The world will have 1.7 mn fewer bankers within the next decade
Balance of payments deficit widens as remittances, international assistance and tourism receipts fall. (Speed Round)
Shakeup at Telecom Egypt: Gov’t replaces all of its representatives on the fixed-line monopoly’s board. (Speed Round)
Lukoil to buy 20% of Zohr from Eni? (Speed Round)
Significant minority shareholders could get more control under EFSA’s proposed Companies Act changes. (Speed Round)
Kuwait’s Al Salam Holdings gets nod for EDR offering; Pharos has food and retail IPOs in pipeline for 2H16.
Cabinet signs off on state budget plan for FY2016-17, targets for 5-6% economic growth.
Top and bottom lines up at IDH, Domty, OHD, but ODH issues earnings warning.
Bad news for investment bankers in the short and long term. (Speed Round)
EGPC paying demurrage charges on stalled fuel deliveries. (Energy)
Hikma concludes EGP 300 mn acquisition of cancer specialist EIMC United. (Health + Education)
Automotive industry reports 32% drop in Jan-Feb 2016 sales compared to previous year. (Automotive + Transportation)
MAF Egypt lands EGP 2.5 bn to complete City Center Almaza. (Banking + Finance)
WHAT WE’RE TRACKING TODAY
Amer cancels meeting with bank bosses: Central Bank of Egypt Tarek Amer has cancelled the previously scheduled Sunday, 3 April meeting with bank chiefs, the number twos and other senior staff from the industry. No reason has been given for the cancellation, we’re told.
An internal investigation at Borg El Arab Airport prompted by this week’s hijacking of an EgyptAir flight have determined that security procedures at the airport are sound. Normal operations can resume under current security protocols, which meet the standards of the International Civil Aviation Organization, the airport’s chief executive, Hassan Youssef, tells Al Borsa. As we noted yesterday, a number of Russian tourism officials have called Egypt’s airport security into question once again as a result of the hijacking, threatening to delay any resumption of flights.
German security talks in Cairo: German Interior Minister Thomas de Maiziere arrived in Egypt yesterday on a two-day visit aimed at enhancing security cooperation, airport security, immigration and counterterrorism operations. De Maiziere is scheduled to meet with President Abdel Fattah El Sisi, Interior Minister Magdy Abdel Ghaffar, and Al Azhar Grand Imam Ahmed Al Tayeb.
The Downtown Contemporary Arts Festival (D-CAF) starts today in Cairo and will run until 22 April. This year, D-CAF’s program includes film screenings, music shows, visual arts, and performing arts shows, among other events. Check out the full calendar here.
WHAT WE’RE TRACKING THIS WEEK
Ashraf El-Sharkawy, minister of the newly created Ministry of Public Enterprise, and CBE Governor Tarek Amer are expected to meet “within days” to talk about rescheduling debt worth EGP 40 bn owed by state-owned enterprises, a ministry source tells DNE.
ON THE HORIZON
The “Giza Investment Conference” will take place on Sunday, 3 April, to highlight investment opportunities in the governorate. A number of cabinet ministers are due to attend, Al Mal reports.
Saudi Arabia’s King Salman will be in Cairo the next Monday for talks with senior Egyptian officials including President Abdel Fattah El Sisi.
DO YOU WANT TO READ OUR GCC EDITION? We recently launched the beta version of our Enterprise GCC edition, and are now publishing Sunday-Thursday at 3 am UTC/ GMT (7 am UAE, 6 am KSA, 5 am Cairo), give or take a few minutes. We’re in beta, after all. You can sign up via this link and may view the Enterprise GCC site online at gcc.enterprise.press. Comments, suggestions and criticisms are always welcome at firstname.lastname@example.org.
Egypt’s balance of payments (BoP) deficit grew to USD 3.4 bn in 1H FY2015-16 from USD 1 bn a year earlier mostly on a widening current account deficit, which more than doubled to USD 8.9 bn from USD 4.3 bn a year earlier. Even though the trade deficit narrowed on weaker oil and commodity prices, remittances fell to USD 8.28 bn in the first six months of the fiscal year from USD 9.38 bn a year earlier. The larger drop was in international assistance to the government, which fell from USD 2.61 bn to just over USD 30 mn; tourism revenues, meanwhile, fell 32.5% y-o-y to USD 2.7 bn. The positives include a net inflow in the capital and financial account of USD 9.2 bn from USD 772.1 mn a year earlier as FDI increased by USD 500 mn y-o-y and Egypt managed to secure USD 7.8 bn in credit financing, an achievement the CBE attributes to the “confidence in the Egyptian economy, given its ability to honor its external obligations.”
Shakeup at TE: Trading of Telecom Egypt shares was suspended yesterday after the government replaced all of its representatives on the company’s board of directors, two sources told Reuters. The new government representatives appointed are Tamer Gadallah, Maged Othman, and Mohamed Shamroukh. Al Borsa confirmed the news, publishing the complete composition of the board and noting that Othman has submitted his resignation from Orange Egypt’s board to assume his position on TE’s.
…speaking of Big Red: Vodafone Egypt owes TE EGP 4.5 bn in deferred profit payments, a CIT Ministry source told Reuters. “Vodafone will pay the amount in two instalments, the first in April, the source said.” Al Borsa says Vodafone Egypt has already agreed to pay TE EGP 1.5 bn. Vodafone Group has also reportedly dropped an arbitration suit over its trademark with Vodafone Egypt for an agreement which would see royalty payments grow to 1% of Vodafone Egypt’s total revenues in its April 2016-March 2017 fiscal year, which would then increase to 1.75% through to 2022, according to Al Borsa.
Clients can receive cash through mobile phones but can only withdraw it in EGP, the CBE dictated, as per Al Borsa. The regulations surrounding phone transfers also stipulate that clients complete their know your client protocols with their respective banks before allowing them access to the service. The regulations are to guarantee that the transfers are not used in money laundering or terror or crime financing. Al Borsa says the CBE approved the regulations in a meeting on 23 March.
Lovejacking Update #1: A Cypriot court ordered the man accused of hijacking flight MS181 to be held for eight days “on suspicion of hijacking, abduction, threatening violence, terrorism-related offences and two counts related to possession of explosives.” A police source told Reuters the latter counts are connected to his claim of being strapped with explosives, even though the belt he wore is believed to have been fake. Although the details of Seif Eldin Mustafa motives remain unclear, he told Cypriot police he acted because he wanted to see his estranged wife and children: “When someone hasn’t seen his family for 24 years and wants to see his wife and children, and the Egyptian government doesn’t allow it, what should one do?,” he said in a statement.
Lovejacking Update #2: Contrary to reports by Al Mal on Tuesday, a Cyprus police spokesman and a government official have said that any talk of extradition right now was premature. However, Egypt’s foreign ministry spokesperson Counselor Ahmed Abu Zeid confirmed to Ahram Online on Wednesday evening that Seif Eldin Mustafa should be tried first in Cyprus before being sent back to Egypt in accordance with bilateral treaties, following prosecutor-general Nabil Sadek’s decision on Wednesday to submit a formal extradition request.
Best Facebook post on the Lovejacking, by one of the hostages: Here.
Is Eni selling 20% of Zohr to Lukoil? Italy’s Eni is reportedly discussing the sale of a 20% stake in Egypt’s Zohr gas field to Russia’s Lukoil, Italian-language newspaper La Repubblica reported last Monday citing industry sources. Reuters picked it up in brief form, but there appears to be no confirmation of the story. Eni had announced earlier this month that it was raising USD 7 bn by selling stakes in recent discoveries as part of its 2016-2019 strategic plan. Subsequent meetings with Oil Minister Tarek El Molla and statements by EGAS officials made clear Egypt hadn’t been notified of a confirmed sale, and an Egyptian government official recently told Al Shororuk that Eni had not so much as informed the government of a plan to sell.
EFSA looks to propose regs that will strengthen the rights of significant minority shareholders: The Egyptian Financial Supervisory Authority (EFSA) is planning amendments to the executive regulations of the companies and capital markets act, in addition to authoring new regulations governing the planned global commodities exchange, according to remarks yesterday by EFSA head Sherif Samy. Changes to the Companies Act would include: allowing boards of directors (without approval from an extraordinary assembly) to terminate treasury shares that have been in their books for a year; allowing shareholders who own 10% or more of a company’s shares to review internal documents (contracts, books, memos, etc.) of the company; allowing minority shareholders holding 10% or more to file cases to terminate contracts; allowing a third EGM for the year to be held even if a quorum is not reached, to prevent large shareholders from hijacking the general assembly. Samy told Al Borsa that EFSA is also tweaking how the Capital Markets Act’s listing regulations define define independent board members. Finally, the EFSA chief says the commodities exchange will be required by regulation to be managed by an “experienced and accredited” financial institution.
Kuwaiti investment firm Al Salam Holdings has won regulatory approval in Kuwait to list on the EGX, according to a company statement. Kuwait’s Capital Markets Authority said Al Salam can list a maximum of 40% of the company’s shares on the EGX. As we noted back in January, Al Salam Holdings plans to have 30% of its shares converted to Egyptian depositary receipts (EDRs) and traded on the EGX by July of this year. The company had already received EFSA approval to convert 17% of its shares in the Kuwaiti bourse to EDRs. Al Borsa is reporting that Al Salam would be the first Kuwaiti company to enter the EGX.
Pharos Holdings plans to IPO two companies in the food and retail sector in 2H16, Pharos Chairman Mohamed Taymour tells Amwal Al Ghad. However, these plans are contingent on improvement in the market’s trading volumes and the influx of fresh liquidity, he added. The story did not name the companies planning IPOs.
The Industrial Development Authority (IDA) will begin regularly scheduled land tenders for industry and manufacturing, according to a statement by IDA head Ismail Gaber. Utilities for part of the tendered land will be developed by the private sector, while the government will provide the required infrastructure on the rest. This marks a significant departure from the tenets of the Investment Law, which tasks the General Authority for Investments and Free Zones (GAFI) with running state land tenders. A placeholder system is currently being used for housing development, whereby the Housing Ministry and GAFI jointly tender land.
Amr El Garhy is asserting his control over the Finance Ministry, Al Masry Al Youm suggests. The paper says he has already begun removing “Dimian’s men” from the Ministry and is now advertising vacancies in the ministry’s website.
Sherif Ismail’s Cabinet approved the proposed state budget plan FY2016-17, and the social and economic development plan for the same year, at yesterday’s cabinet meeting. The plan sets targets in line with the government’s agenda as presented to the House of Representatives including:
- Delivering economic growth of 5-6% by FY2016-17, up from 4.4 in FY2015-2016;
- Targeting a GDP of EGP 3.3 tn (USD 372 bn);
- Reducing the budget deficit to 9.9% from the current 11.5% on EGP 627 bn in revenues, EGP 434 bn from taxes (much coming from the value-added tax);
Additionally, the Cabinet also approved the following:
- Approved Ministry of Agriculture’s suggested price for buying domestic corn at EGP 2,100 per tonne
- Approved law defining the role and responsibilities of the Ministry of Public Business Sector Affairs
- Approved the Egyptian Electricity Transmission Company contracting 358 km in 220 kV and 500 kV cables for the emergency plan to support the unified electrical grid
- Approved Ministry of Antiquities request to pursue a USD 482 mn facilitated loan from Japan to complete the Grand Egyptian Museum
London-listed IDH, Egypt’s top medical diagnostics company, reported normalised net earnings of EGP 286 mn on revenues of EGP 1,014 mn as both its top and normalised bottom lines surged 18% in 2015 over the previous year. The company’s board is recommending a final 2015 dividend of USD 0.06 per share. CEO Hend El Sherbini noted that IDH performed “23.8 mn tests for over 5.8 mn patients [last year, representing] 7% annual growth in total tests and 4% annual growth in patients served.” Contract clients accounted for 61% of revenues, while walk-ins accounted for 39%, the company said in a regulatory filing.
Newly listed Domty, Egypt’s largest cheese manufacturer, reported 355% year-on-year net profit growth in FY15, reporting net earnings of EGP 129 mn on revenues of EGP 1.4 bn, Al Borsa reports. The company’s top line was up 24% year-on-year in 2015. Plans going forward include investing EGP 175 mn on a new distribution fleet in April to expand its distribution networks, the company said yesterday. Domty is also looking to complete construction of its EGP 100 mn factory in 6 October before the end of 2016, with an eye towards separating its cheese production line from its juice production.
Orascom Development Holding (ODH) expects to report a 20-22% y-o-y increase in its consolidated revenues for 2015, according to a guidance it provided the EGX. ODH expects to register a net loss of CHF 21-23 mn during the year, from a net profit of CHF 41.9 mn in 2014. The company said its subsidiary Orascom Hotels and Development more than doubled its net profits to EGP 228.9 mn in 2015 from EGP 100 mn in 2014. Meanwhile, resort developer Orascom Hotels & Development is reporting a doubling of net profits to EGP 229 mn on revenues of EGP 588 mn. You can read OHD’s earnings statement here in pdf. El Gouna’s parent company reported that it is also “studying the possibility of entering the first and second home markets in Cairo and the North Coast” and said it is entering into talks with its bankers to further reschedule its bank debt, seeking a three-year grace period rather than two.
The Prosecutor General is forming a new investigative team to follow up on leads in the kidnapping and murder of Italian graduate student Giulio Regeni, according to an official statement by the prosecutor’s office on Wednesday, carried by Al Mal in its entirety. The statement also indicates that Prosecutor General Nabil Sadek spoke by phone with his Italian counterpart, Rome’s chief prosecutor Giuseppe Pignatone, Ahram Online noted. The ministry of interior has previously stated that the storming of the apartment of a suspected gang of criminals resulted in their death in a following shootout; Regeni’s identification documents were found in the flat. The domestic media took this statement and ran with it, saying this meant the MOI were laying blame on the slain gang, an accusation which has yet to be clearly made by the authorities. Meanwhile, AFP adds detail to the Reuters story we picked up yesterday on Regini’s mother’s press conference in the Italian Senate, noting she has threatened to publish the photograph of her son’s body if Egypt “continued to refuse to share the findings of its investigation with the Italian police.”
It’s bad news for investment bankers… Investment banks are now girding themselves to report “dreadful first quarter [results] because of continuing market turmoil,” writes the Financials Times (paywall), saying that seven analysts polled expect the top four investment banks — Credit Suisse, Deutsche Bank, UBS and Barclays — will see average brokerage revenues plunge 25%. Goldman, Credit Suisse and Morgan Stanley will all see collapses of 30% or more, while the industry average in Europe will come in at about 27%.
…But wait: The longer-term outlook is even more depressing, the FT (paywall) predicts, saying that fintech could result in the world having about 1.7 mn fewer bankers of all stripes in the next decade as commercial and investment banks alike slash jobs. And the 1.7 mn job cuts? That’s on top of the 730k positions U.S. and European institutions have already shed from their peak. Business Insider quotes the report as noting: “Banks’ Uber moment will mean a disintermediation of bank branches rather than the banks themselves. … Specifically, it will mean the shift to mobile distribution being the main channel of interaction between customers and the bank.” The silver lining: “As more transactions are automated and done on a mobile phone, we believe there will be a rebalancing of staff from transaction-based roles to advisory-based roles.” Oh, and your job prospects are may be better in the U.S. going forward than in Europe. The FT quotes one of the report’s authors as noting, “In the US, investment banks clearly have selectively cut a lot of people but US consumer banks haven’t cut as much . . . in Europe there’s been little progress on branch headcount as well.”
One of the father’s of emerging markets investing is retiring from the day-to-day grind at age 79, reports Bloomberg. Templeton has said that Mark Mobius will step down on 15 April after a 40-year run, handing over to Stephen Dover, who will become chief investments officer at Templeton’s emerging markets group. Mobius will remain on board as the group’s chairman.
Other international headlines this morning that either carry implications for Egypt or that are simply worth noting in brief:
- Microsoft is pinning its future on artificial intelligence, the Financial Times (paywall) reports. The only problem: The first AI bot Microsoft created is a Neo-Nazi millennial with a drinking problem, if its now-decommissioned Twitter presence is anything to judge by. Is it any wonder that AI has so far failed to win over investors (paywall)?
- Qatar is under fire once again for its treatment of World Cup 2022 workers, according to the latest report from Amnesty International. The story is getting wide pickup in the business (FT), sports (ESPN) and mainstream press (Guardian) alike.
EGYPT IN THE NEWS
The impact of low oil prices on Egypt is “surprisingly negative,” Yasser El Shimy writes for the Carnegie Endowment for International Peace. El Shimy says this is because the negative impact on petrochemicals exports, the drop in Suez Canal revenues, and the limitations on aid from the GCC countries, which is coming in tandem with an expected drop in remittances that mostly come from the GCC. While the short-term impact is clearly negative, El Shimy writes, the low oil prices could “actually be conducive to future economic growth.”
A group of US congressmen and senators sent a letter to US Secretary of State John Kerry in February, that was leaked and published by Politico on Wednesday (pdf), calling on him to enforce the Leahy Law with regard to Israel and Egypt. The law prohibits the United States from providing military assistance to foreign governments who violate human rights. Politico notes that under the Leahy Law, “overall US military aid to the country need not be stopped. The details of when the US invokes the law also are often kept secret. The letter’s real impact may be political.”
3,400 year old necropolis discovered in Aswan: A grouping of 40 tombs, likely for high officials and viziers, was discovered at a site in Aswan that has been under exploration since 2012, according to a statement published by the Ministry of Antiquities on Wednesday and which has since appeared in Discovery News and Atlas Obscura, among other outlets. “Preliminary analysis of the bones suggests burials of men, women and children of all ages. Importantly, this indicates a more permanent habitation at Gebel el Silsila than previously thought,” associate director of the Gebel el Silsila Survey Project said to Discovery News.
President Abdel Fattah El Sisi is apparently facing “stinging criticism” over an alleged normalisation of ties with Israel, according the Jerusalem Post. The paper says El Sisi is being attacked by Ikhwan sympathisers after Banque Misr quoted an EGP (which, for some odd reason, the newspaper insists on calling the lira) exchange rate to the shekel.
While he may be no match for criminal mastermind Seif Eldin Mustafa, the Atavist’s 7-part series on master criminal Paul Le Roux continues anyway in The Mastermind, Episode 3: He always had a dark side.
IMAGE OF THE DAY
An EgyptAir Flight 181 passenger hugs a family member after safely returning from their ordeal. (View image via Reuters, Photo credit: Mohamed Abd El Ghany)
DIPLOMACY + FOREIGN TRADE
International Cooperation Minister Sahar Nasr met yesterday with Canadian Ambassador Troy Lulashnyk to discuss bilateral cooperation, Amwal Al Ghad reported. Canada is expected to provide Egypt with EGP 340 mn in funding for development projects related to employer training in Aswan as well as education-related programs for Egyptian and Syrian kids in six governorates. Al Borsa adds that Lulashnyk said Canada will provide Egypt with CAD 50 mn (EGP 340 mn, give or take) in funding to expand vocational training and increase the empowerment of women.
President Abdel Fattah El Sisi met with Niger’s Foreign Affairs and International Cooperation Minister Aichatou Boulama Kane on Wednesday. Discussions focused on the Libyan crisis, according to a statement from Ittihadiya.
Foreign Minister Sameh Shoukry is in Washington, DC, to attend a nuclear security summit on Thursday and Friday, Foreign Ministry spokesman Ahmed Abu Zeid said, according to Al Ahram. The threat of nuclear terrorism loomed largely on the event’s proceedings, according to Reuters. The notable boycott of nuclear giant Russia may jeopardize resolutions at the summit. The 2016 Nuclear Summit in Washington is part of a series of meetings organized first by U.S. President Barack Obama in 2010, in Seoul in 2012, and in The Hague in 2014, according to NDTV.
EGPC facing waiting fees for stalled fuel shipments
EGPC has allegedly failed to make good on payments for 13 vessels’ worth of fuel shipments, which are currently held up at the Alexandria Port, sources tell Daily News Egypt. Banks did not provide letters of credit guaranteeing payment for the shipments because EGPC has not provided the funds to issue letters of credit, the source added. EGPC faces a daily demurrage fee of USD 8,000 (which seems a bit low to us), confirmed sources within the Alexandria Port Authority. Al Borsa quotes government officials claiming the stall at the port is caused by the Electricity Ministry overestimating the quantity of fuel oil it needed, and that three other ships carrying petroleum products are currently being unloaded, with the terminal operating at maximum capacity.
Electricity Ministry requests 120 mn cubic meters of gas per day for the summer
The Ministry of Electricity requested that the Petroleum Ministry supply 115-120 mn cubic meters of natural gas per day and 25k tons of mazut for its power plants to meet rising electricity usage during the summer. Power plants will need a minimum 108 mn cubic meters of gas per day before tapping into reserves for industry, an EGAS source tells Al Borsa. (Read in Arabic)
Xingbang breaks ground on EGP 130 mn packaging plant
China Xingbang Industry Group broke ground yesterday on an EGP 130 mn packaging plant in Sixth of October City. The 20K sqm factory, whose utilities and infrastructure was developed by the Industrial Development Group, will have a production capacity of 180K tons of packages per annum which will supply the poultry industry, Youm7 reports. The company plans to develop four more factories in Egypt with investments of up to EGP 650 mn. As we noted earlier this month, rising costs of packaging (20-25%) has led a number of poultry farms to close down.
HEALTH + EDUCATION
Hikma acquires EIMC United for EGP 300 mn
Multinational pharmaco Hikma acquired 97.7% of of Egypt’s EIMC United in an EGP 300 mn transaction, according to an email statement from HC Securities & Investments, which acted as the financial advisor on the transaction. The acquisition of EIMC, which specializes chemotherapeutics, is Hikma’s third in Egypt, following the 100% acquisition of A.B.C. Pharma.
Egyptian Medical Syndicate calls for increasing health sector budget to 3% of GDP in next state budget
The Egyptian Medical Syndicate EGM is meeting on Friday to discuss demanding increasing the health sector’s budget in the 2016/2017 state budget to 3% of the GDP, up from the current 1.7%, Al Borsa reports. The constitution specifies a minimum of 4.3% of GDP be spent on healthcare. Also on the agenda: The health ins. law, the Matariya hospital incident, and discussing increasing the punishment for attacking a medical establishment or its employees. (Read in Arabic)
REAL ESTATE + HOUSING
Heliopolis Housing to invest EGP 550mn in FY2016-17
Heliopolis Housing is investing EGP 550 mn in FY2016-17, Reuters reported. The company’s board of directors also approved the executive plan for the upcoming fiscal year, according to a bourse statement, and said it would notify the market with any other developments. “Earlier this month [Heliopolis Housing] signed an agreement with Egyptian real estate developer SODIC to jointly develop 655 acres of land in east Cairo for commercial and residential use,” Reuters notes.
Bawabat Al Sharq signs EGP 692 mn agreements with Perkins Eastman, Arab Construction Company for City Gate project
Real estate developer Bawabat Al Sharq has signed an EGP 534 mn agreement with the Arab Construction Company to build the second phase of the City Gate project in New Cairo which includes 429 villas over an area of 365k sqm, said company CEO Ayman El Qousy. The company also contracted Perkins Eastman to complete engineering design work for the entire project. The City Gate project includes three international schools, four hotels, a sporting club, a golf court as well as a 300k sqm allocated towards entertainment and commercial purposes. (Read in Arabic)
AUTOMOTIVE + TRANSPORTATION
Automotive sales drop 32% Y-o-Y in Jan-Feb 2016
The automotive market fell 32% year on year to 31,900 vehicles during the months of January and February, down from 46,700 during the same two-month period in 2015, Al Mal reports. Passenger car sales fell 33% year on year to 21,100 cars, down from 31,700 cars during the same period in 2015, according to data from AMIC. This unusual merger of data from January and February may be an attempt by the industry association to mask the extent to which sales have declined. 16,500 imported cars were sold in Jan-Feb 2016, while 15,400 locally assembled vehicles were sold. In a sign that import restrictions are working, the margin between imported cars and locally assembled cars sold in Egypt shrunk to 1,100 cars, while the margin in Jan-Feb 2015 was 3,000 cars, according to Al Mal. Hyundai retained its market leadership and its 26% market share of passenger car sales for the period, followed by Nissan, whose market share grew to 14% from 8% last year, and Chevrolet, who grew its share of the market to 12.3% from 11.4%, Al Mal reports.
BANKING + FINANCE
Banking consortium lends MAF EGP 2.5 bn to complete City Center Almaza
A banking consortium has signed the final agreement for an EGP 2.5 bn loan to the Majid Al Futtaim (MAF) group to complete the City Centre Almaza project, Amwal Al Ghad reports. The banks include the Arab Bank, Bank Audi, Bank of Alexandria, Emirates NBD, and the National Bank of Abu Dhabi, among others, sources told Amwal Al Ghad. The total cost of the project is estimated at around EGP 4 bn and is expected to be complete in 1Q2019, creating 36k direct and indirect jobs, the source added. (Read in Arabic)
Finance Ministry cancels 7-year and 10-year bond issuances in 4Q15-16
The Finance Ministry has cancelled all upcoming bond sales of 7-year and 10-year bonds during the 4Q15-16 fiscal year due to interest rate hikes and “budgetary constraints,” said Samy Khalaf, head of the ministry’s Debt Unit. 5-year bonds will be the longest terms issued for the quarter, Khalaf added. 85% of bonds issued for the quarter will hold one-year terms, Al Borsa reports. (Read in Arabic)
OTHER BUSINESS NEWS OF NOTE
Egyptian Polish Businessmen Association sends doorknock delegation to Warsaw
The Egyptian Polish Businessmen Association (EPBA) is sending its biggest delegation to date to Warsaw in May, Al Shorouk reported. The delegation will consist of over 35 members, compared to the usual 20-25, said EPBA president Medhat El Kaissy. Despite a trade deficit between the two countries pouring in Poland’s favor, 90-95% of Egypt’s imports from Poland are in the form of capital goods meaning importing from Poland increases production in Egypt, added El Keisy. The EPBA plans on equalizing the trade deficit by establishing a company with storage space in Poland to eliminate high costs of import and bring in smaller companies. (Read in Arabic)
LEGISLATION + POLICY
Khorshid to reassess one-stop shop, address land allocation concerns
Investment Minister Dalia Khorshid is putting together a complete plan to promote investment in Egypt, Al Mal reported. Khorshid is prepared to look into reassessing the one-stop shop policy and the problems associated with land allocation. She will meet with investors to address their concerns and listen to their suggestions in policy implementation, she added. (Read in Arabic)
Factoring companies granted exemptions from debt-equity clauses of the Income Tax Law
Factoring companies, which buy receivables from other companies at a discount, can now claim tax deductions on interest payments even if their leverage exceeds the 4:1 debt to equity ratio set by a clause in the Income Tax Law. Under the clause, companies can claim a tax deduction on interest payments on their debts if their leverage is less than four times their equity. Companies who are leveraged to over the 4X ratio would not receive the deduction. Factoring companies have been granted an exception by the Finance Ministry given the reliance on leverage as a crucial part of their operations, a move praised by EFSA head Sherif Samy. (Read in Arabic)
EGYPT POLITICS + ECONOMICS
Contentious deliberations on the gov’t plan begin in the House
The House of Representatives began contentious deliberations on the government’s agenda on Wednesday. The sub-committee on Social Justice, part of the committee to review the plan, heavily criticized what MPs called the “conceptual nature” of the social justice and social services pillar of the program. Sub-committee members attacked the lack of a concrete framework to achieve the lofty goals and targets set by the plan, with some stating that it did not provide a sufficient legislative framework or strategy. Discussions also shifted to more fundamental issues, namely, can parliament issue recommendations or amendments to the plan. The sub-committee was fraught with confused anger over the lack of options parliament has, which MPs felt comes down to an outright rejection or acceptance of the cabinet’s program. Some MPs believe the lack of choice could lead to a constitutional crisis or the paralysis of state functions. (Read in Arabic)
ON YOUR WAY OUT
Taxi drivers in Alexandria went on strike yesterday to protest Uber and Careem, saying they caused a wave of “mistrust” between passengers and taxi drivers. In their typical self-defeating fashion, the taxi drivers blocked the roads and caused major traffic jams in the city, Al Shorouk reported.
Edita’s Extraordinary Assembly approved a EGP 73 mn capital increase to EGP 146 mn from EGP 73 on Wednesday by way of 363 mn free shares as part of the profits from FY15, Al Borsa reports.
USD CBE auction (Tuesday, 29 March): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Tuesday, 29 March): 10.04 (+0.036 since Monday, 28 March)
EGX30 (Wednesday): 7,485.06 (-1.09%)
Turnover: EGP 798.04 mn (83% above the 90-day average)
EGX 30 year-to-date: 6.837%
THE MARKET ON WEDNESDAY: After shrugging-off on Tuesday the hijacking of an EgyptAir flight, the benchmark EGX30 closed down yesterday about 1% on reasonable volumes. The index’s best performers were Telecom Egypt (up 4.5%), Crédit Agricole – Egypt (advancing 2.7%) and Elsewedy Electric (up 2.3%). Meanwhile, Oriental Weavers fell 6.3%, TMG slumped 3.7% and and index heavyweight CIB eased 3.2%. Regional investors were the sole net sellers of the day. Regional equity markets fared better, with KSA’s Tadawul inching up 0.6% and the DFM General Index in Dubai gaining 1.5%.
Foreigners: Net long | EGP + 13.8 mn
Regional: Net short | EGP -37.1 mn
Domestic: Net long | EGP +23.3 mn
Retail: 67.0% of total trades | 72.0% of buyers | 62.0% of sellers
Institutions: 33.0% of total trades | 28.0% of buyers | 38.0% of sellers
Foreign: 13.0% of total | 13.9% of buyers | 12.2% of sellers
Regional: 12.5% of total | 10.2% of buyers | 14.8% of sellers
Domestic: 74.5% of total | 75.9% of buyers | 73.0% of sellers
WTI: USD 37.70 (-1.38%)
Brent: USD 38.91 (-0.89%)
Gold: USD 1,228.20 / troy ounce (-0.03%)
TASI: 6,215.7 (-1.3%)
ADX: 4,394.7 (1.8%)
DFM: 3,324.6 (1.5%)
KSE Weighted Index: 360.0 (0.6%)
QE: 10,312.9 (0%)
MSM: 5,467.4 (-1.3%)
29-31 March 2016 (Tuesday-Thursday): Future Rail and Metro Egypt, Cairo.
31 March-22 April (Thursday-Friday): The Downtown Contemporary Arts Festival (D-CAF), various locations, Cairo.
04 April 2016: Saudi Arabia’s King Salman visits Cairo.
07-10 April 2016 (Thursday-Sunday): Cityscape Egypt Conference, Cairo International Convention Centre, Cairo
13-16 April 2016 (Wednesday-Saturday): Cafex, Cairo.
17 April 2016: German economic delegation visits Cairo.
25 April 2016 (Monday): Sinai Liberation Day (national holiday)
26-28 April (Tuesday-Thursday): Arabian Hotel Investment Conference, The Madinat Jumeirah, Dubai.
01 May (Sunday): Easter Holiday / Labour Day (national holiday)
02 May (Monday): Sham El Nessim (national holiday)
02-03 May (Monday-Tuesday): The Middle East Investment Summit 2016, Ritz-Carlton DIFC, Dubai.
16-17 May (Monday-Tuesday): Egyptian-Bahraini committee meets, Cairo.
25-26 May (Wednesday-Thursday): The Middle East and North Africa Solar Conference and Expo MENASOL 2016, Hyatt Regency, Dubai.
06 October (Thursday): Armed Forces Day (national holiday)
27 November 2016 (Sunday): 2016 Cairo ICT Conference Group
04-06 December 2016 (Sunday-Tuesday): Solar-Tec Conference, Cairo International Convention Centre, Cairo