What we’re tracking on 22 March 2017
** What are the biggest challenges facing businesses in Egypt? Were the last three months good for doing business? Where do you and your business see the exchange rate stabilizing? Help us help you find out by taking our quarterly reader poll for 1Q2017. The survey would only take a couple of minutes to complete and, as always, you don’t need to answer every question — but we’ll be ridiculously grateful if you do. And taking the couple of minutes to fill it out will benefit everyone in the community by serving as a snap poll of sentiment.
Fill out the survey and maybe we’ll take you to lunch at the Four Seasons Nile Plaza. We’ll draw the names of two readers who filled in all survey questions and send them to lunch with the editors of Enterprise at the Four Seasons Nile Plaza (that’s the one in Garden City). Each reader will be entitled to bring a friend or colleague. If you’re interested, make sure you leave your full name, email address and best telephone number at the end of the survey. The poll closes next Tuesday, and we’ll announce the results and the names of our lunch guests on Sunday, 2 April.
Good morning, you’ve just been stamp taxed: The Ismail cabinet approved imposing the 0.125% stamp tax on all capital market transactions, during its Tuesday meeting, a cabinet statement said. The tax will increase progressively to 0.175% over the coming three years. A 0.3% levy will be imposed on the buy- and sell-side of transactions where 33% or more of a company’s shares are being sold. The decision — which will still pass through the Council of State and House of Representatives — is expected to come into effect on 1 May. The cabinet also approved postponing the capital gains tax for three years from May 17, Reuters reports, citing the state news agency MENA.
We anxiously await seeing how this news plays out in the stock market today. In the days preceding the decision, the market reportedly lost EGP 3.7 bn, something which perplexed Deputy Finance Minister Amr El Monayer, who maintained that the stamp tax came as a surprise to no one.
The UK sits, rolls over on command, and oh, joins the US in banning laptops, tablets, and other electronic devices on inbound flights from several Middle Eastern countries including Egypt, Turkey, Lebanon, Jordan, Tunisia and Saudi Arabia. Prime Minister Theresa May’s spokesman James Slack told reporters in London on Tuesday that phones larger than normal-sized mobiles or smartphones will also be forbidden. “We have been in close contact with the Americans throughout this process,” Slack said as he announced the details, which earmark a different list of countries from those on which restrictions were imposed by the U.S. earlier on Tuesday. “We’ve spoken closely, but we’ve each taken our own decisions,” (our entire staff burst out laughing at that last point). According to Bloomberg, the measures will affect 14 airlines: EgyptAir, British Airways Plc, Monarch, Thomas Cook, Thomson Airways Ltd., Turkish Airlines, Pegasus Airlines, Atlas Global, Middle East, Royal Jordanian, Saudia, EasyJet Plc, Tunisian, and Jet2.com.
…As for the ban by daddy Amrika, Egyptian authorities will begin enforcing the ban on flights from Cairo to the US on Friday 24 March, sources at Cairo Airport told Ahram Online. EgyptAir released a statement confirming the ban on Tuesday.
How long will the ban take place? It will be in place initially for nearly seven months before it is reviewed, Reuters reports. An Emirates spokeswoman said on Tuesday the airline understood that "the directive comes into effect on 25 March 2017 and is valid until 14 October 2017." A U.S. Department of Homeland Security spokeswoman termed that date "a placeholder for review" of the rule. The stated reason for all this mess is an unspecified security threat. As we noted yesterday, passengers from 10 international airports from Cairo, Amman, Kuwait City, Doha, Dubai, Istanbul, Abu Dhabi, Casablanca, Morocco; Riyadh and Jeddah, Saudi Arabia can expect to park their valuable devices with their checked baggage. We respectfully urge all baggage handlers at these airports to be gentle.
Thank you, Fed, for all the help: US equities are looking expensive after the Trump reflation trade and asset inflation driven by the Fed, making EM asset classes six of the 12 best performing asset classes so far this year. Analysts are even overlooking EMs’ propensity for excess, with Egypt being a prime example as the USD 4 bn eurobond issuance was three times oversubscribed, according to the Financial Times.
And speaking of EM bond sales, Saudi Aramco is seeking to raise about USD 2 bn in its debut bond sale in 2Q17, ahead of its planned IPO. Aramco will issue SAR-denominated sukuks which may be privately placed with investors, anonymous sources tell Bloomberg.
The Egyptian-Lebanese Business forum will be held today in Cairo, headed by Prime Ministers Sherif Ismail and Saad Al Hariri, with 200 companies participating, Al Borsa reports.