The EGX plummeted 4.9% yesterday

Good morning, folks. The government’s draft state budget for the coming fiscal year has finally dropped. In today’s issue, we’ve got a rundown of the draft budget along with plenty of energy, acquisition, startup, and bourse news for you to read through this morning.

And don’t forget, we’re in line for a long weekend starting tomorrow. The public, private, and banking sectors will have the day off tomorrow in observance of Sinai Liberation Day, according to statements from the cabinet, central bank, and EGX .

** EnterpriseAM Egypt will also be taking a break from your inboxes starting tomorrow, but we will be back in your inbox at our customary time with all the latest business news on Sunday.

And we’ve got another short work week ahead: The public and private sectors will be off on Sunday, 5 May and Monday, 6 May in observance of Labor Day and Sham El Nessim, according to a cabinet statement.

WATCH THIS SPACE-

Gold customs exemptions extension? The Cairo Chamber of Commerce may submit a request to the Madbouly government for the extension of the decision allowing Egyptians living abroad to import gold to Egypt without paying customs duties, the head of the chamber’s gold division, Hani Milad, told Al Mal. The move would increase gold supplies in the local market and stabilize prices.

Remember: Prime Minister Mostafa Madbouly in November extended zero-customs exemption for gold imports until 10 May 2024.

WEATHER- It’s another swelteringly hot day in Cairo today, with a high of 41°C and a low of 29°C, according to our favorite weather app.

There’s little respite from the heat in Alexandria, with a high of 37°C and a low of 24°C.

Senior citizens and those with respiratory illnesses are advised to stay indoors today and tomorrow, on the back of poorer air quality this weekend, the Environment Ministry warned.

And over the long weekend, the weather will start cooling off from tomorrow with temperatures dropping to the low 30s in the capital and down to the mid 20s for our friends on the Mediterranean.

ATTENTION, EGYPT INVESTORS-

Foreign investors are falling in love with Egypt again… Foreign investors we speak with (debt, equity, and strategic alike) have a growing appetite for Egypt. They’re buying into local debt, eyeing promising shares, and committing bns of USD to both new ventures here and the growth of their existing businesses. They like the Egypt story that’s taking shape after the float of the EGP, and its competitive advantages are clear to many of them: It’s a massive consumer opportunity and a regional export hub of tomorrow.

The Enterprise Optimism Forum 2024 will do exactly what it says on the tin: Spark conversations about a future that we think is much brighter than so many in our community feel right now. Think of it as much-needed shock therapy combined with an early, actionable roadmap for those of us who are “long Egypt.”

We’ll be talking with you about the agenda over the coming couple of weeks. It features speakers from Egypt and abroad who are future-proofing their businesses and angling to capture tomorrow’s opportunities — and who aren’t afraid to answer some tough questions.

*** Interested in attending? Tap or click here to let us know. Seating is limited.

IN THE HOUSE-

It was a busy day in the House yesterday, as representatives discussed a string of domestic issues including the draft state budget, the Unified Ins. Law, and a grant from the World Bank. The House will reconvene on 7 May.

#1- Draft budget for the next fiscal unveiled: Finance Minister Mohamed Maait gave the House a first glance of the draft state budget for FY 2024-25. The draft budget is now in the Budget Committee’s hands to be up for discussion and will be voted on and passed by the House before the end of June.

** We have a deep dive into the ins and outs of the draft budget in our lead story in the news well below.

#2- Unified Ins. Law gets a preliminary thumbs up: MPs gave their preliminary approval to the new Unified Ins. Law, which will be put to a vote one more time in an upcoming session before being formally introduced. The law aims to draw up new and comprehensive rules for regulating the ins. industry and to widen compulsory ins. coverage.

#3- USD 9 mn World Bank grant gets the green light: MPs approved a USD 9 mn grant from the World Bank that will go into improving the management of waste from the healthcare and electronics sectors.

EGXWATCH-

The EGX plummeted 4.9% yesterday, with Egyptian stocks lost about EGP 86 bn of their market value. The bourse also halted trading on 13 stocks after they fell by 5-10%, according to Asharq Business.

The sharp decline is “not surprising,” after the stock market had been hitting fresh highs in the run-up to the float of the EGP, as investors looked to hedge against a weakening local currency, CI Capital’s Monsef Morsi said. Geopolitical tensions in the region have prompted “a strong corrective process that has affected the stock market,” Azimut Investments’ Ahmed Morshed added.

POLLWATCH-

Economists see Egypt’s GDP growing by an estimated 3.0% clip in FY 2023-24, according to a Reuters poll of 14 economists. This is lower than previous estimates of 3.5% in January and 4.2% in July, as regional tensions have caused foreign revenues from the Suez Canal to plummet.

But they’re more optimistic about the country’s growth in 2025: Analysts see the economy’s growth surging to 4.35%, up from January’s prediction of 4.15%, on the back of a slew of int’l aid packages and the Ras El Hekma agreement. This is higher than the government’s own predictions of 4.2% growth for next year, unveiled by Finance Minister Mohamed Maait yesterday in the draft state budget. See our lead story in the news well below for the fuller picture.

What will determine how fast the economy recovers? "The biggest factor will be private consumption and whether or not this recovers from March-June on the back of the relaxation of capital controls and the floating of the pound," said Ivan Burgara from the Institute of International Finance. "This will dictate whether we see a recovery in manufacturing and services which will boost or further hinder growth."

What about the EGP’s value? Analysts are pricing in an average rate of 48.65 against the greenback by the end of June this year, and 48.25 by the end of June next year.

THE BIG STORY ABROAD-

Tesla leads all of the big Western business papers, from the Financial Times and Les Echos to the Wall Street Journal and Reuters. The company’s shares rallied 11% in after-hours despite posting poor 1Q 2025 results after it promised to introduce “more affordable models” by early next year.

A tale of two cities: Hong Kong’s biggest IPO so far this year has flopped (bubble tea chain ChaPanda’s shares were down as much as 38% in their debut) as investors shy away from the Asian financial capital. In New York, cloud and data security outfit Rubrik is looking at a 20x oversubscription rate for its IPO, which could raise as much as USD 713 mn.

ELSEWHERE- Star fund manager Cathie Wood’s Ark is still being slammed by redemptions, college protests against US support of Israel’s war in Gaza are growing, and our friends at Visa beat expectations with strong 1Q earnings.

SIGN OF THE TIMES- Defense spending is up 9% in the Middle East, driven by bigger outlays by Saudi Arabia, Turkey, and Israel, the Financial Times notes this morning.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: We hear from industry insiders on how Egypt can boost real estate exports efforts to support the sector and bring in fresh inflows of FX.