SCA’s Rabie pushes shipping companies to return to the Red Sea

Good morning, friends. We are kicking off the workweek with a busy issue packed with fresh M&A news, the details of El Sisi and Trump’s conversation, and Morgan Stanley’s two cents on Egypt’s economic outlook.

PSA-

WEATHER- It’s another cool day in Cairo, with a high of 21°C and a low of 12°C, according to our favorite weather app.

It’s just as cold in Alexandria, with a high of 21°C and a low of 11°C.

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WATCH THIS SPACE-

#1- The Mabdouly government is in talks to temporarily use Cyprus’ floating storage and regasification unit Etyfa Prometheus, according to industry publication Mees. Currently being tested in Malaysia, the unit could be lent to us for the short-term in exchange for certifying it, Cypriot Energy Minister George Papanastasiou said. With Cyprus’ own LNG import plans delayed until at least late 2025, the potential agreement could see Egypt using the vessel until Cyprus has a need for it, according to the report.

#2- Suez Canal Authority head Osama Rabie went on a charm offensive to persuade shipping lines to return to the canal, telling representatives of 23 leading companies in the field that “the current conditions in the Red Sea region are witnessing many positive indicators towards the start of stability returning to the region,” according to an authority statement.

Remember, traffic is picking up through the canal, albeit very slowly, with reports out last week that six US- and UK-linked ships passed through the Red Sea safely since 19 January, after Yemen’s Houthis announced they would only target Israeli-linked vessels following the ceasefire agreement between Israel and Hamas. However, six ships is just a drop in the bucket when compared to traffic the canal was used to, with shipping giants Maersk, MSC, and Mitsui OSK still avoiding the Red Sea, citing security risks.

#3- Bukhamseen Group wants to acquire local tourism giant in USD 5 bn transaction: Kuwait’s Bukhamseen Group is planning to acquire one of Egypt’s largest tourism and hospitality investment companies in a USD 4.9 bn transaction, Al Mal reports without disclosing the identity of the sought after company. If the transaction comes about, it would mark one of the largest transactions in Egypt’s tourism industry,

Bukhamseen is no stranger to the Egyptian market: The group —- alongside the InterContinental Hotel Group — is one of the controlling shareholders in Maadi’s Holiday Inn.

NEWS TRIGGERS-

It’s the first workday of February — here are the key news triggers to keep your eyes on throughout the month:

• Will non-oil private sector activity contract for a fifth consecutive month — or can we dare to be a bit hopeful? S&P Global will publish Egypt’s PMI figures for January early on Tuesday, 4 February, measuring the country’s non-oil private sector activity. In December, non-oil private sector activity witnessed its deepest slump in eight months on the back of rising input costs and subdued demand.
• Inflation to continue its steady decline to single digits? Capmas and the CBE are expected to publish inflation data for January early on Monday, 10 February. Annual urban inflation dropped 1.4 percentage points to 24.1% in December, marking a two-year low.
• Foreign reserves to continue their rise? The CBE is expected to release January’s foreign reserves figures within the coming days. Reserves inched up to a fresh high of USD 47.1 bn in December, marking a USD 11.8 bn uptick in the 10 months since the government announced the USD 35 bn Ras El Hekma agreement.
• Get ready for a whole lot of energy news, with the Egypt Energy Show set to be held on 17-19 February. Under the theme Building a Secure and Sustainable Energy Future, 47k attendees, 2.5k conference delegates, 300 speakers, and 500 exhibiting companies will come together to talk energy off and on the stage. EnterpriseAM will have its ears to the ground for all the major agreements and news to come out of the event.
• To cut, or not to cut interest rates: The central bank’s Monetary Policy Committee will meet on 20 February to review interest rates. The CBE left rates unchanged when it last met in December — marking the sixth consecutive meeting to keep rates steady — but most analysts see the central bank starting to cut rates sometime this quarter.

FROM THE DEBT MARKETS-

Central Bank of Egypt to issue USD 1 bn in T-bills? The central bank is looking to raise USD 1 bn from auctioning off one-year USD-denominated treasury bills this week, unnamed sources tell AlArabiya

The issuance would coincide with a similar amount of T-bills set to mature next week, with a yield of 5.1%.

THE BIG STORY ABROAD-

Trade wars begin: US President Donald Trump is once again dominating the conversation in the international press this morning, after delivering on his pledges to impose tariffs on top US trading partners yesterday.

Trump ordered 25% tariffs on Canadian and Mexican imports, and an additional 10% on imports from China as of Tuesday. Canadian energy products got a smaller duty at 10% in response to concerns of American refiners, while Mexican energy imports will be hit with the full 25%. Tariffs will be lifted when fentanyl and immigrants stop flowing into the US and “the crisis is alleviated,” the White House said in a statement.

Both Canada and Mexico vowed retaliatory tariffs, while Trump warned he will escalate tariffs in case of retaliation, and hinted at expanding them to include the EU, without specifying a timeline. The decision — affecting around USD 1.3 tn of imports — has sparked widespread fears of inflation spiralling out of control and businesses shutting down in the US and other countries. (Reuters | Bloomberg | NYT | CNBC)

CLOSER TO HOME- Hamas released three Israelis yesterday in exchange for 182 Palestinians, as the Gaza ceasefire agreement remains on track. This was the second exchange over the weekend, after Hamas exchanged three Israeli and five Thai nationals for 110 Palestinians on Thursday. The Rafah border crossing was also reopened for evacuating wounded Gazans from the strip for the first time since Israeli forces captured it nine months ago. (BBC | Associated Press | CNN)