Auto sales down 43% m-o-m in March as customers wait for further price reductions

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What We're Tracking Today

EGX30 down 6% to four-month low

Good morning, friends. The EGX30 may be down, but we hope that all of your spirits are up with a long weekend just two days away. In case no one told you, the public and private sectors and all banks will be off on Sunday and Monday next week in observance of Labor Day and Sham El Nessim.

In today’s issue, we’ve got news that auto sales have slumped to their lowest in at least five years, another Chinese manufacturing project in the works (no surprise here), the prospect of increased trade and investment cooperation with Belarus, and much, much more for you today.

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

PSA-

WEATHER- It’s another warm and sunny day in Cairo today, with a high of 30°C and a low of 18°C, according to our favorite weather app.

It’s a little cooler and breezier in Alexandria, with a high of 25°C and a low of 16°C.

EGX WATCH-

The EGX30 dropped 6.0% at yesterday’s close, with each of the index’s components — bar E-finance with a modest 0.4% gain — ending in the red, after the index jumped 5.6% and reached a four-year intraday high the day before. The index now sits at 24,449 — its lowest level in four months — and is down 1.8% YTD.

It’s all about figuring out the value of the EGP, say EGX insiders: Sharp fluctuations on the bourse have been on the back of traders trying to figure out the value of stocks as the EGP settles following the float of the national currency in March, Former EGX board member Ehab Saied told Enterprise.

The why: The EGX reached historic highs in the run up to the float — hitting 35k points when the EGP exchange rate against the greenback on the parallel market was in and around the EGP 70 mark — as investors looked to the bourse to hedge against currency volatility, Saied explained. Now we’ve said goodbye to the unpredictability of the parallel markers and investors are no longer looking towards the EGX as a way to hedge, investors are trying to figure out the actual value of stocks.

But there’s also other drivers of market instability: Rumors about capital gain taxes on EGX transactions have been circulating in the local media have affected the market, Horizon Security Brokerage’s Moatasem Al Shahidy told Al Ain. Heightened tensions in the region have also added to the unpredictability of the market, he added.

WATCH THIS SPACE-

A more optimistic primary surplus forecast: Finance Minister Mohamed Maait now expects the country’s primary surplus to come in at 5.75% by the end of the current fiscal year on the back of the arrival of around USD 12 bn from the landmark Ras El Hekma agreement, he told Morgan Stanley’s head of EMEA Clare Woodman, according to a statement from the ministry. The government’s last forecast penciled in a primary surplus of 2.5% for the current fiscal year.

And a more positive budget deficit to boot: Maait also sees the budget deficit finishing the fiscal year at 3.95%, down from the government’s forecast of 7.0%.

More Morgan Stanley news to come? “We look forward to benefiting from the capabilities of Morgan Stanley and enhancing cooperation in hedging arrangements against rising prices for the most popular commodities... and in non-traditional financing,” Maait said.

HAPPENING TODAY-

#1- The Immigration Ministry has opened the door for Egyptians living abroad to settle unfulfilled military service obligations for two months starting today, according to a ministry statement. The settlement cost has changed to USD 7k / EUR 7k from USD 5k / EUR 5k in the first iteration of the initiative.

#2- Attention, investors: Supply Minister Ali El Moselhi will offer investors the chance to invest in several internal trade projects today, MENA reports, without diving deeper into the details. We will be keeping our ears to the ground today to find out more.

#3- Early signs of Egypt-EU strategic partnership bearing fruit? A technical mission from the EU is in town to meet with various ministries and national authorities in Egypt to discuss ways of offering macroeconomic and budget support as part of a two-day trip that started yesterday, according to a statement from the International Cooperation Ministry.

On the agenda: During its trip, the delegation has penciled in meetings with the ministries of finance, planning, international cooperation, trade, environment, electricity, labor, and the Central Bank of Egypt.

NEWS TRIGGERS-

It’s the first day of May — here are the key news triggers to keep your eyes on in this month:

Inflation: Capmas and the CBE are expected to publish the inflation data for April next week. The likelihood that we’re on a deflationary path seems good, with annual urban inflation cooling 2.4 percentage points to 33.3% in March on the back of a softer increase in food prices as traders priced in a lower exchange rate following the fall of the parallel market.
Interest rates: The central bank’s Monetary Policy Committee will meet on 23 May to review rates. Most analysts are yet to unveil their forecasts, but Goldman Sachs expects the CBE to cut rates by 200 bps at its next policy meeting to bring rates down after its 600 bps rate hike in March alongside the EGP float.
Foreign reserves: Economists and analysts will be awaiting the release of April’s foreign reserves data from the central bank over the coming few days to see how fresh inflows coming our way following the float of the EGP will continue to affect our net foreign reserve position after our net foreign reserves rose in March to their highest level since Russia’s war on Ukraine and the global rise of interest rates triggered the flight of hot money from EMs.
PMI figures: S&P Global will publish Egypt’s PMI figures for April on Wednesday 8 May measuring the country’s non-oil private sector activity, which has been in contraction for the last 40 months. We’re still yet to see the hoped for uptick in business activity following the float of the EGP with March’s data showing “ softer but still-solid deterioration ” on the back of persistent currency challenges and elevated inflationary pressures.

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-

The end of the Egyptian gold rush? Local sales of gold bullions and coins were down 36% y-o-y to record 5.2 tons in 1Q 2024 — its lowest figure since 2Q 2022 — according to the World Gold Council’s Gold Demand Trends quarterly report and data set. “Egypt’s improved economic circumstances diluted the safe-haven motive of gold investors,” the report said, pointing to the country’s expanded package from the IMF and the central bank floating the EGP.

But Egyptians are as fond of jewelry as ever: Local sales of gold jewelry rose 3% y-o-y in the same period to 8.0 tons.

CIRCLE YOUR CALENDAR-

Aqarmap is bringing Egyptian and Saudi developers together: Real estate marketplace Aqarmap will organize a developers-get-together platform on Sunday 12 May in Cairo, bringing together Egyptian and Saudi real estate developers and property investors, according to a press release (pdf) from the company.

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-

Just a couple of stories are getting very wide play in the global business press on an otherwise very quiet Wednesday morning. It’s a national holiday today from much of Europe (France, Germany, Italy, Spain, Sweden) to India, Korea, and Latin America in observance of labor day.

Here’s the rundown on what’s making headlines:

#1- BlackRock has landed a USD 5 bn commitment from Saudi Arabia’s Public Investment Fund and will open a “multi-class investment firm” in Riyadh. A unit of the world’s largest asset manager will target investments in the Kingdom as well as across the Middle East and North Africa. EnterpriseAM Saudi has more, as do the Financial Times, Retuers, Bloomberg, and Wall Street Journal.

#2- Benjamin Netanyahu is signaling he will push ahead with a ground assault on Rafah “with or without a deal.” Speaking as Cairo-brokered ceasefire talks continued, Netanyahu said, “The idea that we will stop the war before achieving all of its goals is out of the question. We will enter Rafah and we will eliminate Hamas’ battalions there — with or without a deal,”

We’ll know more tonight: Hamas is expected to reply later today to Israel’s latest proposal and Israel says it’s not talking until it does.

#3- Demand for artificial intelligence drove sales growth at Amazon’s cloud division in 1Q — a fact you now know because every single news outlet from the FT and Wall Street Journal to Bloomberg is leading with that story at the top of their homepages as we head to dispatch this morning. Germany’s Handelsblatt notes that both Google and Microsoft Azure (both admittedly smaller players) grew their AI cloud businesses twice as fast in the fourth quarter. Amazon’s income more than tripled, comfortably ahead of analyst expectations.

#4- Pro-Palestinian protests on US college campuses — and heavy-handed responses to them — are also getting plenty of ink. Columbia President Minouche Shafik is still under fire from both sides, New York City is massing police next to the campus after protesters “dramatically” took over a building, and those occupying the building have been threatened with expulsion.

#5- Palace intrigue at HSBC: The Financial Times has the best insider take we’ve seen yet on the “shock exit” of Noel Quinn, the CEO of Europe’s biggest bank. “Inside HSBC headquarters, the narrative is that it was impossible for both Quinn and group chair Mark Tucker to continue in their roles.” Each effectively had a “three-year deadline” to leave the organization at around the same time — and Tucker wanted to oversee the selection of the third CEO his board will work with.

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*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: We take a look at Egypt’s spending plans for infrastructure in the next fiscal year.

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Chinese-backed USD 146 mn iron pipes factory breaks ground. PLUS: A Thai USD 20 mn sportswear factory in the works, EGP 100 mn home appliances factory for Egypt’s Tredco

A bout of fresh investments into our industrial zones: In familiar news to regular readers of Enterprise, another Chinese big ticket manufacturing project is in the works. While in not too familiar — and very encouraging — news, a Thai company looks set to become the first from the country to set up an industrial project in the country. And for good measure, a new home appliances factory from Egypt’s Tredco could also be in the cards.

#1- Construction of a USD 146 mn iron pipes factory has kicked off in TEDA: China’s state-owned Xinxing Ductile Iron Pipes Company has begun construction on a USD 146 mn ductile iron pipe factory in the TEDA industrial park, according to an SCZone statement. The project will manufacture 250k tonnes of cast iron pipes per year with an annual production value of USD 1.2 bn

Remember: The Chinese company inked an agreement with the SCZone in March granting it the right to build the iron pipes factory on the 270k sqm plot of land.

#2- Thai investors will set up a USD 20 mn sportswear factory in the SCZone: Thai ready-made clothing giant Hi-Tech Apparel has signed an agreement with the SCZone for the land to build a USD 20 mn sportswear factory in Qantara West above Ismailia, marking the first Thai industrial project in the country, according to an SCZone statement. The project is expected to break ground in 2H 2024, kick off in 2H 2025, and create 1.5k jobs.

Hi-Tech? The company operates ten factories across Thailand, Vietnam, Cambodia, and Laos, and manufactures sportswear for companies including US legacy brand Nike.

#3- Tredco wants to build a EGP 100 mn factory in the Tenth of Ramadan Industrial Zone: Egyptian manufacturer Tredco for Engineering Industries is looking to set up a factory to manufacture stoves in the Tenth of Ramadan Industrial Zone with investments of up to EGP 100 mn, the company’s chairman Sherif El Sayad told Al Borsa. The factory will be financed in equal part by the company and government banks. Operations are expected to launch in the first half of next year, with production capacity to hit 60k stoves within the first year.

Egypt, Belarus ink agreements to boost trade and investment

First visit of a Belarusian prime minister to Egypt ends with a raft of agreements: Belarusian Prime Minister Roman Golovchenko wrapped his visit to Egypt with the inking of three agreements between the two nations on trade, stock market cooperation, and bilateral investment, according to cabinet statements (here, here, and here).

The agreements included:

#1- Strengthening trade relations between the two countries by giving each other's exports priority when clearing customs and by launching a year-long pilot project to exchange information on the movement of goods between the two countries.

#2- Working together to up investor participation in their stock markets by inking an MoU to exchange expertise, sending delegations of experts between the two countries, and to cooperate in legal and technical matters that relate to the stock market.

#3- Boosting bilateral investment cooperation by promoting areas of investment of interest to investors in each country, facilitating joint projects, and encouraging business delegations to travel between the countries to find out more about potential investments.

IN OTHER DIPLOMACY NEWS- President Abdel Fattah El Sisi welcomed the Emir of Kuwait Sheikh Meshal Al Ahmad Al Jaber Al Sabah to Cairo yesterday and discussed increasing investment and trade between the two and cooperating on energy, infrastructure, and healthcare, according to an Ittihadeya statement. The two also discussed the need for a ceasefire in Gaza and Sudan, Libya, and Egypt’s right to water security.

AND- Another stock-take of ceasefire efforts between El Sisi and Qatari emir: El Sisi followed up on efforts to reach a ceasefire in Gaza and deliver sufficient humanitarian aid into the besieged enclave during a call with Emir of Qatar Sheikh Tamim bin Hamad Al Thani, according to an Ittihadeya statement.

** We have more on yesterday’s visits in Last Night’s Talk Shows, below.

Egypt’s auto sales fall 43% m-o-m in March as customers wait for further price reductions

The car market has been running low on gas: Auto sales in March recorded a 43% m-o-m drop to 4.2k vehicles, according to figures from the Automotive Marketing Information Council (AMIC) seen by Enterprise. The figure is the lowest we’ve seen since we started keeping track of auto sales in the country in January 2019.

February went a little differently: Sales saw a 20% m-o-m rebound in February from a 10-month low recorded in January with distributors selling some 7.4k vehicles.

The breakdown: The dip was driven by a 53% m-o-m decrease in passenger car sales, with just 2.8k units sold throughout the month. Truck sales were also down 10% m-o-m to 920 units, while bus sales remained essentially flat at 522 units.

On a yearly basis: Auto sales fell down 37% y-o-y in March, driven by a 41% y-o-y decrease in passenger car sales. Bus and truck sales were also both down in comparison to where they were a year ago, falling just over 18% and 32%, respectively.

Why the massive dip in demand? The decline in sales comes in direct relation to the central bank’s decision to float the EGP in March, Egyptian Association of Automobile Manufacturers head Khaled Saad told Enterprise. As a result of the EGP float, car distributors have started slashing their prices, which seems to have pushed customers to hold off from buying a car with the possibility of further price reductions down the line seen as a possibility.

What’s next? Despite the increase of cars in the market from the easing of FX shortages, buyers have remained hesitant to make any purchases in hopes that prices will cool even further, Saad said.

The caveat: AMIC figures reflect data contributed by member distributors, who include most(but not all) industry participants.

HSBC’s revenue inches up in Q1 2024 + CEO Noel Quinn resigns

HSBC’s revenues rose 3% y-o-y to USD 20.8 bn in 1Q 2024, defying the London Stock Exchange Group’s forecast of just USD 16.9 bn. The bank’s net income after tax logged USD 10.8 bn for the quarter, down 1.7% on the same period last year, according to the e arnings report (pdf).

Driving the increase in revenues: The lender’s revenues were up due to the selling of its banking business in Canada to the Royal Bank of Canada in late March, which amounted to a gain of USD 4.8 bn. Revenues were also driven by “higher wealth revenue in Wealth and Personal Banking, notably from a strong performance in Global Private Banking, well as revenue growth in Equities and Securities Financing in Global Banking and Markets, as market sentiment improved.”

Dragging down the lender’s bottom line: The lender’s net income after tax was down due to a USD 2.1 bn adjustment in 1Q 2023 related to the sale of its French retail banking operations. This adjustment was reversed in 4Q 2023 before the sale was finalized. Additionally, net income before tax in 1Q 2023 included a USD 1.5 bn gain from acquiring Silicon Valley Bank UK, according to the bank’s financials.

On a quarterly basis: The lender’s net income after tax surged almost 48x q-o-q from USD 222mn, while revenues were up 59% from USD 13 bn in 4Q 2023.

NOEL QUINN IS LEAVING HSBC-

HSBC’s chief executive Noel Quinn is stepping down from his post after nearly five years, the bank said in a statement. “After an intense five years, it is now the right time for me to get a better balance between my personal and business life. I intend to pursue a portfolio career going forward,” said Quinn. The lender’s board has begun its search for Quinn’s successor and should settle on a replacement by 2H 2024.

Health Ministry allays fears amid fresh AstraZeneca Covid-19 blood clots controversy

Talk shows were gripped by a fresh controversy over the AstraZeneca vaccine yesterday, after the pharma company admitted in a legal document that its Covid-19 vaccine could lead to blood clots. A visit from the Kuwaiti emir to Cairo and the Belarusian prime minister also received airtime yesterday.

“Clotting as a side effect of some vaccinations is a well-known and recognized issue since 2021, but this symptom is very rare and amounts to three cases in every mn,” Health Ministry spokesman Hossam Abdel Ghaffar told Lamees Hadidi on the Kelma Akhira (watch, runtime: 11:36). The spokesperson reassured listeners that “the chances of getting clots after vaccination are almost as likely as getting clots after being infected with the virus,” adding that “since 2021 until now, nobody — be it the European Meds. Agency or the World Health Organization — has issued recommendations to stop using the vaccine, because its benefits far outweigh the risks of harm.”

“The chances of developing clots from the vaccine are 10 times lower than getting clots from the virus itself,” Abdel Ghaffar explained. “What’s more, the exposure to clots lasts no more than two months after vaccination... there is no scientific evidence to show that I could take the vaccine in 2021 or 2022 and get a clot in 2024.”

Yesterday’s visit from the Kuwaiti emir will soon be followed by another high-level visit, said the Kuwaiti ambassador in Cairo, Ghanem Saqr Al Ghanim, on a phone call with Ahmed Moussa on Ala Mas’ouleety after the Emir of Kuwait Sheikh Meshal Al Ahmad Al Jaber Al Sabah met with President Abdel Fattah El Sisi yesterday in Cairo (watch, runtime: 3:48). The next visit — which was promised by the emir of Kuwait during yesterday's meeting — will convene a higher joint committee between the two countries to discuss the details of potential Kuwaiti investments in Egypt, he added. We have the story in the news well, above.

The prospect of increased economic cooperation with Belarus also caught the attention of the nation’s hosts: “The most important features of industry in Belarus are agricultural tractors, trucks, agricultural equipment, and silos, and we seek to cooperate with them in these aspects,” Secretary General of the Federation of Chambers of Commerce Alaa Ezz said on a call with Mohamed Shardi on Al Hayah Al Youm following the Belarusian prime minister’s trip to the country (watch, runtime: 6:51).

“Egypt has been manufacturing these tractors since the Soviet Union era,” he added. “What we are currently seeking is to remanufacture them locally, and to export them to neighboring countries and the European Union.” Talks with Belarus yesterday also dealt with establishing grain silos in Egypt to serve the Egyptian market and export to other countries.

The two countries are currently studying a direct flight route between Minsk and Egyptian destinations to attract more tourists and medical tourists from Belarus, Egyptian co-chair of the Belarusian-Egyptian Business Cooperation Council, Ahmed Kilani told Moussa on Ala Mas’ouleety (watch, runtime: 7:21).

US International Development Finance Corporation mulls financing Actis’ Gabal El Zeit acquisition. PLUS: Saudi SMEs to expand in Egypt, The HUB plan new frozen food factory, UAE’s Horizon Egypt eyes North Coast project

RENEWABLES-

#1- DFC to fund Actis’ Gabal El Zeit acquisition? The US government’s US International Development Finance Corporation (DFC) is considering financing UK-based private equity giant Actis’ planned acquisition of the Gabal El Zeit wind farm, Al Borsa reports, citing DFC data. This comes only a few weeks after the European Bank for Reconstruction and Development said it was reviewing a proposed USD 140 mn loan for Actis to finance its acquisition of the 580-MW wind farm.

Remember: Actis reportedly wrapped up due diligence on the wind farm in February and the IMF thinks stake sales of the Gabal El Zeit and Zafarana wind farms will be finalized before the end of June.

#2- Egypt + Indonesia talk green energy: The Suez Canal Economic Zone welcomed a delegation from Indonesia’s Trade Ministry to discuss potential cooperation in several areas including green energy, according to an SCZone statement. The talks focused on the economic zone's capabilities, including its four industrial zones and six seaports, and Egypt's infrastructure development plan. The Indonesian delegation expressed interest in collaboration, especially in ports and green energy.

SMEs-

USD 25 mn extended to Banque du Caire to help Saudi SMEs export to Egypt: Banque du Caire will receive a line of financing worth USD 25 mn from the International Islamic Trade Finance Corporation and the Saudi Export-Import Bank to help Saudi SMEs expand their presence in Egypt and encourage non-oil exports to Egypt, according to a statement.

INVESTMENT-

An EGP 150 mn frozen food factory: Local F&B firm The HUB for Food Industries is looking to set up a EGP 150 mn factory for frozen fruits and vegetables by 4Q 2024, the firm’s chairman Mohamed Abdelsabour told Al Borsa. The factory will have an initial production capacity of 15k tons, all of which will be exported, Abdelsabour said.

REAL ESTATE-

UAE developer Horizon Egypt eyes the North Coast to set up tourism complex: Emirati real estate developer Horizon Egypt Developments is reportedly looking to buy 180 acres land on the North Coast to build an integrated tourism complex, writes Shorouk News, citing sources it said are in the know. The sources added that there are other property developers looking to get the land to set up similar projects.

FOOD-

KSA’s Baazeem Trading has signed a three-year exclusive distribution contract with Egypt-based food manufacturer Kellogg Tolaram Noodles valued at SAR 20 mn per year, according to a Tadawul disclosure. Baazeem anticipates annual sales growth of SAR 20 mn.

ADQ to sell first USD-denominated bonds

ADQ mulls inaugural benchmark-sized USD bond issuance: Abu Dhabi sovereign wealth fund ADQ is reportedly selling its first dual-tranche USD-denominated benchmark sized senior unsecured bonds with tenors between five and ten years, Bloomberg and Reuters reported, citing people they say are familiar with the matter. A global investor call reportedly took place on Monday to discuss the debut offering.

Sound smart: A benchmark sized issuance usually has a minimum value of USD 500 mn.

ADQ is looking to diversify its funding sources for future acquisitions, according to one of the sources. In addition to its landmark USD 35 bn agreement with the Egyptian government back in February, ADQ has committed to plenty of investments over the last few months, including agreements in Kenya worth USD 500 mn and initiated a USD 180 mn tech-focused fund in Oman just last week.

The offering comes one week after Abu Dhabi’s first eurobond sale in three years, raising around USD 5 bn in one of the biggest emerging market transactions of the year, according to Bloomberg. Companies under Abu Dhabi’s ownership had around USD 113 bn in outstanding debt by the end of 2023, according to the bond prospectus.

DATA POINT: The wealth fund, chaired by Sheikh Tahnoon bin Zayed Al Nahyan, manages around AED 720.5 bn (USD 196 bn) worth of assets.

Advisors: Our friends at HSBC Holdings and First Abu Dhabi Bank, alongside Citigroup, Crédit Agricole, Goldman Sachs International, and Standard Chartered will act as joint global coordinators and active bookrunners, according to Reuters and Bloomberg.

MARKETS THIS MORNING-

Most Asian markets are closed this morning in observance of Labor Day. The Nikkei was down about 0.7% in early trading, while Australia’s ASX 200 was off a bit more than 1%. Markets are also closed today in France, Germany, Italy, and Spain and will look to make up ground tomorrow after the broad Stoxx 600 closed down nearly 1.5% for the month of April. Futures suggest shares in London and New York will face selling pressure at the opening bell later today.

EGX30	24,449	-6.0% (YTD: -1.8%)
USD (CBE)	Buy 47.79	Sell 47.93
USD (CIB)	Buy 47.80	Sell 47.90
Interest rates CBE	27.25% deposit	28.25% lending
Tadawul	12,395	+0.2% (YTD: +3.6%)
ADX	9,067	+0.1% (YTD: -5.3%)
DFM	4,156	-0.1% (YTD: +2.4%)
S&P 500	5,036	-1.6% (YTD: +5.6%)
FTSE 100	8,144	0.0% (YTD: +5.3%)
Euro Stoxx 50	4,921	-1.2% (YTD: +8.8%)
Brent crude	USD 87.86	-0.6%
Natural gas (Nymex)	USD 1.99	-1.9%
Gold	USD 2,302.90	-2.3%
BTC	USD 60,118.00	-4.5% (YTD: +41.8%)

THE CLOSING BELL-

The EGX30 fell 6.0% at yesterday’s close on turnover of EGP 3.5 bn (29.1% below the 90-day average). Local investors were net buyers. The index is down 1.8% YTD.

In the green: E-finance (+0.4%).

In the red: Talaat Moustafa Group (-12.0%), Qalaa Holding (-10.7%) and Eipico (-10.4%).

CORPORATE ACTIONS-

#1-Sidi Kerir Petrochemicals Company will pay out a dividend of EGP 1.25 per share on its 2023 earnings, the company said in an EGX disclosure (pdf). The dividend will be paid in two installments, EGP 0.75 at the end of this month and EGP 0.50 in September.

#2- Rameda Pharma will pay out a dividend of EGP 0.67 per share on its 2023earnings, which will be paid over three installments in June, October, and December of 2024, the company said in a bourse disclosure (pdf).

A look at Egypt’s infrastructure spending priorities for FY 2024-25

What are the state's infrastructure priorities for FY 2024-25? Last week, Planning Minister Hala El Said presented the government’s socioeconomic development plan (pdf) for the next fiscal year in an address to the House of Representatives, while Finance Minister Mohamed Maait presented the first-ever consolidated draft budget (pdf) for FY 2024-25. The two documents give us our first real insight into the state’s infrastructure priorities for the coming year.

Remember: Budget season is going to be a bit different this time round, with the issuing of the first Public Government Budget. The new budget — which does not replace the state budget — shows the budgets of all the state’s economic bodies in addition to the state budget collated together. The first phase includes some 40 economic bodies.

The government plans to increase its FY 2024-2025 spending 29% y-o-y to EGP 3.9 tn in the draft state budget. This time round, public investments will also be capped at EGP 1 tn, in response to the International Monetary Fund’s request to slow spending on infrastructure projects and rationalize fiscal policy, according to the Finance Ministry’s analysis report (pdf). When taking into account the state’s economic bodies, spending is estimated to read EGP 6.6 bn in the Public Government Budget.

The state will be more selective when making public investments: Government-funded investments will focus on ongoing national projects that are at least 70% complete and expected to enter the operational phase within a year or two at most, according to the Planning Ministry. The plan notes that the government will only invest in new national projects if deemed necessary or approved by the cabinet

Urban development is among the government’s top priorities: The government will allocate EGP 186 bn to urban development — which would account for 19% of public investments allocated for the next fiscal year — where EGP 50 bn will go to the real estate sector, EGP 45 bn to water services, and EGP 91 bn to sanitation, the socioeconomic development plan showed. The plan includes developing 471 drinking water stations, 100 pumping stations, and 248 sewage treatment plants.

Some EGP 136 bn are earmarked for the oil and gas sector, where natural gas will be distributed to houses under the second phase of the Decent Life initiative, oil terminals and refineries revamped, and oil pipelines completed.

As Egypt’s fastest growing sector, ICT will receive EGP 85 bn in FY 2024-2025, with the target of increasing revenues from outsourcing and tech consulting activities to USD 8 bn within three years to end in 2026. The plan also aims to accelerate the digitization of government services, such as the issuance of e-visas, real estate taxes, and universal health ins.

The state wants to save up to USD 3 bn by localizing certain industries: The government wants to ramp up efforts to localize the manufacturing of iron, steel, paper, pharma products, pipes, and boilers, among other products in the next fiscal year in a bid to narrow the EGP 25.7 bn trade deficit by 11% by saving USD 3 bn.

Driving up exports: The plan also aims to accelerate export-oriented industries, such as food, textile, engineering, and chemicals, by targeting 20% more industrial exports.

Fueling the green transition: The government said it will focus on environmentally-friendly industries that support sustainable development such as electric vehicles, green hydrogen, solar panels, wastewater treatment and seawater desalination plants, and the manufacture of energy-saving devices.

** You can get the full breakdown of the government’s plan for the green economy in the coming fiscal year in our latest Going Green.

A nod to industrial zones: The government will continue working on upgrading the Rubiki Leather City, along with industrial zones in Sohag and Qena governorates in the coming fiscal year. It also plans to upgrade the infrastructure in industrial complexes including Damietta Furniture City, textile industrial zones in El Mahalla El Kubra and Kufr Al Dawar, and the plastic industries complex in Al Aamiriya.

Your top infrastructure stories for the week:

DACT, Rowad to work on Tahya Misr 1 container terminal: Damietta Alliance Container Terminals (DACT) and Rowad Modern Engineering have inked an agreement to develop the superstructure of Damietta Port’s Tahya Misr 1 container terminal. (Statement)
Suez Canal Authority, Hyundai discuss investments: The Suez Canal Authority and Hyundai Corporation have opened talks on avenues for investment in the canal, including the distribution of spare parts for vessels transiting the waterway as well as the offering of rapid repair services and maintenance at its entrances. (S tatement)
Orange, Huawei bring the Cloud to Egypt: Orange and Huawei have teamed up to launch Huawei Cloud services in Egypt. (Statement | pdf)
Pricier hydropower? The Egyptian Electricity Holding Company is looking into raising the price of hydropower in FY 2024-25 following the float of the EGP. (Al Mal)

CALENDAR

2024

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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