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Tuesday, 3 Sep 2024

What We're Tracking Today
Poll
M&a Watch
M&a Watch
M&a Watch
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Going Green
Calendar

Central Bank of Egypt seen keeping rates unchanged -Enterprise poll

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Today at a glance

1

POLL

CBE expected to keep interest rates unchanged when it meets on Thursday.
2

M&A WATCH

GCC investors want a stake in the new capital’s Mount International School.
3

M&A WATCH

Basata and Jordan Kuwait Bank wrap up 27.1% acquisition of MadfoatCom.
4

M&A WATCH

Cairo Housing and parent company eye raising stake in United Housing to 90% through MTO.
5

What We're Tracking Today

An African investor-focussed freezone is in the cards.
6

LAST NIGHT’S TALK SHOWS

President Sisi’s anticipated Turkey trip dominates the airwaves.
7

Also on our Radar

Auto distributors push for more locally-assembled vehicles to make up for import restrictions.
8

PLANET FINANCE

Historic losses and US Fed uncertainty weigh on traders in September.
9

Going Green

The roadmap to adding 28 GW of renewable energy to Egypt’s energy mix — Part II.

Tuesday, 3 Sep 2024

What We're Tracking Today
Poll
M&a Watch
M&a Watch
M&a Watch
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Going Green
Calendar
1

What We're Tracking Today

Gov’t mull African investor-focussed freezone to boost trade with the continent

Good morning, friends, and happy hump day. As we get ready for PMI data later this morning that will give us insight into the health of our non-oil private sector, El Sisi’s trip to Turkey tomorrow, news of Chinese investments from Madbouly’s trip this week to Beijing, and the central bank’s decision on whether to cut interest rates at the end of the week, we’ve got plenty of M&A news to keep us busy in the meantime.

In today’s issue, we’ve got an interest rate poll conducted by yours truly, M&A news aplenty, auto industry localization updates, and much, much more. We have a packed issue today, so let’s jump right in.

WATCH THIS SPACE-

#1- An African investor-focussed freezone is in the cards: The industry, transport, and investment ministries are mulling the creation of a freezone for African investors as part of the government’s long-term goal of increasing trade with the continent, Al Borsa reports, citing unnamed sources. According to the outlet’s sources, African investors are increasingly turning to countries with better-developed infrastructure to produce their goods, after which they re-export them to their home markets.

Remember: The new Madbouly cabinet has placed a special emphasis on increasing trade with the rest of Africa via the African Continental Freetrade Area (AfCFTA) — which seems to be picking up steam — and the COMESA. African exports will also be supported by new trade missions, with added support for companies targeting exports to Africa also on the cards.

#2- Could we be in line for a wave of Indonesian investments? Indonesia plans to ink USD 3.5 bn worth of trade and investment agreements with African countries — with a particular focus on Egypt, Kenya, South Africa, and Nigeria — as it looks to expand its investment portfolio outside its usual trade partners, Bloomberg reports, citing a senior diplomat, who singled out the gas, healthcare, and agriculture sectors. These agreements will be announced during the Indonesia-Africa Forum that will wrap up today, according to the country’s Deputy Foreign Minister Pahala Mansury.

#3- Fertilizer subsidy system set for a shakeup? Only eight crops — wheat, corn, soybeans, beets, sugarcane, cotton, rice, and sunflowers — will be eligible to receive subsidized fertilizers starting next year, Al Mal reports, citing unnamed sources it says have knowledge of the matter.

Remember: Urea fertilizer producers have been calling on the government to give them the greenlight to almost double the prices for the 55% of their monthly output that they are obligated to sell on to the Agriculture Ministry to be distributed as subsidized fertilizers. The cost of production has skyrocketed in tandem with the float of the EGP and rising cost of natural gas — which represents about 65% of the raw materials used to create fertilizers.

HAPPENING TODAY-

#1- Will today be the day that the non-oil private sector activity break its 44-month streak in the red? S&P Global will publish Egypt’s PMI figures for August later this morning measuring the country’s non-oil private sector activity. Last month saw business activity hit its second highest level since August 2021, sitting just below the threshold that marks growth.

#2- Madbouly heads to Beijing: Prime Minister Moustafa Madbouly will land in Beijing this morning to represent Egypt at the Forum on China-Africa Cooperation that will kick off tomorrow and run until Friday, according to a cabinet statement.

We here at Enterprise will be on the look out for news of fresh Chinese investments: In addition to attending the forum, Madbouly is also expected to meet with Chinese officials and business leaders. The prime minister is set to ink a number of MoUs and contracts related to investments in the Suez Canal Economic Zone and the Egyptian telecommunications sector, the statement notes without providing any further details.

Madbouly is also booked in to speak at the forum: On the docket for the visit are a number of high-level sessions, with Madbouly expected to give a speech for a session entitled Industrial Transformation, Agricultural Modernization, and Green Development.

#3- It’s the second and final day of Seamless North Africa: Mechants, enterprises, and SMEs in the e-commerce space as well as players in the fintech, banking, and retail sectors will be gathering for the last day of the event today “to drive forward the future of digital commerce.” Take a look at the schedule here and register to attend here.

#4- We have lift off at the Egypt International Airshow, which is entering its first day in El Alamein today The event will cover all things aviation from now until Thursday — be it commercial, defense, and even space — and feature exhibitions from 200+ companies, discussions from industry leaders, and even aircraft flyovers and displays.

AT THE CENTRAL BANK-

Bond bonanza ahead of upcoming interest rate meeting on Thursday: The Central Bank of Egypt sold some EGP 23.2 bn of EGP-denominated three-year treasury bonds yesterday — over 3.5 times its target of EGP 5 bn — according to data from the bank. The bonds carry an average interest rate of 25.2%, down slightly from 25.3% in the previous auction.

Remember: Earlier this month, foreign investors sold some USD 600 mn worth of local debt instruments — 7-8% of total foreign investment in the market, according to Prime Minister Moustafa Madbouly — amid a global sell-off that wiped USD 6.4 tn from global stock markets. While the CBE doesn’t report what portion of treasury purchases are made by foreign investors, strong demand for our long-term debt likely signals higher investor confidence in the economy.

PSA-

WEATHER- It’s another late summer day in Cairo today, with a high of 35°C and a low of 27°C, according to our favorite weather app.

It’s only a little cooler 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.

CIRCLE YOUR CALENDAR-

Upper Egypt-focussed startup accelerator Athar is showcasing ten green startups from its Climate Action Accelerator program this Thursday in Minya. Athar is also set to launch its Green Manifesto during the event. You can RSVP to attend here.

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

THE BIG STORY ABROAD-

Developments related to the war in Gaza remain the main item across most international headlines, as Israeli prime minister Benjamin Netanyahu holds out on his added conditions for a ceasefire agreement with Hamas amid ongoing mass Israeli protests and news that the UK is halting some arms exports to the country.

Netanyahu continues to reject increasingly vehement calls from the Israeli street and international community to reach a ceasefire agreement with Hamas, saying yesterday that maintaining an Israeli troop presence in the Philadelphi corridor on the border between Gaza and Egypt remains a non-negotiable condition for an agreement. The comments come as a general strike, ongoing protests, and public spats in the Israeli cabinet continue to roil an increasingly divided country.

Meanwhile, the UK is banning the sale of some arms to Israel — including aircraft components — that risk being used in Israeli actions that seriously violate international law. The suspension constitutes the first such action by a major ally of Israel since the war’s inception.

While over in int’l business news, Volkswagen is considering closing factories in Germany for the first time in its 87-year history, with potential to renege on a promise to not cut jobs in Germany until 2029. The move comes as the car-maker has struggled to cope with a shrinking European and Chinese market for its EVs as new competitors and cheaper models increasingly take center stage.

Plus, Kamala Harris has expressed her opposition to Japanese Nippon Steel’s USD 15 bn bid for US Steel, saying at a campaign event late last night that the company “should remain owned and managed by Americans.”

And Georges Elhedery began his tenure as HSBC’s new CEO yesterday, saying in an internal memo that he plans to build on the bank’s current strategy as the bank seeks to shift from restructuring to growth in the coming period.

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: We look at what the state is doing to ensure we’re on the right track to boosting the percentage of renewables in our energy mix.

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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.

2

POLL

Egypt’s central bank expected to keep interest rates unchanged when it meets on Thursday

Another uneventful Thursday ahead? The Central Bank of Egypt is expected to once again leave interest rates unchanged when it meets on Thursday, as persisting inflationary pressures keep potential rate cuts at bay, according to our interest rate poll. All eight of the analysts and economists we surveyed see the Monetary Policy Committee (MPC) holding rates steady.

Where rates currently stand: The overnight deposit rate stands at 27.25%, the overnight lending rate at 28.25%, and the main operation and disc. rates at 27.75%. The committee delivered a 600 bps rate hike following a surprise monetary policy meeting in March in conjunction with the float of the EGP and a larger loan package from the IMF being approved soon after.

Rates have been stable since March: The central bank hasn’t touched rates since its March rate hike — leaving them as is when it met in May and then again in its July meeting — citing its commitment to sustaining the current trajectory of inflation moderation.

We aren’t out of the woods just yet when it comes to inflation: Despite inflation being on a downward trend, “prematurely cutting rates could exacerbate the problem of core inflation,” economist Hany Abou El Fotouh tells us. “Our view on macroeconomic developments is positive, as we expect a positive adjustment in Egypt's credit rating at the beginning of 2025, which requires controlling inflation and not rushing to lower interest rates,” IBIS Consultancy economist Ali Metwally told us.

Remember: Annual urban inflation cooled to its lowest level since December 2022 in the last monthly data set, which showed annual inflation coming in at 25.7% in July, down 1.8 percentage points from 27.5% in June. Annual core inflation — which excludes volatile items such as food and fuel — slowed to 24.4%, down from 26.6%.

A recent uptick in inflationary pressures may soon start making its mark: Some analysts see inflation picking up again in August after falling for five consecutive months on the back of recent price hikes. Metwally sees inflation in August and September rising to somewhere in the range of 30-31% between August and September. The favorable base effect played a crucial role in reducing inflation over the five months ending in July, but this will change for August, September, and October as these months will reflect the impact of increased fuel and electricity prices,” Zilla Capital’s Aya Zoheir told us.

Inflation aside, the MPC will also be taking ongoing geopolitical tension and IMF demands into account when making its decision. “The central bank may adopt a more cautious approach and begin easing rates in 1Q 2025 if it sees a reason to do so in light of geopolitical tensions and their unpredictable developments,” Al Ahly Pharos analyst Esraa Ahmed told Enterprise. There is also pressure from the IMF to continue with restrictive monetary and fiscal policies to keep inflation tamed, EGBank board member Mohamed Abdel Aal tells us. Abdel Aal also pointed to planned subsidy cuts, also courtesy of the IMF, and their impact on inflation, explaining that all of this will likely push the MPC to keep rates unchanged.

ICYMI- We have an IMF loan review around the corner: The Fund is set to conduct the fourth review of our USD 8 bn loan program by the end of September or in October at the latest. The review, which was pushed back from its initial date in September, is set to unlock a USD 1.3 bn tranche.

All eyes on the Fed: Economist Mona Bedair sees the CBE continuing its wait-and-see approach even as the US Federal Reserves appears to be getting ready for a much-anticipated interest rate cut. The Fed cutting rates will not pressure the CBE to start cutting rates as well, she added. “If the Fed cuts rates this month, the pressure on the EGP will ease and it will strengthen against the USD,” Metwally said.

So if not this week, when will the CBE start slashing rates? Analysts see the CBE easing monetary policy by late 2024 or early 2025. The bank may start cutting rates in its November or December meetings after we start to see the impact of fiscal reforms on inflation, Bedair said. Some see rate cuts happening later, including CI Capital’s Sara Saada, who sees the bank kicking off its fiscal easing cycle in 1Q 2025.

Reuters analysts agree: The median prediction of 15 analysts polled by Reuters was that the CBE will hold rate this Thursday, with just one analyst penciling a 100 bps rate cut. “We anticipate interest rates being left on hold by the CBE given inflation remains well above target,” Capital Economics’ James Swanston told the newswire. “However, momentum is in the right direction and with a sharper fall anticipated in the headline rate in early 2025, attention will turn to when that first rate cut will be — for our part, we have penciled it in for 1Q 2025.”

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3

M&A WATCH

GCC investors want a stake in the new capital’s Mount International School

GCC investors want a slice of Mount International: A number of undisclosed Saudi and Emirati investors — investment funds and family businesses — are in negotiations to acquire a 40% stake in Mount International School Community in a EGP 280 mn transaction, advisor Business City Group ’s founder and vice CEO Ahmed Semeda told Al Mal. The transaction should be finalized by the end of 2024.

About the school: Established in 2020 in the new capital’s Mostakbal City, Mount International School Community offers IB, IG, and the American high school diploma. It was set up by brothers Diaa and Hossam El Din, who each own a 30% stake in the school. Shareholder Ihab Mounir owns the remaining 40%.

How much is the school worth? The school is currently valued at some EGP 700 mn, Sameda said, adding that the valuation is expected to hit EGP 1.3 bn after carrying out expansion plans.

What’s next for the school? The school wants to set up branches across New Cairo and a number of governorates during the next three years.

This comes during a particularly turbulent time for the education sector, which is currently experiencing inflationary pressures, exchange rate instability, and lack of incentives. Private and international schools are also having to figure out how to position themselves after the Education Ministry decided to keep the limits up to which they can raise their tuition fees for the upcoming academic year.

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4

M&A WATCH

Egypt’s Basata and Jordan Kuwait Bank wrap up 27.1% acquisition of MadfoatCom

Basata snaps up stake in MadfoatCom: Local fintech player Basata and the Jordan Kuwait Bank have acquired 27.1% of Jordanian bill payment provider MadfoatCom for an undisclosed sum, Hapi Journal reported, citing unnamed sources.

Basata wanted more: The two buyers were 2.9 percentage points off their target to acquire upto 30% of the Jordanian company in a binding offer submitted in March.

But Basata may soon be back for more: Unconfirmed reports last week said Basata wants to eventually up its stake in the company to 49%.

Advisors: Aniston Capital and Imara Asset Management were reportedly Basata’s financial advisors on the transaction.

Up next: Basata is reportedly planning to expand into the Saudi market through MadfoatCom as it already has the necessary regulatory approval.

** We sat down with Basata Holding CEO Karim Shehata last month for our weekly My Morning Routine section. You can check out our interview here.

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5

M&A WATCH

Cairo Housing and parent company eye raising stake in United Housing to 90% through MTO

Cairo Housing wants in on United Housing: EGX-listed real estate player CairoHousing and Development will submit an MTO for a stake in United for Housing and Development via share swap after its board greenlit the move, according to an EGX disclosure (pdf).

How much are they after? The percentage stake Cairo Housing is after remains unclear, as it is looking to increase its parent company and its subsidiaries’ stake in United to up to 90%. Aspire and its subsidiaries own a combined minority 49.9% stake in United.

Share swap details: If the transaction moves forward, the share swap will happen at a ratio of one United share to three Cairo Housing shares.

What’s next? Cairo Housing’s extraordinary general assembly will meet to discuss increasing the company’s capital through issuing more shares.

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6

LAST NIGHT’S TALK SHOWS

President Sisi’s Turkey trip dominates the airwaves

President Abdel Fattah El Sisi’s upcoming trip to Turkey got significant airtime on the talk show circuit last night, with hosts also touching upon the mutual accusations levied by Egypt and Israel following the failure of Gaza truce negotiations.

President Sisi will visit Turkey for the first time tomorrow after having been invited by Turkish president Recep Tayyip Erdogan, Ahmed Moussa said on his program Ala Mas'ouleety (watch, runtime: 2:21). Moussa noted on social media that Egyptian-Turkish relations are currently witnessing significant development and improvement, explainging that “the visit will include discussions on all bilateral and international issues, as well as the signing of numerous agreements and MoUs in various areas.” Moussa also mentioned that El Sisi and Erdogan will chair a session of the countries’ Strategic Cooperation Council, which was established during the Turkish president’s visit to Cairo in February.

“No official statement has been issued by the Turkish side regarding the visit’s date so far, but Turkish media confirms that it will be on Wednesday,” Al Arabiya’s correspondent in Turkey Zidan Zanklu told Amr Adib on his program El Hekaya (watch, runtime: 3:56). Zanklu added that El Sisi will visit Ankara accompanied by a large delegation that will include several ministers, senior officials, and businessmen. The two sides will discuss ways to enhance economic relations and cooperation in areas such as tourism, transportation, and the defense industry, alongside expanding the countries’ joint freetrade agreement, according to Zanklu.

Meanwhile, Amr Adib focused on heightened tension between Egypt and Israel amid the latter’s insistence on keeping troops on the Egypt-Gaza border on his show El Hekaya (watch, runtime: 3:41). Adib referred to statements made by a high-level source to Al Qahera News that “Egypt reaffirms its steadfastness on conditions for a peace agreement, foremost among them the categorical rejection of an Israeli presence in the Philadelphi Corridor and the Rafah crossing.” The source added that “the continuation of the current war and the possibility of its regional expansion are extremely dangerous and could have severe consequences,” noting that “the Israeli government is responsible for the failure to reach a truce agreement and is seeking to impose a new reality on the ground to cover up its internal crisis.” Adib described the source’s public statements as “momentous” (watch, runtime: 1:55 and 4:03), and reiterated that “the Israeli state has been in a state of paralysis since the bodies of six hostages were discovered in Rafah the day before yesterday.” Ahmed Moussa also covered the story (watch, runtime: 9:11).

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7

EGYPT IN THE NEWS

Egypt’s struggles to keep the lights on amid an energy shortage is continuing to catch the attention of the int’l press

In a quiet morning for Egypt in the foreign press, the Financial Times dives into our “journey from gas bonanza to power blackouts.” The broadsheet tracks how the country went from having ambitious plans to become a regional energy exporting powerhouse — bolstered by the Zohr discovery whose estimated reserves put it as the Mediterranean’s largest discovery — to our present predicament of power cuts and costly energy imports eating away at the public purse.

Reuters also took a look at our efforts to bridge the energy supply gap, with a report claiming that Saudi Arabia and Libya are allegedly funding the purchase of around USD 200 mn worth of natural gas shipments to Egypt in an effort to help alleviate our energy crisis, citing two unnamed industry sources. The country needs around USD 2 bn worth of gas to cover demand until October, according to the newswire.

Remember: The government is spending USD 1.2 bn for energy imports this summer to help fill a supply gap and put a temporary end to blackouts during the hottest months of the year. After becoming a net exporter of LNG in 2018 and signaling its intention to become an important energy exporter to the region and Europe, production falls and rising domestic demand led to Egypt having to ramp up imports to bridge the supply gap.

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8

Also on our Radar

Auto distributors push for more locally-assembled vehicles to make up for import restrictions. PLUS: Somabay + Redcon, SODIC, TMG, Mass Developments, EFG Hermes, Kima

AUTOMOTIVE-

Auto distributors call for more locally-assembled vehicles: Authorized distributors of Hyundai, Chery, Chevrolet, Nissan, and BYD vehicles have requested that the automakers increase the amount of locally-assembled vehicles allotted to them to make up for import restrictions, Al Mal reports, citing unnamed sources. One of Egypt’s largest car distributors is reportedly holding negotiations with automakers that assemble their vehicles locally to increase their allocation by 40-50%.

There movement already: A group of companies that assemble vehicles led by GB Auto have agreed to increase their allocations to accredited distributors, while others have postponed their decision until shipments of production components arrive from abroad.

Remember: Major car dealerships have faced significant delays in getting their cars released from local ports — delays that have threatened contracts and future investments from car manufacturers and exacerbated the severe shortage of new cars on the market, sources in the automotive market previously told us.

ON THE SAME WAVELENGTH- Stellantis Egypt is looking into exporting locally-made Citroen models to Libya and Algeria, among a number of other Arab nations, Al Mal reports, citing an unnamed Industry Ministry official. This comes as Stellantis looks to partake in the Egyptian Automotive Industry Development Program, which will offer incentives to auto players o encourage the localization of the industry.

The first of many: A number of other automakers are also looking to export a percentage of their locally-produced vehicles, including General Motors, the source said, adding that it’s all in early stages.

REAL ESTATE-

#1- New projects in the Red Sea: Somabay and Redcon Construction will set up a number of projects in the Red Sea with EGP 1.7 bn in investments under a newly-signed MoU, according to statement. The two companies will set up a number of residential and commercial projects in Somabay, inlduing 2k residential units and multiple luxury hotels.

More to come? “This partnership is also poised to extend into subsequent years, contingent upon the successful execution and satisfactory performance by Redcon Construction,” the statement read.

#2- SODIC launches new Japan-inspired project on the North Coast: SODIC is breaking ground on its 440-acre Ogami development in Ras El Hekma, the company said in a press release (pdf). The hospitality project was planned by the DLR Group and includes a Nobu hotel, restaurant, and residences, alongside 800 m of pristine beachfront.

#3- TMG expects to double its FX revenues by 2028: Talaat Moustafa Group (TMG) expects to see its USD revenues double to USD 856 mn by 2028 on the back of its acquisition of a majority stake in a group of seven historic hotels, it said in an EGX disclosure (pdf).

#4- Mass Developments launches EGP 22 bn multi-use project: Real estate developer Mass Developments has begun development of its new 30.6k sq m multi-use project in New Cairo with investments of over EGP 22 bn, Al Borsa reports.

FINANCIAL SERVICES-

EFG Hermes launches asset servicing, custody arrangement services: Our friends at EFG Hermes have launched asset servicing arrangement and custody arrangement services, which aim to “address the unique challenges faced by high-net-worth individuals, family offices, and small- to mid-sized funds in accessing custody arrangement services,” the firm said in a press release (pdf). The company will help facilitate the custody arrangement process for clients at “highly competitive” rates.

What they said: “Introducing our asset servicing and custody arrangements is a testament to our commitment to expanding our offering by addressing the challenges that high-net-worth individuals and institutional and specialized investors face. By offering seamless access to over 40 markets and handling the complexities of custodial arrangements, we empower our clients to navigate global markets easily and confidently,” EFG Hermes Global Head of Brokerage Ahmed Waly said.

EARNINGS-

Egyptian Chemical Industries (Kima) saw its net income dip 93.9% y-o-y to EGP 70 mn during the fiscal year 2023-2024 from EGP 1.2 bn the year before, it said in its latest earnings release (pdf). Revenues fell 1.2% y-o-y to EGP 6.5 bn during the year. The company attributed the dip in income to an EGP 80 mn decrease in sales revenues and a EGP 722 mn increase in operational costs.

COMMODITIES-

Gov’t wants to increase its wheat reserves amid geopolitical concerns, Supply Minister Sherif Farouk told Al Mal. “We are working to secure the largest amount of strategic wheat reserves to ensure we can meet the country’s needs in light of current geopolitical tension,” the minister said. The government will be able to up its strategic wheat reserves from six-months’ supply to nine months if it secures the necessary funds. Farouk previously said that the government will announce the purchase of 3.8 mn tons of wheat before the end of the year.

Remember:President Abdel Fattah El Sisi reportedly gave the order for last month’s huge wheat buy following concerns over the country’s food security. An intelligence briefing raised concerns over our food security in light of escalating regional tension. State grains buyer GASC last month purchased 280k tons of wheat in a tender that aimed to secure some 3.8 mn tons, locking in just c. 7% of its target.

Speaking of: The government is looking into increasing the storage capacity of silos by 76% to 6 mn tons of grains, legumes, and other strategic goods by 2030, Asharq Business reported citing the deputy supply minister. The project will be carried out over two phases at a total cost of EGP 34 bn.

EXPANSION-

#1- Intercap Capital to expand into Saudi Arabia by 2025: Investment banking firm Intercap Capital is looking to expand into Saudi Arabia early next year, managing partner Rafik Dalala told Al Borsa.

#2- Coca Coffee wants to set up shop in the UAE: Local coffee company Coca Coffee is planning to set up a factory in the UAE next year, Al Borsa reported, citing the company chairman. The company is still studying the project and is yet to determine its cost,

Coca Coffee? Established in 2023, Coca Coffee produces high quality coffee beans from its EGP 12 mn factory. It currently serves the local market and exports its products to the UAE and Saudi Arabia.

FINTECH-

MID Takseet links up Al Ahly Momkn: Fintech player MID Takseet customers now have access to e-payment company Al Ahly Momkn’s — a subsidiary of the National Bank of Egypt’s investment arm Al Ahly Capital Holding — 90k points of sale, according to a press release.

EDUCATION-

A new branch of a Greek university may be coming to Alexandria: The Higher Education Ministry and Greek authorities are exploring establishing a branch of the University of Patras in Alexandria, alongside plans to create a joint curriculum and establish an exchange program, according to a ministry statement.

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9

PLANET FINANCE

Historic losses and US Fed uncertainty weigh on traders in September

September is often a turbulent month for asset classes including stocks, bonds, and gold — and there are few signs suggesting this year will be much different, Bloomberg writes.

What gives? Anxiety over whether the US Federal Reserve will cut rates (and by how much) later this month and generalized anxiety about the US presidential election.

The “traditional” September slump: Bonds, stocks, and gold regularly dip in September as traders rebalance portfolios after summer vacation, the business information service notes. Just about all of the S&P 500 and Dow’s biggest losses (in percentage terms) in each year since 1950 have come in September. Bonds have fallen in eight of the last ten Septembers, and gold has dropped every September since 2017.

Investors are eyeing this coming Friday’s US employment report for insights into the US economy and the Fed’s next moves. The Fed meets on 17-18 September and will then convene again in early November and mid-December. With Fed Chair Jerome Powell having largely settled the question of whether there will be a rate cut in September, the key issue now is the extent of the cut, Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets wrote.

Politics is making things more fraught, with the prospect of a 10 September TV debate between Vice President Kamala Harris and former President Donald Trump is also adding to anxiety — to say nothing of the question of who is elected in November.

All eyes on Friday? “September has a mixed record, with risk-off sentiment being common, especially in election years,” Bob Savage, head of markets strategy and insights at BNY said. “The upcoming US jobs report will likely set the tone for the rest of the year,” he added.

MARKETS THIS MORNING-

Asian markets are mixed this morning, with the Hang Seng and Shanghai Composite both in the red and both the Nikkei and Kospi up slightly. Australia’s ASX 200 is essentially flat, as is India’s Nifty 50.

Futures suggest we’ll see US shares open under modest selling pressure at the opening bell later today, while most major European benchmarks we follow are set to today’s session in the green.

EGX30

30,732

-0.6% (YTD: +23.5%)

USD (CBE)

Buy 48.46

Sell 48.60

USD (CIB)

Buy 48.49

Sell 48.59

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,167

-0.2% (YTD: +1.7%)

ADX

9,363

+0.8% (YTD: -2.2%)

DFM

4,357

+0.7% (YTD: +7.3%)

S&P 500

5,648

+1.0% (YTD: +18.4%)

FTSE 100

8,364

-0.2% (YTD: +8.2%)

Euro Stoxx 50

4,973

+0.3% (YTD: +10.0%)

Brent crude

USD 77.52

+0.8%

Natural gas (Nymex)

USD 2.19

+2.9%

Gold

USD 2,531.70

+0.2%

BTC

USD 58,992.10

+1.1% (YTD: +40.1%)

THE CLOSING BELL-

The EGX30 fell 0.6% at yesterday’s close on turnover of EGP 6.2 bn (60.3% above the 90-day average). International investors were the sole net buyers. The index is up 23.5% YTD.

In the green: Elsewedy Electric (+3.7%), Madinet Masr (+2.8%), and AMOC (+2.5%).

In the red: Palm Hills Development (-4.5%), Emaar Misr (-4.4%), and Cleopatra Hospitals (-3.6%).

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Our weekly deep dive into the green economy and ESG issue in Egypt.

Published every Tuesday in EnterpriseAM.

Read going Green
10

Going Green

The roadmap to adding 28 GW of renewable energy to Egypt’s energy mix — Part II

What should the state do to ensure our ambitious renewable targets become reality? The road to boosting the percentage of renewables in our energy mix is not without challenges, but what should the state do to ensure we reach the finish line?

In part one of the story, we looked at the pipeline of projects that will help us fulfill the state’s goal of adding 28 GW of renewable energy to the country’s energy mix over the next five to seven years and the incentives needed to keep the investments coming.

Refresher: The government wants to see 3-4 GW-worth of renewable energy projects go live and start feeding the national grid by next summer to fill the energy supply gap. This push is part of a broader plan to secure the country's energy needs amid declining natural gas production and expanding electricity interconnection projects to enable exports to surrounding countries.

To help make renewables more attractive, the government is looking into scrapping the cap on renewable energy production for households and allowing the state to purchase whatever excess energy produced to use it to feed the electricity grid, one of our sources said. Former head of the Sustainable Energy Division Adel Bishara told Enterprise that the government needs to provide more incentives to encourage individuals and companies to expand the use of solar panels.

Remember: Integrated grid-connected, small-scale solar systems could save Egyptian households on their electricity bills and ease pressure on the national grid. The Electricity Ministry has reportedly begun implementing hikes that will see household electricity prices rising by 14-40%.

It doesn’t come without challenges: The high cost of implementation and barriers to financing plans are preventing many from turning to the sun’s rays. We dove into the ins and outs of households going solar in a Going Green published earlier this year.

The solution? Bishara suggested cutting down on the costs of approval and installation procedures and fully exempting solar panel imports from customs to help push more households to go solar.

Incentives for solar panel assembly: Reducing the cost of building solar power plants heavily relies on tax and customs breaks, Romany Hakeem, chairman of Beneshty Solar and vice chairman of Sustainable Energy Development Association told Enterprise.

The bigger picture: More households using solar energy to keep the lights on will help the government cut down on fuel costs — the government is looking to install up to 30 GW of new renewable energy as it looks to save USD 4.1 bn in annual fuel costs.

No time to waste: Making the shift to renewable energy is no longer a luxury with ongoing challenges in the traditional energy sector and the world shifting to reduce emissions, Hakeem said.

Regulatory challenges remain: Hakeem pointed out that inconsistent regulations remain a major challenge to the growth of the renewable energy sector. He noted that some regulations prevent the sector from reaching its full potential, pointing to the cap on renewable energy production.

AS THINGS STAND-

Our current energy mix: Despite recent efforts, renewable energy’s contribution to the country’s energy mix remains limited. A source from the Electricity Ministry explained to Enterprise that the major renewable projects set up over the past few years helped make Egypt one of the first countries in the region to enter the renewables field, pointing to the Benban solar power plant and a number of wind farms.

By the numbers: Renewable energy made up some 11.5% during the past fiscal year and is forecast to make up some 13.8% during the current fiscal year. And the government sees renewables making up 18.6% of Egypt’s total energy mix by the fiscal year 2026-2027.

Expanding our renewable capacity is a top priority: Our sources at the Electricity Ministry confirmed that expanding the country’s renewable energy and encouraging private sector investment in green energy sources is on top of its list of priorities for the coming period.

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CALENDAR

2024

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.

9 September (Monday): Egyptian delegation to visit Iraq.

10 September (Tuesday): The fifth edition of technology conference Tech Invest will take place.

10 September (Tuesday): Finance Minister Ahmed Kouchouk to speak at AmCham luncheon, Nile Ritz Carlton, Cairo.

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.

30 September (Monday): Portfolio Egypt 2024, Nile Ritz-Carlton, Cairo.

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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