Good morning, friends, and welcome to the start of a new month. We kick off September with an issue busy with a little bit of everything — fresh investment news, updates on our upcoming IMF review, and the Finance Ministry increasing its borrowing target for the month.

Madbouly’s time in China continues to bear fruit, with China’s CEEC expressing interest in investing some USD 1 bn in the local market over the coming five years to better position Egypt as a regional energy hub.

AND- If you have an appointment at the British Embassy this week, you may have some difficulty entering the embassy building. The embassy closed its doors yesterday and directed those with pre-booked appointments to reach out to a specific number for directions regarding how to access the embassy compound.

In the fourth issue of our Destination Sahel series, we're bringing you the latest updates on New Alamein City and a look at the best investments in Sahel today. We also investigate the growing issue of beach erosion and its impact on our shores.

Look for Destination Sahel, Issue IV, in your inbox on Wednesday, 3 September.

Missed the first three issues? Tap here to read the full series.

PSA-

WEATHER- It’s another warm day in Cairo, with the capital in for a high of 37°C and a low of 24°C, according to our favorite weather app.

It’s a little cooler in Alexandria, with a high of 31°C and a low of 24°C.

WATCH THIS SPACE-

#1- Local banks are starting to lower interest rates on savings products following the central bank’s 200 bps rate cut last week, with Banque Misr and the National Bank of Egypt (NBE) leading the way.

Banque Misr said it reduced rates on its new EGP and USD certificates starting today, with its flagship three-year fixed-rate EGP certificate now offering 17% annually, down from 18.5%, according to a statement seen by EnterpriseAM. The bank also cut yields on its tiered Ibn Misr certificates to 20.5%, 17%, and 13.5% — down 2.5 percentage points. Interest on USD-denominated certificates was also trimmed by 30-45 bps across maturities. The NBE followed suit, cutting rates between 1.5-4 percentage points on its newly issued savings products starting today.

#2- Egypt will begin construction of a long-stalled gas pipeline with Israel next year, a government source told EnterpriseAM, adding that the project was agreed to years ago, but was put on hold due to financial issues and geopolitical turmoil. This comes as we prepare to more than double Leviathan gas imports under the recently inked USD 35 bn agreement to send 130 bn cubic metres of gas to Egypt from 2026 through 2040.

Construction is expected to wrap up by 2028, with Egypt covering USD 200 mn of the cost and Israeli companies contributing a similar amount.

Gas flows will be channeled to Egypt’s gas liquefaction plants in Damietta and Idku ahead of re-export to Europe as LNG, we were told.

HAPPENING TODAY-

#1- It’s day one of a three-day G20 summit on global and regional food security challenges, which marks not only the country’s first time hosting the group, but the first time any non-G20 state has done so, according to a Foreign Ministry statement. The discussions will feed into a ministerial declaration set to be adopted in an upcoming G20 Ministerial Meeting in South Africa on 19 September.

#2- The revamped Labor Law is now live. After years of debate and discussion between the government, parliament, business groups, and labor unions, which saw previous iterations of the bill pulled from the House over competing claims that it was lopsided in favor of either business owners or workers, the new Labor Law is officially the law of the land.

What does the new law entail? We dove into the ins and outs of the new law in our coverage here.

#3- Calling all pharma manufacturers, Pharmaconex is kicking off at the Egypt International Exhibition Center today, according to a statement (pdf) from the organizers. The three-day event will highlight recent public and private sectors’ efforts to localize drug manufacturing and strengthen supply chains under the National Health Strategy 2024-2030. The exhibition will host over 350 exhibitors from 40 countries and feature some 70 conference sessions.

NEWS TRIGGERS-

It’s the first work day of September — here are the key news triggers to keep your eyes on this month:

  • Will the country’s non-oil private sector return to growth territory? S&P Global will release hotly anticipated PMI figures measuring non-oil private sector activity for August on 3 September. Last month’s report saw the country’s headline figure rise to 49.5, just short of the 50.0 neutral threshold that separates growth from contraction. Non-oil private sector activity has declined for five straight months and has only been in expansion territory for two months since November 2020.
  • Many are expecting inflation to cool again in Capmas’ upcoming release of August inflation data, set for 10 September. Annual headline urban inflation cooled by a whole percentage point in July to 13.9%, marking the second straight month of easing inflation and giving the central bank confidence to restart its interest rate easing cycle last week. The CBE expects inflation to continue its downward path to hit an average of 14-15% in 2025 and continue to make progress toward its 7% (± 2 percentage points) target for 4Q 2026 — an assessment most analysts seem broadly in agreement with.
  • The IMF says it will hold its combined fifth and sixth reviews of Egypt’s USD 8 bn Extended Fund Facility arrangement in the second half of September — but don’t expect the IMF to keep to its timetable exactly. Finance Minister Ahmed Kouchouk put the completion date in September or October in comments last month.

EGX WATCH-

The EGX30 fell 1.6% yesterday to close at 35.1k points after reaching an intraday high of 35.9k during its first session after the CBE cut rates by 200 bps on Thursday. Some investors took the closure of the British Embassy’s main building in Cairo (more on that in the news well, below) as a negative signal, while others used the rally as a window to lock in gains, Al Ahly Pharos Head of Research Hany Genena told EnterpriseAM, describing the dip as a brief pullback the market is likely to shake off. Building materials led the drag, slipping 3.6% after a strong run-up in recent months, while tourism and energy were the only sectors to finish in the green. The benchmark index remains up 18.2% YTD.

DEBT WATCH-

Yields on local debt instruments fall following rate cut: The Central Bank of Egypt sold EGP 62.3 bn worth of EGP-denominated t-bills — exceeding its target of EGP 55 bn — at yields well below those accepted last week, reflecting the impact of Thursday’s 200 bps rate cut. The CBE sold EGP 26.7 bn worth of three-month t-bills at an average yield of 27.2% — the average yield for last week’s auction stood at 27.7% — and EGP 35.6 bn worth of nine-month bills at an average yield of 26.3%, down from last week’s 26.7%, according to data on the CBE website.

CIRCLE YOUR CALENDAR-

#1- The annual Cairo Water Week will kick off on 12 October at Cairo’s Triumph Hotel, bringing together regional and international experts and policymakers to discuss and promote water security and global sustainable development, according to a statement. The week-long event, under the theme Innovative Solutions for Climate Resilience and Water Sustainability will feature competitions, workshops, policy dialogues, and exhibitors wanting to showcase their latest water and climate solutions. Register to attend on the event’s official website.

#2- Investors have until 11 September to apply online for more than 1.3k industrial land plots across 23 governorates with a total area of 6.8 mn sqm, according to a statement. Interested investors can apply through the Made in Egypt digital platform and the General Authority for Industrial Development will announce the results for the bids before the end of the month.

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

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ICYMI- Missed this week’s Inside Industry? In our weekly vertical exploring all things industry and manufacturing, we looked at the current state of Egypt’s fertilizer industry, and what risks loom just around the corner. You can check out the story here.

THE BIG STORY ABROAD-

Trade news is dominating the global front pages this morning after India and China agreed to stabilize relations previously disrupted by tensions over their Himalayan border. Chinese President Xi Jinping and Indian Prime Minister Narendra Modi agreed that their nations are “partners not rivals” and to strengthen trade ties amid US tariff pressures on India and shifting global economic conditions. (Reuters | FT | AP | NYT | Bloomberg | CNN)

What do improved relations between the two countries mean? The two sides agreed to resume direct flights between the two countries, which have been suspended since 2020, and ease tourist visa restrictions. China had previously agreed to lift export restrictions on rare earths, fertilizers, and tunnel-boring machines.

MEANWHILE- Stocks are bracing for the September blues after posting strong gains in August. While September is usually the worst-performing month for stocks, with the S&P 500, Dow Jones, and tech-heavy Nasdaq incurring their worst losses during the month, some market experts are optimistic about what’s to come. UBS Global Wealth Management’s Mark Haefele expects “an economic soft landing, solid corporate earnings, and lower interest rates to support markets over the next 12 months.” CNBC has the story.

IN OUR NECK OF THE WOODS- Israel said it killed Hamas spokesman Abu Obeida on Saturday. Israeli Defense Minister Israel Katz said in a post on X that forces have “eliminated” the masked spokesman. Hamas is yet to confirm or deny the news. (Bloomberg | Washington Post | NYT | Wall Street Journal)

Also making headlines: Over 1 mn people were evacuated in Pakistan’s Punjab province due to severe flooding submerging more than 1.4k villages and damaging key grain crops, Reuters reports.

*** 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: We take a look at how SAT exams returning to Egypt after a four-year hiatus is increasing demand for international schools.

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