Wednesday, 6 January 2016

Ismail promised fiscal, subsidy reform and improved business climate to land World Bank, AfDB loans

TL;DR

Ismail promised fiscal, subsidy reform and improved business climate to land World Bank, AfDB loans. (Speed Round)

Investment and housing ministries mend fences, prepare to launch land tenders in partnership. (Speed Round)

Global markets stabilized on Tuesday after Monday’s meltdown. (What We’re Tracking Today)

Egypt, Saudi reach three-month petroleum products agreement; five-year contract tabled to next meeting of Egypt-Saudi Coordination Council. (Speed Round)

Customs duties on vehicles of EU origin with 1.3 L or smaller engines will fall to zero within days, says Finance Ministry. (Speed Round)

Microsoft’s Nadella, Agrium’s Magro were in town yesterday to talk about investments (Speed Round)

Donald Trump has released his first campaign ad, and you’ll never guess who stars as the bad guys… (Speed Round)

By the Numbers + With Egypt’s 5Y USD credit default swap (CDS) spread at a two-year high, a risk compression trade is in sight.

WHAT WE’RE TRACKING TODAY

Global markets stabilized somewhat yesterday after Monday’s worldwide equities sell-off. The EGX50 gained 0.92%. In New York, the S&P 500 and Dow advanced fractionally, while the Nasdaq slid a modest 0.1%. Markets in Shanghai and Shenzhen closed down just 0.3% after government controlled funds there reportedly bought into the market to prop-up prices. In Europe, the FTSE, CAC and DAX all closed in the green for the day after seesawing during the day.

It’s official: Chinese President Xi Jinping will visit Egypt 20-22 January, according to media reports. The visit follows trips to Beijing in 2014 and 2015 by President Abdel Fattah El Sisi that added new energy to the relationship.

We’re also keeping an eye out for an announcement from the Hermit Kingdom today at 5:30 pm CLT, 3:30 pm GMT, as noted by The Globe. North Korea is suspected of having tested a nuclear device in their own territory, which led to an artificial 5.1-magnitude earthquake 49 km from a previous nuclear test site. That, or the DPRK have finally embraced their role in the international order as the world’s movie supervillains by creating a nuclear-fuelled earthquake-doomsday device.

Enterprise will also be off on Thursday for Coptic Christmas — it’s a national holiday — but we’ll be back to our regularly scheduled programming on Sunday.

This publication is proudly sponsored by

Pharos Holding - http://www.pharosholding.com/

CIB - http://www.cibeg.com/

WHAT WE’RE TRACKING THIS WEEK

The Purchasing Managers’ Index for the UAE and Saudi Arabia is due out on Thursday.

ON THE HORIZON

We may be heading into a three-day weekend, but next week is already jam-packed. Sunday in particular is looking like the gift that keeps on giving:

  • The Coordination Council meets to look at ways to curb imports and a possible lifting of the ceiling on foreign currency deposits.
  • The House of Representatives will convene for the first time to elect a speaker of the House. The session will be broadcast live on national television that morning. There are currently no plans to air every session on television C-SPAN style. (More in our Spotlight section on the incoming House of Representatives below)
  • The Emirates NBD Egypt Purchasing Managers’ Index is due out at 7:30am CLT.

LAST NIGHT’S TALK SHOWS

Ibrahim Eissa on “Al Kahera Wal Nas” dived into the Saudi-Iran conflict, calling it an ideological struggle between Wahhabis and “Khomeinis” [followers of Khomeini], saying both provide funding and arms to advance their strategic aims under the guise of Islam. “Where is Egypt in all this? Absent.” Eissa went on to say that Saudi Arabia and Iran should fight open war among themselves rather than engage in regional proxy wars, which he noted have caused suffering and wide-scale destruction in Syria, Iraq, Yemen, Syria, Lebanon and Bahrain. (Watch in Arabic, running time: 3:36)

Eissa also ripped into Minister of International Cooperation Sahar Nasr for temporarily donning hijab simply to speak with Saudi officials during her visit to Riyadh (pictured here via AMAY). Calling it absurd and hypocritical, Eissa said it was representative of Egypt’s servile stance toward Saudi and the country’s willingness to abandon its identity and leadership role within the region to appease the country’s Gulf backers.

Most of last night’s “Hona Al Assema” was a tribute to actor Mamdouh Abdel Aleem, who passed away last night. Lamees spoke on the phone with celebrities who have worked with him including Ilham Shaheen, Athar El Hakeem, and Leila Elwy who eulogized the fallen star. She briefly mentioned President El Sisi’s meeting with General Intelligence Directive (GID), which she says focused on the Iran-Saudi tensions. She concluded the episode with performances by an interfaith musical group of cantors performing for the Coptic Christmas celebrations.

** SHARE ENTERPRISE WITH A FRIEND **

Enterprise is available without charge — just visit our English or Arabic subscription page, depending on which edition you would like to receive. We give you just about everything you need to know about Egypt, in your inbox Sunday through Thursday before 7am CLT (8am for Arabic), and all we ask for is your name, email address and where you hang your hat during business hours.

SPEED ROUND

Speed Round is presented in association with

SODIC - http://sodic.com/

Prime Minister Sherif Ismail promised the World Bank fiscal and subsidy reform and an improved business environment as part of agreements to secure USD 3 bn from the bank and USD 1.5 bn from the African Development Bank, Al Mal reports. In a letter to World Bank President Jim Yong Kim, Ismail says his government will work on reducing the budget deficit by 3-4% from 11.5% over the next four years and cut expenditure on fuel subsidies by 30%. The Ismail government has also committed to upping the average duration of its borrowing to at least three years by FY2018-19, Al Mal goes on to report.

…The first tranche of the World Bank loan “will take time to arrive,” Al Ahram quotes Central Bank of Egypt (CBE) Governor Tarek Amer. The governor confirmed news we received yesterday that USD 500 mn from the African Development Bank would arrive within days.

The CBE has updated the list of imports to which banks are to give priority for FX allocation, Al Mal reports. The list groups the imported goods into four categories. Basic commodities include staple food items. The second category includes machinery and spare parts and the third a number of intermediate goods. Pharmaceuticals are listed separately in the fourth category. Besides having prioritized access to foreign currency funding from domestic banks, the goods are also spared the requirement that their importers provide a 100% cash cover.

The CBE also reiterated its ban on banks issuing letters of credit without receiving collection and shipping documentation directly from an exporter’s bank — a move meant to curb FX smuggling, Al Mal reports. This second notice specifically prevents banks from dealing with foreign exporters directly. And the banks are playing ball, having amended contracts with import clients requiring their compliance with these directives. Banking sources report that these have now become standard issue within the sector ahead of the regulation coming into effect on 21 January. Furthermore, the Customs Authority instructed banks to require import clients to submit all documents justifying the value of the transactions to curb customs evasion.

The investment and housing ministries appear to be mending fences and working together on issuing land tenders in 20 new cities and tourism resorts, according to a statement by Housing Minister Mustafa Madbouly. This would be the first batch of land plots issued for investment in a year under the new Investment Law and one-stop-shop system, Al Borsa reports. Companies vying for the plots, which cover over 1,500 feddans, must pay an advance of 100k to the New Urban Communities Authority (NUCA) and 5% of the land value to hold the land, the head of NUCA’s Commercial and Real Estate Division Tarek El Sebaai tells Al Shorouk. The move now places NUCA front and center in issuing land tenders, assuming some of the Investment Law’s mandated role from GAFI, at least for this specific tender offer. Bids on the plots will begin on 13 January and will close on 4 February.

Saudi Arabia has agreed to supply Egypt’s petroleum derivative needs for a 90-day period beginning this month, a government source tells Al Borsa. The news came out of the meeting in Riyadh of the Egypt-Saudi Coordination Council, which also saw the council table talks for a longer-term agreement to supply petroleum products to the next council meeting later this month. The two sides also reached an agreement that will see Egypt receive USD 260 mn in gas supplies this month, the source adds. Financial aid from the Saudi Fund for Development includes a USD 200 mn grant to fund infrastructure development projects this year.

No agreement has been signed with Control Risks to improve security in Egyptian airports, Egyptian Airports Company (EAC) Chairman Adel Mahgoub tells Al Mal. He denied that the agreement, announced late December, had been finalized and says the contract value its implementation date are yet to be determined. EAC will supervise the implementation of any recommended security measures, Mahgoub adds.

Customs duties on cars with engines 1.3 L or less coming out of the European Union will fall to zero “within days” under the EU-Egypt Association Agreement, Al Borsa reports, citing an unnamed official at the Finance Industry. Both Renault and Seat have models that will benefit from the cut. The news comes a week after President Abdel Fattah El Sisi appeared to endorse the notion of an “automotive directive” that would protect domestic assemblers from what they say are “unfair” customs advantages enjoyed by EU, Turkish and Moroccan imports. (Details on the latter in the third-to-last paragraph here.)

Pharma HoldCo chief claims Indian, Chinese agreements could be worth more than EGP 1 bn: El Nasr Pharma Chemicals Co., a subsidiary of the state-owned Holding Company for Pharmaceutical Industries (HCPI), will invest EGP 20 mn to acquire know-how that will allow it to produce in-house the raw materials to make an unnamed cure for hepatitis-C, HCPI chief Adel Abel Halim told Al-Ahram. The raw materials agreement is the first of four investments that will see the two sides commit more than EGP 1 bn to expansion opportunities, he said. HCPI has also closed an EGP 50 mn technology transfer agreement with an Indian biotech company and is in talks with prospective UAE and Chinese partners on technology transfer agreements for a fully vertically-integrated insulin production facility that would cost as much as EGP 1 bn to build.

President Abdel Fattah El Sisi met with Microsoft CEO Satya Nadella yesterday. The two discussed Microsoft’s investments in Egypt, according to Al Ahram, citing a report from Ittihadiya. Nadella also met with Prime Minister Sherif Ismail and discussed the future of CIT investments in Egypt, according to Al Borsa. The president also met yesterday with senior staff of the General Intelligence Directorate to discuss regional issues, the domestic press reports. GID chief Khaled Fawzi is reported to have attended the meeting.

In other investment news, Prime Minister Sherif Ismail met with Agrium CEO Charles Magro to discuss its investments in Egypt, Al Masry Al Youm reports. The meeting focused on the Toronto- and New York-listed company’s plan to push ahead with a c.USD 2 bn expansion of its MOPCO nitrogen facility in Damietta. Work on the expansion has been stalled for the last four years due to political complications, including a freeze by the Supreme Council of the Armed Forces, according to Daily News Egypt. It is unclear if discussions included disputes over LNG feedstock prices, which we noted last month. Ismail also met with yesterday with the Italian ambassador to discuss the upcoming visit by Italy’s Economic Development Minister at the head of a business delegation (more on that in Diplomacy + Foreign Trade).

USD 9.6 bn: The total value of bilateral trade between Egypt and China in 9M2015, up 13% y-o-y year-on-year, Al Borsa quotes the head of Egypt’s trade commission in Beijing Ayman Ali Osman as saying. Chinese exports to Egypt accounted for USD 8.9 bn of trade, up 17% y-o-y, while the trade deficit jumped to USD 8.2 bn, growing 22% over the same period last year, saysOsman.

MOVES- Organizational Consultants (OC) has appointed Salah Aloui as General Manager of its Egypt office, according to a statement yesterday. Aloui has a track record in sectors including energy, oil and gas, FMCG and automotive and was previously communications manager at Qalaa Holdings.


Geneina called in for questioning on allegations of insulting the judiciary: Corruption watchdog Hisham Geneina, head of the Central Auditing Organization, has been ordered to appear for questioning on 18 January in relation to a lawsuit recently filed by Justice Minister Ahmed El Zend against Geneina and television presenter Wael Ebrashy. Ebrashy was released pending an investigation, centered around Geneina’s November 2014 appearance on Ebrashy’s show. During the interview, Geneina accused the judiciary and the Judges Club, of which El Zend was president at the time, of corruption.

Former forensic department spokesperson Hisham Abdul Hamid, dismissed for saying slain activist Shaimaa El Sabbagh died because she was too skinny to absorb the birdshot fired at her by a police officer as she walked in a peaceful march in Downtown Cairo, has now been appointed head of the Forensic Medicine Authority by Justice Minister Ahmed El Zend.

Quasi-state affiliated human rights council disputes Interior Ministry’s report on the council’s visit to Al Aqrab prison: Ragia Omran, a prominent human rights lawyer and member of the state-affiliated National Council for Human Rights (NCHR), was denied entry to Al Aqrab prison on Tuesday, allegedly because her name was not on the “guest list,” despite other council members being allowed access. Further, the council is disputing the Interior Ministry’s preemptive statement on the NCHR’s pending report on the visit. Instead of the ministry statement saying the NCHR members found prisoners to be in good health, NCHR member George Ishaq has informed Daily News Egypt that access to medical care has not improved and that visitation rights are the exception rather than the rule, among what he suggested were other ongoing violations of law or policy.

The Endowments Ministry was reportedly distributing a leaflet to mosques on Monday urging imams to forbid during Friday sermons participation in any planned 25 January protests, Al Masry Al Youm reports. The leaflet quotes what appears to be this fatwa from Dar Al Ifta that prohibits non-peaceful demonstrations and goes on to call 25 January anniversary protests a “full crime and poisoned, ominous call that aims at [promoting] sabotage, murder and destruction in the country.” The leaflet urged imams to remind us to appreciate the “blessings” of “security and stability.”

Following on the same theme, Mada Masr says the state is using a combination of releases and arrests in a bid to preempt protests on the upcoming anniversary of the 25 January uprising in.


Regional tensions following Saudi Arabia’s execution of Shiite cleric Nimr Al Nimr continued to mount yesterday with Kuwait recalling its ambassador from Iran, BBC reports. For his part, Iran’s President Hassan Rouhani “lashed out” at Saudi Arabia, according to CNN, “calling its decision to sever ties with Tehran after uproar over a prominent Shiite cleric’s execution a strange move in response to what he called justified criticism.”

In the escalating feud between Saudi Arabia and Iran, the international financial press is not taking too kindly to the kingdom:

Simeon Kerr writes for the FT saying that while Saudi’s execution of prominent Shiite cleric Nimr Al Nimr was likely aimed at placating and intimidating domestic audiences, the spillover effect into the region has a good chance of spiraling out of the royal court’s control, according to analysts. (Riyadh executions send message to Saudi public, FT, paywall)

Senior fellow at the Council on Foreign Relations Ray Takeyh writes an op-ed for the FT in which he argues that the royal court will be hurt the most by the chain of events set into motion with their execution of Al Nimr. Takeyh praises the late King Abdullah’s approach as opposed to the current leadership, whereby Abdullah emphasized interfaith dialogue and respect. (Middle East pays the price for a poorer, weaker House of Saud, FT, paywall)

The FT’s editorial board goes much further with their bluntly titled “The folly of Saudi Arabia’s battle with Iran,” which like the above piece also praises the wisdom of the late King Abdullah as opposed to the Salmans. The editorial board’s message, however, is aimed directly at the Americans, stressing the need for US diplomatic intervention for the sake of peace in the region as opposed to standing back as the various Saudi-Iranian proxy wars intensify. (paywall)

The Wall Street Journal rounds out the look at Saudi’s machinations with its latest by Ahmed Al Omran and Bill Spindle. With regard to Deputy Crown Prince Mohammed Bin Salman: “Privately, some Saudis express their worry his lack of experience and aggressive foreign policy is contributing to regional instability and endangering the kingdom and its neighbors as they try to navigate the region’s complex conflict during a period of low prices that are putting increasing pressure on the government.” (Iran Crisis Puts Pressure on New Generation of Saudi Leaders, WSJ, paywall)


And while we’re on regional news: UAE banks are being required to get the central bank’s approval on dividends before releasing the details of their payments, banking sources tell Reuters on Tuesday. Regulatory clearance is reportedly aimed at “safeguarding lenders’ capital base and ensuring they do not over over-extend themselves as liquidity becomes scarcer.” Banks often announce dividends before they get the regulator’s okay, only to have to backtrack later on the final amount after the central bank rejects it, says a source.

Egyptian actor Mamdouh Abdel Aleem passed away on Tuesday at the age of 60, reportedly of a sudden heart attack while at the Gezira Club gym, Egyptian Actors Syndicate Ashraf Zaki tells CNN Arabic. Aleem starred in television series “Layali El-Helmiyya,” which ran from 1987 to 1995, according to Ahram Online.

Just imagine Twitter arguments with 10k character-limits per tweet: Twitter co-founder and CEO Jack Dorsey tweeted a statement several hours ago reaffirming the utility of Twitter’s 140-character limit in forcing brevity and concision in writing, while at the same time saying that his team have observed that users often screenshot larger blocks of text. (The statement itself was a screenshot of a larger block of text…) “Instead, what if that text…was actually text? Text that could be searched. Text that could be highlighted. That’s more utility and power,” the statement read, while holding out that the change may not eventually be implemented. Re/code cites unnamed sources a saying that Twitter is looking into expanding the limit to 10k characters, the same limit currently in place for direct messages.

Donald Trump released his first campaign ad. Muslims and Mexicans are the bad guys. Shocking, we know. (Run time: 0:31)

SPOTLIGHT on preparations for first session of the House of Representatives

100 laws in 15 days: So it will be a very busy first two weeks following the swearing in ceremony as parliament will have only 15 days to pass more than 100 laws — representing all legislation passed over the past three years — according to Legal Affairs Minister Magdy El Agaty. On the docket: Everything from the Anti-Terror Act to the amended Investment Act and the new Civil Service law. We would expect an up-or-down vote on the full package of legislation, particularly given the vocal pro-Sisi bloc in Parliament.

Well, maybe not all laws… El Agaty, however, suggests that some of these laws may not make it to a vote, in which case they might be repealed — seemingly contradicting his previous statement. El Agaty notes in particular that if the controversial Protest Act were not passed by Parliament, it would result in all those imprisoned under it being released.

Some laws went gently into that goodnight: We’ve been focusing heavily on high-profile legislation such as the investment law and the value-added tax, whose the most recent draft of which was released in Al Mal, but we doubt it will be final one. One law that caught our attention was amendments to the Universities Law. These amendments—passed around the height of the university protest movement—ban any political affiliations on campuses, makes the appointments of university deans and university presidents will the prerogative of Ittihadiya (they were previously chosen by faculty), and grants universities the right to ban from campus professors and students accused of incitement and agitation.

To air, or not to air: There is strong opposition from members of the House of Representatives to airing its sessions live on national television. An alternative suggestion has been that sessions be recorded and aired at later dates, according to sources from Egypt’s state television. It was reported in December that an NGO named the Association for the Freedom of Thought and Expression was suing for the right to air parliamentary sessions live. A final decision has yet to be made, says Egyptian State Television’s head of news Safaa Hegazy. Sunday’s inauguration and swearing in ceremony is still, however, set to be broadcast live, AMAY reports.

EGYPT IN THE NEWS

The Paradise That Was Egypt: Noga Tarnopolsky writes on the latest documentary on Egypt’s Jews, Italian filmmaker Ruggero Gabbai’s Starting Over Again. Gabbai himself comes from a Jewish family expelled from Alexandria during Nasser’s purge. In the filmmaker’s own words: “No, in general. I don’t know of many cultures or countries where people were able to live together as they did in Egypt after the Second World War. For more than 30 years people prospered in an Arab country, living together, respecting and enriching each other.” (Read)

The big questions of ancient Egypt: Egyptologist Joann Fletcher reviews the more recent “discoveries and controversies surrounding the ancient civilisation,” in a piece for History Extra which originally ran in BBC History Magazine. #7: Was Cleopatra an Egyptian? “Cleopatra VII was born in Egypt, as were most of her predecessors [the other members of her family the Ptolemies], but was the first to learn the Egyptian language and gain the support of her subjects against the growing power of Rome … Controversy about Cleopatra’s ethnicity continues to rage; the identities of her mother and grandmother are unknown — they might have been members of the Egyptian aristocracy.” (Read)

WORTH READING

How Stories Deceive, Maria Konnikova, The New Yorker. “When we’re immersed in a story, we let down our guard. We focus in a way we wouldn’t if someone were just trying to catch us with a random phrase or picture or interaction … In those moments of fully immersed attention, we may absorb things, under the radar, that would normally pass us by or put us on high alert. Later, we may find ourselves thinking that some idea or concept is coming from our own brilliant, fertile minds, when, in reality, it was planted there by the story we just heard or read … Propositional thought hinges on logic and formality. Narrative thought is the reverse. It’s concrete, imagistic, personally convincing, and emotional. And it’s strong.” (Read)

WORTH WATCHING

If Wall Street does not end its greed, we will end it for them,” Democratic presidential candidate Bernie Sanders said during a speech in New York on Tuesday. If this isn’t the nail in his campaign’ coffin, we don’t know what is. Sanders plans to put together a list of banks whose failure would jeopardize the U.S. economy and “break these institutions up.”

On the other end of the populist spectrum, Donald Trump has been found to exclusively, and perhaps deliberately, speak at a fourth-grade reading level, cited as a possible reason for his strong lead in the polls. Would giving Trump a British accent make him sound more intelligent and refined? See for yourself in Sophisticated Trump, parts one and two.

DIPLOMACY + FOREIGN TRADE

A technical delegation from Egypt travelled to Ethiopia yesterday to hold the first meeting discussing Egypt’s concerns over the Grand Ethiopian Renaissance Dam, Al Masry Al Youm reports. The meetings were agreed to as part of the Khartoum Declaration signed last week.

An Italian business delegation representing 25 companies and headed by Italy’s Economic Development Minister Federica Guidi is expected to arrive in February, according to statements made by Italy’s ambassador to Egypt during a meeting with Prime Minister Sherif Ismail, AMAY reports. The business delegation is set to meet with the ministers of investment, electricity and petroleum to discuss investment opportunities, particularly in the Suez Canal Development Area.

ENERGY

French lenders to finance MIDOR’s expansion
MIDOR will finance its planned refinery expansion using USD 1.2 bn borrowed from French banks Crédit Agricole and BNP Paribas, Oil Minister Tarek El Molla tells Al Ahram. The loan will be guaranteed by the Italian Central Bank and the Italian Export Credit Agency. UOP is contracted to increase MIDOR’s refinery capacity to 160k bbl per day from 100k bbl per day currently at a total cost of USD 1.4 bn. The project is scheduled to begin this year and will take three years to be completed. (Read)

Int’l institutions looking for clarity before extending finance to Benban solar farm
International finance institutions are looking for a stable operating environment before agreeing to finance feed-in tariff solar companies in Benban, according to Al Borsa. Due diligence by these institutions (namely the IFC and EBRD) will review all technical, legal and political aspects of the projects, including security, infrastructure development, corporate governance and operating procedures, in addition to environmental impact and corporate social responsibility. Feed-in tariff companies sent a memo to these institutions addressing their concerns, according to company sources. Recent reports on the Benban solar farm — an important test-case for the feed-in tariff system — revealed security concerns, new army permits, poor infrastructure and amendments to the feed-in tariff contract. However, these companies responded by forming a committee to unify policy and are now looking to hire consultants to handle these concerns. (Read in Arabic)

MANUFACTURING

30 factories have shut down in Ain Sokhna due to energy prices
Up to 30 factories were forced to shut down in the industrial zone in Ain Sokhna and Al Adabiya port due to rising energy costs and an inability to meet financial demands, an official at the Red Sea Ports Authority tells Al Mal. The factories include Miratex Co., which had to lay off 3,000 employees, and Integrated Oil Industries, which halted production and laid off 500 employees. The crisis extends to ports that suffered reduced incomes due to dwindling exports, says Egyptian International Shipping Co. Manager Mohamed Abu Hashish. (Read in Arabic)

HEALTH + EDUCATION

Finance Ministry sets pricing for 71 inactive drug ingredients
The Finance Ministry has set compulsory pricing for 71 inactive drug ingredients (any dug component, such as fillers or carriers, that are not the active ingredient) used in pharmaceutical production and for 25 pharmaceutical drug packaging materials, with the new prices including a 10% sales tax, Al Mal reports. The ministry sent a copy of the decree to the Customs Authority to be used for reference when dealing with import bills related to the ingredients considering most raw materials for pharma production in Egypt are imported. (Read in Arabic)

Valeant presents mandatory tender offer for minority interest in Amoun
Canadian specialty drug manufacturer Valeant Pharmaceuticals presented an offer to buy a minority stake in Amoun Pharmaceuticals last week, sources tell Al Borsa. The offer is a continuation of the USD 800 mn acquisition that began in July of last year. (Read in Arabic)

Doctors Syndicate criticizes new health insurance bill
“The bill, which is supposed to establish a complete social health insurance system in accordance with the constitution, does not describe the insurance authority as non-profit in nature, but rather an economic entity,” said Doctors Syndicate undersecretary Mona Mina Al Ahram last weekend, reports Ahram Online. Mina noted that the ministry has submitted the bill despite a number of requests from the syndicate to discuss the draft law, pointing out what she described as a number of the proposed legislation’s flaws, including the governance of the quality control board, conflict of interest in the selection of the board, nor “any role or participation or representation for citizens — who receive the service — on any board in these authorities, including the quality control authority,” among a number of other concerns.

Gov’t to build a university in South Sinai
The government is planning to build a national university in South Sinai, Higher Education Minister Ashraf El Shihy tells Al Shorouk. The university, part of the government’s higher education expansion plan, will be built in the city of Tor. El Shihy says the university will offer specialties related specifically to South Sinai and is now recruiting faculty members from other universities across the country. (Read in Arabic)

REAL ESTATE + HOUSING

NUCA approves land classification change at Sheikh Zayed extension
The New Urban Communities Authority (NUCA) has approved changing the classification of land plots in Sheikh Zayed City from “desert land reclamation” to “residential,” according to Gamal Talaat, head of the Sheikh Zayed City Authority. The 550-feddan land plots are located in the east extension and were added by presidential decree in 2003. The price premium is estimated at EGP 1,660 per sqm, which includes EGP 310 per sqm in infrastructure costs.
The premium will be paid in installments — 15% as an upfront payment, followed by a grace period of three years, and the rest over semi-annual instalments for seven years. (Read in Arabic)

TOURISM

Tourism Minister expects progress on lifting travel warnings to Egypt
“Expect good news by the end of the month,” Amwal Al Ghad quotes Tourism Minister Hisham Zaazou as saying. Egypt is engaged in talks with Russian and British counterparts to lift their travel warnings to the country. Zaazou says the newly adopted security measures at airports will drive the countries to lift their warnings soon, hinting that a development could be reached by the end of the month. (Read in Arabic)

Electricity Ministry postpones receivables from tourism sector for six months
The Electricity Ministry has postponed receivables from the tourism sector for six months without any additional fees or interest, according to ministry spokesperson Mohamed El Yamani. The move follows a request from Tourism Minister Hisham Zaazou that tourism-sector debts to the government, including those related to infrastructure and insurance, be postponed for six months as of December 2015 and repaid over 24 months. (Read in Arabic)

TELECOMS + ICT

NTRA reaches agreement with mobile operators over SIM-card sales
The National Telecommunication Regulatory Authority (NTRA) and telecom operators reached an agreement over the sale of mobile SIM cards, Al Borsa reports. The agreement is set to be signed on 20 January and will regulate the sale of new mobile phone lines following the telecom operators’ complaints over the NTRA’s restrictions. The authority had banned all line sales not conducted through official outlets to make sure that all user data is registered. The deputy head of the telecommunications sector of the Chamber of Commerce expects the agreement to increase new mobile phone line sales by 30% in 2016. (Read in Arabic)

NTRA close to issuing virtual ISP license
The NTRA is reportedly close to issuing a virtual internet service provider (ISP) license, according to Al Borsa. This will allow companies to offer internet services through the networks of the main ISPs in Egypt for a fixed predefined rate. Meanwhile, the NTRA will receive 3% of the revenues generated from the virtual ISPs. The authority says EGP 1.2 bn is lost each year due to illegal connections, an issue the new regulations should combat. (Read in Arabic)

AUTOMOTIVE + TRANSPORTATION

Suez Canal Bridge to reopen within days
The Suez Canal Bridge that connects both banks of the canal in Al Qantara will be reopened and made available for public use “within days,” Amwal Al Ghad quotes the head of the military’s Engineering Authority as saying. The bridge, also known as Al Salam Bridge, will serve the increased industrial, agricultural and commercial activities related to the Suez Canal Area development projects, he adds. The authority head adds that security measures will be taken to ensure the bridge’s safety, in coordination between the military and police. Transport Minister Saad El Geyoushi had told Al Borsa that the bridge would undergo repairs and is set to be reopened by mid-January.

Traffic issues thwart Mansheya tram project … again
The Alexandria governorate backtracked on the Mansheya tram project due to traffic congestion caused by the construction work, notes Alexandria Governor Mohamed Abdel Zaher. The project was launched last December to revive the Mansheya tram line, which was terminated over 20 years ago, also due to traffic issues. The roads will be repaved this week, the governor added. The project was part of a larger French Development Agency strategy to develop the El Raml Tram to connect the El Raml Station to the west Alexandria at a total cost of EUR 300 mn. (Read in Arabic)

NATIONAL SECURITY

Police sergeant assassinated
Police Sgt. Diab Abdel-Latif was ambushed and shot dead by unknown assailants on a motorbike in Beni Suef on Tuesday, according to a statement by the Interior Ministry as reported by Daily News Egypt. The NCO was on his way home when he was attacked; retired police officer Mohamed Khater also shot and wounded in the assault. No group has yet to claim responsibility for the attack.

Military kills 32 North Sinai militants
The Egyptian Army has killed 32 “takfiri elements” and arrested six in North Sinai as part of the ongoing Martyr’s Right operation, Daily News Egypt quotes an official army statement as saying. This follows news that 26 militants were killed in North Sinai on Sunday in the first major offensive of the year, according to army spokesman Mohamed Samir. Raids were carried out on Monday in Al-Arish, Rafah, Sheikh Zuweid and Central Sinai.

ON YOUR WAY OUT

Egypt will host a head-of-state-level conference on African investment on 20-21 February, Al-Mal reports, stopping short of reporting the conference’s name or location. It says 21 heads of state, 96 ministers and 1,500 investors are due to hold talks centered on five themes: energy, infrastructure, IT, healthcare and agrifoods. The gathering is being organized by the Foreign Affairs Ministry, the paper says, and will be attended by President Abdel Fattah El Sisi.

A Cairo Criminal court has slapped 11 people detained in the Al Azhar clashes with hard-labor prison sentences on Tuesday, Daily News Egypt reports. The Al Azhar students were found guilty of destructing public and private property and threatening public officials during the events in December 2015, according to Al Masry Al Youm. They were also ordered to pay a total of EGP 2.16 mn in damages.

BY THE NUMBERS
Powered by
Pharos Holding - http://www.pharosholding.com/

USD CBE auction (Tuesday, 05 January): 7.7301 (unchanged since Wednesday, 11 November)
USD parallel market (Tuesday, 05 January): 8.58 (+0.01 from Thursday, 31 December)

EGX30 (Tuesday): 7021.42 (0.56%)
Turnover: EGP 510.8 mn (17% above the 90-day average)
EGX 30 year-to-date: 0.22%

THE MARKET ON TUESDAY: The EGX30 fell at the open, but climbed during the session to end the day up 0.56% to 7,021.42 points. Petrochemical stocks (particularly AMOC, Sidi Kerir and KIMA) fared well yesterday as investors bet on stronger oil prices in the wake of growing tensions between Saudi Arabia and Iran. Palm Hills and Emaar Misr were among the worst performers yesterday. Shares worth EGP 510.8 mn changed hands, with regional investors being the sole net sellers. Most regional markets slumped yesterday, with the exception of the ADX, which gained 1.6%. Major European indices also managed to regain some ground after the selloff, with the Germany’s DAX, London’s FTSE 100 and France’s CAC up.

Foreigners: Net long | EGP +29.9 mn
Regional: Net short | EGP -33.2 mn
Domestic: Net long | EGP +3.3 mn

Retail: 63.5% of total trades | 70.4% of buyers | 56.6% of sellers
Institutions: 36.5% of total trades | 29.6% of buyers | 43.4% of sellers

Foreign: 19.1% of total | 22.1% of buyers | 16.2% of sellers
Regional: 10.8% of total | 7.5% of buyers | 14.0% of sellers
Domestic: 70.1% of total | 70.4% of buyers | 69.8% of sellers


***
PHAROS VIEW

With Egypt’s 5Y USD CDS spread at a two-year high, a risk compression trade is in sight

Egypt’s five-year USD credit default swap (CDS) spread — which reflects the premium required to insure against sovereign default on a specific Eurobond issue — has sharply risen since end October 2015, reflecting both a corresponding surge in EM CDS spreads as well as Egypt-specific spread. Tap here to read more about why we think this is a key tactical indicator on which you should keep you eyes as you fashion your trading strategy this month.

***


WTI: USD 36.16 (+0.53%)
Brent: USD 36.58 (-1.72%)
Gold: USD 1,076.20 / troy ounce (-0.20%)

TASI: 6,743.2 (-0.7%)
ADX: 4,283.6 (+1.6%)
DFM: 3,078.7 (-0.2%)
KSE Weighted Index: 377.1 (-0.3%)
QE: 9,959.7 (-0.8%)
MSM: 5,417.1 (-0.1%)

 

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.