.” Meanwhile, the airline Kogalymavia [Metrojet] says it has not received this preliminary report, according to RBTH citing Interfax.

Government to hire international firm to improve airport security
The government is looking to hire an international security company to help improve the country’s airport security procedures, Reuters reports. The government had recently announced it had met with several international companies and that one would be chosen, but no timeline was given. (Read)

Airlines operating flights destined for Sharm El-Sheikh and Hurghada face a lower hurdle to clear when applying for state subsidies designed to keep them flying into the two Red Sea destinations. Eligibility for the subsidies is determined by how full a flight is, and airlines can now apply for a subsidy if they’re in the 50-90% range rather than the current 60% rate, said Adla Ragab, an economist at the Ministry of Tourism. Foreign charter flight operators had requested an eligibility rate of 40%-100%, but were rejected as this rate would be too costly in the event of a reversal in tourism downturn, said Ragab. The Ministry also approved raising subsidies to USD 45 per seat, up from USD 40 for flights over four hours long, and raised subsidies on flights less than four hours to USD 40 per seat, up from USD 30, Al Borsa reports. Subsidies for charter flights have long been at the core of Tourism Minister Hisham Zaazou’s strategy to combat the downturn in the sector, before and after the Metrojet disaster.

What’s on Sherif Ismail’s mind? The prime minister held a press conference yesterday at which he ran down the state of the nation and the government’s policies. He said President Abdel El Sisi will review the government’s plan to improve services, address the FX shortage, cut the budget deficit to 8.5% (Al Ahram is reporting 9%) and achieve a growth rate of 6% before the plan is brought before the House of Representatives when it holds its first session before the end of the month. The PM said the Draft Media Bill—which has been dormant since it was revealed in August—will be reviewed at tomorrow’s cabinet meeting. “Work on the legislation would take multiple sessions,” Al Ahram reports Ismail as saying. The draft media law will then be taken to the president for approval if it is ready before the House of Representatives convenes. Other legislation on Wednesday’s agenda includes the draft social healthcare law, which aims to institute universal healthcare of a reasonable standard by 2030. Ismail stated that all legislation passed during the “previous period” will be reviewed by the incoming parliament, Al Borsa reports. His meeting today with Deputy Crown Prince of Saudi Arabia will look into merging both countries’ power grids, and cooperating on customs and taxes. Commenting on the ruling against EGAS, Sherif Ismail said that the government will not be a party to the commercial dispute. He added that the government is still mulling over gubernatorial reshuffle, but a cabinet reshuffle is unlikely.

The Central Bank of Egypt injected USD 660 mn in Sunday’s FX auction, meaning the CBE would have covered 40% of the import backlog, according to “high level” sources speaking to Al Ahram. Earlier reports in the domestic media, which also cited unnamed sources, had stated that the auction pumped out USD 1 bn. Sunday’s auction was aimed at medium-sized businesses, Federation of Egyptian Industries Chairman Mohamed El Sewedy told Amwal Al Ghad. The funds were directed towards companies of a business volume smaller than USD 750k. El Sewedy said the CBE has injected 50% of the USD 4 bn it said it will provide to clear import backlogs. Since As we noted yesterday, the CBE told banks it will intervene again in the market on Wednesday to cover a second portion of USD-denominated credit facilities for importers.

Upping the ante: Egypt will be targeting an economic growth rate of 6% in FY 2017-18, along with a reduction of the budget deficit to 8.5% of GDP, Reuters reported, quoting Prime Minister Sherif Ismail.

Plan B for the Leviathan partners could be to cut development plans in half if Egyptian exports are off the table, Globes’ Hedy Cohen reports. The size of the proposed floating production, storage, and offloading vessel (FPSO) could be halved from the 16 bcm annually proposed originally. The smaller operations would supply gas to Israel’s domestic market and to Jordan. All is not lost, however. Israel’s daily Maariv said a settlement for the gas dispute between Egypt and Israel could be reached within the context of a regional agreement, Al Shorouk reported. The settlement will include agreements with Cyprus and Greece and will also settle the fate of Israeli gas exports to Egypt. Maariv reportedly adds that Prime Minister Netanyahu could intervene to force the Israel Electricity Company to accept a settlement with Egypt. Other concerns the Leviathan partners have are BG’s acquisition by Shell, and the latter’s disinclination to engage in Israel.

…which might not be good news for Israel as Shell cleared the final regulatory hurdle for its acquisition of BG Group after receiving the greenlight from Chinese regulators yesterday, leaving the deal on track for completion by early 2016. “With the regulatory approvals out of the way, Shell and BG turn their focus to shareholders and will publish within weeks a prospectus containing information on the deal and the change in the share structure and also announce dates for general meetings where the transaction will be put to vote,” Reuters reported. To celebrate, Shell announced it will cut 2,800 jobs once the merger is complete, with BG Group likely to lose its corporate offices in Reading as well, The Telegraph said.

Agrium could resort to international arbitration if the Ismail government raises the price of natural gas to its fertilizer plants, a source informed Al Mal. A government source said raising the price of natural gas to around USD 5-6 per mmBtu is being considered as LNG import costs increase. As it stands, Egyptian Nitrogen Products Company (ENPC), which is wholly owned by Agrium, has is on a contract to buy natural gas at USD 2 per mmBtu, whereas MOPCO, 26% of which is controlled by Agrium, buys gas at USD 4.5 per mmBtu. MOPCO’s Chairman says the figures are untrue and that his company buys gas at a pricing formula linked to the international price of urea that hike prices when urea prices increases, but does not bring them down when they fall.

Feed-in tariff contracts have been amended in response to feedback from investors, said New and Renewable Energy Authority chief Mohamed El Sobky, who stopped short of saying what the amendments centered on. Feed-in tariff contracts are currently being reviewed and translated by Zulficar & Partners Law Firm before being shipping to the Council of State for review, El Sobky added. The NREA head also stated that the authority is reviewing policies to help make FX available to energy investors. The recommendations of the Council of State would potentially affect the contacts of 39 solar power companies and 11 wind power outfits. One of these, Polaris, is in talks with Turkey’s Demirer Holding to form a consortium to build two wind power plants in Gabal Al Zeit for USD 150 mn. The two are discussing ownership and shareholder structure for the partnership. Polaris is also in talks with CIB, HSBC, and the National Bank of Greece (NBG) to provide 70% of funding for the project, according to a company source speaking to Al Borsa.

LEGISLATION WATCH- Other economic policies under review include amending article 29 of the Investment Incentives and Guarantees Law, which governs special free zones investments. The Cabinet economic group is currently considering eliminating special free zones, according to government sources speaking to Al Borsa. Finance Minister Hany Dimian had come out strongly against special free zones, which he blames for facilitating customs evasion. The source adds that the General Authority for Investment and Free Zones (GAFI) has alternatives lined up in the event special free zones are repealed, including renegotiating terms with investors. This comes as 10 regional and local companies have applied to run projects under the special free zones system, despite GAFI refusing to process more applications until the issue is resolved. 13 companies have received permission to operate under the system before policy came into review. Egypt has 10 such free zones with 262 projects worth USD 10 bn, Al Borsa reports.

More Bimmers in Egypt in 1Q2016: Bavarian Auto Group plans to begin marketing locally assembled BMW X4 and X6 models domestically in the first quarter of next year, Al Mal reported. The new models follow an announced USD 7 mn investment to expand production lines. Bavarian Also said it will assemble 10,000 vehicles for a third party, without naming the company.

The Middle East is on track to import 9.8 mn tons of LNG in 2015, up from 3.9 mn tons a year earlier, Energy Aspects Ltd says, according to Bloomberg. The MENA region had the biggest growth in LNG demand in 2015 with Egypt and Jordan commissioning floating terminals. One of the biggest winners of this shift is Trafigura, which more than doubled its LNG volume this year as it became the world’s largest independent LNG trader primarily on stronger demand from Egypt and Pakistan.

Banque Misr granted extended financing of c. EGP 250 mn to three renewable energy companies, according to Al Borsa. The bank is exploring extending five renewable energy companies EGP 400 mn in credit facilities, with sources reporting that bank will approve this policy this month. Energy makes up 60% of the bank’s portfolio for the year.

Saudi Arabia announced the formation of a 34-state coalition of Muslim-majority countries to fight terrorism on Tuesday, in a two-part statement from the Saudi Press Agency, as noted by Reuters. Among the states is Egypt, which would make this the third or fourth such coalition for Egypt to join in recent months, following those created by the United States, Russia and France (possibly).

Your shrimp was likely peeled by slaves in Thailand -AP investigative report: A much-discussed and remarkable piece of investigative journalism by the AP published on Monday has already spurred calls for a boycott, and has found that the global supply chain for peeled shrimp is being sourced from workers being held in slave-like conditions in Thailand, and has found its way to American grocer Wal-Mart and restaurant chain Red Lobster, among others.

Pew: The American middle class is losing ground. No longer the majority and falling behind financially: A report from last week still making headlines is Pew Research’s analysis of four decades of US government data demonstrating the hollowing-out of the American middle class. Out of various demographic groups surveyed over 40 years, the groups who gained the most in terms of average income were the elderly, married couples, and blacks, with the groups falling farthest behind over the same period being those with less than four years of university education, the unmarried and Hispanics.

Just more evidence that Egyptians are both intentionally and unintentionally the funniest people in the world: Ahmed Zayat appeared to be legitimately, non-sarcastically, angry that Serena Williams was named Sports Illustrated Magazine’s Sportsperson of the Year over his horse American Pharoah, according to a series of tweets starting with this one here that simply read “ROBBED. ROBBED. ROBBED.” American Pharoah had won Sports Illustrated’s online poll ahead of the announcement that the title was going to Williams. Zayat did, however, retweet criticism of his criticism.


With the news being what it is, it is a rare moment when we can find something to laugh about. Thankfully, we’ve found one such example. British newspaper tabloid website The Express has actually confused the preliminary report from the investigative committee on the crash of Metrojet Flight 9268 with the Turkish downing of a Russian bomber to conclude: ‘Egypt says ‘no sign of illegal intervention’ in downing of Russian jet as it support Turks.’ Questions such as how and why Egypt would be investigating the shooting of a Russian bomber that crashed in Syria that Turkey immediately claimed responsibility for apparently never entered the hivemind at work at the Express. Hopefully, they won’t catch their error before our dispatch time this morning so everyone can enjoy a laugh at their expense.

The Express piece is perhaps the only take on this story to prompt any of us to crack a smile after skimming the international press’ coverage of Egypt this morning: Global media on Egypt last night and into this morning is focused squarely on the preliminary results of Egypt’s investigation into the Metrojet crash. Most reports are emphasizing that Egypt stands alone in its assertion that thus far there is no evidence the jet was downed by a bomb. Reactions by readers in their comments are overwhelmingly negative and sceptical, centering on the assumption that Egyptian authorities have motive to cover up any evidence of terrorist activity due to the importance of the tourism sector for the economy.

Nour Youssef’s report for the Associated Press is the only one worth reading. According to Youssef, “two officials involved in the investigations said Egyptian police had run their own tests of wreckage that had come up positive for traces of explosives.” In addition, the report claims “Three officials involved in the investigations said the authorities’ reluctance to acknowledge a bomb could have been smuggled into the airport stems from their refusal to admit to a security failure and it is affecting the seriousness of the probe. ‘They are in denial,’ said one of the officials.”


Leila Fadel’s excellent piece of investigative journalism for NPR tracks down Dr. Raslan Fadl, the first doctor in Egyptian history to be handed down a conviction for performing FGM on 13-year old Soheir al Batea, who died due to his procedure. While the police had said that Fadl is a fugitive and that they were searching for him day and night, Fadel found Fadl currently working at a state-run hospital.


Flashdance – Maniac: Following Republican presidential candidate Donald Trump’s comment that fellow candidate Ted Cruz was “a little bit of a maniac,” Ted Cruz’s Twitter account tweeted out the following on Sunday: “In honor of my friend @realDonaldTrump and good-hearted #Maniacs everywhere” (Watch, running time: 4 minutes) Of course, we don’t believe Cruz himself is actually this funny. This was likely the work of his social media campaign manager Josh Perry.


Egypt still urging Aramco to provide fuel shipments
EGPC is still trying to get Saudi Arabia’s Aramco to provide Egypt with USD 300 mn worth of fuel shipments, Daily News Egypt reports. The shipments would be part of a USD 1.4 bn contract to provide fuel for three months ending November, which EGPC hopes to carry forward to December. The drop in energy prices implies that Egypt could be getting more fuel shipments under the same price. An EGPC official said “the previous contract with the Saudi company included the provision of 500,000 tonnes of diesel, 220,000 tonnes of fuel oil, and 150,000 tonnes of gasoline a month.” (Read)

Bechtel keen on increasing investments in Egypt
Global construction firm Bechtel is keen on increasing investments in Egypt, said its Regional Chairman David Welch, who met with Prime Minister Sherif Ismail on Sunday, reports SIS. Bechtel is interested in infrastructure projects in Egypt, according to Welch. Focusing currently on the oil and gas sector in Egypt, the company is also interested in assisting the government with coal-powered plant application issues, he added. (Read)


Cnood Asia proposal to participate in Suez Canal Axis infrastructure, power projects
EPC contractor Cnood Asia has offered the Suez Canal Authority a proposal to participate in infrastructure and electricity projects in the industrial zone in East Port Said, Al Mal reported. Cnood is reportedly also looking to build a USD 60 mn photovoltaic cell factory. Al Mal says the company began operations in Egypt this year, building a wind farm in Zafarana, and a solar power plant in Aswan with investments of USD 100 mn. (Read in Arabic)


Industry experts expect QIZ agreement expansion
Readymade garments exports should increase after reports saying that Israel agreed to reduce to required percentage of its components in Qualifying Industrial Zones’ (QIZ) production to 9% from 10.5%, Al Borsa said. Readymade clothing manufacturers that are part of QIZ are reportedly outraged that they were not officially informed of the Israeli decision by the government, Al Borsa reports. Israel’s move, according to the Israeli press, is part of the prisoner swap agreement for Ouda Tarrabin, a convicted Israeli spy who was released from Egyptian prison last week. However, QIZ exports are expected to fall to USD 800 mn from USD 815 mn in 2014 due to restrictions imposed on Egyptian imports by the US, Magdy Tolba, a member of the Readymade Garments Export Council, said. (Read in Arabic)

Wadi Group begins manufacturing food additive monocalcium phosphate
Wadi Group has entered the production phase at its EGP 80 mn monocalcium phosphate production plant in Sadat City. The company has not began marketing its output yet due to a delay in issuing the operational license, despite starting operations three months ago, said company board member Essam El Behery. The facility is the first of nine to go into operation, after the company acquired a 250 sqm land plot to build a phosphate complex of nine plants, he added. El Behery says the plant is Egypt’s first and that the country has been importing 100% of its monocalcium phosphate requirements. (Read in Arabic)

El Araby Group pumps EGP 65 mn into water heater factory
Electronics manufacturer El Araby Group aims to invest EGP 65 mn in its water heater factory over the coming year, said Mohamed Hamed, head of the El Araby water heater factory. The investment will go towards expanding operations into gas and solar powered heaters. The company aims to boost its market share of water heaters to 15%, up from 9% currently, by adding two production lines. The company is aiming to export its products in the MENA region, and is currently studying standard specifications, he added, expecting to export 13k units next year. (Read in Arabic)


Mobinil considers issuing shares to Egyptians
Mobinil confirmed it is planning, along with its parent company, Orange, to issue a portion of Mobinil’s shares to Egyptian investors. The company noted it has not yet finalised the amount, the timing, or the mechanism of the issuance. In separate bourse statement, the company denied that a decision to appoint an Egyptian Chairman for Mobinil has been made.

NBE to invest EGP 1 bn in upgrading its IT infrastructure over the coming three years
The National Bank of Egypt will spend EGP 1 bn over the coming three years to upgrade its IT infrastructure, Samir Sharawy, who heads the bank’s IT Group, said at the Cairo ICT conference. The bank had already spent EGP 1 bn over the past five years developing tech-based service platforms, with its mobile payment service Phone Cash raking in 500K customers, Sharawy added. He went on to discuss how the bank has two data centers, with its main center holding data for 3 mn customers. The bank also plans to open 3K new ATM machines in the coming three years, and will issue a tender to build a 1000 new ATMs, Al Mal reports. (Read in Arabic)


Cairo-suburb tram negotiations with China stalled
Talks to build a tram system connecting Cairo’s suburbs have stalled, according to Al Masry Al Youm. Transportation Minister Saad El Geyoushi reportedly changed the terms of the initial agreement, asking the Chinese company conducting the project to transform its loan to Egypt into equity in the project — a request that was rebuffed. El Geyoushi said the move was to ease the debt burden on the project, but a source countered saying the move would increase the cost of the project considerably. The agreement was supposed to be signed during the Chinese president’s anticipated visit to Cairo next month. The agreement, presumably with the Aviation Industry Corporation of China (AVIC), was first made public last year.


EFSA seeks powers to enforce decisions on insurance disputes
The Egyptian Financial Supervisory authority says it will advocate for amendments to the Insurance Act giving itself the power to compel insurers to comply with its rulings when customer disputes arise, said EFSA chief Sherif Samy. The EFSA boss wants the amendments crafted such that EFSA has flexibility to specify dispute-resolution powers and policies in the act’s executive regulations without having to resort to the House of Reps for future changes.


Indorama reaches Shebin Textiles settlement, to be paid USD 50 mn
A settlement with Indonesian investor Indorama regarding its investment in Shebin Textiles was reached, Al Borsa reported. The Cotton and Textile Industries Holding Company will pay Indorama USD 50 mn after a court renationalised Indorama’s Shebin Textiles in 2011. The settlement value was reduced from an initial agreement of USD 54 mn that followed Indorama asking for USD 156 mn in compensation from an international arbitrator. 70% of Shebin Textiles’ shares were sold to Indorama in 2006. (Read in Arabic)


Israel releases four more prisoners in Tarrabin prisoner swap
Israel released four jailed Egyptians yesterday, completing a prisoner swap for Ouda Tarrabin who was jailed in Egypt, Reuters reported. Prime Minister Benjamin Netanyahu told the Israeli cabinet yesterday the six freed Egyptians are “three who have completed their sentences and three who are connected to security offences — without blood on their hands, of course.” Netanyahu also reiterated that Tarrabin is not a spy saying he gave his “word” that Tarrabin “was not a spy for Israel.” (Read)


Banque Misr postponed loan payments of up to EGP 600 mn owed by tourism industry borrowers until the end of the current state fiscal year next July. The move is part of a series of CBE-approved banking policies to help the tourism industry struggling in the wake of the Metrojet crash. The move comes days after the postponement of EGP 1.2 bn by the National Bank of Egypt (NBE) of debts owed to it by tourism operators. The ailing sector makes up 13% of Banque Misr’s “bad debts”, said an official at the bank. It had settled bad debts owed to it by the sector down to EGP 600 mn, from EGP 1 bn in the beginning of 2015, Al Borsa reports.

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USD CBE auction (Sunday, 13 December): 7.7301 (unchanged since Wednesday, 11 November)
USD parallel market (Sunday, 13 December): 8.55 (-0.02 from Thursday, 10 December, Reuters)

EGX30 (Monday): 6,408 (0.2%)
Turnover: EGP 313.7 mn (28% below the 90-day average)
EGX 30 year-to-date: -28.2%

THE MARKET ON MONDAY: Egypt’s benchmark index inched up 0.2% on low volume. GB Auto’s gains were driven by news claiming that local manufacturers are currently negotiating with the government to implement a new policy aiming to protect the industry against Turkish, Moroccan and European competitors. At an anaemic market turnover of EGP 313.7 mn, foreign investors were the sole net buyers. Regionally, indices diverged in performance as Saudi’s TASI shed 1.3%, whereas Dubai’s General Index and Abu Dhabi’s General Index closed in the green. Globally, Germany’s DAX, France’s CAC 40, and UK’s FTSE 100 closed down.

Foreigners: Net Long | EGP + 25.9 mn
Regional: Net Short | EGP – 7.4 mn
Domestic: Net Short | EGP – 18.5 mn

Retail: 58.4% of total trades | 56.6% of buyers | 60.1% of sellers
Institutions: 41.6% of total trades | 43.4% of buyers | 39.9% of sellers

Foreign: 32.0% of total | 36.2% of buyers | 27.9% of sellers
Regional: 3.3% of total | 2.1% of buyers | 4.4% of sellers
Domestic: 64.7% of total | 61.7% of buyers | 67.7% of sellers


The CBE is aggressively running down on foreign reserves but is simultaneously using makeup to conceal the impact of its operations on the published NIR figure. The reason why the published figure hardly falls below the USD 16.0bn mark is that the CBE sells dollars then borrows from banks to keep the reserves figure stable. But from where do banks get their dollars and euros? The answer is foreign currency customer deposits. For example, if you deposit USD 100 at CIB, CIB deposits your funds at Citi Bank in New York. If at the same time the CBE has to sell USD 100 to banks out of its reserves to meet import requirements but does not want to show that its reserves fell by USD 100, it can sell the USD 100 then borrow the same amount from CIB to window-dress the reserves figure. As banks pull their clients’ foreign currency assets from banks abroad, this process should be reflected in a steep contraction in banks’ net foreign asset position in November and December. What the above means in plain English is that the CBE and banks are deploying every dollar in the whole system to restore confidence in the EGP.


WTI: USD 36.24 (-0.19%)
Brent: USD 37.83 (-0.24%)
Gold: USD 1,064.80 / troy ounce (+0.13%)

TASI: 6,686.3 (-1.2%)
ADX: 4,026.2 (+0.6%)
DFM: 2,916.0 (+1.2%)
KSE Weighted Index: 381.3 (-0.9%)
QE: 9,742.8 (+1.0%)
MSM: 5,403.7 (-0.2%)


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. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.