A USD 1.2 bn phosphoric acid plant in the works set to support local fertilizer industry

Wednesday, 28 Aug 2024

A USD 1.2 bn phosphoric acid plant in the works set to support local fertilizer industry

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Today at a glance

Investment Watch

Local consortium to set up a USD 1.2 bn chemical production plant to feed fertilizer industry.

Investment Watch

India is looking into setting up a USD 60 mn carbon black factory in Egypt.

M&A WATCH

Egypt’s MaxAB and Kenya’s Wasoko complete Africa's largest-ever tech merger.

Automotive

Auto sales jump over 40% m-o-m in July.

Moves

SFE taps Noha Khalil as interim CEO.

What We're Tracking Today

CBE in the green following seven years of losses.

Also on our Radar

Stellantis in talks with gov’t to start assembling Fiat, Citroen, and Opel models locally.

PLANET FINANCE

Retailer Temu’s parent company sees stocks crash in latest warning over struggling Chinese economy.

HARDHAT

What is the gov’t doing to revive and enhance the building and property sector in the country?

What We're Tracking Today

Sweetening the pot for oil and gas companies

Good morning, everyone. After a slow start to the week, the local business news cycle is heating up with a boat load of investment news, M&A updates, and more. We’ve got a packed issue for you this morning, so let’s jump right in.

PSA-

WEATHER- It’s a warm and sunny day in Cairo today, with a high of 36°C and a low of 26°C, according to our favorite weather app.

It’s a little cooler over in Alexandria and along the North Coast, with a high of 33°C and a low of 24°C.

** 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.

WATCH THIS SPACE-

#1- Fresh incentives for oil and gas players incoming: The Oil Ministry is rolling out a batch of incentives to help ramp up oil and gas output by encouraging investment in exploration, drilling, development, and production, the Oil Ministry said yesterday.

The inside track: The new incentives offer foreign entities an increased share of the natural gas or crude oil produced from their concessions in Egypt, provided they increase production through new investments in exploration and development, Al Mal reports, citing unnamed sources at foreign and jointly-owned oil companies. The additional production will be divided between the government and the foreign partner at agreed-upon percentages and foreign partners will also be given the right to market and export their share, earning USD revenues. The government can also market its share and use the proceeds to repay arrears to foreign companies.

#2- Where’s our long-awaited medical tourism platform? The government has called for the quick launch of the online platform for medical tourism, with Health Minister Khaled Abdel Ghaffar following up with the company in charge of developing the platform to review the work done so far, according to a statement. The statement said that the platform would launch “in the coming period,” without mentioning a specific date. The platform was initially set to launch in June.

What it will offer: The platform — which the government has been developing for the last year — will allow users to reserve spots hospitals and clinics in Egypt and apply for and receive a visa for the medical treatment within only 72 hours, as well as virtual consultations and follow-up services for patients when they return to their home countries.

Remember: Egypt has ambitions of becoming a medical tourism hub to attract FDI and to open fresh FX revenue streams from patients from Africa, the Middle East, and Europe coming here for treatment on the back of our talented and well-trained medical staff and the competitive price point Egyptian hospitals can offer.

#3- Telecom Egypt wants NTRA to relax the rules as it looks to sell off its tower portofolio: Telecom Egypt is in advanced talks with the National Telecom Regulatory Authority (NTRA) to expand the legal framework to allow unregulated companies to own cell towers, Al Arabiya reports, citing anonymous sources with it says have knowledge of the matter.

Remember:Telecom Egypt could offload a majority of cell towers in a sale and leaseback agreement that could be worth between USD 150-250 mn. It has received several offers from digital infrastructure providers — both local and foreign, the sources said.

FROM THE CENTRAL BANK-

CBE turns the page on a seven-year chapter of losses: The Central Bank of Egypt reported a net income of EGP 22.8 bn in fiscal year 2023-2024, compared to losses of EGP 86.3 bn in the previous fiscal year, according to its latest financials (pdf). This marks the first time that the bank has turned a profit since it was last in the green in FY 2016-2017.

Some cost cutting may have helped: A decree issued by the Prime Minister in November 2022 led the CBE to stop funding subsidized loans and pass the responsibility to the finance, housing, and tourism ministries. The decision followed substantial losses incurred by the Central Bank as it covered the difference between subsidized and market interest rates on behalf of the Finance Ministry. It was also said that ending subsidized loans was one of the conditions attached to the USD 3 bn loan program we inked with the International Monetary Fund back in October 2022

HAPPENING TOMORROW-

Attention, investors: Our friends at HSBC, together with the Egyptian-British Chamber of Commerce (EBCC) and UK Export Finance (UKEF), will host a webinar tomorrow to discuss how to support infrastructure reforms, potential partnerships in Egypt, and ways to support and connect companies around the world. The webinar will take place from 12-1pm CLT / 1-2pm UAE.

Want to attend? You can sign up here.

The webinar is a scene-setter for the Egypt-UK Investment and Opportunities Forum in London on Monday, 16 September. The gathering — which follows on from a June infrastructure mission — will focus on promoting trade and investment in infrastructure, with an emphasis on green hydrogen and renewables as well as sectors including the auto industry, food processing, and tech. The forum will also include both open panels and pre-arranged business-to-business networking. It will also give attendees the chance to meet with government officials and industry leaders. GAFI will be on hand to deliver an economic update.

Want to join them in London? Register your interest in attending the event here.

CIRCLE YOUR CALENDAR-

El Sisi to make his first official trip to Turkey as ties with Erdogan warm: President Abdel Fattah El Sisi is set to pay his Turkish counterpart President Recep Tayyip Erdogan a visit on 4 September for the first time as the two countries work to strengthen ties following years of tense relations, Bloomberg reports. The visit will see the pair discussing cooperation, trade, and the war in Gaza. They will also hold a high-level Strategic Cooperation Council that they agreed to reinstate back in February.

Remember: Egypt and Turkey have been working to mend a decade of frayed relations triggered by a host of issues including Turkish President Recep Tayyip Erdogan’s support for the Muslim Brotherhood, competing interests in Libya, and tensions over gas resources in the Eastern Mediterranean. They restored diplomatic ties and reappointed ambassadors last summer and relations progressed further when Erdogan in February visited Egypt for the first time in over a decade.

Key areas of cooperation: The two countries are working to boost the volume of bilateral trade to USD 15 bn annually in the next five years — up from USD 6.6 bn at the end of 2023. They are also seeking to cooperate in the fields of LNG and nuclear energy, expand an existing free trade agreement, and restart freight shipping between the Turkish port of Mersin and Alexandria, Bloomberg quotes Turkish Foreign Minister Hakan Fidan as saying during a visit to Cairo earlier this month.

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-

Trump gets indicted, again: Former President and current presidential nominee Donald Trump was hit with a fresh indictment yesterday in the 2020 election case, as special counsel Jack Smith submitted a revised indictment accusing Trump of election subversion.

The new indictment was revised to remove parts of the case that would conflict with arecent Supreme Court ruling granting presidents immunity for “official acts” while in office, including allegations “related to an effort … to make the Justice Department support his false claims of voter fraud.” The ruling, in effect, granted Trump immunity from being indicted over colluding with Justice Department officials because communicating with the Justice Department would count towards his “core official duties.”

The fresh indictment was filed at the eleventh hour before the start of a 60-day window before presidential elections, in which the Justice Department has a policy of avoiding prosecution-related work that could influence an election.

*** 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 what the government is doing to revive and enhance the building and property sector in the country.

Tags:

energy oil and gas Oil Ministry What We're Tracking Today

Beauty unveiled amidst ancient wonders: Celebrate the beauty, nature, and cultural legacy of 30 nations as Miss Elite 2024 returns to the enchanting shores of Somabay from 2-14 September. For the fourth consecutive year, Somabay is hosting this prestigious international beauty pageant, celebrating women’s beauty and intelligence on a global scale. Experience the fusion of antiquity and modern elegance by attending the Grand Finale on 13 September at Mazeej Soma Beach Platform.

Investment Watch

Egyptian consortium to set up a USD 1.2 bn chemical production plant o feed fertilizer industry

A mega phosphoric acid plant in the works set to give the local fertilizer industry a boost: A local consortium led by Abu Tartour For Phosphoric Acid will set up a USD 1.2 bn phosphoric acid production plant, an unnamed government official told Al Arabiya. The project will be carried out over a 36-month period and aims to produce 900k tons of phosphoric acid a year.

Phosphoric acid? Although it has numerous uses — including changing the taste of carbonated soft drinks, preserving foods, treating rust, adjusting pH levels for cosmetics and more — by quantity and especially in Egypt, phosphoric acid is mostly used in the manufacture of fertilizer. The vast majority — if not all — of the phosphoric acid produced by the plant will presumably end up being consumed by the fertilizer industry, considering who’s involved in the project.

Who’s involved? Nine local players will take on the project, including Abu Tartour, Enppi, Petrojet, Chemical Industries Holding Company, Abu Qir Fertilizers, Phosphate Misr, and East Gas Company. Abu Tartour — which runs the largest phosphate mine in Egypt and one of the largest in the world — will operate the facility once it's up and running.

Who’s paying? The consortium is looking into its financing options — finding a new investor to take over financing the project in return for a percentage of the project or turning to lenders for 65% of the funds needs and self funding the remaining 35%.

Tags:

fertilizers investment watch

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Investment Watch

India is looking into setting up a USD 60 mn carbon black factory in Egypt

Indian investments incoming? Head of the Trade Ministry's Commercial Representation Authority Yehia El Wathek Bellah held a series of meetings with representatives from major Indian companies to discuss potential investments in Egypt, according to an authority statement.

TL;DR: The talks covered an array of sectors — automotive, green hydrogen, furnishing, and carbon black — but produced no concrete agreements.

#1- A USD 60 mn carbon black factory in the making? One of India’s largest black carbon producers is interested in setting up a USD 60 mn plant in Egypt, the statement read, without providing the name of the company or when we can expect the project to materialize. A delegation from the company will be visiting Egypt to conduct field visits to potential locations that could house the factory.

Carbon black? It’s a material mainly used to strengthen rubber in tires, but can also be used in the production of plastics, batteries, pipes, and more.

#2- Welspun wants to set up shop in Egypt: Textile manufacturer Welspun — one of the largest home textile companies in India and globally — wants to set up a project in Egypt to help it enter African markets and boost exports to European, Arab, and US markets. Company representatives, during their meeting with El Wathek Bellah, discussed investment costs related to land acquisition, energy prices, and labor, and the incentives available, particularly in the Suez Canal Economic Zone.

What’s next? A delegation from Welspun will visit Egypt to meet up with government officials and private sector players and wrap up the feasibility studies needed for setting a project here.

#3- Hinduja continues to mull over entry into the Egyptian market: Officials from Indian conglomerate Hinduja Group have been developing plans to produce buses and light vehicles with officials from the General Authority for Investment and Free Zones and other local government bodies during recent visits to the country.

Not the first time we hear Hinduja is interested in Egypt: It was reported back in February that Hinduja is in talks with the Sovereign Fund of Egypt to set up an automotive factory in the country in partnership with El Nasr with an annual capacity of 6k vehicles.

AND- Flights between New Delhi and Cairo: El Wathek Bellah also met with executives from India’s flag carrier Air India and discussed setting up a direct flight route linking Cairo and the Indian capital. The two sides also looked into ways to boost transport, tourism, and trade between the two countries.

PLUS- El Wathek Bellah also met with officials from India’s Ocior Energy to follow up on its planned green ammonia production project Ain Sokhna. The company inked a USD 4.3 bn agreement with the SFE to develop the plant at the Port of Ain Sokhna earlier this summer.

Tags:

automotive green hydrogen India investment watch Manufacturing Ocior Energy

M&A WATCH

Egypt’s MaxAB and Kenya’s Wasoko complete Africa's largest-ever tech merger

It was a busy day for M&A news, with a lot of M&A activity taking place here in Egypt.

MAXAB AND WASOKO ARE NOW ONE-

That’s a wrap on Africa’s largest tech merger: Egyptian B2B e-commerce platform MaxAB and Kenya-based Wasoko have completed the largest tech merger the continent has ever seen, according to a statement (pdf).

Remember: The two companies inked a preliminary merger agreement in December 2023 and unconfirmed reports said that the merger will create a new entity named Maxoko and will see its annual operations hit USD 500 mn.

Leading the merged entity: MaxAB CEO Belal El Megharbel (LinkedIn) and Wasoko CEO Daniel Yu (LinkedIn) will serve as co-CEOs of the new entity as well as board directors alongside existing investors.

Creating a mega platform: The all-stock transaction establishes a Pan-African platform serving Africa's USD 600 bn informal retail sector. The new entity will be Africa’s large network of B2B informal retailers, with more than 450k merchants connected to over 65 mn consumers across Egypt, Morocco, Kenya, Tanzania, and Rwanda.

Future plans: The company's long term plans include going public on a stock exchange, according to unconfirmed reports out in July.

The international business press also picked up the story: Bloomberg.

DICE WANTS STAKE IN TWIN TOP-

Dice wants a big piece of Twin Top: EGX-listed Dice Sports and Casual Wear is looking to snap up a controlling stake in Twin Top Real Estate Investment Company, according to an EGX disclosure (pdf). The company has appointed Osoul Arabia for Investment and Financial Consultancy as independent financial advisor to conduct the fair value study of Twin Top, which the disclosure points out owns a textiles mall catering to manufacturers and merchants.

Dice has been doing a lot of acquiring: Earlier this month, Dice increased its stake in United Dyers, acquiring an additional 16.7% stake in the company and pushing its ownership in it to 99.3%. Late last year, the founders of Dice upped their stake in the company to 58.6% in an EGP 436 mn transaction.

ORASCOM DEVELOPMENT EXITS TOURISM SUBSIDIARY-

Orascom Development offloads stake in UAE tourism arm: Orascom Development Holding (ODH) has sold its Emirati subsidiary RAK Tourism Investment to SPV Cove Holdings in a USD 40 mn transaction, two unnamed sources told Asharq Busin ess. ODH and other RAK shareholders are getting some USD 23 mn in cash for their stake in the company and the buyer will assume around USD 18 mn of RAK’s debt. The two sides entered into the binding share purchase agreement earlier this summer. The transaction is expected to close this quarter.

FAISAL ISLAMIC BANK IS ALSO LOOKING TO EXIT STAKES-

Faisal Islamic Bank to exit Giza Paints: Faisal Islamic Bank of Egypt will sell its entire 48.57% stake — representing 145.7k shares — in Giza Paints and Chemical Industries in an EGP 32.3 mn transaction, it said in an EGX disclosure (pdf).

Tags:

Dice Sports and Casual Wear Fintech M&A Watch MaxAB Orascom Development Egypt startups textiles Wasoko

Automotive

Auto sales jump over 40% m-o-m in July

Auto sales on the up for the fourth consecutive month: Auto sales in July climbed 42.2% m-o-m to 11.4k vehicles, according to figures from the Automotive Marketing Information Council (AMIC) seen by Enterprise. Auto sales have been on the up for four consecutive months following a 43% m-o-m drop in March that saw the sale of just 4.2k vehicles — the lowest number of auto sales we’ve seen since we started keeping track in January 2019.

We haven’t seen auto sales like these for a while: The total number of vehicles sold is the highest reported since August 2022 — a whole 23 months ago — according to data tracked by Enterprise. Although a promising sign that customers may be beginning to return to the market, July’s figures are still well below the monthly average of 24.2k vehicles sold in 2021 before FX shortages stunted supply and gave distributors leverage to hike prices as they pleased.

Growth across the board: Passenger car sales saw the biggest jump, rising 50.7% from June to some 9.7k units in July and accounting for 85.5% of total sales. Meanwhile, bus sales inched up 4.9% m-o-m to 643 units and truck sales rose 8.1% to just over 1k units during the month.

On a yearly basis: Auto sales last July came 81.2% higher than the 6.3k units sold in July 2023. The growth was driven by a 97.6% y-o-y increase in car sales, a 13.6% y-o-y rise in bus sales, and a 27.2% climb in truck sales.

Always read the fine print: AMIC figures reflect data contributed by member distributors, who include most, but not all, industry participants.

Tags:

AMIC automotive

Moves

Sovereign Fund of Egypt taps Noha Khalil as interim CEO. PLUS: Ahmed El Sheikh appointed to head the EGX for another year

A new (temporary) face at the helm of the SFE: The Sovereign Fund of Egypt’s (SFE) board has appointed Noha Khalil (LinkedIn) as acting CEO of the fund, following the resignation of Ayman Soliman who headed the fund since 2019, according to a Planning and International Cooperation Ministry statement. Khalil has been with the SFE since 2020, first joining the fund as chief IR officer before moving up the ranks to chief strategy and business development officer in 2023.

What’s next? Khalil will assume the role until the procedures for appointing a new CEO are completed.

AND- El Sheikh secures a second term as EGX head: Prime Minister Moustafa Madbouly has reappointed Ahmed El Sheikh (LinkedIn) as the chairman of the Egyptian Exchange (EGX) for another one-year term starting 26 August, according to a statement by the bourse. An EGX veteran, El Sheikh first joined the bourse in 1993 and became vice chairman in 2018. El Sheikh was also at the Financial Regulatory Authority for six years from 2005-2011 and briefly worked at Misr for Central Clearing, Depository, and Registry in the ‘90s.

The second in command? Heba El Serafi (LinkedIn) has also been reappointed as the vice chairman of the EGX, a position she has held since August 2022. El Serafi has been with the EGX for over 25 years.

Tags:

Ahmed El Sheikh EGX moves Sovereign Fund of Egypt

LAST NIGHT’S TALK SHOWS

Iraqi Prime Minister Mohammed Shia' Al Sudani was in town to discuss Gaza, investment, and cooperation

Diplomacy dominated the discussions on last night's talk shows, as the nation’s talking heads focused on President Abdel Fattah El-Sisi’s meeting with Iraqi Prime Minister Mohammed Shia' Al Sudani, who is currently visiting the country as the head of a high-level Iraqi government delegation.

At the Alamein palace: The pair discussed bilateral cooperation, focusing on boosting mutual investments and collaborating in areas such as infrastructure, urban development, tourism, energy, transportation, and industry. They also stressed the need to de-escalate regional tensions. The story got airtime on Ala Mas'ouleety’ (watch, runtime: 5:36) and Salet El Tahrir (watch, runtime: 1:39).

ALSO ON THE AIRWAVES- Gov’t penalizes 36 Hajj tourism companies: Tourism Minister Sherif Fathy yesterday issued a number of decisions to revoke the licenses of 36 travel companies that were found to have facilitated unauthorized Hajj trips for pilgrims using visit visas not designated for Hajj during the last Hajj season. This move follows the deaths of hundreds of Egyptian pilgrims in a heat wave last season, Salet El Tahrir’s Faten Abdel Maaboud explained (watch, runtime: 8:22).

Remember: The government’s task force set up to investigate the tragedy said that the pilgrims died because they were not provided with medical services or accommodation from the travel agencies and had to access Mecca on foot via desert roads during the heatwave to avoid being caught by Saudi authorities as they were not on an authorized trip.

Some think the move was a bit too heavy-handed: "This is the harshest measure ever taken in the history of the tourism sector," Ihab Abdel Aal, a member of the Supreme Hajj and Umrah Committee said in a phone call with Faten Abdel Maaboud. He explained that these companies did not organize the Hajj trips themselves. Instead, they facilitated the processes for intermediaries and brokers by issuing barcodes for the Hajj and Umrah portal and assisted with accommodation using the personal visit visas that were issued.

Heavier penalties to come? In addition to the license cancellations, the owners of the companies will be referred to the Public Prosecution for legal action, which could result in imprisonment, Abdel Aal said.

Tags:

DIPLOMACY Egypt-Iraq relations LAST NIGHT’S TALK SHOWS

Also on our Radar

Stellantis in talks with gov’t to start assembling Fiat, Citroen, and Opel models locally. PLUS: SODIC, CIB + Chemicals & Fertilizers Export Council, Misr Ins., Eaton, MSMEDA

AUTOMOTIVE-

We could soon see Fiat, Citroen, and Opel models assembled in Egypt: Automotive player Stellantis is in talks with the Trade and Industry Ministry over locally assembling its Citroen, Fiat and Opel brands in the coming period, A l M al reports citing a government source. Stellantis was one of several car makers that expressed interest in the Egyptian Automotive Industry Development Program (AIDP), which will offer incentives to auto players with the aim of localizing the industry.

ENERGY-

EGAS offers up 12 new exploration blocks: Egyptian Natural Gas Holding Company (EGAS) is inviting bids for 12 new oil and gas exploration blocks in the Mediterranean and Nile Delta. The offering includes 10 offshore and two onshore areas, with details available on the Egypt Upstream Gateway (EUG) platform.

REAL ESTATE-

SODIC unveils its latest North Coast developments: Real estate developer SODIC has unveiled Matcha, its latest commercial project at its North Coast Caesar development, and Good Days, a boutique compound housing a collection of hotel apartments within Matcha, according to a statement (pdf) from the company.

TRADE-

CIB lends its backing to support chemical exporters: CIB has inked an agreement with the Chemicals &Fertilizers Export Council (CEC) that will see it provide financial and strategic support to local chemical exporters in a bid to boost the competitiveness of the sector’s exports, according to a statement (pdf).

The details: The bank will offer a range of financial solutions, including short- and medium-term credit facilities, letters of credit, and letters of guarantee. It will also assist companies in expanding their operations overseas, especially into African markets, by leveraging its international financial relationships and its direct presence in Kenya. Additionally, it will link up exporters with a range of service providers across different fields — including export, logistics, legal and tax consulting, marketing, and training — under its Business Solutions program.

CAPITAL MARKETS-

Misr Ins. wants to enter the carbon market: Misr Ins. has inked a preliminary agreement with VNV Advisory that will see it make its entry into our newly-launched carbon market, VNV’s Omar El Nemr told A l M al. VNV is no stranger to our carbon market, having helped local agriculture firm Daltex purchase 1.5k carbon credits from an agroforestry project in India’s Punjab during the first day of trading.

UTILITIES-

Eaton expands its footprint in the local market: NYSE-listed power management company Eaton has opened up a new office in Cairo, according to a press release from the conglomerate. The new office will house Eaton's second customer care center in the Middle East. Eaton will work with local manufacturing partners for low voltage and medium voltage systems that includes Egyptian Manufacturing and Advance Systems, Madkour Industries, 2M Electric Group, Technical Projects Company, and Lectro El Habashy for Works.

TOURISM-

Egypt and Bahrain could launch a joint tourism marketing program targeting East Asia, as part of wider efforts to enhance tourism cooperation, according to a Tourism Ministry statement. The program will aim to take advantage of the growing tourist movement in Egypt and Bahrain's flight connections to the region.

DEBT-

MSMEDA could partner up with the World Bank for another VC fund: The Micro, Small and Medium Enterprise Development Agency (MSMEDA) is in talks with the World Bank over launching the second phase of their joint VC fund, MSMEDA’s venture capital head Hany Emad told Al Borsa. The agency aims to secure the funds before the end of the year, he told Al Arabiya, without disclosing the value.

Remember: MSMEDA launched a World Bank-backed USD 50 mn VC fund in early 2022. The agency deployed the funds in about 15 venture capital funds.

LOGISTICS-

East Qantara Dry Port to kick off operations mid 2025: New Suez Canal for Dry Ports and Logistics Services plans to start operating the East Qantara Dry Port by mid 2025, with 70% of the port’s superstructure having already been completed, the company’s vice chairman Mohamed El Banna told Al M al.

Remember: The company is reportedly in talks with entities over financing the superstructure of the port. The company has reportedly already fully completed the infrastructure of the port at a cost of EGP 500 mn, and had been looking to secure an additional EGP 500 mn for further development.

Tags:

ALSO ON OUR RADAR automotive Bahrain capital markets carbon trading CIB EGAS Egypt-Bahrain relations energy logistics real estate SODIC tourism

PLANET FINANCE

Retailer Temu’s parent company sees stocks crash in latest warning over struggling Chinese economy

It’s not been a good week for Temu parent company PDD Holdings: Chinese fast fashion retailer Temu’s parent company PDD Holdings saw its shares fall by a whopping 29% during Monday trading on the Nasdaq — its biggest fall on record that saw its market value dip by some USD 55 bn. Things didn’t get much better for the company yesterday either, with its stock value falling another 4.1% by the end of trading.

The trigger: The company’s results for the second quarter of the year fell short of market expectations. The company recorded revenues of CNY 97.1 bn — up 86% y-o-y, but below Wall Street forecasts of CNY 100 bn. The crash came as a shock to global investors, as the company’s long-standing low-pricing strategy was expected to appeal to cost conscious consumers amid ongoing volatility and slowing Chinese consumption.

The results are “the latest in a series of red flags” in the Chinese economy, Bloomberg writes, pointing to disappointing earnings from a number of Chinese conglomerates over the last period that have also suffered from weak consumer demand in the world’s second largest economy. The “big issue” is the weakness of domestic consumer demand, Robeco Hong Kong’s Joshua Crabb told Bloomberg. “The read-across for competition and a weak consumer will be negative for sure.”

But the volume of the sell-offs may represent an overreaction: The size of the drop in shares was “too much of a correction,” CNBC quotes China Market Research Group Managing Director Shaun Rein as saying. Rein added that now would be a good time for investors to buy into the stock, emphasizing that the panic was “overblown.”

This comes at a crucial time for China, which is expected to see its first yearly outflow from its bourse since 2016 as overseas fund flows continue to exit the market. The country’s benchmark CSI 300 is down 3.7% for 2024 and is at risk of extending losses into a record fourth consecutive year.

MARKETS THIS MORNING-

Asian markers are in the red during early trading this morning, with traders eagerly awaiting Nvidia releasing its much anticipated earnings later today. Korea’s Kospi is down 0.5%, China’s Hang Seng is down 0.3%, and Japan’s Nikkei is down 0.2%.

EGX30	30,363	+0.8% (YTD: +22.0%)
USD (CBE)	Buy 48.64	Sell 48.77
USD (CIB)	Buy 48.65	Sell 48.75
Interest rates (CBE)	27.25% deposit	28.25% lending
Tadawul	12,182	-0.6% (YTD: +1.8%)
ADX	9,334	-0.2% (YTD: -2.6%)
DFM	4,343	+0.4% (YTD: +7.0%)
S&P 500	5,626	+0.2% (YTD: +18.0%)
FTSE 100	8,345	+0.2% (YTD: +7.9%)
Euro Stoxx 50	4,899	0.0% (YTD: +19.5%)
Brent crude	USD 79.55	-2.3%
Natural gas (Nymex)	USD 1.92	+1.1%
Gold	USD 2,560.10	+0.2%
BTC	USD 61,878.50	-2.5% (YTD: +46.5%)

THE CLOSING BELL-

The EGX30 rose 0.8% at today’s close on turnover of EGP 5.8 bn (56.3% above the 90-day average). Foreign investors were net buyers. The index is up 22.0% YTD.

In the green: Beltone (+7.3%), GB Corp (+5.2%) and Alexandria Container & Cargo Handling (+3.7%).

In the red: Mopco (-7.1%), B Investments (-4.3%) and Credit Agricole Egypt (-1.0%).

Tags:

China Financial Markets Planet Finance

HARDHAT

What is the gov’t doing to revive and enhance the building and property sector in the country?

What’s in the cards for Egyptian real estate? The real estate sector has seen rapid development in recent years as the government has shifted its focus toward regulating building operations across the country. The Madbouly government is now backing the sector with new measures and simplified procedures, as the headwinds that real estate operations have faced over the past two years begin to recede. This new impetus is fueling growth in property, contracting, and construction materials markets, officials and industry insiders tell Enterprise.

Remember: Global real estate consultancy JLL said in its Construction Market Intelligence Report for 1Q 2024 that Egypt’s construction sector is set for a recovery, with the firm penciling in a compounded annual growth rate for the sector above 8% until 2029. The report highlighted government spending, PPPs, infrastructure development, and rising FDI inflows as positioning the country to become an appealing destination for future investments.

PERMIT ISSUANCE TO RESUME-

Positive movement on long-awaited construction permits: The Local Development Ministry is set to roll out much-anticipated measures to resume issuing construction permits in various governorates, head of the House’s Housing Committee, Mohamed Attia El Fayoumi, told Enterprise. These measures will significantly boost construction activity and reduce the violations that emerged during the four-year period in which permit issuance was suspended, El Fayoumi added.

Refresher: The government imposed a suspension on building permits in 2020, initially expected to last six months, in response to continued building code violations. The suspension seriously hurt real estate companies’ bottom lines, with contractors facing challenges liquidating letters of guarantee and finding themselves short on liquidity.

The new rules will see permits issued within 26 days: El Fayoumi highlighted that easing building requirements will enable applicants to obtain permits within just 26 days, which is expected to alleviate long-standing issues in the construction industry.

Streamlining building regulations: Local Development Minister Manal Awad confirmed that the number of procedures required to obtain a building permit in cities will be cut from 15 to 8 steps. This simplification aims to ease the process for citizens and shorten the time needed to secure a permit.

Plus, longer permit validity: One of the biggest wins for the sector is the government extending administrative building permits’ validity to five years, up from just one, Tarek Shoukry, chairman of the Federation of Egyptian Industries’ (FEI) real estate division, tells Enterprise. This will give developers more flexibility to manage projects, Shoukry added.

More permit issuance will revive stagnant industries: The expected decisions will stimulate construction activity and demand for building materials, head of the Cairo Chamber of Commerce’s Building Materials Division Ahmed El Zeiny told Enterprise. This comes as cement manufacturers have been reducing production due to limited demand, which was previously offset by investment demand that also took a hit due to rationing measures. El Zeiny stressed that resuming construction permit issuance with proper support from the government will revive an industry that serves over 90 other trades.

MEASURES ARE IN THE WORKS TO HELP CONTRACTORS-

Support for the contracting sector: The contracting sector is working to regain balance amid changes in economic conditions like the recent FX shortage and many companies’ shift from now-scarce government projects to those led by the private sector, Egyptian Federation for Construction and Building Contractors (EFCBC) head Mohamed Sami Saad told Enterprise. The government has capped public sector investment spending at EGP 1 tn in FY 2024-25 to control the budget deficit and stop the development of new projects.

Tackling liquidity issues amid soaring inflation: Saad also noted that the current challenges facing the sector are rooted in liquidity shortages and delayed dues payments, compounded by high inflation and rising costs. EFCBC has received assurances from Housing Minister Sherif El Sherbiny that the ministry will consider several sector proposals, including:

Issuing a circular for projects with a completion duration of six months;
Reviewing penalties and project withdrawals;
Following up on compensation and price differentials, including approving submitted compensation, releasing retained securities, and fast-tracking the approval of final statements;
Forming a coordination committee between the EFCBC and the Housing Ministry to monitor implementation;
Addressing issues related to e-invoicing, balanced contracts, and exiting unfunded projects without cashing in on guarantees for delayed work;
Expanding the number of contractors working with new city authorities by preparing a list of qualified companies for infrastructure, housing, utilities, and other projects.

Ras El Hekma is a bright spot for a recovering sector: EFCBC board member Shams El Din Youssef told Enterprise that the sector had seen a significant reduction in small contractors and challenges in project execution during the FX crisis. Companies still in operation today have two windows of opportunity, however: they can execute large-scale investment projects like those in Ras El Hekma City, or they can export expertise to neighboring countries.

Remember: Ras El Hekma is expected to attract USD 150 bn in investments as it’s built out, with investments expected to come at a rate of USD 3-4 bn per year, Prime Minister Moustafa Madbouly said earlier this year.

Fixed pricing for land in new communities: The Housing Ministry has resolved one of the most significant issues facing the real estate sector — changing land prices over time in new urban communities. The ministry has approved fixing land prices, Shoukry told Enterprise, mitigating potential pricing risks. This sentiment was echoed by Fathallah Fawzi, chair of the Real Estate Development Committee at the Egyptian Businessmen's Association, who emphasized that changing the land price at the time of the final contract harms the project's investment costs.

Fast-tracking nearly finished projects: Shoukry also told us that the government’s move to classify projects that are 80% complete as “finished” is a substantial support measure that will push real estate companies to complete their projects.

FINALLY, FINANCING-

Locking in interest rates at 15%: The Housing Ministry has agreed to cap the interest rate on installments for real estate developers at 15%, which will reduce financial burdens and allow for faster project completion, according to Shoukry.

Ring a bell? This step resembles a EGP 120 bn program approved by Prime Minister Moustafa Madbouly in March that offers subsidized loans for manufacturers in freezones, players in the agriculture industry, and renewable energy companies at an interest rate of 15%.

Your top infrastructure stories for the week:

Egypt to help develop Sierra Leone’s roads: An Egyptian delegation will visit Sierra Leone next month ahead of a planned cooperation between the two sides to develop the country’s roads and bridges. The two sides are also looking to set up a shipping line connecting them. (Statement)
Three maritime terminals seeking operators: Alexandria Port Authority is gearing up to hand over three maritime terminals to local and foreign operators before the end of the year.
Dry port and logistics zone in Borg El Arab: The Transport Ministry got the thumbs up from the cabinet to proceed with contracting an unnamed company to finance, design, establish, manage, and maintain the planned dry port and logistics zone in Borg El Arab.

Tags:

construction Federation of Egyptian Industries Hardhat real estate

CALENDAR

2024

AUGUST

August 2024: Shalateen to announce gold exploration tender winner.

SEPTEMBER

2-3 September (Monday-Tuesday): The Seamless North Africa conference, Cairo.

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

4-5 September (Wednesday-Thursday): The US-Egypt Joint Economic Committee meeting, Washington.

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

9-12 September (Monday-Thursday): The annual EFG Hermes London Conference.

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

16 September (Monday): Egypt-UK Investment and Opportunities Forum, London.

24 September (Tuesday): Enterprise Finance Forum, Cairo, Egypt

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

25-28 September (Wednesday-Saturday): Cityscape Egypt, Egypt International Exhibition Center, Cairo.

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

OCTOBER

1-3 October (Tuesday-Thursday): Cairo Sustainable Energy Week, Cairo, Egypt.

6 October (Sunday): Armed Forces Day.

10-12 October (Thursday-Saturday): Egy Health Expo, Egypt International Exhibition Center, Cairo.

10-12 October (Thursday-Saturday): The FinExpo Conference and Exhibition, Cairo.

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.

20-22 October (Sunday-Tuesday): Mediterranean Offshore Conference (MOC), Alexandria, Egypt.

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

NOVEMBER

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

12-15 November (Tuesday-Friday): Arab African Investment and International Cooperation Summit, Aswan, 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

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

3Q 2024: Egyptian-Armenian Joint Committee.

September 2024: Turkish-Egyptian Business Council meeting in Turkey.

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.

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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