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Tuesday, 29 May 2018

What we’re tracking on 29 May 2018

State-owned enterprises will be in the spotlight today as we expect the Ministry of Public Enterprise to start announcing multiple overhaults drives that will see SOCs forced to restructure both their debt and their organizations. The move is a prelude, in some cases, to new partnerships with the private sector and potential stake sales The drive comes as Minister Khaled Badawy announced yesterday that the government plans to offer another 4% of Eastern Tobacco to investors. We have more on this in today’s Speed Round.

EXCLUSIVE- Among those restructuring are the Cotton & Textile Industries Holding Company, which will announce today an agreement to restructure EGP 8.7 bn in debt it owes to the state National Investment Bank (NIB), CEO Ahmed Moustafa tells Enterprise. The announcement could be a prelude to an asset sale to the private sector. The transaction will see some EGP 2.7 bn in debt swapped for equity, raising NIB’s stake in the company to 20%. The remainder of the debt will be repaid through asset sales. Moustafa had told us last week that the company will also shed some assets to pay off EGP 2 bn in late electricity and gas bills owed to the government.

On a related matter, state auto companies appear are meandering toward the the Nasserist dream of an Egyptian car in the age of the long-awaited Automotive Directive, sources tell us, as the drive to have a bunch of them merge continues. El Nasr Automotive Manufacturing is said to be among them. Don’t hold your breath, folks.

Sudan, Egypt to talk GERD, Halayeb today: Foreign Minister Sameh Shoukry is meeting his Sudanese counterpart, Al Dirdiri Al Dhikheri, in Cairo today to follow up on tripartite talks over the Grand Ethiopian Renaissance Dam (GERD), Al Ahram reports. Egypt, Sudan, and Ethiopia had taken a step towards breaking the months-long deadlock in negotiations over the dam during a meeting in Addis Ababa earlier this month. Shoukry and Al Dhikheri are expected to look into the next steps in GERD talks ahead of an upcoming trilateral meeting in Cairo on 18 and 19 June. You can expect Sudan to raise its claim to Halayeb during the meeting: Al Dhikheri had told Sudan’s parliament that Khartoum is planning to resolve all of its border disputes. But again, don’t hold your breath.

Ibrahim Mahlab is representing Egypt at a Libya-focused conference in Paris today. The gathering will bring rival factions together to agree on a political roadmap, according to a Foreign Ministry statement. Mahlab, the president’s advisor for national projects, will be among officials from 19 countries present for the meeting. Others include the UAE, Qatar, Turkey, and Italy. President Abdel Fattah El Sisi and French Foreign Minister Jean-Yves Le Drian had agreed in Cairo last month that they would push for the war-torn country to hold elections by year’s end.

Our friends at AmCham are holding their annual general meeting and iftar today. Their guest speaker will be Education Minister Tarek Shawki, who will speak about the government’s “national strategy for education transformation in Egypt.” We don’t know Tarek Shawki, but the man is brave to push for sweeping education reform — he deserves our support. Members and their guests and register here to attend the iftar and AGM.

Once again, Mohamed El Erian is the voice of reason. Writing on the Emerging Markets Zombie Apocalypse in a column for the FT, our favourite Egyptian abroad notes that “emerging markets are at it again. Having attracted plenty of money, they have been going through one of their periodic downturns marked by sharp price losses, negative headlines and even anxiety among some specialist EM investors.” But EM investors shouldn’t be spooked, he suggests: So-called “crossover investors” are running for the exits because that’s what they always do: Flee at the first sign of risk. Given that they’re much larger than most EM-focused managers, the cross-overs have an outsized effect on even large emerging markets. The key is keep faith and look for substantial opportunities amid the storm by drilling deeper into the unique “opportunities offered by different countries, securities and currencies.” READ: Emerging markets turmoil can be navigated profitably.

Goldman Sachs isn’t phased by Saudi Arabia and Russia’s plan to ramp up oil production, saying it will have a minimal impact on the upward trajectory of oil prices. Even an output hike of 1 mn bbl/d would only offset involuntary production declines, according to a research note by the bank picked up by Bloomberg. Goldman has been an oil bull since last year, believing that growing demand and the need for OPEC to see prices go up will make it the dominant trend.

Your Ramadan rundown for today:

Bank hours run 09:30 am to 01:30 pm for customers and from 09:00 am to 02:00 pm for employees, CBE announced.

The EGX is running shorter trading hours. The trading session kicks off at 10:00 am, but closes at 1:30 pm. Tap or click here for the full schedule.

We’re looking at reasonably good weather for the rest of the week, with the mercury set to hover between 32°C and 34°C all the way through Friday. A spell of warmer weather is on the horizon starting Saturday, according to the long-range forecast on our favorite weather app.

So, when do we eat? For those of us observing, Maghrib is at 6:50 pm CLT today. You’ll have until 3:12 am tomorrow to finish your sohour.

Four pieces of recommended Ramadan reading for that hour before iftar:

On creating wealth:

Entrepreneurs are driving a hard bargain with their investors. “Founders of highflying startups are increasingly wresting control of their companies from venture-capital backers and extracting huge pay packages tied to going public,” the Wall Street Journal writes. Faced with competition from mutual funds, sovereign wealth funds and others, VCs have less leverage than before, leaving room for founders to demand special voting shares, governance rights and other tools. (Read)

Souq rival Jumia is getting plenty of love in the Wall Street Journal,which highlights an investment by Goldman Sachs and other “big-name investors.” There are plenty of lessons in the piece for Egyptian entrepreneurs who want to grow by serving a mass audience — whether you’re a startup or own an established business. (Read)

On preserving wealth:

Never mind the mn;’aires: Here’s advice from bn’aires. Bloomberg columnist Barry Ritzholtz distills business and life lessons from the multiple bn’aires he’s spent time with over the years. (Read)

Family offices are becoming a ‘thing.’ The latest to get in on the action is Carlyle founder and former CEO David Rubenstein. Bloomberg takes a quick look at his Declaration Capital in a piece that has been shot into our inbox by multiple readers in the past couple of days. (Read)

Before we move on: The EGX has named a number of our friends to its Sustainability Advisory Committee. CIB’s Amal El Araby (sustainable development manager), EFG Hermes’ Hanaa Helmy (CEO of the EFG Hermes Foundation and head of CSR) and Qalaa Holdings’ Ghada Hammouda (chief marketing and sustainability officer) are now members of the committee, according to a statement from the EGX.

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