TL;DR

Busy week on the diplomatic front: U.K. trade delegation in town, Shoukry in Washington, U.S. rights envoy in Cairo, GERD talks resume. (What We’re Tracking)

Wheat controversy continues as ministers look to reassure markets. (Speed Round)

No petchem IPOs says Oil Ministry. (Speed Round)

CBE receives USD 900 mn of USD 1 bn loan from China. (Speed Round)

Daba’a contract to be signed this month. (Speed Round)

Earnings season kicks off – PHD, UNB-Egypt, Abu Qir post results. (Speed Round)

Is UAE next on the list to send ground troops to Syria? (Speed Round)

Yes, water prices have gone up. (Infrastructure)

Zika could hit Minya, Assiut first this summer. (Health + Education)

A red carpet flap on the talk shows. (Last Night’s Talk Shows)

By the Numbers

WHAT WE’RE TRACKING TODAY

CIB is still waiting to hear what Al Ahly Capital is willing to pay for CI Capital, Al Borsa reports, citing a disclosure to the EGX in which CIB notes: “As we have already received a non-binding offer from a potential buyer which was disclosed on Dec. 17, accordingly, we highlighted to the interested party that they are requested to sign a non-disclosure agreement and present a non-binding offer.”

A UK trade envoy arrived in Cairo on Sunday for a weeklong visit to discuss investment opportunities, Ahram Online reports, noting: “The envoy’s visit is set to focus on discussions related to several opportunities in energy, infrastructure, and education during events that will take place in Cairo, Alexandria, Idku, Port Said, and Ismailia.” The UK trade envoy to Egypt, Northern Ireland MP Jeffrey Donaldson, will meet with Prime Minister Sherif Ismail and Trade Minister Tarek Kabil. Donaldson is also set to meet business leaders Naguib Sawiris and Ahmed El-Sewedy as well as chairman of the Suez Canal Economic Zone Ahmed Darwish.

Donaldson penned an op-ed in Al Ahram yesterday, where he posits that the UK should be considered the leading trade partner for Egypt despite the numerous agreements recently signed with China and Russia. He argues that UK investments in Egypt amounted to USD 5.4 bn in 2014 and 2015, or 40% of all foreign direct investment in Egypt for the period. The UK has invested USD 25 bn over the past five years. He goes on to cite the contributions to the domestic economy of UK companies including BP and Vodafone.

Foreign Minister Sameh Shoukry headed to Washington on Sunday for three days for talks with Secretary of State John Kerry, National Security Advisor Susan Rice, and a number of congressmen, according to a ministry statement.

The New York Times’ Declan Walsh suggests “diplomatic meetings in Cairo and Washington this week are likely to further focus international attention on the death of an Italian graduate student whose badly beaten body was found in Cairo last week.” While Shoukry is in Washington for talks, the U.S. State Department’s top human rights official, Sarah Sewall, is in Egypt for meetings with religious leaders and civil society groups, Al Borsa reports.

Egypt, Sudan and Ethiopia reportedly began “fresh talks” on the GERD in Khartoum on Sunday to “discuss the technical offer from French firms BRL and Artelia on impact studies” of the dam, Ahram Online reports. The three-day talks will also discuss the offers with representatives of the two firms.

Prime Minister Sherif Ismail is currently attending the World Government Summit in Dubai, which kicks off today and plays host to 3,000 world leaders, government officials and intellectuals to discuss the role of government in meeting the world’s changing needs.

WHAT WE’RE TRACKING THIS WEEK

The Business News Summit on Capital Markets and Financing Growth is being held on  Tuesday at the Nile Ritz-Carlton, Cairo. Speakers include Investment Minister Ashraf Salman, Housing Minister Mostafa Madbouly and Finance Minister Hany Dimian.

The 2016 Solar Power North Africa Conference takes place in Cairo this week on 8-11 February.

Voters in New Hampshire are casting ballots in the the first U.S primary on Tuesday, 9 February.

ON THE HORIZON

Prime Minister Sherif Ismail will present his government’s agenda to the House of Representatives next week, according to a government source speaking to Al Masry Al Youm. The source adds that government has finalized the plan and will present it to the House over two sessions.

The fifth meeting of the Saudi-Egyptian coordination council, which was planned for 10 February in Riyadh, has been postponed because President Abdel Fattah El Sisi is scheduled to give a speech in the House of Representatives on 13 February.

The Egypt Energy Investment Summit is scheduled for 16-18 February at the Nile Ritz-Carlton, Cairo.

Egypt will talk trade and investment with Africa in Sharm El Sheikh on 20-21 February at the Africa 2016: Business for Africa, Egypt and the World conference.

The president of Gabon will visit Egypt on 17-19 February ahead of the conference to talk cooperation in infrastructure and the food industry and the possibility of direct flights connecting the countries.

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LAST NIGHT’S TALK SHOWS

We now return you to your regularly scheduled programming: We understand some of our readers think we gave a bit too much space to coverage of the murder of Italian grad student Giulio Regeni, and we concede we should focus on what’s really important in the news. What’s important to the majority of our fellow countrymen? A story that has gripped the nation, and has been on the minds and lips of everyone in the country for the past two days, with talk shows being no exception: President Abdel Fattah El Sisi’s motorcade driving over a red carpet during a recent unveiling of a completed housing project. Since the entirety of our country’s men and women have been reduced to sounding like the gossipy members of this writer’s family sitting around in their pajamas, cracking seeds open with their teeth and spitting the shells out all over themselves, we would be remiss in our duty to the country if we don’t join in on the national noise pollution conversation. Shofto eh il hassal?

Setting aside the irony that a country that appears to have five chandeliers per capita and yellow gold on almost everything is going to presume to lecture anyone on their taste and or perceived lack of restraint, let’s just examine the commentary, as it were.

Yesterday, CBC’s Lamees El Hadidy, with true courage and grit, criticized the red carpet. Sure, walk on a red carpet. But drive? La2, ovaar. Someone give this brave host a press freedom award immediately. (Watch in Arabic, running time: 2:05)

OSN’s Amr Adeeb answered the important, burning questions on everyone’s minds by having an expert call in to answer: The Origin Story of this Red Carpet. Where did it come from? Where has it been and what is the carpet’s plans for the future? (Watch in Arabic if you don’t believe us, running time: 5:31)

Ibrahim Eissa on Al Kahera Wal Nas called RedCarpetGate “a major political disappointment” (Read in Arabic).

Oh, and don’t blame the broadcast people alone: Al Mal is running with it on the front page, citing a senior official with the Armed Forces’ department of morale affairs speaking to the origins and past use of said red carpet.

If we were deeply cynical we would ask aloud whether what is truly disappointing is that this is what people find important, but that’s just not who we are as an organization; never has been and never will be.

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SPEED ROUND

GASC is still negotiating a contract for the direct import of 3 mn tons of wheat outside the regular tender process, Reuters reports. Prices offered in the last tender were USD 10 above market prices, GASC Vice Chairman Mamdouh Abdel Fattah tells Reuters. Egypt had cancelled a tender on Friday after receiving an insufficient number of bids. Yesterday, Egypt decided to send 63,000 metric tons of French wheat back home after it was found to exceed the allowed 0.05% threshold for ergot, Bloomberg quotes Supply Minister Khaled Hanafy as saying.

…Al Ahram reports that the shipment was up to standard, citing legal counsel to Bunge, a top global commodity player (and our downstairs neighbor — hello, Bunge…), who says the shipment was approved by the Egyptian Agricultural Quarantine Authority and who presented documents supporting the fact. Hanafy made what seems like a contradictory statement, saying the ministries of health and industry had approved the shipment, with the rejection coming from the Agriculture Ministry. Speaking at a joint press conference with Hanafy, Agriculture Minister Essam Fayed said the Egyptian officials responsible for approving the shipment would be investigated, Al Mal reports. He confirmed Hanafy’s statement that the officials from the health and trade ministries were to blame for the confusion.

As for domestic wheat, both Fayed and Hanafy say farmers began receiving EGP 1,300 per feddan as part of the new wheat subsidy program approved in November. The new subsidy plan will also see the state purchase wheat at international prices, an element of the policy that members of the House of Representatives shot down last week. Hanafy has since promised to reverse the policy, but the agriculture minister’s statements from yesterday imply that the Ismail government is having second thoughts. Agriculture Minister Essam Fayed sang the programs praises, saying it would eliminate problems stemming from having both a subsidized price and an international price. Fayed added that the system would encourage the private sector to buy domestic crops due to the FX crunch, Al Mal reports. In a separate statement, Supply Minister Hanafy said Egypt has wheat reserves to last until mid-May, a statement usually given around this time of year. He also added that the bread and supply subsidy program — based on smart cards and bread points — had saved the state EGP 6 bn in subsidy expenses, giving no specifics.

Still wondering what “ergot” is, anyway? WebMD’s got you covered, noting the poisonous, hallucinogenic fungus may have “played a role in the Salem witch hunt of 1692. They think that some women in Salem developed peculiar behaviors and accused other women of being witches as a result of eating ergot-contaminated food.”

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No petchem IPOs, Oil Ministry decides: The Oil Ministry has shelved plans to float shares of petrochemical companies on the EGX, Daily News Egypt reports. An official at the Egyptian Petrochemicals Holding Company (ECHEM) citing low interest as the cause. “New petrochemical projects are in need of large investments and as such, IPO will not be [sufficient] to cover their costs. ECHEM has begun negotiations with a number of countries to finance those projects,” DNE adds. (Read)

The Central Bank of Egypt has received USD 900 mn of the USD 1 bn loan from China, which was inked last month during President Xi Jinping’s visit, CBE Governor Tarek Amer tells Al Mal.

Daba’a contract to be signed this month, Russia’s ambassador says: The contracts to build the Daba’a nuclear power station will be signed this month, Ambassador Serge Kirpichenko says, according to Al Mal. Kirpichenko adds that the Russian experts have visited the proposed site of the power station to ensure that safety procedures are being met. Also, a gag order has been placed on the investigation into the project’s finances. The public prosecutor is investigating issues related to expenditure on preparing the power station’s site since January 2011.

In one of the worst downturns the oil and gas sector has faced in decades, companies have adopted contrasting strategies to lead them out of the crisis, Ron Bousso and Terry Wade write for Reuters. BP is betting on offshore gas in Egypt, they write. “BP was one of very few companies that approved a major project last year, with its USD 12 bn investment decision in the West Nile Delta gas project in Egypt. The strategy is partly based its plans to see a large part of its future production growth come from gas off the coast of the North African country,” they explain.

The Transportation Ministry plans to have a foreign company operate and manage Egypt’s railway network, forming a committee to set terms and conditions for an agreement to curb financial and quality-of-service declines, according to ministry spokesperson Ahmed Ibrahim. The ministry plans to fund the agreement using the World Bank loans. The move has created some backlash over fears of privatization, prompting Ibrahim to reject the notion, saying the ministry does not have the power to privatize such a critical piece of infrastructure, AMAY reports.

Trade Ministry wins over Union of Investor Associations in the battle for import registry: The Trade Ministry’s charm offensive to get business on side with its import restriction measures is paying off. Trade Minister Tarek Kabil won an endorsement from Union of Investor Associations chief Mohamed Farid Khamis: “The ministry’s policies were much needed in this time,” he said. The union joins the Federation of Egyptian Industries, which reaffirmed its support for the registry in a press conference yesterday. On the other side of the debate, the Federation of Chambers of Commerce and the Cairo Chamber of Commerce criticized the policy at a press conference yesterday, Al Masry Al Youm reports.

Uber is denying having commented on claims that it is not licensed to operate in Egypt, according to an emailed statement. The only comment the company made is: “Uber is all about keeping Cairo moving – connecting people to safe, reliable and affordable transport at the tap of a button. We’re proud to bring more choice to Egypt – for riders and driver-partners alike. Uber is creating over 2,000 work opportunities a month and we are excited about growing this number through partnerships that provide more access to education and training.” Amwal Al Ghad had reported that the company’s General Manager Jambu Palaniappan said Uber obtained licenses from the National Telecom Regulatory Authority.

EFG Hermes took home three nods from the MENA Fund Manager Awards recognizing its performance in 2015. Two of the awards were performance-based, while the firm was also the first to win the juried recognition as the top “MENA Asset Manager,” according to an emailed statement. The division was also named Egypt Asset Manager of the Year for the fourth consecutive year.

EARNINGS WATCH: Among the companies posting earnings yesterday:

• Palm Hills Developments posted net earnings after minority of EGP 1 bn on revenues of EGP 3.6 bn in FY2015, according to a company release.
• UNB-Egypt posted a net profit of EGP 160 mn in FY2015 compared to EGP 63.1 mn last year. (Disclosure)
• Abu Qir Fertilizers say its net profit rise 25.4% y-o-y to EGP 506.6 mn in 1H2015/16 (Disclosure).

How much are Japanese vehicles going for in the market today? Al-Borsa has a roundup of Toyota, Nissan, Honda, Mazda and Suzuki prices (jpg table).

The UAE is ready to send ground troops to Syria to support and train an international military coalition against Daesh, provided the efforts are led by the U.S., according to Reuters. The statement followed news that Saudi Arabia and Turkey are also willing to send troops to Syria.

Succession planning: Algeria’s parliament adopted a package of constitutional reforms yesterday reintroducing two-term limits on the presidency and requiring the president to appoint a prime minister from the largest party in parliament. The amendments also recognize the Amazigh (or Berber) language as one of the country’s official languages, next to Arabic. “The reforms also foresee the creation of an independent electoral commission and recognition of the roles of women and youth. Freedoms of assembly and the press will be explicitly [protected],” according to the AFP.

Saudi Oil Minister Ali al-Naimi held “successful” talks with his Venezuelan counterpart about ways of cooperating to stabilize the crude market, but there was no word on what steps producers would take to bolster prices, Bloomberg reports. The two ministers met yesterday in Riyadh. Reuters has a few more details, “During the meeting, there were discussions about the cooperation of the producing countries within OPEC and outside (OPEC)… and the importance of the continuation of such consultations.”

Credit Suisse’s CEO has asked the board to trim his bonus, the Wall Street Journal reports, “after the Swiss bank posted quarterly results that sent its share price tumbling lower.
‘I have asked the board of directors for a significant reduction in my bonus,’ said Tidjane Thiam, who took over as chief executive in July and has sought to commence a revamp of Credit Suisse amid challenging conditions.”

THE MACRO PICTURE

Still very much in the headlines last night was news that U.S unemployment had fallen below 5% while wages rose after years of meager gains, the FT (paywall) reports. The New York Times has a more detailed piece on the issue. You can also see Obama speak on the matter on Reuters (run time 0:53).

Surprise, China isn’t doing so well. Its FX reserves shrank to the lowest level since 2012, “indicating that the central bank sold USD as the yuan’s retreat to a five-year low exacerbated depreciation pressure,” Bloomberg reports. Reserves fell USD 99.5 bn in January to USD 3.23 tn, according to a People’s Bank of China statement released on Sunday. “With China’s economy growing at its slowest pace since 1990, and investors worried about a possible hard landing, Beijing faces a dilemma. If it eases monetary policy to boost activity it risks undermining its recent efforts to support the currency, further undermining investor confidence,” the FT (paywall) writes.

More oil woes as the prolonged oil slump sparks another wave of cuts to 2016 budgets, Reuters reports. “Less than two months into the year, the top U.S. shale oil companies have already cut their budget for 2016 a second time as the relentless drop in oil prices continues to erode their cash flow.” 18 of the top 30 U.S. oil companies by output have outlined spending plans for 2016, shrinking their budget by an average of 40%, far more than most analyst expectations, according to a Reuters analysis.

EGYPT IN THE NEWS

International media coverage of Egypt continued last night and into this morning to focus on the murder of Giulio Regeni as well as controversial statements by Israeli Energy Minister Yuval Steinitz.

More on Israel: A senior Egyptian Foreign Ministry has reportedly told Al-Monitor on condition of anonymity that Egyptian and French officials are contemplating an “Egyptian initiative to restart Israeli-Palestinian negotiations on a two-state solution in coordination with the French Foreign Ministry’s initiative.” A regional security conference in Sharm El Sheikh, according to the piece by Uri Savir is reportedly part of the Egyptian policy proposal outlined as well as a UN Security Council resolution coordinated with France.

Finally: A bit late to the game, the Washington Post has a piece about the crackdowns on activists in Egypt with a focus on writer Ismail Iskandarani, although he’s only mentioned three times throughout the piece, which runs the usual gamut of detentions, arrests and forced disappearances.

WORTH READING

Return of the Anonymous Egypt-based Arab b’naire: Business Insider interviewed at Davos an unnamed Arab billionaire at Davos for the second year in a row. If you don’t like progressive outlooks on the country and the region, this is really going to ruin your day. The rest of us, however, are gratified to see it in print. (Read: An Arab b’naire shares his explosive views on Obama, Iran, ISIS, and what falling oil prices will do to the Middle East)

WORTH WATCHING

Bern Your Enthusiasm: Larry David as Bernie Sanders as Larry David, from last Saturday’s SNL. (Watch, running time: 5:27)

DIPLOMACY + FOREIGN TRADE

Cozying up to Congo: Establishing an “information and decision support center” in the Democratic Republic of the Congo and cooperating on the construction of the Grand Inga Hydroelectric Dam on the Congo River were among the more important issues on the agenda in a meeting between President Abdel Fattah El Sisi and Prime Minister of the Democratic Republic of Congo Augustin Matata Ponyo, according to an Ittihadiya statement. Also during the visit, the countries signed an MOU for cooperation between the economic authority for the development of the Suez Canal Area and the Inga Dam Development Authority, according to the statement. The Congolese Trade Minister was taken on a tour of General Motors factory in Egypt and Juhayna’s dairy plant.

The international community needs to cut off sources of funding and arms for terrorist groups if the region is to have a chance at quelling the burgeoning refugee problem in the region, President Abdel Fattah El Sisi said during a meeting with an expanded delegation from the European Parliament, headed by German Member of the European Parliament and Chairman of the European Parliament Committee on Foreign Affairs Elmar Brok, according to a statement from Ittihadiya statement.

INFRASTRUCTURE

Water prices have gone up since January
Water prices have indeed increased this year, with a new pricing system having been in place since last month, says the head of the Holding Company for Water Mamdouh Reslan. His statements follow an announcement by President Abdel Fattah El Sisi calling on the need to cut consumption. Price increases range from EGP 0.07 to EGP 0.20 depending on the consumption tier. As we noted yesterday, Reslan confirmed that these prices will continue to increase annually for the next five years. Al Masry Al Youm published a detailed list of new water prices. (Read in Arabic)

MANUFACTURING

AVIC offers to overhaul NCC cement factories for EGP 2 bn
State-owned Aviation Industry Corporation of China (AVIC) has offered to overhaul and refurbish two cement factories owned by the National Cement Company (NCC) for EGP 2 bn, according to NCC head Saeed Abel Moty. AVIC offered to provide credit facilities for 85% of the project, conditional on sourcing equipment from China or Germany, he added. On another note, NCC is beseeching the Ministry of State for Environmental Affairs to reverse its decision to ban the company for using coal due to its factory’s proximity to homes. (Read in Arabic)

HEALTH + EDUCATION

Zika could hit Egypt this summer, with Minya and Assiut being the most ripe for an epidemic
The Zika virus could hit Egypt sometime this summer, said World Health Organization spokesperson Christian Lindmeier in a phone interview with Al Masry Al Youm. Lindmeier called on Egyptian authorities to take all necessary precautions to monitor infections. Health Minister Ahmed Rady pointed to Minya and Assiut as likeliest to be hit as the mosquito that carries both Zika and Dengue fever is present there, Al Mal reports. Al Shorouk News is reporting that the minister’s statement is stoking fears among citizens in both governorates. A ministry official in Minya defended the statements, saying the minister’s comments were aimed at preventing the disease.

Customs Authority clears Sovaldi raw materials
The Customs Authority has cleared all raw materials used in the manufacture of Sovaldi and its generics, says head of the Customs Authority Magdy Abdel Aziz. The move is part the authority’s effort to expedite clearing pharmaceutical raw materials, especially those for chronic illnesses, in coordination with the Health Ministry. (Read in Arabic)

AUTOMOTIVE + TRANSPORTATION

Civil Aviation Ministry signs USD 300 mn agreement with Azimut and Lemz
The Civil Aviation Ministry signed a USD 300 mn agreement with Russian-based companies  Azimut and Lemz R&P, contracting them with developing and upgrading air navigation and air traffic control systems in five airports, Al Borsa reports. The project will seek to automate air navigations at the airports of Luxor, Aswan, Sharm El Sheikh, Al Arish and Borg El Arab. (Read in Arabic)

BANKING + FINANCE

ACE Group in talks with HSBC to provide bancassurance services
ACE Group is in talks with HSBC-Egypt to partner up to provide bancassurance services in 1H2016, Amwal Al Ghad reports. ACE had managed to secure an agreement to provide bancassurance with the Egyptian Arab Land Bank in September 2014. (Read in Arabic)

Audi Bank plans to issue EGP 8 bn in new loans this year
Audi Bank plans to issue EGP 8 bn in new loans this year and has appetite for the agrifoods, transport and logistics and heavy industry sectors, according to Managing Director Mohamed Fayed. Since December of last year, the bank increased SME financing to EGP 1 bn, representing 5.5% of its loan portfolio, says Fayed. The bank signed a cooperation agreement with international finance institutions to provide consulting for SMEs, Fayed adds. (Read in Arabic)

LEGISLATION + POLICY

ECA focusing on sectors that affect citizens directly – El Garf
The Egyptian Competition Authority (ECA) is prioritising focus on sectors affecting citizens directly, ECA head Mona El Garf says. The ECA is also expanding its assessment of the services sector and working on improving cooperation with government entities. El Garf also reiterated her intent to increase reviews of M&A transactions and promote a culture of competitiveness domestically. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

AfDB delegation meets Prime Minister to review development program
Prime Minister Sherif Ismail and International Cooperation Minister Sahar Nasr met on Sunday with a delegation from the African Development Bank, which is visiting the country as part of a periodical check up on the progress of development programs relying on its USD 500 mn loan. The delegation will travel to the Suez Canal Development Area during the visit, Al Mal reports. (Read in Arabic)

Journalists Syndicate cites 782 violations of press freedom in 2015
The Journalists Syndicate’s Freedoms Committee issued a report tallying 782 violations against journalists and press freedoms in 2015. These run the gambit of 14 gag orders, 12 cases of banning the publication of books or halting broadcasts and 63 assaults and wrongful arrests of journalists. The report logs 35 complaints of mistreatment of journalists in prisons including banning visitations and denying prisoners access to medication and proper clothing. The report criticized censorship of content in newspapers including Sawt El Umma, El Sabah and Al Masry Al Youm. The syndicate also attacked legislation such as the Anti-Terrorism Act and how authorities ignored numerous recommendations by the syndicate. (Read in Arabic)

ON YOUR WAY OUT

The International Organization for Migration (IOM) flew 39 Syrian refugees from Egypt to Toronto last week in coordination with UNHCR and the Governments of Canada and Egypt. “They are the first of 600 Syrian refugees – some 47 per cent of them children – whom IOM will help to resettle from Egypt in Canada this month, as part of Canada’s commitment to relocate 25,000 Syrian refugees from the region,” an IOM press release read.

“Illegal immigrants are victims and I refuse to have them punished,” Immigration Minister Nabila Makram says, according to Al Shorouk. Makram says the new immigration law being drafted will include a definition of what constitutes a migrant legally and how to include them in the political process.

A Cairo criminal court imposed a travel ban on Mubarak-era Interior Minister Habib El Adly and froze his assets as well as those of his family as other defendants in the corruption case against them, Ahram Online reports. El Adly and 12 other former ministry officials are accused of illegally acquiring over EGP 2.4 bn while in office.

Remittances from Egyptian expatriates in Jordan amounted to USD 510 mn in 2H2015, according to the Ministry of Manpower and Immigration, as per Mubasher. Egypt received USD 4.3 bn in remittances from nationals working abroad from July to September, 2015.

Marriott and Conrad hotels in Egypt have reduced their consumption of electricity by 30% through the adoption of more efficient energy usage practices, UNDP Egypt Country Officer Mohamed Bayoumi tells Al Mal.