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Monday, 3 February 2020

What we’re tracking on 3 February 2020

The results of the 2020 Enterprise Reader Survey are in. Altogether, businesses in Egypt say they fared relatively well in 2019 and optimism is making a comeback for 2020. Other key takeaways from the poll, which we carry in full in this morning’s Speed Round:

  • Investment began picking up in 2019 as the CBE kicked off its easing cycle…
  • …but the majority of you still want more rate cuts to fully unlock capex spending;
  • You’re looking to hire new staff, but say you’re struggling to find and retain talent;
  • With inflation cooling substantially, you’re being less generous with raises than in recent years;
  • More of you expect to beat your competition in the next six months than did when asked the same question a year ago;
  • The IPO outlook seems mixed, but a lot of you are expecting healthy M&A activity in the pipeline.

As a token of our gratitude, 50 respondents to the poll will be getting their very own Enterprise mug and a bag of our special coffee blend, produced in association with our friends at 30 North (website | Facebook). Deliveries start tomorrow morning.


STORY OF THE DAY- Markets are slumping amid worries about the global economy as the Wuhan coronavirus is “increasingly looking like a pandemic.” Chinese markets tumbled this morning, with benchmark Shanghai Composite off more than 8% and the Shenzhen Composite plunging nearly 9% as the world’s second-largest economy is effectively shut off from the rest of the world.

It’s unprecedented: “China’s health crisis is testing the entire global economic system and placing unexpected and additional strain on the fragility of an extended boom,” the Wall Street Journal notes. Countries are closing their borders and airliners are scrapping routes to China. Factories could be shut for weeks. Oil is down 20% since China identified the virus (its own demand is off 20%), and market watchers are now predicting that Beijing’s injection of USD 22 bn into markets today won’t stave off further pressure on the country’s stock markets, but might “ease a global sell-off.”

It’s squeezing emerging markets: “A sense of foreboding is spreading through emerging markets on concern that the fast-spreading virus … could crimp global growth,” Bloomberg flatly suggests.

What it means for Egypt (so far):

  • Egypt received coronavirus diagnostic kits yesterday, the World Health Organization (WHO) bureau in Cairo said in a press conference, according to Egypt Today.
  • An evacuation flight from Wuhan will deliver Egyptian nationals to Matrouh later today. All those on the flight will be subject to a 14-day quarantine.
  • It could constrain tourism growth this year: Egypt was looking to attract 600k tourists from the Far East in 2020, half of whom would have been Chinese.
  • And it’s going to slow the pace at which Chinese companies invest in Egypt. Case in point: El Nasr Automotive and China’s Dongfeng were expected to ink an agreement in 2Q2020 that will see them manufacture 25k electric cars using the state-owned company’s facilities. Talks could now be delayed for “months,” Public Enterprise Hisham Tawfik said yesterday.
  • The EGX has so far proven fairly resilient, with the benchmark EGX30 edging down just 0.2% yesterday in fairly heavy trading as EGP 794 mn worth of shares changed hands, or about 26% more than the trailed 90-day average.

How deadly is it? Wuhan coronavirus appears to kill about 2% of those it infects, and it’s not as contagious as measles. To keep that in perspective, SARS killed one of every 10 people it infected. Those at particular risk appear to include folks with a history of smoking, bacterial coinfection and high blood pressure as well as those who are above the age of 65.

The coronavirus has sickened 17,384 people and killed 362 people worldwide, according to a Bloomberg virus tracker.

If you read nothing else on the subject this morning, make it this: Coronavirus closes China to the world, straining the global economy in the WSJ.

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SWF, Defense Ministry to ink restructuring pact: The Sovereign Fund of Egypt will sign an agreement today with the Defense Ministry’s National Service Products Organization (NSPO) to restructure some of its companies, the Planning Ministry said in a statement (pdf). The agreement aims to “maximize the value of these assets and develop them,” the statement reads. NSPO is a manufacturer and contractor, with companies working in industry, mining, agriculture, food, and services.

Swiss business delegation arrives in Egypt: A delegation of Swiss business leaders led by the country’s head of economic affairs Guy Parmelin is in town until Wednesday. Parmelin will join a Swiss-Egyptian business forum before meeting tomorrow with Prime Minister Moustafa Madbouly and Trade and Industry Minister Nevine Gamea to discuss the EU-Egypt trade agreement.

Eight Irish companies will accompany a trade mission this week looking to establish partnerships with Egyptian dairy firms, reports the local press.

Cabinet will discuss amendments to the Public Enterprises Act on Wednesday, Public Enterprises Minister Hisham Tawfik said on the sidelines of a financial inclusion conference in Cairo.

News triggers to keep your eye on over the coming weeks:

  • The purchasing managers’ index for Egypt, Saudi Arabia and the UAE is due out tomorrow at 6:15am CLT;
  • Foreign reserves figures for January will be released tomorrow;
  • Inflation figures are due out next Monday, 10 February;
  • The Egypt Petroleum Show runs 11-13 February;
  • The CBE will meet on Thursday, 20 February to discuss interest rates.

EFG Hermes’ annual One on One conference runs 2-5 March. The largest frontier and emerging markets conference of the year, the 1×1 takes place once again at Atlantis, The Palm in Dubai. Check out the conference website here.

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The race for the Democratic nomination to challenge The Donald in this fall’s election officially begins today as the Iowa Caucus convenes: Bernie Sanders has been leading the nomination charts in Iowa and is inching up even faster in New Hampshire, which will vote on 11 February, but Joe Biden is still in the lead across the nation. Democrats are concerned that Sanders will claim victory after the first vote and before the caucuses are concluded, thus impacting the final count, Politico reported.

Not quite sure how the caucus works (or what it means)? Reuters has you covered with this explainer.

For those who enjoy American football: The Kansas City Chiefs rallied to come from behind and win the Super Bowl, downing the San Francisco 49ers 31-20. It’s the Chiefs’ first title in 50 years.

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*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed. Blackboard appears every Monday in Enterprise in the place of our traditional industry news roundups.

In today’s issue: We look at the state of education for people with disabilities and people with special educational needs, and the economic opportunities Egypt stands to lose by not focusing on them.

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.