Egyptian assets are Renaissance Capital’s top pick: Egypt is now reaping the rewards of the EGP devaluation, according to Rencap’s Global Chief Economist Charles Robertson. He says the weaker EGP “should spur exports and encourage foreign direct investment over the next few years.” Robertson told Bloomberg “Egypt is one of the most interesting stories in emerging markets right now for any investor anywhere … There is an investment opportunity in Egypt now that’s as good as it was in South Africa when the rand was 16 to the [USD] a year ago.” Speaking on the sidelines of Rencap’s Egypt conference, Robertson said even with the risks in terms of regime change, the cheap EGP makes it already priced-in and if there is a change, what is more likely is that Egypt “becomes a little bit more like a Turkey or a Russia or a Malaysia, where Parliamentary elections do happen, more parties can compete in them, but it’s not full democracy.”

Foreign investors have reportedly grown their holdings of Egyptian treasuriesto EGP 91.8 bn since the EGP float, Al Borsa reports, citing government sources. Foreign investors snapped up EGP 1.4 bn in T-bills in Sunday’s offering alone, the newspaper said on Wednesday. By Bloomberg’s last count (citing the Finance Ministry), the figure was EGP 79 bn as of March, a rate of government borrowing already 11% higher than this year’s target and 18% over budget. The pace of borrowing may have slowed down at Tuesday’s sale, where the government reduced its offering of 5 and 10-year bonds, borrowing EGP 1 bn from an initial target of EGP 1.5 bn, according to Al Borsa.

IPO WATCH- Government officials are in talks with local and international investment banks to advise on the sale on the EGX of stakes in state-run companies, Alaa Shahine and David Westin write for Bloomberg. “Egypt has already hired HSBC and EFG-Hermes to advise on the planned IPO of state-owned lender Banque du Caire, while officials have said the program would also include oil companies,” Shahine and Westin say.

M&A WATCH- Global commodities giant Louis Dreyfus’ local affiliate, Al Mona Misr, has presented a bid to acquire Misr Capital Investment’s 42.96% stake in National Company for Maize Products (NCMP), according to an EGX filing. Al Mona’s bid is non-binding, but, if approved, the company will submit a mandatory tender offer to purchase 100% of NCMP. Archer Daniels Midland (ADM)’s Swiss unit made a rival bid for NCMP last month. Al Mal says Cairo Three A Group is also interested in the company. NCMP produces fructose and glucose syrups as well as starches for the pharma, food, paper and other industries. ADM and Dreyfus are two of the four “ABCD” companies that dominate the global commodities trade, alongside Cargill and Bunge. ADM moved directly into Egypt back in late 2015 when it announced it would acquire a 50% stake in Medsofts; the transaction was completed (pdf) last July.

Donald Trump wants to cut the State Department’s aid budget for Egypt by half: The Trump administration is proposing a 47.4% cut to the US State Department’s Economic Support Fund aid for Egypt, according to State Department documents published by Foreign Policy on Monday (scroll down the page to view the embedded document). The cut would see assistance under the fund fall to USD 75 mn from USD 142.7 mn. The documents are part of an internal budget plan and are part of the administration’s stated goal of cutting more than a third of the total budgets of the State Department and USAID. Jordan would see a 21% cut in aid under the budget plan. The move comes despite the warm reception Trump gave to both President Abdel Fattah El Sisi and Jordan’s King Abdullah earlier this month. The proposals are creating backlash in Congress, with some congressmen warning that the step could undermine alliances with key partners in the region. Trump had previously stated that he would spare Israel from aid cuts and appears to have marginally increased aid to the Palestinian Authority, Syria, Libya and Iraq.

Also yesterday, Trump roiled global markets as he signaled the United States could pull out of the North American Free Trade Agreement and proposed “radical” tax cuts that would see the rate for corporations fall to 15% in what White House officials said was the biggest tax cut in US history.

The big brawl over who gets to appoint the heads of judicial bodies: The House of Representatives had what may its most productive day ever on Wednesday after passing controversial amendments to the judicial code without so much as holding discussions on the Council of State’s objections to the act. The amendments, which would grant the president the right to appoint heads of the judicial committees, have been widely condemned by jurists, who claim the law would curb the independence of the judiciary guaranteed under the constitution. Two-thirds of MPs voted to pass the act, Al Masry Al Youm reports. A number of MPs walked out of the session in opposition to the law, including members of the 25-30 Coalition. Some have called into question the validity of the voting procedures, Al Shoroukreports.

What are these judicial bodies? They are the State Council (Maglis El-Dowla, effectively the nation’s top administrative court), the Court of Cassation (the nation’s top appeals court), and the State Lawsuits Authority and the Administrative Prosecution Authority.

What power does the law grant the presidency? It will allow the president to choose the head of each of the nation’s primary judicial bodies, selecting in each instance from a list of three nominees proposed by each body. “The current judicial authority law stipulates that the heads of judicial bodies are selected based on seniority by their judicial councils, and that the president simply ratifies the council's selection,” Ahram Online notes.

The judiciary responds: The Judges Club of Egypt has already fired back, announcing it will hold a general assembly on 5 May to “reaffirm the independence of the judiciary” and calling on the Supreme Judicial Council to reaffirm its opposition to the law. The club is also demanding President Abdel Fattah El Sisi veto the law, according to AMAY. The Judges Club (effectively a cross between a union and an industry association for Egypt’s judges) appears to have also issued a veiled threat to the head of the Court of Cassation — the nation’s highest appeals court — demanding he call an assembly of all of the nation’s judges for next Tuesday. The club said it will call for the gathering if he doesn’t and would then move to replace him (a power the club doesn’t enjoy). A petition now circulating calling for the meeting apparently has some 400 judges’ signatures on it.

The House also approved amendments to the Emergency Law that would allow for the indefinite pre-trial detention of those charged on terrorism cases, Al Masry Al Youm reports. MPs also made changes to the criminal code to expedite the prosecution of those charged with terrorism-related offenses, according to the newspaper.

Another controversial bill up for debate was the proposed National Elections Act, as the House Legislative Committee reportedly refused a compromise by the government. The law, which caused the “rumble in the parliament jungle” last month, had been sent back to the House Legislative Committee after MPs failed to agree in a civilized way on whether to approve clauses that mandate judicial supervision of the proposed national elections regulator. The Ismail cabinet had proposed a compromise that would see the role of the judiciary limited to the next ten years, according to Al Shorouk.

The House passed a number of measures related to the economy on Wednesday — none of them had anything to do with the proposed Investment Act, which was supposed to have been approved by the Economic Committee this week. The decisions included:

• Approving a law that would grant the Industrial Development Authority an independent budget (as opposed to tying it to the Trade and Industry Ministry) to give it more flexibility to operate, Al Mal reports.
• Approving a law that would require manufacturers to receive approval from their industry’s division at the Federation of Chambers of Commerce and the Federation of Egyptian Industries before being listed in the Commercial Registry.
• Approving a EUR 68 mn grant from the French Development Agency to supply gas to homes, according to Al Shorouk.
• The House Energy Committee also gave its preliminary approval for establishing a Nuclear Energy Authority which would supervise nuclear facilities.

Inflation will average 21.6% by the end of state’s 2016-17 fiscal year, Prime Minister Sherif Ismail said at a government-run youth conference in Ismailia yesterday. Inflation is running at over 30%, but Ismail sees it dropping by the end of June, Al Masry Al Youm reports. The prime minister sees the average inflation rate falling further still to 15.2% in FY2017-18. He noted that the country’s heavy reliance on imports has played the biggest role in pushing up inflation, according to Al Mal. Egypt’s food exports have risen 25% over the past three months and there are plans in place to increase local production of the foods we import in large quantities, Agriculture Minister Abdel Moneim El Banna said at the conference, Al Mal reports. The prime minister also said that tax revenues account for 15% of Egypt’s GDP, a low figure in comparison to other countries, Al Borsa reports. Ismail said he expects the state to end the current fiscal year with a 10% budget deficit. On a separate note, Ismail said the Health Ministry is studying several scenarios to address rising meds prices, but maintained that the ministry’s decision to hike prices earlier this year was necessary to ensure industry kept producing, the newspaper reports.

Ismail also announced that the new Investment Act should be in place in May, with the government having already “approved a draft for the law in March 2015 with a view to bolstering investor confidence, easing bureaucracy and attracting foreign investments.” The government is aiming for FDI of USD 9.4 bn in FY2016-17. As of last week, the law was stalled in the House Economics Committee amid what appear to be disagreements about semantics.

President Abdel Fattah El Sisi was also focused on the economy and the government’s effort to improve living conditions in his speech at the conference. He pointed to the ballooning population as one of the country’s biggest hurdles, noting that Egypt’s economy must grow 9% per annum to keep up with our annual population growth rate. Acknowledging that times are tough for the average citizen, El Sisi said that the country’s economic progress came to a halt in 1967, as successive governments shied away from taking necessary steps to spur growth. Repeating his previous (and controversial) statement that Egypt is a poor country with scant resources, he said that our economic renaissance will take several years and called on Egyptians to hang in there for one more year. The government is struggling to finance three agricultural projects it launched to provide food at affordable prices, according to El Sisi. He also pointed to the inefficiency of state bodies in implementing the government’s vision on the ground as another culprit for the lack of progress, singling out the 1.5 mn feddans project in specific.

El Sisi said that he respects the judiciary’s conclusion on the Tiran and Sanafir island agreement, and that the House of Representatives also has a role to play in determining the outcome of the case. You can watch his remarks in full here (runtime 27:48).

Health Minister Ahmed Rady denied that the government is looking to have the private sector manage the full-service “Takamol” hospitals, according to Al Mal. Rady’s comments are at odds with a cabinet decision last week to allow the private sector to bid to manage as many as 48 Takamol hospitals. Rady said the goal from having Takamol hospitals nationwide is to improve the provision of healthcare in rural areas, but they have not been completed adequately. He added that the ministry is looking to offer some of the Takamol facilities to charity organizations.

The e-visa program will go live in May for incoming tourists, who will not be allowed to obtain an entry visa on arrival at Egyptian airports, Tourism Minister Yehia Rashed said yesterday in Dubai, according to AMAY. Other reports, however, claim he said the e-visa will go into effect in early June, Al Mal reported. The minister added that foreign residents of the GCC will be granted an entry visa on arrival, and that his ministry has secured preliminary approvals to grant tourists from North African countries their entry visas on arrival as well. Rashed also said his Bahraini counterpart wants more flights on the Manama-Sharm El-Sheikh route to serve the expected increase in incoming tourists from the GCC this summer.

The ministries of agriculture and trade and industry are working new regulations governing agricultural exports, says Abdel Hamid Al-Demerdash, head of the Agriculture Exports Council. He added that these will set new quality control measures for the goods Egypt exports. Al-Demerdash noted in particular the excessive use pesticides in Egypt’s farming, Al Masry Al Youm reports. The move was apparently undertaken to bans on Egyptian produce of the type we saw both last year (see the Egyptian strawberries Hepatitis A scare) and this year (see our report on peppers yesterday). A delegation from the ministries of trade and industry, agriculture and the Agriculture Export Council is visiting the UAE to discuss reversing that country’s ban on Egyptian pepper, Al Borsa reports.

On a related note, food prices in the UAE are expected to surge following the ban on certain fruit and vegetables from five Middle Eastern companies, Caline Malek writes for The National, with the editorial board saying it is a “short pain for a long gain.” The ban is also expected to pose even more problems during Ramadan with the increased consumption of leafy vegetables, almost all of which came from the Middle East.

Dana Gas to keep full proceeds of Egyptian condensates sale as arrears continueto mount: Dana Gas has made its first international sale of Egyptian gas condensate, selling 150K barrels of condensate produced at its El Wastani gas fields in the El Manzala concession in the Nile Delta, for USD 7.2 mn the company said in a statement on Wednesday. It added, however, that arrears are still mounting as the Egyptian government paid only half of what it owed the company in 1Q17. The company said that it expects to sell three additional cargoes over the next 12 months if current production rates are maintained. The company plans to keep all the proceeds of the sales and says total arrears it is owed by the government have grown to USD 289 mn, up from USD 265 mn at the end of last year. "Collections of our overdue receivables in general remain well below our expectations. We are yet to receive a significant payment this year," said CEO Patrick Allman-Ward.

Lebanon’s government prequalified eight new companies for its first round of offshore E&P licences, Reuters reports. The government had already prequalified 46 companies in 2013. Of the new companies, India's ONGC Videsh, had been prequalified to bid as an operator and the other seven are PJSC Lukoil , Qatar Petroleum, Britain-based New Age African Global Energy, JSC Novatek, Iran's Petropars, Sonatrach International Petroleum Exploration and SapuraKencana. Prequalified companies will submit their bids to the Lebanese Petroleum Administration in September for consideration. The bidding process for Lebanon’s offshore blocks 1, 4, 8, 9 and 10, three of which border Israeli waters, was postponed for years as Lebanon was forming a government.

EARNINGS WATCH- Emaar Misr recorded a net profit of EGP 437.9 mn in Q1 2017, up from EGP 254.5 mn in Q1 2016, according to a regulatory filing.

Our friend Seif Fikry’s UCITS-compliant Afkar S&P UAE exchange traded fund hit a new volume record yesterday with 1.14 mn share changing hands. UBC was the executing broker and the transaction for clients including retail investors and family offices, Gulf News reports. “It’s a huge day for us. Today’s achievement was a clear example and is a testimony of a perfect environment for ETF’s in the UAE,” Fikry said, noting that he’s now working to bring in a second market maker. The fund is the first ETF in the Emirates launched under new UAE regulations for the industry.