The US expects to sanction new Iran-linked entities roughly weekly, Treasury Secretary says

Good morning, friends. Systems are under pressure this morning, and we’ve got three stories for you about the workarounds keeping them running.

The Red Sea tourism story is a bit counterintuitive, but stay with us. Winter arrivals are expected to jump 20%, but 90% of hotels are holding rates flat anyway. That’s because operators are wagering on volume over margin, absorbing a year of higher energy and utility costs rather than passing them on.

On the EGX front: The exchange rewrote some of the rules governing its OTC order market, scrapping both the explicit application route for reinstatement and the power to permanently halt and remove a security. Resumption is now the chairman’s call.

The Energos Winter story has immediate stakes. The government is reportedly weighing two repair options for the damaged Damietta FSRU, either a six-week local fix with Petrojet or a one-month job in Turkey. It’s running its Mediterranean LNG capacity on stored reserves and workarounds in the meantime, and with the rest of Egypt’s FSRU fleet on the Red Sea, there’s no Med route to the grid until the repair is done.

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US readies weekly Iran sanctions

US Treasury Secretary Scott Bessent expects Washington’s financial policy arm to keep adding names to its Iran sanctions list at a pace of roughly one round a week, and banks are where the campaign begins, he told Reuters. This comes days after the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) moved to strip correspondent banking access from Banque Misr’s UAE outpost.

For banks already in Washington’s crosshairs, Bessent said the next step could be cutting them off entirely from the USD-based financial system. “We’re starting with the banks, and we’re telling the banks it’s not okay to have Iranian money and to aid the regime,” he said.

There’s no middle ground on offer at the G20. Finance ministers and central bank governors meeting in Asheville, North Carolina, will be told to end their economic relationships with Iran or expect sanctions themselves, Bessent said. “You’re either with us, or you’re with the Iranians.” He waved off the argument that the campaign needs Chinese firms in the frame, saying the US blockade of Iranian ports has already done that work.

REMEMBER- Banque Misr’s UAE branches — the first target under Operation Economic Outcast — sit in limbo until FinCEN closes a 30-day public comment window to decide whether to finalize the rule. FinCEN is proposing to cut the UAE branches off from correspondent banking access based on allegations that the branches processed roughly USD 1.8 bn between January 2024 and June 2026 for 103 companies that FinCEN says may be tied to Iranian shadow-banking networks.

The loan scandal freeze

The prosecutor general has ordered asset freezes and travel bans on several parties connected to the school-loan scandal, according to a statement. These include the owner of Global Paradigm School, the leadership at the consumer-finance company linked to the case, several of the firm’s shareholders, and a number of the school’s administrative staff members. The measures also apply to the suspects’ spouses and minor children, but exclude the accounts of companies in which they hold stakes.

REMEMBER- Last week, the Financial Regulatory Authority referred the consumer-finance company to the Public Prosecution, barred it from signing new financing contracts for one month, and cancelled the consumer-finance activity licence of its CEO. The regulator also said it has cancelled the financial and credit obligations incurred by affected parents. Prosecutors say the school entered into 839 consumer-finance contracts worth EGP 321 mn using parents’ personal data, copies of their IDs, and documents bearing signatures. The school’s chairman has been detained pending investigation.

The case has also begun to weigh on GlobalCorp, which has ties to the consumer-finance firm. The European Bank for Reconstruction and Development has paused talks on a potential USD 20 mn financing package, while a potential sale of GlobalCorp to local and foreign investors — which we reported in May could value the company at around USD 200 mn — has reportedly stalled.

Welcome back, Jade

MSC has rerouted its Jade service back through the Suez Canal and Bab Al Mandab, connecting Saudi Arabia’s King Abdullah Port to Europe and Asia on the direct route rather than the long way round the Cape of Good Hope, the Saudi Ports Authority (Mawani) said on X.

It’s not back to normal yet: Bab Al Mandab traffic was still fluctuating late last week, with visible commodity vessel transits falling to 19 on Wednesday, 26 August, from 24 a day earlier, Reuters reports, citing Kpler data.

MSC joins a shift already underway: Maersk and Hapag-Lloyd returned their AE15 through Suez in July, before Maersk also brought back its MECL and WAF6. The two carriers also moved AE19 Gemini service onto the corridor earlier this month.

Pharma’s next float

El Arabi Pharma Group (EPG) is looking to float a minority stake on the EGX in 3Q 2027, with proceeds earmarked for expansion over the following two years, Al Borsa reports, citing Chairman Sherif El Masry. The IPO is expected to fetch around USD 100 mn, though it is unclear whether the offer is purely primary, secondary, or both. EFG Hermes is among those in the running for the mandate.

Demand is already there: US and local investment funds have tabled offers, currently under review, of USD 50-60 mn to buy into the company, which are conditional on EPG listing, El Masry said. All five of EPG’s subsidiaries will be up for grabs, spanning manufacturing, distribution, and exports.

Looking forward: The group aims to reopen next year its offices in Libya and Syria, which have been closed since 2011. It stops short of the GCC, which El Masry says isn’t in the current plan.

IN CONTEXT- EPG joins El Ezaby in the IPO pipeline. B Investments has been prepping the pharmacy chain for an EGX listing since February, with Chairman Hazem Barakat telling us in May that El Ezaby could come to market as early as next year. That plan appears to be intact despite B Investments telling the EGX in July that it has no current plan to sell its stake in the chain, ruling out an exit but not necessarily the IPO itself. Both are coming to a market where pharma is running hot: healthcare and pharma account for less than 5% of EGX market capitalization but around 14% of value traded, according to yesterday’s figures.

Happening today

The Customs Authority completed a decade-long phaseout of import duties on category-D goods under Egypt’s freetrade agreement with Mercosur today, lifting the preferential reduction from 90% to 100%, according to a government document seen by EnterpriseAM. The final 10% step means qualifying products from Argentina, Brazil, Paraguay, and Uruguay will no longer pay the customs duty otherwise due at the border — subject to rules-of-origin and documentation requirements. The basket includes selected chemicals, glass, plastics, textile inputs and garments, agricultural products, and industrial components.

IN CONTEXT- The agreement entered into force in 2017, progressively eliminating tariffs on specified Mercosur imports over a decade. The commercial question is now whether the final cut is large enough to shift sourcing or input costs for Egyptian manufacturers and importers — especially where Brazilian and Argentine suppliers already have a foothold.

PSA-

WEATHER- It’s another hot summer day in Cairo, with a high of 35°C and a low of 25°C, according to our favorite weather app.

Alexandria will be a little cooler, with temperatures reaching 32°C during the day and easing to 23°C overnight.

The big story abroad

Political drama at the G20 finance meeting has top billing in the international press today, after Russia’s participation drew opposition from European officials. This week’s summit of finance ministers and central bankers in North Carolina marks Russian Finance Minister Anton Siluanov’s first time at a G20 meeting since Moscow’s 2022 invasion of Ukraine.

Amazon in hot water: The US Federal Trade Commission has filed a suit against Amazon, alleging that the e-commerce giant misled advertisers by manipulating the prices they paid to promote products on its platform. The suit, filed by a bipartisan coalition of 22 states, claims Amazon illegally made USD 20 bn by deceiving some 1.2 mn US advertising customers.

Logistics is big in Japan: US-based investment firm Ares Management, through its real estate arm, raised USD 4 bn for its fifth logistics development fund, which is almost 50% larger than its predecessor. The Japan Logistics Development Partners fund reached its maximum target, marking the unit’s largest closed-end institutional fundraise, drawing investments from pension funds, sovereign wealth funds, and insurers across four continents.

*** It’s Going Green day — your weekly briefing of all things green in Egypt: EnterpriseAM’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: We unpack why financing is backing solar for ceramics makers, but not the gas-saving upgrades Egypt needs to cut its import bill.