Act Financial gears up for 2Q 2024 IPO after getting EGX green light

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What We're Tracking Today

Goldman Sachs forecasts 2% CBE interest rate cut in May

Good morning, friends. It may not just be the weather that’s warming up in Egypt at the moment, with news that the country’s IPO winter may soon be over. We’ve got news of Act Financial penciling in 2Q 2024 for an IPO after getting the green light from the EGX, another USD 820 mn from the IMF arriving in June, and so much more in the issue today.

HAPPENING TODAY-

#1- Several ministers are in Riyadh for a World Economic Forum meeting: Prime Minister Mostafa Madbouly, Planning Minister Hala El Said, and Foreign Minister Sameh Shoukry will be attending a two-day event in Riyadh organized by the World Economic Forum, according to several government statements (here, here and here).

Entitled the Special Meeting on Global Collaboration, Growth and Energy forDevelopment, the event will gather heads of state and senior officials from the public and private sectors to discuss solutions to economic, environmental and humanitarian challenges.

What to watch out for: El Said will take part in a meeting on What Homeland Economics Means for Trade at 11:30 am Riyadh time later today, looking into how domestic politics and geopolitical tensions affect trade policy. Tomorrow morning, Madbouly will speak at a Briefing on the Gaza Crisis and later in the day Shoukry will take to the stage alongside his Saudi counterpart and columnist Thomas Friedman to speak about the Middle East Under Stress on Monday afternoon.

#2- Car import scheme draws to a close: Expats have until the end of today to register forthe expat car-for-FX scheme, according to a statement from the Emigration Ministry.

By the numbers: As of earlier this month,some 490k Egyptian expats had registered in the initiative and some USD 750 mn had been transferred to the government under the scheme, the Finance Ministry said. Around 27k cars have entered the country under the initiative. The two phases of the scheme had brought in USD 1.7 bn by February, within reaching distance of the Finance Minister’s USD 2 bn goal.

INTERESTED? You can sign up for the initiative through the government’s app on Google Play and the App Store.

HAPPENING THIS WEEK-

El Sisi to touchdown in Ankara: President Abdel Fattah El Sisi is slated to visit theTurkish capital this week at the invitation of Turkish President Recep Tayyip Erdogan to discuss ways to strengthen bilateral cooperation and a ceasefire in Gaza, Asharq News reports, citing Egyptian sources and a Turkish presidential source. The visit will see the pair head the first high-level strategic cooperation council meeting between the two countries.

What can we expect: The two sides will likely ink a number of cooperation agreements during the council, the Turkish source said.

Remember: The anticipated visit comes on the heels of Foreign Minister Sameh Shoukry’s meeting with Erdogan and Foreign Minister Hakan Fidan in Istanbul last week. Relations between Cairo and Ankarahave been warming after a decade of tense relations, with President Erdogan visiting Cairo for the first time since 2012 this February.

WATCH THIS SPACE-

#1- Goldman Sachs sees CBE trimming rates by 2% in May on the back of easing inflation: Goldman Sachs expects the Central Bank of Egypt to cut rates by 200 bps at its next policy meeting in May, according to a research note by the US-based investment bank seen by Enterprise. The prediction is based on the Goldman Sachs’ forecast that inflation will fall to 20% by the end of the calendar year, down from 33.3% y-o-y recorded for March.

Remember: The bank’s Monetary Policy Committee (MPC) is scheduled to meet on Thursday, 23 May to review interest rates. The MPC delivered a jumbo 600 bps rate hike at its last meeting in March alongside the EGP float.

#2-Progress on the tax policy framework? Prime Minister Moustafa Madbouly and Finance Minister Mohamed Maait discussed a proposed tax policy document for 2024-2030 that will be used to inform and provide clarity to businesses, investors, and society at large on the country’s targets, policies, and plans for taxation over the next six years, a cabinet statement reads. The document aims to support individuals as they build their investment strategies, create forecasts, financial models, and feasibility studies with a greater degree of tax certainty.

The gov’t is keen on avoiding tax hikes: The document will lay out ways in which the government can increase the effectiveness and management of tax policies rather than looking to apply new taxes or increase current taxes.

ATTENTION, EGYPT INVESTORS-

Foreign investors are falling in love with Egypt again… Foreign investors we speak with (debt, equity, and strategic alike) have a growing appetite for Egypt. They’re buying into local debt, eyeing promising shares, and committing bns of USD to both new ventures here and the growth of their existing businesses. They like the Egypt story that’s taking shape after the float of the EGP, and its competitive advantages are clear to many of them: It’s a massive consumer opportunity and a regional export hub of tomorrow.

The Enterprise Optimism Forum 2024 will do exactly what it says on the tin: Spark conversations about a future that we think is much brighter than so many in our community feel right now. Think of it as much-needed shock therapy combined with an early, actionable roadmap for those of us who are “long Egypt.”

We’ll be talking with you about the agenda over the coming couple of weeks. It features speakers from Egypt and abroad who are future-proofing their businesses and angling to capture tomorrow’s opportunities — and who aren’t afraid to answer some tough questions.

*** Interested in attending? Tap or click here to let us know. Seating is limited.

DATA POINT-

#1 Egypt has issued USD 71.6 bn worth of debt instruments since the beginning of the year, marking a 57% y-o-y increase, writes Asharq Business, citing calculations by Bloomberg. The value of EGP-denominated debt sold during the period reached its highest point in over ten years at USD 69.2 bn, rising 64% y-o-y.

#2-Egypt welcomes more tourists in 1Q 2024: The number of tourists visiting Egypt has increased 3-4% y-o-y in the first quarter of the year, according to a Tourism Ministry statement. Hotel occupancy in tourist cities reached 54.8% during the quarter, up 8% y-o-y, the ministry said in a separate statement.

#3- Gold imports under the customs-exemptions initiative rose to 4.6 tons over the last year, Finance Minister Mohamed Maait told Asharq Business. The initiative, which kickstarted last May and expires 10 May this year, has allowed gold to be brought into Egypt tax-free in a bid to stabilize gold prices.

No word yet on a possible extension: The government hasn’t yet decided whether the initiative will be extended once it expires, Maait told the outlet.

PSA-

Smoke price hikes: Tobacco distributor JTI-Nakhla has raised the prices of cigarettes by 3-10%, according to a statement (pdf) from the company. The price of its popular unflavored Winston brand is up 10% to EGP 55, while a pack of unflavored Camel cigarettes is up 5% to EGP 60 and a pack of the company’s flavored Camel Activate is up only 3% to EGP 62.

JTI is the latest tobacco distributor to hike its prices after the government approved a decision allowing tobacco distributors to hike their prices by up to 12% earlier this month.

WEATHER- It’s going to be a warm and sunny day in Cairo today, with a high of 31°C and a low of 18°C, according to our favorite weather app.

It’s a whole lot cooler in Alexandria, with a high of 24°C and a low of 17°C.

WAR WATCH-

Egyptian officials touch down in Israel for ceasefire talks: A high-level Egyptian delegation met with Israeli officials on Friday to push for a ceasefire in Gaza and avert an Israeli offensive on Rafah, Reuters reports. While Israel made no new proposals, it was willing to consider Egypt’s proposal for Hamas’ release of 33 hostages in exchange for a limited truce, an Egyptian official told the outlet. Should an agreement be reached, the pause would be “definitely less than six weeks,” the official anticipated.

Israel delivers an ultimatum: Israeli officials told the delegation that it would give negotiations “one last chance” before it moves forward with its planned ground invasion of Rafah, Axios reports, citing two unnamed senior Israeli officials.

THE BIG STORY ABROAD-

It’s a mixed bag on global front pages this morning: No single story hold sway, as is often the case on Sunday mornings

The US Federal Reserve’s ongoing bid to tame inflation is making it more difficult for the European Central Bank and Bank of England to start cutting interest rates, the Financial Times warns. Policymakers aren’t being explicit about it, but investors are already pricing-in the idea that rate cuts will be delayed, futures suggest. At the same time, a key index that the US Fed relies on to gauge inflation says that American consumers are borrowing more and dipping into their savings to keep spending, CNBC notes, raising the odds the Fed will slow-walk cuts.

Why it matters now: The Fed’s open markets committee will meet Tuesday and Wednesday. Pundits are parsing Jay Powell’s every gesture for a suggestion as to when rate cuts might begin. Few now expect action before fall.

MEANWHILE- Pro-Palestine protests on US university campuses — and heavy-handed reactions by police and university officials — are getting plenty of ink around the world. The story is everywhere from the Wall Street Journal to the Guardian, while the New York Times notes that Columbia University’s senate has called for an investigation into Minouche Shafik, the university’s Egypt-born president.

ALSO making headlines: Wall Street is getting its head around a US ban on non-compete agreements — and shares of both Google parent company Alphabet and Microsoft advanced after the companies reported strong first-quarter results. Google declared its first-ever dividend and saw strong AI-based Google Workspace sales, while Microsoft reported improved cloud sales.

AND- Europe is worried about Chinese spies | Apple is talking to OpenAI and Google about using their AI tech on its iPhone.

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Egypt could receive another USD 820 mn tranche in June

IMF greenlights expedited access to funding unlocked by upcoming third review: Egypt could receive USD 820 mn from the International Monetary Fund from June 15 onwards — shortly following the Fund’s third review of our loan program in the same month — after the Fund agreed to “to better align access with review cycles under the program,” according to a country report (pdf) from the Fund on Friday.

Remember: The IMF’s Executive Board signed off on a USD 5 bn extension for Egypt’s extended fund facility and completed its long-delayed first and second reviews of the facility in late March, when it approved a decision to let the state draw USD 820 mn. Egypt received an initial tranche of USD 347 mn in December 2022.

When will the next tranches be disbursed? Egypt will have access to five tranches of around USD 1.2 bn each if it passes reviews in September 2024, March 2025, September 2025, March 2026, and September 2026, according to the proposed schedule in the IMF’s report.

The country met 7 of the 15 structural benchmarks put forwards by the Fund: Policymakers managed to discard the use of letters of credit, publish a state-ownership policy, amend competition law with regard to M&As, widen the scope of social protection programs to include more households, list tax policy measures for the FY 2023-2024 budget draft, prevent exemptions to banks breaching net FX open position limits and hit the brakes on launching new subsidized loans that are backed by the CBE.

But the Fund still wants us to make progress on publishing public procurement contracts exceeding EGP 20 mn on the government’s e-tenders website, keeping the mechanism used in the retail fuel pricing up to date, ensuring the timely publication of audit reports on fiscal years, releasing comprehensive reports on tax expenditure, implementing executive regulations of the public finance management law, and reporting payment arrears by the Finance Ministry.

Two of the targets were dropped by the IMF: The adoption of a risk-based approach to customs procedures and the acceleration of the release of goods at the Alexandria port was dropped as a target by the Fund, as was the digitalization of real estate records to include geo-coded identifiers to facilitate property taxation. The fund said that they are no longer critical for the current program.

The Fund thinks we may be on the verge of finalizing stake sales of the Gabal El Zeit and Zafarana wind farms: The IMF is anticipating that the state will wrap its stake sale for the Gabal El Zeit wind farm in the current fiscal year and thinks the sale could bring in USD 339 mn. The Fund also thinks the state is nearing the stake sale of either the Zafarana wind farm or a desalination plant that could bring in USD 300 mn.

Even with a rush of fresh funds coming in, the Fund is still penciling in a big financing gap: The IMF estimated the country’s financing gap at USD 28.5 bn for the remainder of the loan program by 2026 when taking into account the inflows from the Ras El Hekma agreement.

Closing the gap is going to be difficult with arrears to pay: The state-owned oil firm Egyptian General Petroleum Corporation owes external arrears of between USD 4-5 bn, the fund said, adding that lower gas production amid higher domestic demand impeded the company’s exports.

Act Financial gets EGX approval for IPO in 2Q 2024

Act Financial gets the green light to list on the EGX: Investment management firm Act Financial is closing in on its long-awaited initial public offering on the EGX and expects to start trading its shares within two months, after obtaining approval from the EGX, according to a statement (pdf) from the company yesterday.

What stake size are we talking? The company will be out with details of the upcoming IPO as soon as it works to finalize listing on the EGX in 2Q 2024.

No exit: Act Financial aims to raise the whole amount through a capital increase, without the exit of any existing shareholders, the statement added.

Where the fresh funds will go: Of the proceeds — which are expected to reach EGP 1 bn, according to unconfirmed media reports last month — 75% will go into acquiring stakes in EGX-listed companies, while 20% will finance the registration of new SMEs on the bourse, Al Mal reports, citing what it says are sources in the know. The remaining 5% will go into restarting its subsidiaries in securities trading and asset management.

Retail investors will get 25% of the offering, while institutional investors will get 75%, the sources added to Al Mal.

What they said: “This has been our vision and dream since starting Act almost a decade ago in 2015,” said CEO Bassem Azab. “The IPO will not only mark a new chapter in our journey but also provide us with the necessary resources to capitalize on our pipeline of opportunities. This will allow us to grow and expand, further solidifying our position as a key player in the investment scene.”

The advisors: Investment bank Zilla Capital and law firm Matouk Bassiouny have been tapped as consultants on the transaction.

Remember: We first caught wind of Act’s IPO plans back in 2022, when Managing Partner and Co-Founder Mostafa Abdel Aziz told us that the investment firm is aiming to offer up to a 40% stake on the EGX.

Cabinet greenlights freezone, tourist port for Egypt’s Ras El Hekma

Ras El Hekma is getting a freezone, tourist port: Cabinet last week approved decisions to set up a freezone, investment zone, and international tourist port in the North Coast’s Ras El Hekma, it said on Wednesday following its weekly meeting.

Remember: The government in February inked a landmark USD 35 bn agreement with Abu Dhabi wealth fund ADQ, giving it the development rights to Ras El Hekma. We received the first tranche of the payment late February and the second tranche is expected to arrive in the nation’s coffers at the beginning of May.

Who is in charge? Cabinet has also greenlit a decision to set up a company dubbed Ras ElHekma for Urban Development, which will be given golden licenses to develop both the freezone and investment zone and will also be setting up the tourist port, according to the statement. Cabinet also approved the formation of a board of directors for the investment zone.

ALSO APPROVED BY CABINET-

Funds for Gabal El Asfar water treatment plant: The ministers approved financing from the European Union and the French Development agency for the third phase of the Gabal El Asfar water treatment plant. Phase three will raise the plant's capacity by 1 mn cubic meters per day to serve 17.5 mn people by 2040.
Land for the NREA: Cabinet approved a draft decision allocating three plots of land in the Suez and Red Sea governorates for the New and Renewable Energy Authority (NREA) to set up renewable-energy power plants.

USD 12 mn Chinese steel factory opens in Egypt’s SCZone. PLUS: Elaraby and Taiwanese company to build AC factory, Public Enterprise Ministry mulls mineral extraction project

Chinese state-owned construction giant inaugurates steel factory in the SCZone: The China State Construction Engineering Corporation (CSCEC) — the world’s largest construction outfit by revenue — has opened the doors of its CNY 87.4 mn (c.USD 12.3 mn) steel structures manufacturing factory in the Suez Canal Economic Zone last week, a SCZone statement said.

About the factory: The factory has a production capacity of 25k tons of steel structuresannually, the statement read. The plant will create some 200 jobs.

Fast-tracked factory: The factory was established within eight months, driven by thepartnership between the SCZone and China’s special economic zone TEDA, the statement said. The factory will provide the technical development, design, testing, processing, and construction of steel structures.

CSCEC loves Egypt: South Korean construction and plant operation company SK ecoplant willwork with CSCEC to build a green hydrogen and green ammonia plant in the SCZone. The group has also been contracted to design and construct the Crystal Lagoon project in downtown New Alamein on top of constructing five residential skyscrapers as part of the Alamein Downtown Towers project. The state-owned construction giant may also establish a medical city project in collaboration with the Health Ministry.

ELARABY, RECHI’S AC COMPRESSOR FACTORY IS COMING-

An update on a long-stalled project: Local home appliance manufacturer Elaraby Groupinked a strategic partnership with Taiwanese manufacturer Rechi to build a USD 40 mn air conditioning compressor factory in Beni Suef with an initial investment of USD 10 mn, according to separate statements from the companies (here and here).

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The details: The factory will kick off production in 2025 with an initial annual production capacity of 1.5 mn units, which will rise to 6 mn units. Half of the units will be earmarked for exports and the factory will create 500 new jobs. Rechi will hold a 51% stake in the project, according to Elaraby Group

Years in the making: The project has been in the making since 2022. At the time, the factorywas expected to start production in 2024.

A SALT EXTRACTION COMPLEX-

Salts, mineral extraction on the table: State-owned Holding Company for Chemical Industries subsidiary El Nasr Salines Company has submitted a proposal to establish an integrated industrial complex to extract salts and minerals, a Public Enterprise Ministry statement said. The project will be implemented in cooperation with private sector companies as part of a wider strategy to export high-value raw minerals.

What we know: If given the greenlight, the project would extract an annual 380k tons of tablesalt, 140k tons of magnesium sulfate, 78k tons of magnesium hydroxide, 28k tons of potassium chloride, and 2.3k tons of bromine.

What we don’t know: The statement did not provide a timeline for the project or how much it would cost.

MORE INTEREST IN SODIUM CYANIDE-

A new USD 160 mn sodium cyanide project in the works: Austria’s Petrochemical Holding Company and Czech company Draslovka are planning to jointly establish a sodium cyanide facility in Egypt, with delegations from the two companies discussing their plans last week with Trade Minister Ahmed Samir, according to a statement from the ministry. The facility would see initial investments of USD 160 mn in its first phase, Samir said.

SOUND SMART: Sodium cyanide is the solution commonly used for gold extraction from low-grade ore, and can be used to extract other metals, including copper, zinc, and silver.

Not the first time foreign players have eyed sodium cyanide in Egypt:Last month, German cyanide producer CyPlus submitted an investment proposal to set up a USD 150 mn factory that would produce 30k tonnes of sodium cyanide per annum, while another Austrian company separately submitted a proposal for a USD 120 mn factory. It remains unclear whether that Austrian company mentioned last month is the Petrochemical Holding Company.

Visa Security Summit 2024

More than 350 industry leaders from 50 markets across Central and Eastern Europe, the Middle East, and Africa (CEMEA) convened to unravel the future of digital security. With two days of keynotes, panels, and breakout sessions, the summit brought together global and regional Visa execs with experts in the field of payments and risk to discuss what’s next when it comes to security.

What were the takeaways?

AI investments to combat fraud are a priority.

A zero liability guarantee for consumers in the face of fraudulent transactions is a must.

Tokenization, replacing sensitive card data with tokens, will be a game-changer.

Get the details here. See the highlights.

Mashreq’s net income after tax rose by 25% in 1Q2024; Mo Salah on board for Mashreq NEO Visa in Egypt

Our friends at Mashreq reported AED 2.0 bn in net income after tax in 1Q 2024, rising 25% y-o-y, according to an earnings report (pdf). On a pre-tax basis, the UAE-based bank’s net income came in at AED 2.3 bn (up 36% y-o-y), with the lender noting that its net income after tax remained strong despite the introduction of the 9% corporate tax.

Driving the growth: “The main drivers include exceptional business growth, healthy client margins, the current interest rate environment, and low risk costs,” Mashreq said. The bank also reported 23% y-o-y growth in its net interest income, rising to AED 2.1 bn, which accounted for 68% of the lender’s total revenues for the quarter. Non-interest income rose 29% y-o-y, coming in at nearly AED 997 mn.

The bank is expanding and investing abroad: “Our efforts to launch our Digital Retail Bank in Pakistan remain afoot, which will mark a significant step in our international expansion,” said Group CEO Ahmed Abdelaal. “Additionally, the initiation of corporate banking operations in the United Kingdom and the opening of a new branch in Mumbai are pivotal in our mission to deliver innovative banking solutions across diverse markets.”

And that includes Egypt: “In Egypt, the launch of Mashreq NEO represents a key development in offering simplified and innovative banking experiences, which align with our goals to enhance customer satisfaction,” Abdelaal said.

AND ON THE TOPIC OF MASHREQ NEO-

Introducing the Mashreq NEO Visa Card: Our friends at Mashreq Egypt and Visa have launched the Mashreq NEO Visa Card, a new service targeting Egypt’s youth and offering them “seamless banking services, and exclusive benefits,” according to a joint statement (pdf) on Wednesday.

Mo Salah is on board: The Egyptian football superstar and Visa international ambassador will feature prominently in advertising for the Mashreq NEO Visa card in Egypt, Mashreq and Visa said in their statement.

What they said: “Our partnership with Mashreq is a testament to our shared commitment to innovation, accessibility, and the empowerment of individuals,” Visa’s country manager Malak El Baba said. “More than just a new segment, Mashreq NEO is a symbol of our pledge to provide efficient, secure, lifestyle and personalized banking experiences,” added Mashreq Egypt’s retail banking head Mohamed Talaat.

ICYMI: Mashreq Egypt launched Mashreq NEO — a banking segment that fulfills clients’ on-the-go banking needs — last month. Clients from the age of 15 can apply for a Mashreq NEO account through the bank’s mobile application on Google Play or App Store.

Talk shows explore a fresh IMF report on Egypt’s loan program. PLUS: US pro-Palestine student protests get airtime

It was a mixed bag on the talk shows last night, with discussions centring on two main topics — an IMF report on Egypt’s loan program and US university student protests against Israeli aggression in Gaza.

Egypt’s financing gap of USD 28.5 bn until 2026 “is not a terrifying number,” economist Mohamed Fouad told Amr Adib on El Hekaya (watch, runtime: 22:08), in response to figures out by the IMF. The financing gap “can be remedied by increasing exports by about USD 5-7 bn annually, as well as increasing foreign direct investment to the country.”

“The biggest risk to Egypt maintaining its loan program is failing to adhere to a free exchange rate,” Fouad said, referring to the report’s findings. “As long as there is the ability to manage commercial operations without resorting to the parallel market and merchants are able to price their products for the next three or six months ... over time, people will become accustomed and confident in the official exchange rate,” Fouad added,

“Foreign direct investment will not come without transparency and competitiveness,”Fouad said, pointing to the Fund’s demand for the government to publish all procurement contracts with a value exceeding EGP 20 mn on an open and available website, publicizing any exemptions and benefits provided to state agencies, as well as the debts of government agencies to the public treasury every 90 days.

Guiding lines: The Fund puts forward about 15 points and general policy guidelines, but in the end they are non-binding targets and what is important is the results, Fouad explained, adding that “the Fund gives us a framework for governance, which is what we really need.”

AND OVER IN INTERNATIONAL NEWS- Palestine protests in the US captured the attention of the nation’s talking heads: Arrests at pro-Palestinian student protests in the US are “unprecedented,” said Lamees El Hadidi on Kelma Akhira (watch, runtime: 11:43). Columbia University President Nemat Shafik is currently facing increasing pressure to resign for not calling the police on the protesters.

“The White House is in a critical position,”Heba Al Qudsi, director of the Washington bureau of Al Sharq Al Awsat newspaper, told El Hadidi, when asked about the extent to which the pro-Palestine student protests have affected the American political decision. “On the one hand, it cannot condemn the protests from the standpoint of defending and promoting democratic values, and on the other hand, it cannot support the protests because it cannot anger Israel.” The impact on the Biden administration would be “disastrous” if the protests continued and spread outside of the universities.

ALSO ON THE AIRWAVES LAST NIGHT-

The universal healthcare ins. scheme got significant airtime. El Hadidi conducted a discussion about how the first phase of the universal healthcare ins. scheme has been going, the extent of citizens’ satisfaction with it, and the reasons for the weak private sector participation so far (watch, runtime: 42:36)
The latest commodity prices, especially in light of the calls for a boycott of some commodities, were scrutinized on Kelma Akhira (watch, runtime: 12:11), El Hekaya (watch, runtime: 3:42), and Alaa Masouleety (watch, runtime: 40:38).
Mohamed Salah’s altercation with coach Jurgen Klopp in the Liverpool-West Ham match yesterday also caught the attention of talk show hosts. El Hekaya (watch, runtime: 3:04), Kelma Akhira (watch, runtime: 7:00), and Alaa Masouleety (watch, runtime: 2:48) all had the story.

Growing Gulf investor interest in Egypt is catching the attention of the international press

The international press zeroes in on Egypt-bound Gulf investments: Abu Dhabi wealth fund ADQ has made big investments in the Egypt’s lucrative tourism sector this year — including, but not limited to the landmark USD 35 bn Ras El Hekma agreement — and Saudi Arabia could soon be following suit in south Sinai, thinks Bloomberg, as the Gulf powerhouses seek to shore up the country’s economy and ensure regional stability through investments rather than handouts.

Luxury tourism in particular could benefit from the new influx of funds, bringing Egypt’sstandards up to those of luxury customers, Abu Dhabi Commercial Bank Chief Economist Monica Malik told the outlet.

It’s not just Egypt’s travel destinations that are attracting Gulf attention: Both the UAE andSaudi Arabia have reportedly shown interest in the stake sale of Egypt’s military-built petrol station chain Wataniya, while Qatar could also be joining the mix, with its eye on a stake in Vodafone Egypt.

ALSO PUTTING EGYPT IN THE NEWS- Shawarma restaurant set up by displaced Gazan gives Palestinian refugees a taste of home: A restaurant opened by a Palestinian businessman who fled Israel’s war on Gaza and had his restaurants and house destroyed in the siege has set up shop in Cairo, offering Egyptians and Palestinans alike a taste of authentic Gazan shawarma, writes Reuters.

Italian energy giant Eni slows down Egypt operations. PLUS: More incoming LNG shipments, foreign funding for high-speed rail, Hassan Allam + Siemens land GCC railway project, new Nobu project

ENERGY-

#1- Eni scaling back Egypt ops? Italian energy giant Eni has “slowed down exploration operations in Egypt a little,” Reuters quotes an executive at the company as saying in a story picked up by Asharq Business. Eni issued its earnings release for 1Q 2024 last week (pdf), which showed that the company’s production in Egypt dropped by 11.7% y-o-y to 293k barrels of oil equivalent by the end of the quarter.

A change of tone: Eni in September announced plans to invest USD 7.7 bn with its partners in their Egypt operations over the next four years, marking a massive step up in its spend on exploration.

#2- Another LNG shipment on its way: State gas firm EGAS has purchased another LNG shipment as part of a plan to secure gas supplies ahead of peak consumption this summer, Asharq Business reports, citing Bloomberg. The shipment is expected to reach the Aqaba LNG terminal in Jordan in late May for regasification and was reportedly purchased at a premium to the benchmark Dutch TTF.

Remember: The government has purchased at least two shipments of LNG due to be delivered next month, an Oil Ministry source previously told Enterprise. The government reportedly plans to spend up to USD 120 mn per month between July and October to import three LNG shipments monthly during the period, while sources told Reuters last week that the government is expected to import 20 shipments in total until the end of summer.

TRANSPORT-

#1- Our friends at Hassan Allam Construction and Siemens Mobility were awarded a signaling contract for the first-ever cross-border railway link in the Middle East, linking Abu Dhabi in the UAE and Sohar in Oman, according to a joint press release (pdf). Under the contract, Hassan Allam and Siemens will work to design, build, and integrate the train protection system over the 303 km long railway link.

It all started in Egypt: “Hassan Allam Construction and Siemens have a long-standing record of successful collocation in Egypt, and we are honored to extend this partnership in other important regional countries like UAE and Oman,” said Hassan Allam Construction Chairman Hassan Allam.

#2-Foreign funding for our high-speed electric rail? A syndicate of 18 international institutions is putting together a EUR 2.3 bn loan for the first line of the high-speed electric railway connecting Ain Sokhna and Matrouh, Asharq Business reports. The loan will finance the manufacture and supply of 15 express trains, 34 passenger trains, and 14 locomotives for freight transportation. It will also cover telecommunication systems and electromechanical work.

Delivery due soon: Currently under construction, the first phase is expected to be ready for trial runs by the end of 2024, or early 2025 at the latest, the news outlet reports.

HOSPITALITY-

The Nobu brand is expanding in Egypt: Global luxury brand Nobu Hospitality will setup another hotel and restaurant in Egypt, this time in East Cairo, under an agreement inked with real estate developer SODIC, according to a press release (pdf). There was no information about the size of investment or timeframe given.

Nobu? A luxury hotel and restaurant company founded in the 1990s by celebrity chef NobuyukiMatsuhisa and Robert De Niro.

Third time’s a charm: This marks the third partnership between the two sides. They are also launching two luxury hotels, a residential project and restaurant in New Zayed and Ras El Hekma.

Emerging markets are driving the global gold market

Emerging economies have become the linchpin of the gold market: Emerging market demand for gold has been driving up the price of the precious metal despite a strong USD, high US interest rates, and weak demand from Europe, World Gold Council’s senior market strategist for Europe and Asia, John Reade, said at the first edition of the World Gold Council conference in Egypt last week. “Gold is very much an emerging market story,” he said.

As good as gold: Gold prices rose to an all-time high of over USD 2.4k an ounce this month, continuing an upward trend that saw the commodity reaching consecutive record highs. Gold has so far outperformed every asset class this year, topping US stocks — to which it came in second last year — said Reade.

The players: India and China account for more than 50% of the world's gold demand, but other emerging areas like the Middle East and Southeast Asia also play a pivotal role, Reade said, name-checking Egypt and Turkey as sources of demand for gold as an investment.

EM central banks have been a main driver of demand: “The biggest change that's taken place in the gold market in the last few years has been the action of the world's central banks,” Reade said. Around the time of the global financial crisis, “emerging market countries who had added tns of USD to their foreign exchange reserves started to buy gold,” while a two-decade trend of selling by Western banks came to a halt, he explained.

By the numbers: EM central banks in 2022 and again in 2023 bought almost double the 500 tons of gold a year that they averaged between 2010 and 2021, he said.

Why are Western investors giving gold a break? In North America, the strong performance of the US equity market coupled with high interest rates mean that the opportunity cost of holding gold is high, Reade said. In Europe, meanwhile, high interest rates are compounded by inflation, which has been eroding disposable incomes and limiting gold purchases, he explained.

EGX30	25,918	-3.2% (YTD: +4.1%)
USD (CBE)	Buy 47.83	Sell 47.97
USD (CIB)	Buy 47.85	Sell 47.95
Interest rates CBE	27.25% deposit	28.25% lending
Tadawul	12,255	-0.8% (YTD: +2.4%)
ADX	9,042	0.0% (YTD: -4.3%)
DFM	4,148	-0.5% (YTD: +6.3%)
S&P 500	5,100	+1.0% (YTD: +6.9%)
FTSE 100	8,140	+0.8% (YTD: +5.3%)
Euro Stoxx 50	5,007	+1.4% (YTD: +14.9%)
Brent crude	USD 89.50	+0.6%
Natural gas (Nymex)	USD 1.92	-3.2%
Gold	USD 2,347.20	+0.2%
BTC	USD 63,184.50	+1.4% (YTD: +49.7%)

THE CLOSING BELL-

The EGX30 fell 3.2% at Wednesday’s close on turnover of EGP 3.8 bn (24.1% below the 90-day average). Local investors were net sellers. The index is up 4.1% YTD.

In the green: E-Finance (+0.3%) and Sidi Kerir Petrochemicals (+0.03%).

In the red: Beltone Holding (-9.2%), Ibnsina Pharma (-8.5%), and Palm Hills Development (-6.8%).

CALENDAR

2024

APRIL

28 April (Sunday): Grace period to ins. brokerage firms to comply with Law 215 for 2023 expires.

28-29 April (Sunday-Monday): Saudi Arabia hosts a World Economic Forum (WEF) meeting on ‘global collaboration, growth, and energy.’

29 April (Monday): The government’s car export scheme expires.

30 April (Tuesday): The Decision Makers Conference takes place at the St. Regis Cairo.

MAY

2-5 May (Thursday-Sunday): Townhall Expo in Riyadh.

5 May (Wednesday): National holiday in observance of Labor Day (national holiday).

5 May (Sunday): Coptic Easter.

6 May (Monday): Sham El Nessim (national holiday).

19-21 May (Sunday-Tuesday): Egypt International Summit for Digital Transformation and Cybersecurity.

20 May (Monday): Malaysian Palm Oil Forum in Cairo, with attendance from Malaysian Plantation and Commodities Minister Johari Abdul Ghani.

23 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

29 May (Wednesday): Virtual launch of Chicago Booth Executive Program.

JUNE

15-19 June (Saturday-Wednesday): Eid El Adha (TBC) (national holiday).

29-30 June (Saturday-Sunday): EU-Egypt Investment Conference.

30 June (Sunday): June 30 Revolution Day (national holiday).

JULY

7 July (Sunday): National holiday in observance of Islamic New Year (TBC).

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

2-5 September (Monday-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.

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

NOVEMBER

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

DECEMBER

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

EVENTS WITH NO SET DATE

April 2024: President Abdel Fattah El Sisi will visit Turkey.

1Q 2024: Egyptian-Qatari Joint Supreme Committee.

1Q 2024: Opening of the newly developed Pyramids Plateau in Giza.

1Q 2024: The government is set to finalize the sale of the Gabal El Zeit wind farm.

February-May: The Grand Egyptian Museum could officially open to visitors.

March 2024: The USD 2.7 bn MIDOR Refinery is set to begin full operations.

May 2024: Egypt to receive USD 20 bn of Ras El Hekma funds.

May 2024: Arab Finance Ministers’ meeting at Egypt’s administrative capital.

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

Mid-year: The fifth Japan-Arab Economic Forum.

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.

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

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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