IMF Executive Board pushes meeting to greenlight USD 820 mn tranche pushed to 29 July

Wednesday, 10 Jul 2024

IMF Executive Board pushes meeting to greenlight USD 820 mn tranche pushed to 29 July

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Today at a glance

Cabinet watch

New cabinet approves energy agreements, education amendments, taxation changes in first meeting.

What We're Tracking Today

IMF meeting to greenlight USD 820 mn tranche pushed to 29 July.

M&A WATCH

Dr Greiche Glass and High Glass ink strategic merger agreement.

Education

Education platform EPP wants to set up two schools in Alexandria and Soma Bay by 2025.

Also on our Radar

Emirati-Egyptian partnership to launch USD 500 mn Nile-side development.

EARNINGS WATCH

Ezz Steel finishes 1Q 2024 in the green following 2023 losses.

LAST NIGHT’S TALK SHOWS

Madbouly’s presser after the new government’s first cabinet meeting caught the attention of the talk shows.

PLANET FINANCE

China is building its war chest for a sovereign bond market intervention.

HARDHAT

A look back at Egypt’s energy mix over the last ten years.

What We're Tracking Today

Customs Authority mulls monthly car import quota

Good morning, friends. To wrap up this shorter-than-usual week, we’ve got the lowdown from the new government’s first cabinet meeting, news that the IMF’s Executive Board is pushing back its meeting to rubber-stamp a USD 820 mn tranche, and so much more.

And in case you forgot, the private sector, public sector, banks, bourse, and even us here at EnterpriseAM Egypt will be off tomorrow for Islamic New Year. But fear not, we will be back bright and early on Sunday morning with all the local business news and updates from the long weekend to keep you up to track.

WATCH THIS SPACE-

#1- Customs Authority mulls 10k monthly car import quota: The Customs Authority is considering a proposal from the automotive division of the Federation of Egyptian Chambers of Commerce to allow a monthly import quota of 10k cars following the tighter restrictions on car imports recently, two sources at the Customs Authority told Enterprise. The division proposes to divy up the monthly imports to companies according to their market share, and to implement the quota until the end of the year in hopes that the local supply picks up and the market stabilizes by then, the sources added.

#2- A temporary pause to blackouts to calculate usage: Prime Minister Moustafa Madbouly has instructed that load shedding be temporarily paused as “experiments” in order to gauge daily energy needs “under normal conditions,” he said in a press conference following yesterday’s cabinet meeting. The move comes ahead of the government’s plan to suspend power cuts for the summer months starting from the third week of July.

#3- SEIC to conclude due diligence on CIRA before September: The Saudi Egyptian Investment Company (SEIC) — a wholly-owned subsidiary of the Public Investment Fund — should wrap up its due diligence ahead of its acquisition plans CIRA Education by the end of August, CIRA CEO Mohamed El Kalla told Asharq Business.

Remember: SEIC said in May that it will buy into Social Impact Capital, the vehicle through which the founding El Kalla family holds a controlling stake in EGX-listed CIRA Education. SIC will use the cash injection to launch a mandatory tender offer to buy CIRA shares at a price of EGP 14 each to up its stake in the company to 75-100%.

PSA-

WEATHER- Another summery day in Cairo today, with a high of 39°C and a low of 28°C, according to our favorite weather app.

It’s continuing to heat up in Alexandria and along the North Coast, with a high of 36°C and a low of 24°C.

And over the long weekend, in the capital it will heat up to 40°C tomorrow, before gradually falling to 38°C by Saturday. While for our friends on the Mediterranean, temperatures will slowly dip to 35°C by the end of the long weekend.

** DID YOU KNOW that we now cover Saudi Arabia and the UAE?

** Were you forwarded this email? Tap or click here to get your own copy delivered every weekday before 7am Cairo time — without charge.

HAPPENING TODAY-

#1- Inflation to drop for a fourth consecutive month? Capmas and the CBE are expected to publish June’s inflation data today. Policy makers and the business community are hoping for the recent downward trend in inflation levels to continue after annual urban inflation cooled to 28.1% in May — its lowest level in 16 months.

Forecasts are all over the place: While annual urban inflation is expected to cool 0.6 percentage points for the fourth consecutive month to 27.5%, according to a median prediction of 17 analysts polled by Reuters, others see inflation moving the other way. Naeem Brokerage is forecasting that headline inflation will pick up 1.9 percentage points to 30% in a note seen by Enterprise, while Barclays has penciled in an even greater 4.2 percentage point jump to 32.3%.

#2- House committee starts reviewing the new government’s policy statement: The parliamentary committee tasked with reviewing the new government’s policy statement will kick off its meetings starting today. The committee will hold two meetings a day, which will see the new cabinet ministers summoned to answer questions on the government’s plan for the next three years.

What’s next? The 42 committee members will draft a report on their findings at the end of the debates to submit it to the House for discussion on Sunday 21 July, before MPs hold a vote of confidence in the new government.

FACT CHECK-

It’s business as usual at our largest power plants: German firm Siemens Energy continues to operate Egypt’s two largest power plants, the Electricity Ministry said in a statement, in response to reports that the energy giant would be stepping back from the power plants due to outstanding debts owed by the government. The energy technology giant operates, maintains, and manages power plants in Beni Suef, Burullus, and the new capital under a eight-year agreement inked in 2018.

CIRCLE YOUR CALENDAR-

#1- IMF meeting to greenlight USD 820 mn tranche pushed to 29 July: After initially being penciled in for today and then disappearing from the Executive Board’s schedule, the Fund’s Egypt head Ivanna Hollar clarified that the board will meet to discuss the staff-level agreement-approved third review of our USD 8 bn loan program on 29 July, in comments to Asharq Business. Assuming the board greenlights the fresh USD 820 tranche into the state coffers, this will in turn allow Egypt to apply for an additional USD 1.2 bn in climate finance from the international lender.

Why the delay? The regional business news outlet cited an anonymous senior government official who alleged that the delay stems from Egypt “not meeting some conditions.” However, the source clarified that these were “simple procedures by the Fund that will be clarified soon.

#2- Calling all fintech SMEs: Changelabs has partnered with Disruptech Ventures and InDrive New Ventures to open applications for fintech SMEs looking to join the Egyptian edition of its flagship MENA fintech accelerator. The Egypt Fintech for a Future Accelerator aims to support 12 local fintech SMEs Egypt, Africa and the Middle East looking to expand into Egypt, develop their products, raise funds, and build their customer base and strategic partnerships, according to a press release (pdf). The program will run from September to January and give participating startups USD 25k in Amazon Web Services funding alongside tech and design support, coaching, and partnership leads. Applications close on 1 August. Apply here.

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

THE BIG STORY ABROAD-

The Nato summit kicked off in Washington yesterday against the backdrop of Joe Biden’s teetering reelection campaign and developments in the Russia-Ukraine war landing on most front pages with news of another support package for Ukraine, this time in the form of an air defense system. (Washington Post | Reuters | FT)

Biden’s speech at the summit stood in stark contrast with his performance at the presidential debate, with Reuters noting his “strong and confident voice” as he read off a teleprompter and looked to avoid signs of weakness.

Still, his future candidacy remains in limbo, with another key democrat — Mikie Sherrill — joining the growing call among Democratic lawmakers for him to drop out, while some others have pledged support, the Financial Times said.

ALSO HAPPENING YESTERDAY- US Federal Reserve Chair Jerome Powell kicked off his testimony before the Senate Banking Committee with a tee-up for an interest rate cut that could take place as soon as September, Reuters reports.

“Leaving monetary policy too tight for too long could unduly weaken economic activity and employment,” Powell said, adding that the US economy is no longer overheated, as inflation and the labor market both continue to cool.

OVER IN EUROPE- It’s a bad week for France on all fronts, as it faces a political stalemate and is kicked out of the Euros by a defiant Spain — led by 16-year-old wunderkind Lamine Yamal — in yesterday’s semi-final.

PLUS- Europe just launched its first rocket in almost 30 years, virtually “power[ing] Europe back into space,” European Space Agency Josef Aschbacher head said, after years of dominance from Elon Musk’s SpaceX. (FT | CNBC)

*** 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 take a look at Egypt’s energy mix over the last ten years and what led us to the ongoing period of gas shortages and electricity blackouts.

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Customs Authority What We're Tracking Today

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Cabinet watch

Egypt’s new cabinet approves energy agreements, education amendments, taxation changes in first meeting

Our new cabinet held its first meeting yesterday, where it approved a number of decisions, according to a cabinet statement.

#1- Five new energy projects got preliminary approval: The cabinet gave preliminary approval to five new petroleum projects to be carried out by the Egyptian Natural Gas Holding Company (EGAS), the Egyptian General Petroleum Corporation (EGPC), and a number of international and local companies with investments totaling USD 200 mn.

The details: The agreements include two that will give EGAS and Eni’s IEOC Production

HBS the right to search for and exploit gas and oil reserves in the Mediterranean’s North Port Fouad offshore area and the South Nour offshore area. The rest of the agreements will see companies explore and exploit gas and oil in the Nile Delta and Western Desert.

#2- Amendments to the US-Egypt Higher Education Initiative got the greenlight from the cabinet. The USD 250 mn initiative provides high-achieving Egyptians with access to higher education locally and in the US. The cabinet statement did not detail what exactly the amendments entailed.

#3- No more double taxation between Egypt and Oman: The cabinet approved an agreement to eliminate dual taxation between Egypt and Oman and crack down on tax evasion. The agreement was first inked during an Egyptian-Omani business forum in May 2023 and ratified by the Omani Sultan the following month.

ALSO FROM THE CABINET- New ministerial groups to boost human and industrial development: Prime Minister Moustafa Madbouly gave directives to form two specialized ministerial groups aimed at enhancing human and industrial development, according to a cabinet statement. The Human Development Ministerial Group — headed by the deputy president for human development and health minister, Khaled Abdel Ghaffar — will focus on national strategies in health, education, culture, sports, and religious discourse, as well as aligning vocational education with market needs. The Industrial Development Ministerial Group — led by the deputy president for industrial development and trade minister, Kamel El Wazir — will work on national industrial strategies, promoting direct private investment, increasing local content in industries, and managing industrial land development.

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cabinet watch Education EGAS Egypt-Oman relations energy Eni Madbouly Cabinet oil and gas tax

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M&A WATCH

Dr Greiche Glass and High Glass ink strategic merger agreement

Glass maker High Glass comes under Dr Greiche’s umbrella: Homegrown glass manufacturers Dr Greiche Glass and High Glass have come together under a strategic merger agreement, in a bid to boost the new entity’s growth in Egypt and foreign markets, according to a press release (pdf). The merger agreement was finalized in May, and now both companies operate under the Dr Greiche brand, Dr Greiche Glass CEO Chahir Greiche told Enterprise.

A bigger and better Dr Greiche: Dr. Greiche Glass now operates seven factories, including the newly acquired High Glass facility, Greiche told us. The merger will help increase glass production by 150k square meters, according to Greiche. High Glass CEO Heba Sakr told us that her company will gain from Dr Greiche's technical, commercial, financial expertise, and quality control systems.

Big export plans ahead: The merger aims to expand the local and export business base of the two companies, with Dr. Greiche Glass already exporting USD 75 mn annually — accounting for 12% of Egypt's total glass exports last year, Greiche told Enterprise. The company currently exports 30% of its annual production to 40 markets worldwide and is planning to expand its access to external markets in 2025, including the US, Europe, Algeria, and Turkey, Greiche told us.

But why High Glass?: Dr Greiche chose High Glass because it is the only Egyptian company — besides Dr. Greiche — that has received quality certifications, including the IATF standard for the automotive industry and has a decade of experience in the market, Greiche said.

More agreements in the works: Dr. Greiche is set to announce new commercial partnerships with some global automotive brands in the coming weeks and is exploring new production sectors outside the glass industry, which will be unveiled later, Greiche told Enterprise.

Tags:

automotive Dr Greiche Glass M&A Watch Manufacturing

Education

Egypt Education Platform will build two schools in Alexandria, Soma Bay by September 2025

EEP to launch two new schools by 2025: The Egypt Education Platform (EEP) — a joint venture set up in 2018 between our friends at EFG Holding, the Sovereign Fund of Egypt (SFE), GEMS Educational Global and other investors — plans to set up two new schools in Alexandria and Somabay by September 2025, EEP CEO Ahmed Wahby told Enterprise.

ICYMI: The EEP recently launched three new schools, with two Mobica-constructed schools being inaugurated in the Cosmic Village in November and the opening of Hayah International Academy’s Hayah West in Sheikh Zayed, Wahby told us.

Current portfolio: The platform’s portfolio includes 12 schools catering to various educational stages with a total capacity of 21k students, along with 11 preschools accommodating 1.5k students in Cairo and Alexandria, Wahby noted.

Regional expansion in the works: EEP is aiming to penetrate two to three new international markets in the near future. While Wahby did not disclose the specific markets, he indicated that they are "regional" markets.

And more EEP investments in Egypt to come: The platform intends to raise its investments to EGP 3 bn over the next three years, building on the EGP 1.5 bn already invested in the Egyptian market since its inception in 2018.

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Education EFG Holding Egypt Education Platform Mobica Sovereign Fund of Egypt

A MESSAGE FROM VISA

Managing the booming subscription economy: how banks can adapt

In today's digital age, subscription services are on the rise and expected to hit USD 406 bn globally by next year. Managing these recurring payments is more critical than ever and financial institutions must ensure they are doing their part in enabling seamless experiences.

From streaming platforms to meal kits, subscription services offer unparalleled convenience and customization, changing how we purchase products and services. An eCommerce company offers a ‘Prime’ example, with more than 200 mn worldwide members holding a subscription to same- or next-day deliveries. This service, expanded to include exclusive deals and streaming, also offers 'Subscribe & Save' for household essentials, making routine purchases hassle-free and discounted. These services have become integral to daily life, shaping spending habits and expectations.

The rise of subscription video on demand (SVoD) in regions like the Middle East, North Africa, Sub-Saharan Africa, and Eastern Europe, where subscriptions are expected to double by 2029, highlights the growth potential of the subscription economy. This trend extends beyond large corporations to small and medium-sized businesses (SMBs), catering to diverse needs—from beauty boxes in the GCC to premium stationery in South Africa. Even traditional industries like pet supplies and prescription drugs have embraced subscriptions, offering tailored recurring deliveries.

Factors fueling the subscription economy's growth include eCommerce, consumer demand for personalized experiences, and technological advancements. Consumers now enjoy a vast array of products and services without leaving home, seamlessly fitting deliveries and services into their lifestyles.

This surge in subscription-based services presents opportunities and challenges. While consumers benefit from convenience and cost savings, managing multiple subscriptions can be overwhelming. A solution that provides transparency and control over recurring payments is essential.

Visa's Subscription Manager addresses this need. This tool allows financial institutions to offer Visa cardholders a simpler way to track and manage subscriptions directly from their banking apps. With Subscription Manager, cardholders gain convenient oversight of where their card details are stored, can identify recurring payments, and cancel unwanted subscriptions with a few clicks—covering everything from streaming services to gym memberships.

As demand for subscription-based services rises, so does the need for streamlined payment management. Subscription Manager meets consumers' evolving needs and benefits issuers and acquirers. By reducing chargebacks, disputes, and call center volumes, it lowers costs and enhances operational efficiency for issuers. For acquirers, it reduces payment authorization declines and standardizes stop payment handling.

As the subscription economy reshapes consumer spending habits, banks must offer solutions that ease the management of recurring payments. By embracing these tools, financial institutions can provide value-added services that meet consumers' evolving needs and retain their loyalty.

Leila Serhan, Senior Vice President and Group Country Manager North Africa, Levant and Pakistan

Tags:

A MESSAGE FROM VISA Visa

EARNINGS WATCH

Ezz Steel finishes 1Q 2024 in the green following 2023 losses

Bottom line back in the green: Local steel manufacturer Ezz Steel posted a net income of EGP 1.3 bn in 1Q 2024, up from a net loss of some EGP 2.5 bn in the same three-month period last year, according to a financial statement (pdf) from the company.

Revenues are also up: The company’s EGP-denominated revenues were up 80.0% y-o-y to EGP 50.2 bn in the quarter. However, in USD terms, revenues recorded a 15.7% y-o-y increase to USD 1.0 bn as steel on the back of exchange rate fluctuations following the devaluation of the pound after the float of the EGP at the beginning of March.

Exports still on the rise: Exports were up 43.9% y-o-y in 1Q 2024 to USD 410, driven by hot rolled coil steel exports that were up 101.5% y-o-y and accounted for 66.8% of all exports.

Remember: Ezz Steel closed 2023 in the red, posting a net loss of of EGP 717 mn for the year despite a 70% y-o-y jump in revenues, as the FX crisis that persisted until earlier this year contributed to FX exchange losses for the steel maker and domestic demand dropped. In the first quarter of 2024, the company’s FX losses amounted to only EGP 255 mn, down from (pdf) EGP 8.9 bn in 1Q 2023.

Looking ahead: “In the medium term, the successful flotation of the Egyptian pound on 6 March, 2024, the new economic measures adopted, and the implementation of the new building legislations are still expected to spur growth and increase consumption. However, on the short term, lack of liquidity and higher costs due to inflation act as a drag on demand,” the company said in comments on its release on the LSE.

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earnings watch Ezz Steel foreign exchange Manufacturing

Moves

AUC’s Sherif Kamel elected chair of the Association to Advance Collegiate Schools of Business

Sherif Kamel (bio), dean of the School of Business at AUC, was elected chair of the Association to Advance Collegiate Schools of Business (AACSB) — the world’s largest business education association — for the 2024-2025 academic year, the American University in Cairo (AUC) said in a press release (pdf). As chair, Kamel “plans to focus on digital transformation in education, foster global collaboration, and promote sustainable and inclusive growth within the industry.”

Kamel brings extensive experience to the role, with the AUC School of Business attaining triple-crown accreditation under his tenure as dean — becoming the only business school in the Middle East to have done so and putting the AUC School of Business among the top 1% of business schools across the globe. Kamel has also served on the board of directors of the Central Bank of Egypt since late 2023.

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AUC Education moves

Kudos

Egyptian analysts and banks rack up awards

#1- HC Brokerage was named the best forecaster of Egypt’s fiscal balance by economics analysis provider FocusEconomics in its 2024 Best Economic Forecast Awards, according to a statement (pdf). HC has held onto the title for the second year running.

#2- NBE tops Egypt syndicated loans league table in 1H 2024: The National Bank of Egypt (NBE) was named Egypt’s best lead arranger, financing agent, and syndicated loans promoter during the first half of 2024, according to Bloomberg rankings, the bank said in a press release (pdf).

#3- NBK mutual funds took home three excellence awards: NBK Egypt’s fund management arm, NBK Egypt Financial Investments, topped the rankings for mutual funds in Egypt for 1H 2024, according to a press release (pdf). Its Al Mizan Fund ranked first in balanced funds, while its Al Hayah Fund was the top-ranked Islamic fund and its Namaa Fund ranked second in equity funds.

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HC Brokerage KUDOS National Bank of Egypt NBK Egypt

LAST NIGHT’S TALK SHOWS

Madbouly’s presser after the new government’s first cabinet meeting caught the attention of the talk shows

Last night’s talk shows zeroed in on Prime Minister Moustafa Madbouly's press conference following the first meeting of the new cabinet. The IMF's delay in discussing the third tranches of Egypt's loan agreement also squeezed in to get a mention on the airwaves.

Madbouly addresses key issues: Lamees El Hadidi praised the prime minister’s press conference, highlighting how Madbouly tackled “all pressing concerns, from power load shedding and its end date, to fuel prices and their expected rise,” (watch, runtime: 3:59). “He also talked about the meds shortage and oil companies' arrears.” El Hadidi added that “this is a good approach, and we hope it continues.”

Why did the IMF push back the third tranche of our loan agreement? “The IMF has not officially disclosed the reasons behind the delay in discussing the disbursement of the USD 820 mn third tranche of its USD 8 bn loan to Egypt, now set for 29 July instead of today. However, there are several potential reasons,” economist Medhat Nafei told Yahduth Fi Masr’s Sherif Amer (watch, runtime: 7:04). Nafie went on to list the potential reasons, naming “the economic ministerial group reshuffle, or the country's failure to meet several key conditions of the program, possibly including fuel price hikes.”

ALSO ON THE AIRWAVES- EGX’s new dialogue platform: After the EGX unveiled plans to launch an online platform to “to receive suggestions and community dialogue,” EGX head Ahmed El Sheikh joined Osama Kamal to explain that how “launching an electronic platform to receive suggestions expands community dialogue by reaching non-members of the stock exchange” (watch, runtime: 11:55).

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debt IMF LAST NIGHT’S TALK SHOWS politics

Also on our Radar

Emirati-Egyptian partnership to launch USD 500 mn Nile-side development. PLUS: Talaat Moustafa Group, ACWA Power + AMEA Power, Elsewedy, Admaius, Concrete, Puma

REAL ESTATE -

#1- Emirati-Egyptian partnership to set up a USD 500 mn project overlooking El Warraq: UAE-based KSH — affiliated with the Private Department of Sheikh Mohammed Bin Khalid Al Nahyan — and the local Safwat Kaliouby Group (SKG) will develop a 20k sqm plot in Giza’s Tanash area overlooking El Warraq Island with EGP 24 bn (c. USD 500 mn) in investments, under a strategic partnership inked between the two sides according to a press release (pdf). The project will see the construction of three mixed-use towers and a five-star hotel over a four-year period.

The international press also took interest in the story: Reuters.

#2- TMG’s North Coast debut breaks records: Talaat Moustafa Group Holding’s (TMG) North Coast project — dubbed SouthMed — garnered reservations worth EGP 200 bn (USD 4.2 bn) in the six working days since its launch, according to an EGX disclosure (pdf). This made TMG “the fastest and top selling company of a single project launch in the MENA region.” TMG kicked off reservations for SouthMed last week, with the project garnering EGP 60 bn (c. USD 1.3 bn) in reservations in the first 12 hours post-launch. The 23 mn sqm project is slated to see investments to the tune of EGP 1 tn.

The bigger picture: The real estate developer raked in EGP 340 bn in total sales across its developments since the beginning of the year, more than seven times the figure achieved during the same period last year.

ENERGY -

National grid to get 700 MW solar boost: Two solar power projects will begin feeding the national grid with 700 MW of power by the end of August, Al Arabiya reports, citing unnamed Electricity Ministry sources. The two solar projects in question are ACWA Power’s 200 MW Kom Ombo solar farm and AMEA Powers’ 500 MW Abydos plant — both which collectively cost USD 700 mn in investments, according to the sources.The Egyptian Electricity Transmission Company will purchase the energy generated by the two solar plants for 25 years as per a previously-inked offtake agreement.

More to come: Another 1 GW of energy will feed into the national grid as wind power projects implemented by AMEA parent company Al Nowais and Orascom Construction come online in 1Q 2025, the sources added.

M&A WATCH-

It turns out that Elsewedy’s newest shareholder is an arm of the Middle East’s second biggest company: Abu Dhabi-based electrical equipment manufacturer Electra Investment Holding, which snapped up 20% of Elsewedy Electric earlier this week, appears to be a subsidiary of 2PointZero Group, which is in turn a subsidiary of the International Holding Company (IHC), according to an ADX disclosure (pdf). The disclosure adds that near 20% of Elsewedy’s shares will be transferred to 2PointZero today and settled no later than Monday, 15 July.

2PointZero? The newly set up holding company was established at the start of the year and is expected to hold the equivalent of USD 27 bn in assets — including Beltone Financial Holding, Chimera, and Lunate, according to a statement (pdf) announcing the launch from parent company IHC.

INVESTMENT WATCH-

Admaius eyes more local investments: Rwanda-based private equity firm Admaius Capital Partners is looking into potential investments in the Egyptian market, namely in the healthcare, medicine, food, and fintech sectors, Managing Director Ahmed Rady told Al Ma l. He expects one transaction to wrap up this year and another to conclude next year. The firm wants to launch a new USD 600-700 mn investment fund before the end of the year.

Remember: Admaius entered the Egyptian market earlier this year through acquiring a stake in Parkville.

RETAIL -

Concrete expands across the Gulf: Concrete Fashion Group launched a number of online stores in KSA, Qatar, Kuwait, and the UAE last month, Al Borsa reports, citing Vice Chairman and Managing Director Alaa Arafa. The move comes ahead of opening up retail stores in those countries starting next year, Arafa said.

MANUFACTURING-

Made-in-Egypt Puma: Sportswear manufacturer Puma is looking into manufacturing its products in Egypt to meet local demand and export across the region, Puma Managing Director Johan Kuhlo said during a meeting with Prime Minister Moustafa Madbouly. The company is also looking to expand locally and pour more investments into the local market.

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Abu Dhabi Islamic Bank Admaius Capital Partners ALSO ON OUR RADAR Concrete Fashion Group electricity Elsewedy Electric energy International Holding Company investment watch real estate renewables retail solar power Talaat Moustafa Group

PLANET FINANCE

China is building its war chest for a sovereign bond market intervention

China is gearing up to intervene in its sovereign bond market for the first time in decades as yields on its debt are at record lows, the Financial Times reports. Following weeks of expressing its concern about record-low yields, the People’s Bank of China is now moving to build up firepower to sell CPY hundreds of bns of sovereign bonds as it looks to cool off demand for the paper. The country’s central bank will “continue to borrow and sell the bonds on an open-ended and unsecured basis,” according to the salmon-colored paper.

Demand for the sovereign bonds has been red-hot: Investors have been pouring into China’s sovereign bonds as the country’s economy stumbles due to an ongoing real estate market crisis and volatility in its equities. That’s pushed yields on 10-year bonds below 2.4% for the majority of the year, while the country’s central bank has said that the “ideal range” for yields on these notes is between 2.5-3%.

It’s going to take more than a limited intervention: Although the signaling from the People’s Bank of China has helped to some degree, pundits say the issue is more structural and is unlikely to be resolved entirely through a bond market intervention “unless the intervention is massive.” One Natixis senior economist tells the FT that the People’s Bank of China will likely need to buy up “at least 5% of outstanding government bonds … to make a significant difference.” Altogether, that would be around CPY 1.5 tn worth of bonds.

MARKETS THIS MORNING-

Asian markets are having another mixed morning, with Hong Kong’s Hang Seng index and Japan’s Nikkei both up, as China reports better-than-expected inflation data and Japan’s corporate goods price index rises in line with expectations. South Korea’s Kospi and the ASX 200 are both in the red.

Wall Street futures were little changed in overnight trading after the S&P 500 posted another record close, as traders celebrated Powell’s signals for a potential rate cut soon.

EGX30	28,466	+0.2% (YTD: +14.4%)
USD (CBE)	Buy 48.03	Sell 48.13
USD (CIB)	Buy 48.02	Sell 48.12
Interest rates (CBE)	27.25% deposit	28.25% lending
Tadawul	11,780	+0.5% (YTD: -1.6%)
ADX	9,136	0.0% (YTD: -4.6%)
DFM	4,078	-0.1% (YTD: +0.5%)
S&P 500	5,577	+0.1% (YTD: +16.9%)
FTSE 100	8,140	-0.7% (YTD: +5.3%)
Euro Stoxx 50	4.904	-1.3% (YTD: +8.5%)
Brent crude	USD 84.85	+0.2%
Natural gas (Nymex)	USD 2.35	+0.1%
Gold	USD 2,367.90	+0.2%
BTC	USD 57,860.60	+2.9% (YTD: +37.0%)

THE CLOSING BELL-

The EGX30 rose 0.2% at yesterday’s close on turnover of EGP 3.5 bn (18% below the 90-day average). Local investors were the sole net buyers. The index is up 14.4% YTD.

In the green: EFG Holding (+5.3%), GB Corp (+5.1%), and E-finance (+3.1%).

In the red: Abu Qir Fertilizers (-2.8%), Sidi Kerir Petrochemicals (-2.8%), and AMOC (-2.5%).

CORPORATE ACTIONS-

#1- Kouchouk is no longer representing Misr Ins. on TMG’s board: Finance Minister Ahmed Kouchouk has resigned from representing Misr Ins. Company in Talaat Moustafa Group’s (TMG) board, TMG said in an EGX disclosure (pdf).

#2- New investment minister resigns from Edita’s board: Newly-appointed Investment and Foreign Trade Minister Hassan El Khatib has submitted his resignation from Edita’s board and the associated committees, according to an EGX disclosure (pdf).

Tags:

Financial Markets Planet Finance

Diplomacy

CIA Director Burns discusses Gaza with El Sisi in Cairo

El Sisi, Burns talk Gaza: President Abdel Fattah El Sisi and CIA Director William Burns discussed ongoing efforts to achieve a ceasefire in Gaza during Burns visit to Cairo yesterday, according to an Ittihadiya statement. El Sisi also highlighted the importance of granting “unfettered access” for relief to Gaza and enforcing the two-state solution.

Another top US official is also Cairo-bound: Assistant Secretary of State for Near Eastern Affairs Barbara Leaf is set to visit Egypt over the coming few days as part of a wider trip that will see her visit the UAE, Qatar, Jordan, Israel and the West Bank, and Italy between 8-14 July, according to a statement from the US Department of State. Leaf will meet with government officials to discuss efforts to secure a ceasefire, the release of hostages, and ensure the entry of aid into Gaza.

Egyptian officials are also heading to Qatar for Gaza talks: Intelligence chief Abbas Kamel, CIA Director Willian Burns, and an Israeli delegation will land in Doha today “on a mission to bring viewpoints closer between Hamas and Israel in order to reach a truce agreement as soon as possible," Al Qahera News reports, citing an unnamed high-level source.

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Abdel Fattah El Sisi DIPLOMACY Gaza

HARDHAT

A look back at Egypt’s energy mix over the last ten years

The road to the gas shortages and electricity blackouts: With the entire nation suffering from rolling blackouts thanks to gas shortages, it is important to look at the years leading up to the blackouts to see what led us to this point in time.

2023 was somewhat exceptional: The Electricity Ministry began reducing the electrical load in July 2023 to ration the consumption of natural gas production. The power cuts were originally blamed on summer heat waves, but after temperatures have fallen, officials noted that the one-hour cut saves the country some USD 300 mn per month. Our gas supply was dealt another blow in October when Chevron temporarily halted shipments of Israeli gas from its Tamar field due to the ongoing war in Gaza.

Egypt’s energy portfolio was a mixed bag in the decade leading up to 2023, between falling oil output and fluctuating LNG production, according to the Energy Institute’s 2024 Statistical Review of World Energy (pdf).

LNG production down: LNG output fell 11.5% y-o-y in 2023 to 57.1 bn cubic meters (bcm). At the same time, LNG consumption grew at an annualized rate of 1.9% in the ten years leading up to 2023, when consumption hovered at some 60 bcm.

A hit for our LNG exports: After growing at an annual rate of 2.3% between 2013 and 2023, our LNG exports took a massive hit in 2023, falling 46.8% to sit at 4.9 bcm. After becoming a net exporter of LNG in 2018, Egypt has been trying to position itself as an important LNG exporter to Europe and to fully utilize the 12 mn tons a year capacity from its two liquefaction plants in Damietta and Idku. However, a fall in domestic gas production caused our exports to take a hit.

More electricity production, but it’s still not enough: Electricity production grew at an annualized rate of 2.9% in the ten years leading up to 2023 to settle at some 220.1 terawatt hours (twh), the report showed. Despite this growth, there remains quite the gap between supply and demand — our electricity consumption was up some 4.4k MW last year in comparison to the year before due to higher temperatures.

The breakdown: Natural gas accounted for the lion’s share of Egypt’s electric output making up 81.2%, followed by hydroelectricity and other renewables (11.3%) and oil (7.5%).

It also means less production: Fertilizer companies have been struggling to keep the lights on and operations ongoing amid the ongoing gas shortage, with many having to pause operations time and time again. Meanwhile, ceramics producers reported noticeable declines in production due to the gas shortage.

So what’s the plan? Egypt has resorted to importing LNG in order to bridge the gap between local production and demand for electricity generation, in a turnaround from its previous status as a net exporter of the fuel. State gas firm EGAS recently secured some 20 LNG shipments as it works to ensure it has sufficient supplies to keep the lights on during the current period of increased demand expected to last till September.

What about our oil production? Egypt’s oil production declined at an annualized rate of 1.5% between 2013 and 2023, standing at some 610k barrels per day (bpd) at the end of 2023, the report said. The figure contrasts with a 1.1% increase in global oil output as non-OPEC producers ramped up production throughout the decade. Despite oil consumption declining at a yearly rate of 0.3% over the decade, Egypt consumed some 742k bpd of oil in 2023, yielding a 132k bpd deficit.

And then there’s Egypt’s emissions record: Carbon emissions grew at an annualized rate of 1.1% between 2013 and 2023 — emissions stood at some 279.3 mn tons of CO2 equivalent by 2023, the report showed. Our emissions increased at a rate faster than the 0.8% global trend. Nevertheless Egypt’s carbon footprint was considerably lower than our Gulf neighbors — KSA produced 725.9 mn tons of carbon emissions in 2023 and the UAE produced 340.8 mn tons.

Egypt is lagging slightly behind in terms of its green transition: Renewables consumption grew at an annualized rate of 4.8% in the ten years leading up to 2023 in Egypt, standing at some 0.23 exajoules by the decade’s end. The same period saw a 5.5% per annum ramp up in renewable energy consumption globally to 85.49 exajoules, the report said.

THE BIGGER PICTURE-

Regionally, oil production took a hit: Many regional states underwent notable dips in hydrocarbon production between 2022 and 2023 as OPEC+ production cuts came into play — GCC oil giants and OPEC members KSA (6.6%), Kuwait (4.2%), and the UAE (2.5%) all experienced dips in output.

Dip in production to last? OPEC+ has recently extended its cuts into 2025 in efforts to stimulate demand.

Your top infrastructure stories for the week:

Adeer to set up mixed-use development in East Cairo alongside Paragon: Real estate company Adeer is working with local real estate player Paragon Developments to build a mixed-use development in eastern part of Cairo.
Real Estate Development Chamber aims to work with gov’t on affordable housing: The Federation of Egyptian Industries’ Real Estate Development Chamber is planning to propose an integrated affordable housing initiative that would see the government facilitate private sector development of affordable housing projects.

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electricity energy Hardhat oil and gas renewables

CALENDAR

2024

JULY

9-18 July: Act Financial IPO subscription period for institutional investors.

9-23 July: Act Financial IPO subscription period for retail investors.

10 July (Wednesday): CBE and Capmas to publish inflation data for June.

10-11 July (Wednesday-Thursday): The Japan-Arab Economic Forum, Tokyo.

11 July (Thursday): National holiday in observance of Islamic New Year.

16-17 July (Tuesday-Wednesday): The Egypt Mining Forum, Cairo, Egypt.

18 July (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

23 July (Tuesday): Revolution Day (national holiday).

AUGUST

4-5 August (Monday-Tuesday): Egypt Expat Forum.

SEPTEMBER

3-5 September (Tuesday-Thursday): Egypt International Airshow, El Alamein International Airport.

5 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

15 September (Sunday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

25-26 September (Wednesday-Thursday): The Asian Infrastructure Investment Bank’s (AIIB) 2024 annual meeting, Samarkand, Uzbekistan.

OCTOBER

6 October (Sunday): Armed Forces Day.

17 October (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

13-17 October (Sunday-Thursday): Cairo Water Week, Water and Climate: Building Resilient Communities, Cairo, Egypt.

21-27 October (Monday-Sunday): The World Bank and IMF annual meetings.

30 September (Monday): Ban on sugar exports expiration.

NOVEMBER

4-8 November (Monday-Friday): World Urban Forum, Cairo, Egypt.

21 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

26-28 November (Tuesday-Thursday): Egypt Energy Show, Cairo, Egypt.

DECEMBER

26 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

EVENTS WITH NO SET DATE

June 2024: Gov’t expects to finalize sale of Beni Suef combined-cycle power plant.

1H 2024: Gov’t expects to finalize sale of four water desalination plants.

2H 2024: Gov’t to launch the Cairo Ring Road BRT buses.

3Q 2024: Egyptian-Armenian Joint Committee.

November 2024: Egypt to host the World Urban Forum (WUF12).

End of 2024: The launch of the high-speed train line linking Ain Sokhna with Al Alamein City.

End of 2024: Shalateen Mining Company to launch a gold exploration tender in the Eastern Desert.

2025

July 2025: The first operational trail of Egypt-KSA electricity interconnection line.

EVENTS WITH NO SET DATE

2Q 2025: Safaga Terminal 2 to start operations.

2027

20 January-7 February: Egypt to host the African Games

EVENTS WITH NO SET DATE

End of 2027: Trial operations at the Dabaa nuclear power plant expected to take place.

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