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Monday, 15 August 2022

THIS MORNING: More details on the govt’s electricity rationing strategy coming + Car dealers are facing prosecution for failing to deliver cars

Hello, everyone. We’re feeling more than a bit muted this morning after a fire yesterday at a church in Imbaba killed more than 40 people. Please join us in having a good thought for the families of the victims.

WATCH THIS SPACE- Car dealers that haven’t delivered vehicles could face prosecution: The Consumer Protection Agency (CPA) will soon send a list of names of car dealers that have yet to deliver cars to consumers who booked them before 12 April to the prosecution, Al Borsa quotes a CPA source as saying.

Refresher: The consumer watchdog in May ordered distributors to fully return down payments with 18% interest to anyone who had ordered vehicles before 12 April and wants a refund. Those who still want their vehicles have full price protection (that is, companies are forbidden from retrospectively hiking prices on cars ordered before 12 April due to inflation).


Expect more details on how gov’t plans to cut back on electricity: The Electricity Ministry will hold a press conference in the next few days to announce details of measures to curb electricity use that cabinet approved last week, Electricity Minister Mohamed Shaker reportedly told Al Mal.

REMEMBER- The government is seeking to cut domestic electricity consumption to redirect for export some 15% of the natural gas that currently gets sent to power stations, netting itself an extra USD 450 mn a month in revenues to help shore up FX liquidity. Expect to see darker streets, public squares, government buildings and sports facilities, as well as a 25°C lower limit on A/Cs in malls, among other measures.

MNHD shareholders have the final word on SODIC takeover bid: Madinet Nasr Housing and Development will hold a general assembly meeting on Tuesday, 16 August, to decide whether to allow SODIC to conduct due diligence ahead of a potential takeover.

Interest rates: The Central Bank of Egypt will meet to discuss interest rates on Thursday, 18 August. There was little consensus about what the Monetary Policy Committee is likely to do in our customary poll, where five of the eight analysts we talked to see the interest rates rising by up to 100 bps this week.

The Madbouly government will hold another two rounds of consultations on its privatization strategy tomorrow and Thursday: Chemical producers are up tomorrow while players in the mining sector are up on Thursday. Every Sunday, Tuesday, and Thursday see workshops on how privatization plans will affect specific industries. You can find more details on the schedule of the meetings here.

National Dialogue: The board of trustees overseeing the National Dialogue will hold its next meeting on 27 August. On the agenda: Choosing the rapporteurs for all of the committees and subcommittees of the social, political and economic tracks, and preparing the agenda and topics of discussion for the dialogue.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.


Global commodity prices might be falling, but there’s no quick fix to the damage to global food supply caused by the war in Ukraine, David Lynch writes for the Washington Post. Developing countries that rely on exports for key commodities have yet to reap the rewards of falling prices, and might not be able to for months, according to analysts, who say that changes in the global markets could take months — up to a year, according to the IMF — to filter down to local economies. What’s more, the lower prices are often offset by the weaker currencies of food importers: the red-hot greenback, which surged to 20-year highs earlier this year, has made the price of importing global commodities significantly more expensive for developing nations.

The possibility of more volatility is still very real: “The worst didn’t happen… but there’s a false sense of security in the markets right now,” said one expert. “This fall could have a lot more volatility.” Potential issues with the UN- and Turkey-brokered grain pact, an imminent Russian energy embargo that could drive fertilizer prices further up, and continuing droughts are all persistent threats to global food security.

DATA POINT- Egypt has produced 9.7 mn tons of wheat this season, Naeem Moselhy, advisor to the agriculture minister, told CNBC Arabia yesterday (watch, runtime: 1:43). This is up around 7.8% from last season, when we produced 9 mn tons. The government earlier this year provided incentives to local farmers to increase production in light of Russia’s invasion of Ukraine threatening about 80% of our imports. Some 4 mn tons of the local wheat were procured by the government against the 6 mn tons targeted by the government.

SPEAKING OF WHEAT- A Ukrainian grain ship reportedly disappeared on its way to Egypt — then shows up en route to Syria: The first grain carrier to make it through a safe corridor out of Ukraine’s ports showed up yesterday near Syria’s Tartous port, Reuters reported citing two shipping sources. The ship was headed to Egypt when its transponder went dark off the north-west coast of Cyprus on Friday morning, according to the Financial Times. The cargo had been rejected by its initial buyers in Lebanon because it was stranded for months in Ukraine.


The attack on Salman Rushdie on Friday is still getting plenty of attention globally: Rushdie, who suffered serious injuries after being stabbed during an event in New York, is “on the road to recovery,” his agent said yesterday. (AP | Reuters | WSJ | FT)


Are US stocks really out of the woods? While US stocks staged a rebound last week on hopes that the Federal Reserve could soon change tack and slow the pace of its rate hikes, some investors remain skeptical that this is the end of the market rout, the Wall Street Journal reports. Part of the skepticism is coming from the fact that many of the stocks staging a comeback were among those that plunged the most during the sell-off in the first half of the year. Those include meme stocks — like Bed Bath and Beyond and AMC Entertainment Holdings, which have climbed 107% and 111% respectively since they bottomed out in June — and crypto-related companies like Coinbase. Most investors are remaining prudent with the companies they put their money in for the foreseeable future, the WSJ writes, as the Fed’s trajectory remains uncertain and signs of an economic slowdown remain clear.

AND- What Chinese factory owners are saying right now doesn’t bode well for the direction of the global economy: Chinese exporters are expecting a drop in global demand thanks to soaring inflation in Europe and the US. Orders for certain products fell as much as 30% in July and August from last year while some factories say their European clients are ordering less than half of what they did last year, according to Bloomberg, which interviewed more than a dozen Chinese export managers.

THE TAKEAWAY- “The general direction is export growth will slow down in the coming months, and it’s possible to reach a negative territory by the end of the year,” one economist told the business newswire.


Missed this week’s Inside Industry? In our weekly vertical exploring all things industry and manufacturing, we looked at Egypt’s non-oil exports during the first six months of the year.


*** 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: The 2022-2023 school year at Egypt’s private + international K-12 schools is kicking off in the coming weeks. Today, we run through the tuition fees being charged at the country’s major schools.

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