Good morning, friends. It’s a reasonably brisk morning for news: Lamees El Hadidi tore a strip off policymakers last night as she criticized the slow pace of the privatization program, and the Grand Egyptian Museum is getting plenty of ink after Tourism Ministry Ahmed Issa suggested it could open by next spring.

SMART POLICY- We also think it notable this morning that Volkswagen is going to work with the state on a study to set up an automotive-assembly and part-manufacturing zone on the banks of the Suez Canal. Single-industry industrial clusters make sense a mn different ways, as we’ve previously discussed.

KIND POLICY- We’re still singing the praises of Google, which as we noted yesterday gavea blanket extension of service to many Egyptian companies that are having problems paying for services on domestic credit cards in the wake of currency controls handed down by banks and the CBE. Amazon Web Services and Microsoft, among others, need to follow suit and show they support their small and medium-sized business clients.

MEANWHILE- Core inflation slows again in October:Core inflation eased in October for the fourth consecutive month, according to central bank figures released yesterday. Core prices — which strip out volatile items such as food and fuel — slowed to 38.1% y-o-y during the month from 39.7% in September. On a monthly basis, core inflation slowed to 1.8% from 3.0% in September.

This comes after figures released by Capmas last week showed that annual urban inflation easedfor the first time in six months in October on the back of slowing food prices. Both headline and core inflation rates have soared to record highs this year on the back of a series of currency devaluations and a chronic FX shortage.

WATCH THIS SPACE-

#1- ACUD receives offers from financial advisors for its 2024 IPO: The Administrative Capital for Urban Development Company (ACUD) has received offers from several firms to act as financial advisor ahead of an initial public offering on the EGX, its chairman Khaled Abbas said at Al Mal’s Real Estate Debate on Sunday, according to Asharq Business. The company in charge of developing Egypt’s new capital revived its IPO plans — in the works since 2021 — in September, saying it would offer 10-15% of its shares to investors.

There’s plenty we don’t know about the IPO, including whether ACUD will market it to international as well as domestic investors, what its financials look like, and how the company values itself.

A first look at the company’s finances: ACUD booked EGP 10 bn in net income during the first half of 2023, Abbas revealed at the conference yesterday. The company is a joint venture between the military and the Housing Ministry and will be required as part of the IPO process to make its finances public.

#2- An updated law on informal housing to be introduced by the end of the year: A bill that will make it easier for owners of illegal buildings to go legit is under final discussion in the State Council and will be announced within two to three weeks, the parliamentary Housing Committee’s undersecretary Tarek Shoukry said at yesterday’s Real Estate Debate, Al Mal reported.

Background: Legislation dating from 2019 gives owners of illegal buildings the option to pay reconciliation fees to allow them to legalize their building. Only a fraction of the 2.8 mn reconciliation requests were processed, due in large part to bureaucratic challenges managing data throughout the process. The new bill, which received initial approval in 2022, is expected to streamline the bureaucratic process.

#3- Trouble on the rails: French rolling stock manufacturer Alstom is in a pickle: The company’s shares have plunged in value after it warned last month that it faced a cash flow squeeze, prompting the market to raise flags about the company’s debt position — setting up the possible loss of its investment grade rating, the Financial Times writes. That could set off a downward spiral. Management says that upcoming down payments on projects will help keep it afloat — but some analysts believe that the only way forward is to sell assets.

A bankrupt (or otherwise resource-constrained) Alstom is really bad news for us: The company has a long list of Egyptian projects in the pipeline. It is currently looking to establishtwo factories in Borg El Arab to produce electrical systems and metro and monorail rolling stock and is leading the consortium in charge of the Sixth of October-new capital monorail. Alstom is also heavily involved with our efforts to expand the Cairo Metro, with the company penciled in to provide new rolling stock for Metro Line 1 and signaling and control systems for the third phase of Metro Line 3.

HAPPENING TODAY-

#1- CBE to refinance FX debt in t-bill auction: The Central Bank of Egypt will hold an auction to refinance USD 1.6 bn of USD-denominated one-year t-bills due to mature on 14 November, according to data on its website.

Expect borrowing costs to be higher: The government will likely have to refinance the debt at a higher rate than the maturing bills, which were sold last November at a 4.598% interest rate. The central bank agreed to pay 5.149% on a similar auction in June — the last time it sold USD-denominated bonds in the local market.

#2- The House is in session: MPs are meeting today to discuss and vote on amendments to the 2020 SMEs laws that, if passed, would grant financing handed out by the SMEs Development Agency the same exemptions and benefits afforded under the Banking Act.

Also on the agenda: The House will also vote on three presidential decrees: Banning doubletaxation on profits generated from air transport between Egypt and Brazil, a CAD 10 mn grant from the Canadian government to enhance food security and fight climate change, and Egypt joining the Basel Convention, which aims to regulate the trade and disposal of hazardous waste.

AND- Public Enterprises Minister Mahmoud Esmat will join the House Industrial Committee to discuss the ministry’s strategy to boost the performance of its affiliated holding companies.

#3- Egypt is the focus of day five at the Intra-African Trade Fair, with Elsewedy Electric CEO Ahmed Elsewedy and Hassan Allam Construction’s Mohamed Taher set to take the stage alongside other leaders in the private and public sectors penciled in on the day’s agenda (pdf).

HAPPENING THIS WEEK

The Egypt VC Summit is nearly upon us: Venture capitalists will descend on the Hilton Hotel in central Cairo tomorrow for the Egypt VC Summit, which will run through Wednesday. Flat6Labs’ Dina El Shenoufy, GAFI’s Hossam Heiba, FRA’s Mohamed Farid, and other industry players. The gathering wraps up tomorrow.

ALSO HAPPENING SOON-

Erdogan is coming to Egypt: Turkish President Recep Erdogan is set to visit Egypt in the coming weeks, according to AFP. The planned visit — a first since diplomatic relations broke down in 2013 — comes amid the diplomatic efforts in the region to end Israel’s war on Gaza.

THE BIG STORY ABROAD-

It’s still all about the war on Gaza in the international pages, but each news outlet is looking at it from a different angle. Reuters and the AP are focussed on the Al Shifa hospital — Gaza’s largest — which has halted operations after heavy Israeli attacks. The Wall Street Journal is looking at where Hamas is getting its money from and Bloomberg is leading with the hostage situation. Meanwhile, CNBC is looking at the bigger picture with a comparison of fatalities from both sides since 2008, in which 12 times more Palestinains have been killed than Israelis.

ALSO- Another depressing milestone in Sudan’s tragic civil war: Intense fighting in the Sudanese region of Darfur is getting coverage in the international press, after the RSF and its allied militias reportedly killed more than 1k members of the non-Arab Masalit tribe in under 48 hours this week in West Darfur. (Reuters | Bloomberg)

HELP GAZA-

Want to support relief efforts in Gaza, but don’t know how? We’ve got you. More than 1 mn people in Gaza have been thrown from their homes and every human being there lacks access to food, water, and fuel amid the most intense bombardment any population has endured this century.

The folks at Talabat are processing donations for a range of Gaza relief appeals by charities including the Egyptian Food Bank and Misr El Kheir. Pay in EGP using your credit card.

Or check out our list of charities to which you can make direct donations via bank deposit and / or Fawry.

WAR ECONOMICS-

#1- ETFs in the Middle East record heavy outflows in October: Exchange-traded funds (ETFs) with exposure to Saudi, Qatari, Emirati, and Israeli stocks have seen significant outflows since the outbreak of war in Gaza as investors continue to worry about instability in the region, according to Reuters. iShares MSCI Saudi Arabia ETF, which tracks the performance of an index composed of Saudi Arabian equities, saw the heaviest losses in the region, recording net outflows in October of over USD 200 mn and a 20% drop of what the fund held at the beginning of the month, the newswire reports.

The outflows are bad news for Israel: Israeli ETFs saw net outflows between USD 2.5 mn and USD 9.3 mn since the outbreak of the war on Gaza, according to the newswire, which were accelerated by S&P Global Ratings lowering Israel’s credit outlook to negative at the end of October, following similar moves from Fitch Ratings and Moody’s after the outbreak of the war on Gaza, according to Bloomberg. Concerns over Israel’s credit ratings and its status as a destination for tech investment are “not going to get better any time soon,” VanEck chief economist for emerging markets Natalia Gurushina told Reuters.

#2- Israel’s war On Gaza has dampened global wanderlust: Demand for international flights in the three weeks after October 7 were down 20% on the same period in 2019, bringing to an end a rosy six-month period for the travel industry that saw bookings nearly returning to pre-pandemic levels, according to travel company data cited in the Financial Times. Flight bookings in the Middle East were hit particularly hard and fell 26% in the weeks after October 7 from the period just before the outbreak of the war.

Is it geopolitics or inflation in home markets? Geopolitical uncertainty has “dented consumer confidence” in travel both within the region and elsewhere, says one analyst cited by the newspaper, whilst another suggests that other pressures such as inflation may also be at play.

ICYMI-

Missed this week’s Inside Industry? In our weekly vertical exploring all things industry and manufacturing, we looked at how we can keep our furniture industry flourishing.

*** 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.

In today’s issue: The Higher Education Ministry wants local unis to start offering local foundation courses

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