EGP swings show the system working

Wednesday, 29 Jul 2026

EGP swings show the system working

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Today at a glance

Economy

Economists say the EGP’s swings are the flexible regime working as designed, not a stability threat.

Logistics

ALCN is raising terminal fees just as Egypt’s ports pick up rerouted Gulf trade.

WHAT WE’RE TRACKING TODAY

Eni took a final investment decision on Cronos, targeting 2028 for routing Cypriot gas through Egypt.

WHAT WE’RE TRACKING TODAY

The IMF exec board will meet tomorrow to consider approving the seventh review of Egypt’s loan program.

WHAT WE’RE TRACKING TODAY

At least eight VLCCs are diverting to Sidi Kerir as Houthi threats push Saudi crude around Bab Al Mandab.

EARNINGS WATCH

Sodic’s sales more than triple in 1H on broad-based demand.

Also on our Radar

Hassan Allam inks SAR 2.7 bn Waldorf Astoria contract in Diriyah.

PLANET FINANCE

Chipmaker slump hits global markets as investors reassess AI outlook.

HARDHAT

A global report flags Egypt’s subsea cable corridors as a systemic vulnerability.

WHAT WE’RE TRACKING TODAY

Eni took a final investment decision on Cronos, targeting 2028 for routing Cypriot gas through Egypt

Good morning, ladies and gents. It’s a calm morning on the news front with a couple of stories to dig into.

We asked economists whether the EGP’s swings should worry you, and the one word answer is: relax. The longer answer — where flexibility stops being healthy and starts eating confidence — is the one worth your time reading.

Meanwhile, Alexandria’s container gate is about to get pricier just as the ports are catching trade the Gulf is rerouting our way. Whether a fee this small actually matters depends on who you ask, and the sources we spoke to don’t agree.

Also worth watching this week: Eni finally signed for Cronos, and the IMF board meets tomorrow on the seventh review. More on both stories below.

***

ARE YOU MORE OF A LISTENER? Morning Drive is a 10-minute summary of today’s issue crafted for you to enjoy with your morning coffee, while getting the kids ready for school, or driving through the morning rush. And if you like it, tell your friends to tell their friends. They can find us on Apple, Spotify, or wherever they get their podcasts.

***

Destination Sahel is back for a second edition — and this year, it’s not just about the beach.

Gulf sovereign wealth funds are pouring serious capital into the North Coast, Gulf buyers keep showing up despite regional headwinds, and a new 400 km master plan could reshape the whole coastline before summer’s out.

Over this season’s series, stay tuned to see who’s really buying Sahel, where the money’s coming from, and what could still go wrong.

Plus, the hotels, restaurants, and openings worth checking out this season.

Coming straight to your inbox — today.

A concrete decision

Eni took a final investment decision (FID) on the Cronos gas development offshore Cyprus, targeting first gas to market in 2028, to be routed, processed, and liquefied through Egypt, according to a press release. Cypriot President Nikos Christodoulides approved the field’s development and production plan, along with its commercial framework, in May.

The field sits in Block 6 and holds more than 3 tcf of gas initially in place. It is expected to produce at a plateau of 500 mmscf / d. Last year, the Oil Ministry signed three agreements with Block 6 partners Eni (operator, 50%) and TotalEnergies to move and process Cronos gas through Zohr-linked infrastructure, liquefy it at Damietta, and re-export it to Europe.

The FID turns Egypt’s gas hub strategy into a concrete development. Cyprus gets its first route to monetize offshore gas without building its own LNG infrastructure, while Egypt earns value from transporting, processing, and liquefying it. Eni says the project also restarts the Damietta LNG plant and restores structural LNG exports from Egypt, which marks a reversal after falling domestic output curbed exports and pushed the country back to importing LNG. Eni will market 50% of the volumes, equivalent to 1.4 mtpa, implying total output of about 2.8 mtpa. It did not disclose the development cost or the terms governing Egypt’s infrastructure.

Aphrodite is moving too: The field’s partners — Chevron (35%), Shell’s BG Cyprus (35%), and NewMed Energy (30%) — have completed all signatures on an MoU to sell all recoverable gas from the 3.7 tcf field, in Cyprus’s Block 12, to EGAS, NewMed said in a disclosure (pdf). The parties are now negotiating a binding supply agreement, and signatures on a separate host-government agreement — covering a USD 2 bn offshore pipeline to Egypt, fully funded by Cyprus — are expected within weeks, as the Oil Ministry and Chevron push toward a September FID. Other Cypriot fields could follow the same model, with the Pegasus and Glaucus fields also in line.

IMF could greenlight tranches tomorrow

The International Monetary Fund (IMF) Executive Board will meet tomorrow to decide on the seventh review of Egypt’s loan program, according to its calendar. This green light from the board will unlock some USD 1.6 bn, between the seventh tranche of the Extended Fund Facility and the second Resilience and Sustainability Facility tranche. Cairo should receive the funds within days of board approval, Mohamed Maait, executive director for Arab States and the Maldives at the Fund, previously told EnterpriseAM.

Proceeding apace: The Madbouly government and the IMF reached a staff-level agreement on the seventh review under our USD 8 bn EFF and the second review of the parallel RSF late last month. At the time, the global lender commended Egypt’s energy price adjustments, spending cuts, and flexible exchange rate for cushioning the regional war spillovers and portfolio outflows.

Red Sea’s loss, Sidi Kerir’s gain

At least eight VLCCs are heading to Sidi Kerir Mediterranean terminal, with arrivals scheduled through mid-August as Yemen’s Houthi threats and rising war-risk ins. costs make Yanbu-loaded exports riskier and push Saudi crude onto Egypt’s pipeline workaround instead, Bloomberg reports. Aramco started offering additional Sidi Kerir cargoes on a spot basis earlier this week, with no volumes or pricing disclosed.

Why Sidi Kerir? The terminal lets tankers collect Saudi crude in the Mediterranean without entering the Red Sea’s southern chokepoint. Saudi barrels move through Aramco’s East-West Pipeline from Ras Tanura to Yanbu, then north up the Red Sea to Ain Sokhna — away from Bab Al Mandab rather than toward it — where they discharge into the Sumed pipeline, which carries the crude north across Egypt to load onto tankers at Sidi Kerir on the Mediterranean.

SOUND SMART- A VLCC — very large crude carrier — hauls about 2 mn bbl, which is what makes it the workhorse of long-haul crude trade and also why it can’t transit the Suez Canal fully loaded. At around 20 meters, a loaded VLCC’s draft is too deep for the canal. That’s the problem Sumed partially solves — the pipeline runs parallel to the canal, so tankers can discharge parts of the cargo at Ain Sokhna, let the barrels cross Egypt by pipeline, and reload on VLCCs at Sidi Kerir.

At the loading point, it’s a different story: No tankers were publicly visible at Yanbu early yesterday, though some may have loaded with their transponders switched off. Traffic through Bab Al Mandab remained relatively brisk, with Chinese vessels, tankers carrying Russian crude, and ships linked to Iran-friendly states continuing to transit. At the same time, Western and more risk-averse Asian operators diverted or limited their exposure.

Aramco is also weighing a new pricing mechanism for Sidi Kerir cargoes sold to Asia to reflect the higher shipping costs of the longer route, Reuters reports, citing three sources it says are familiar with the matter. One source estimated that routing around the Cape of Good Hope instead could add about USD 10 mn per cargo — roughly USD 5 a barrel — for Asian buyers.

Sector conviction

B Investments wants a bigger slice of the education platform it entered three months ago. A consortium led by the EGX-listed investment firm plans to raise its combined stake in the Scientific Research, Education and Development Company — the entity behind the European Universities in Egypt (EUE) brand — to more than 40%, up from around 25% currently, Al Borsa reports, citing unnamed sources.

What we know: A consortium led by B Investments plans to funnel EGP 500-700 mn into a capital increase expected to close within days, according to the report. No further details were given.

B Investments is also said to be weighing three to four more education plays, a mix of K-12 schools and universities, on the back of rising demand for education and expected growth in student numbers. The push sits within a wider strategy to build out high-growth sectors, including food and beverage, education, and healthcare, the sources said.

REFRESHER- B Investments first bought into EUE in April, pledging EGP 560 mn through a mix of capital increase and secondary purchase — marking its first move into higher education. The firm sees “growing demand for quality education” here at home, its IR head told EnterpriseAM at the time.

Data point

14.7% — that’s the q-o-q increase in the net asset value of the country’s investment funds, reaching EGP 471 bn at the end of June, up from around EGP 411 bn at the end of March, according to the Financial Regulatory Authority’s 2Q 2026 Investment Funds Performance Report (pdf).

The certificate count grew nearly three times faster than assets. Outstanding fund certificates jumped 40.2% q-o-q to 44.04 bn, against 14.7% NAV growth — the gap says new money came in, rather than existing holdings simply appreciating. Individuals hold 74.7% of the certificates, institutions 24.3%, and founding entities the remaining 1%.

PSA-

WEATHER- It’s another hot day in Cairo, with a high of 38°C and a low of 26°C, according to our favorite weather app.

It’s not as hot in Alexandria, which will be looking at a high of 32°C and a low of 24°C.

The big story abroad

After a four-day pause in direct US-Iran hostilities, the Islamic Revolutionary Guard Corps launched an “attempted surprise attack” on US military bases in the region, the US Central Command said. A US military base in Jordan was reportedly targeted, Axios reports.

Latest on negotiations? Oman introduced a Gulf-backed proposal to Iran aimed at managing the Strait of Hormuz, which includes a provision for collecting voluntary transit fees, Reuters reports, citing a Gulf source and a Western diplomat.

FIFA is looking to sell around 20% of FIFA Forward Enterprise — a new commercial entity valued at some USD 20 bn. FIFA has enlisted JPMorgan to help raise USD 4.2 bn this year by courting external investors. The move has drawn criticism from fan groups, lawmakers, and UEFA, Europe’s governing body of football, with critics accusing the Switzerland-based non-profit of selling out.

China’s battery giant CATL is making strides into AI, power grids, and ships. As the world’s leading battery manufacturer, the company now powers AI data centers, positioning itself at the forefront of the global transition from fossil fuels to renewable energy, grid stabilization, and heavy industry electrification. Its batteries already power some 1k vessels off China’s coastline and rivers and ports.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: EnterpriseAM’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: An international report has flagged Egypt’s subsea cable concentration as a systemic vulnerability, a risk for the country’s attempts to establish itself as a global data corridor.

Tags:

energy Eni WHAT WE’RE TRACKING TODAY

Some places become part of your story.

This summer, slow down, reconnect, and create moments that linger long after the season ends. From sunrise by the sea to unforgettable experiences, every stay at Somabay is designed to become a memory worth keeping.

Economy

Economists say EGP swings are the flexible regime working as designed, not a stability threat

How much FX volatility is too much? As the EGP grows more responsive to capital flows and geopolitical shocks, economists tell EnterpriseAM that recent movements remain a feature of Egypt’s flexible exchange-rate regime rather than a threat to financial stability. The open question is where policymakers draw the line between healthy flexibility and excessive volatility, and whether Egypt’s export ambitions require a weaker EGP or simply a more predictable one.

A new kind of balancing act: The Central Bank of Egypt (CBE) no longer faces the problem that dominated policy for years — defending a fixed rate. Having adopted a flexible regime, it now lets the currency absorb external shocks while trying to keep volatility from spilling into inflation, financial stability, or investor confidence. For now, economists broadly agree Egypt sits comfortably on the right side of that line.

Swings are the system working

Normal volatility, not policy failure: “There is absolutely no reason to view the recent EGP movements as a threat to financial stability,” says Al Ahly Pharos Head of Research Hany Genena. “Frankly, I am surprised that movements of a single EGP up or down have become headline news. We should start talking about volatility when we see movements of 5–10%, or swings of EGP 2–3 within a single day. That is what excessive volatility looks like. What we have today is reasonable, acceptable, and calm,” Genena says. He argues that Egypt has captured the benefits of a float without the usual costs: foreign investors “are penalized when they exit and rewarded when they enter. They have adapted to this framework.”

A natural consequence of abandoning exchange-rate targeting is how London-based macro analyst Aly Metwally frames the swings. “It is natural for the EGP to weaken during wars, capital outflows or geopolitical tensions, before recovering as inflows return and risks subside,” he says. “That is not a failure of flexibility; it is precisely how a flexible exchange-rate regime is supposed to work.”

Flexibility itself does macroeconomic work, Genena says, adding that letting the rate adjust spares the CBE from burning reserves and discourages speculative FX demand under stress. “A large part of the shock is absorbed through changes in buying and selling prices. Some importers postpone purchases, while some foreign investors reconsider exiting. That reduces pressure on the banking system’s foreign assets and ultimately preserves the country’s USD [buffer],” he says.

When to be concerned

When intervention is warranted: The economists agree conditions are orderly today but point to clear triggers for stepping in. The danger begins when exchange-rate movements become larger than companies’ ability to price their products, when banks can no longer provide foreign currency at the quoted rate, or when a meaningful gap emerges between the official and parallel markets, Metwally says. “We are not seeing any of those conditions today.”

The sensitivity is structural

The EGP has grown more reactive to global developments because of the flexibility system’s structure, not because fundamentals have deteriorated, Metwally explains. “The fundamentals have improved in terms of reserves, remittances and FX liquidity,” he says. “However, the exchange rate has become much more sensitive to portfolio flows and geopolitical developments. Any news related to the Strait of Hormuz, oil prices or investor appetite for emerging markets quickly shows up in the EGP. Heavy reliance on foreign investment in local debt markets naturally increases the currency’s sensitivity,” he adds.

Oil is the other short-term driver, given Egypt’s import bill, economic analyst Ehab Saied says. “Petroleum products have become the single largest item in the government’s import bill, making the EGP highly responsive to swings in crude prices, particularly during periods of geopolitical tension.” Portfolio outflows magnify the pressure: “The first wave of the regional conflict in February saw roughly USD 8 bn leave Egypt’s debt market, triggering an almost 15% depreciation in the EGP,” he adds.

Hot money can’t anchor stability, Metwally says. While portfolio inflows do finance part of the state’s needs, they are highly mobile by nature, he adds. This means investors will enter when the real interest rates are attractive and the currency appears stable, but exit quickly when geopolitical risks rise, he explains. “We cannot build exchange-rate stability on hot money. Stability must come from exports, tourism, remittances and foreign direct investment,” he says.

Competitive beats strong

A weaker EGP cuts both ways: Volatility complicates inflation management, but the economists caution against reading depreciation as purely negative. “Every new depreciation raises the cost of imported goods and production inputs,” Metwally says. Companies become more conservative in pricing and build wider safety margins, while investment decisions stall. Genena counters that moderate flexibility sharpens exporter competitiveness. “When foreign investors exit and put pressure on the exchange rate, exporters immediately benefit from higher EGP revenues. That encourages companies to continue investing in export capacity, because weaker exchange rates naturally hedge part of their foreign-currency exposure.”

Exports alone won’t strengthen the currency, Saied cautions, given an import-intensive production base: “Higher exports are likely to be accompanied by higher imports, given that roughly 70% of Egypt’s imports consist of raw materials and intermediate goods. The focus should be on sectors with lower imported-input requirements rather than simply targeting higher export volumes.”

Navigating the swings

Economists credit policymakers with holding macro stability through an unusually hard external environment, managing monetary policy while the region remains engulfed in tensions and Egypt is still recovering from a currency crisis. They point to international reserves near USD 55 bn and banking-sector net foreign assets of around USD 16 bn, arguing that the CBE should keep building the tools that support flexibility, starting with deeper FX hedging markets, rather than defending a predetermined rate for the EGP.

The economists’ recommendation: Forward contracts and FX swaps with greater depth would let companies hedge future FX needs instead of becoming speculators in the USD market, they say. The consensus is that the float is working as intended and the goal is not to eliminate volatility entirely. The real test is deciding how much volatility to tolerate before flexibility starts to erode confidence.

Tags:

economy EGP monetary policy

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Logistics

Alexandria’s container operator is raising terminal fees just as Egypt’s ports pick up rerouted Gulf trade

Alexandria Container and Cargo Handling Company (ALCN) will introduce four new container charges and raise a fifth starting 1 September, according to a summary of board resolutions filed with the EGX (pdf). The new charges cover full export container entry (USD 15-20), empty container handling (USD 10-20), container retention in the inspection yard (USD 10-20), and container movement for weighing (USD 30-60). Meanwhile, the existing inspection and examination charge will rise to USD 32-64 from USD 30-60. All are collected in EGP at the USD equivalent, with the tariff set to be reviewed every six months.

PLUS- There’s a yard expansion in the mix too: The board approved awarding a EGP 97.4 mn contract, excluding VAT, to build Yard B at El Dekheila Container Terminal as part of the company’s infrastructure and capacity-expansion plans.

Why this matters: ALCN is the port’s dominant container operator, and that’s what gives this repricing national weight. Its two terminals, spanning roughly 1.6 km of quay across the Alexandria and El Dekheila ports and wired into the national rail network, carry a combined capacity of 1.5 mn TEUs. That’s only about three-quarters of the 2 mn TEU of container capacity the two ports are designed to handle, according to Alexandria Port Authority figures. Containers accounted for 28.3 mn of the port’s record 82 mn tons of cargo in FY 2024/25 — the dry and liquid bulk that make up the rest move through berths ALCN doesn’t run.

However, containers are where Egypt’s manufactured exports and rerouted transit boxes flow, and the bulk of that capacity is ALCN’s. A repricing at its gates, in a complex that handles about 60% of Egypt’s foreign trade, is a cost added at the country’s main container gateway.

Zoom out, and the picture gets less flattering. The new charges land as the terminals ALCN operates sit at the center of two things Egypt is counting on. Strategically, Cairo is targeting USD 145 bn in annual exports by 2030, a goal that relies on the same container gates ALCN is about to make more expensive to pass. Tactically, the port has become a transit beneficiary of the Middle East conflict: with Gulf shipping rerouting around Hormuz disruption, Egypt’s Mediterranean gateways have picked up volume they wouldn’t otherwise see. Imposing fees at this moment runs against the government’s own stated goal of lowering logistics costs and boosting export competitiveness, shipping sources tell us.

Will the repricing actually leave a mark? Currency volatility is the real problem for importers, not the new fees, Matta Bishay, head of the Internal Trade Committee at the General Division of Importers, tells EnterpriseAM, adding that a USD 20-30 increase per container won’t move the needle on a USD 100k shipment. The total hit comes in under 0.5% of final product prices — the kind of bump that turns an EGP 10 item into an EGP 10.25 one — and is a fair response to rising global shipping and insurance costs, Ahmed Ataby, head of the Exporters and Importers Division at the Giza Chamber of Commerce, tells us.

The counterargument: fees add up. The fee may be negligible by shipping-cost standards, but exporters are looking to save every pound to stay price competitive, Amr El Samadony, secretary-general of the International Transport and Logistics Division, tells us. But he warns that its cumulative effect could weigh on exporters facing fierce price competition in Gulf and European markets. With exporters looking to save every pound to stay competitive, any increase in logistics costs has to be added to the price of the goods, potentially weakening their position against rivals with stronger, cheaper logistics networks.

Ataby sees it differently — for him, the timing is the justification, not the problem. Global shipping pressures, not ALCN’s balance sheet, explain the increase, he tells us. Fuel alone accounts for around 65% of voyage costs, and marine ins. premiums have climbed sharply on the back of the same disruptions. Against that backdrop, he calls ALCN’s increase modest and justified.

What’s next? No other Egyptian container terminal has announced similar increases so far, though industry sources say the Transport Ministry could step in if the fees threaten export competitiveness. Ataby, for his part, expects the opposite. He predicts that other Egyptian terminals will eventually follow ALCN’s lead, arguing that its dominant role in the country’s trade makes its pricing a benchmark for the rest of the market.

Who controls ALCN: Abu Dhabi sovereign wealth fund ADQ holds an indirect 51.33% majority, through Alpha Oryx (32%) and AD Ports subsidiary Black Caspian Logistics (19.33%). A move to consolidate that holding under AD Ports — and potentially lift it to as much as 90% — stalled after the Egyptian government refused to sell its combined 43.9% stake. That state holding is split between the Holding Company for Maritime and Land Transport (36.3%, following a stake increase in April) and the Alexandria Port Authority (7.6%). The remaining 4.76% is in freefloat on the EGX. In FY 2024/25, ALCN posted an EGP 8.37 bn top line, with an adjusted EBITDA margin of 64%.

Tags:

exports logistics trade

A MESSAGE FROM VISA

Between cash and clicks: women entrepreneurs are navigating a hybrid payment reality

Women-led businesses are already building across channels. Visa’s Women SMB Digitization Index 2025 shows that many are selling and getting paid in more than one way. The business question now is what helps that activity turn into growth: stronger payment know-how, better access to capital, and less reliance on the founder’s own savings to fund the next step.

That is where She’s Next comes in. Run with CIB Business Banking and Shark Tank Egypt, Visa’s latest She’s Next Egypt round gives women founders guidance, visibility, and a bigger room for the businesses they are already building.

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A MESSAGE FROM VISA Visa

EARNINGS WATCH

SODIC’s sales more than triple in 1H on broad-based demand

Real estate developer SODIC reported a 201% y-o-y increase in gross contracted sales to EGP 23.5 bn during the first half of 2026, driven by strong demand across its projects, the company said in its earnings release (pdf). Revenue rose 25% y-o-y to EGP 6 bn — led by deliveries at its West Cairo projects, with the VYE development alone accounting for 41% of delivered value — while net cash collections increased 18% to EGP 10.2 bn. Net income fell 36% y-o-y to EGP 834 mn from EGP 1.3 bn a year earlier, with the squeeze following a delivery-heavy half which typically carries lower margins.

Deliveries surged during the period: SODIC handed over 557 units in 1H 2026, up 78% y-o-y, with North Coast projects accounting for 302 units, followed by West Cairo with 192 units and East Cairo with 63 units. Construction spending increased 8% y-o-y to EGP 5.3 bn as the developer continued to ramp up execution across its portfolio.

A healthy backlog: Despite the decline in earnings, SODIC ended the period with EGP 116 bn in unrecognized revenue, which the release says will provide strong visibility over future revenue recognition while maintaining a low debt-to-equity ratio of 0.66x.

What they said: SODIC General Manager Ayman Amer pointed to growth across revenues, deliveries, sales, and collections, and flagged the launch of the first Nobu Residences in Egypt — part of its Ogami development on the North Coast, built with Aldar Properties and Nobu — and the opening of Nobu New Cairo as key milestones during the period.

Tags:

earnings watch real estate SODIC

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Also on our Radar

Hassan Allam inks SAR 2.7 bn Waldorf Astoria contract

Hassan Allam Holding formally inked a SAR 2.7 bn (USD 720 mn) contract to build the Waldorf Astoria Hotel, Residences, and Mixed-Use Super Block in Diriyah, Saudi Arabia, through its subsidiary Hassan Allam Construction Saudi in partnership with Qatar’s UCC Saudi, according to a press release (pdf). The 241k-sqm development sits in the Boulevard Northwestern District of Diriyah and will include a 200-key Waldorf Astoria hotel, 47 branded residences, commercial and office space, an integrated super-basement, and public realm space.

REMEMBER- The contract formalizes an award first announced in June. The project expands Hassan Allam’s gigaproject footprint in the kingdom, following an earlier SAR 1.84 bn contract awarded in April in consortium with Al Bawani to build the Saudi Arabia Museum of Contemporary Art in Diriyah.

Mall offices may lose their break

Mall-based offices could lose their 1% tax treatment as the Finance Ministry considers subjecting administrative units in malls and commercial centers only to the new 14% VAT — eliminating potential overlap between the two levies and aligning their treatment with other administrative premises, a senior government source tells EnterpriseAM. The new tax would apply only to lease contracts signed after the law takes effect, not existing agreements, the source adds.

What we know: Implementation instructions will be issued to tax offices once the VAT amendments are published in the Official Gazette, the source says. The government is expected to pay EGP 840 mn in VAT on buildings in the government district during the current fiscal year once the amendments take effect, the source adds.

REMEMBER- We reported last month that whether the 1% levy would survive alongside the new VAT or be scrapped to avoid double taxation was still under discussion.

More on our radar:

Local fintech player PaySky’s Yalla platform received in-principle approval from the UAE’s central bank for a Category II retail payment services license, putting it on track to expand its payment capabilities in the country once it meets the remaining regulatory requirements and secures the final license. (Statement)

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ALSO ON OUR RADAR Hassan Allam Construction

PLANET FINANCE

Chipmaker slump hits global markets as investors reassess AI outlook

Global stock markets suffer a chipmaker slump as investors question the outlook for AI spending. Chipmakers, which drove markets higher in 1H on expectations of huge AI investment, are now coming under pressure as investors reassess their deployments, the Financial Times reports.

What’s happening? “Worries around funding uncertainties, capex increases and Big Tech cashflow have taken center stage,” Barclays' head of US equity strategy Venu Krishna said.

The sell-off fever spread across the sector: US chip stocks suffered losses over the past couple of days. Memory products firm Sandisk, which dropped 11% on Monday, fell by the same amount yesterday, pushing the stock down more than 40% over the past month. Western Digital, Micron, Advanced Micro Devices, and Intel each lost at least 4% yesterday, while Europe’s ASML declined by 3%.

South Korean chipmakers remained at the center of the rout. The Kospi dropped more than 10% on Tuesday, with SK Hynix falling 14.7% and Samsung Electronics dropping 13.4%, leaving both stocks down more than a third in July. Oversupply concerns dropped the investment appetite for both firms after they revealed plans to each develop two new semiconductor plants to double DRAM production capacity over the next five years.

Other Asian markets were also affected by the trend: Japan’s Nikkei 225 fell 4% yesterday, with memory-chip maker Kioxia plunging more than 18%, halving its share price in July. Meanwhile, China’s memory-chip maker CXMT dropped more than 4%, following a 466% jump in its shares on Monday after raising USD 8.5 bn in its Shanghai listing.

Rising costs and liquidity constraints are fueling concerns: Investors are anticipating Big Tech 2Q earnings to see if they can keep funding their AI buildout, focusing on whether higher capital spending and borrowing levels can be sustained. Alphabet’s shares fell 7% in a single session last week after the company reported a sharp rise in outflows tied to AI infrastructure spending.

China’s AI rise is also affecting investor sentiment: The growing competition from lower-cost Chinese rivals and concerns over Western AI spending drove the sell-off in Asian technology stocks, Deutsche Bank analyst Jim Reid said. Those concerns intensified after Chinese AI startup Moonshot launched a large language model last week with capabilities close to those of leading US developers such as Anthropic.

Despite the rising caution, demand is set to remain strong. Concerns over rising capital spending and funding needs are driving the sell-off, but demand for AI remains robust, based on the earnings reported so far, State Street's head of Equity Research Marija Veitmane said. Investors are being more cautious, however, regarding the end of the AI boom, with rising credit default swap prices tied to big names serving as evidence of growing concerns, GAM Group CEO Albert Saporta said.

MARKETS THIS MORNING-

Asia-Pacific markets are mostly down in early trading as the global tech selloff continues. South Korea’s Kospi, Japan’s Nikkei, and the Shanghai Composite are all down, while the Hang Seng is trading higher.

EGX30	53,730	+0.2% (YTD: +28.5%)
USD (CBE)	Buy 50.46	Sell 50.60
USD (CIB)	Buy 50.45	Sell 50.55
Interest rates (CBE)	19.00% deposit	20.00% lending
Tadawul	10,678	-0.9% (YTD: +1.8%)
ADX	9,835	-0.1% (YTD: -1.6%)
DFM	5,790	-0.9% (YTD: -4.3%)
S&P 500	7,429	+0.2% (YTD: +8.5%)
FTSE 100	10,871	+0.8% (YTD: +9.5%)
Euro Stoxx 50	6,290	+0.1% (YTD: +8.5%)
Brent crude	USD 84.09	+4.8%
Natural gas (Nymex)	USD 2.63	-1.2%
Gold	USD 4,083	-0.4%
BTC	USD 63,861	+0.1% (YTD: -27.1%)
S&P Egypt Sovereign Bond Index	1,084	+0.1% (YTD: +9.2%)
S&P MENA Bond & Sukuk	150.38	+0.1% (YTD: -1.0%)
VIX (Volatility Index)	18.21	-2.5% (YTD: +21.8%)

THE CLOSING BELL-

The EGX30 rose 0.2% at yesterday’s close on turnover of EGP 11.1 bn (18.0% above the 90-day average). Regional investors were the sole net sellers. The index is up 28.5% YTD.

In the green: Telecom Egypt (+1.7%), Arabian Cement (+1.5%), and ADIB (+1.3%).

In the red: Rameda (-2.1%), Juhayna (-1.8%), and Heliopolis Housing (-1.7%).

Tags:

AI capital markets Financial Markets Planet Finance

HARDHAT

Slow repair permits are holding us back from becoming the world’s data corridor

Egypt is trying to cement its position as a global data corridor, but an international report is raising concerns about resilience. The country sits on one of the planet’s most vital digital chokepoints, carrying an estimated 17% of global internet traffic, and the world’s cable-resilience watchdog just flagged that position as a risk to manage. The verdict comes from the International Advisory Body on Submarine Cable Resilience, established by the International Telecommunication Union (ITU) and the International Cable Protection Committee (ICPC), in its final report (pdf) on the subsea cables carrying more than 99% of global data traffic.

Egypt’s Red Sea and Mediterranean corridors sit at the center of the warning. The Suez Canal corridor carries an estimated 90% of Europe-Asia data traffic through more than 100 miles of shallow water — where cables are more vulnerable to anchor strikes and seismic activity — before reaching the Mediterranean, the report notes, citing industry data. Bab Al Mandeb is similarly flagged as the world’s most cable-dense chokepoint, with at least 17 cables passing through a strait less than 14 miles wide, carrying an estimated 17-20% of global internet traffic.

The report names the concentration of cable traffic through Egyptian waters a “systemic vulnerability,” meaning that a single incident can affect connectivity across multiple regions at the same time, a risk no cable owner can offset alone.

The two corridors mark two of the risk points, and the third is a paperwork problem. Slow timelines for processing permits mean slow repair times. Global repair response times have more than doubled in the past decade, from under 20 days in 2012 to over 50 days in 2024, according to ICPC data cited in the report. In Egypt, a March 2024 incident left a pan-African operator waiting up to eight weeks for permits before repairs to its damaged Red Sea cable could begin, which were eventually completed that July.

The paperwork delay came at a cost no one can quantify. We spoke to industry sources who declined to name a specific USD cost tied to the Egypt-based delay. The report cites a comparable 2024 incident off West Africa, where a single cable cut cost one country an estimated USD 590 mn in losses in just four days, driven by the collapse of e-commerce platforms, digital banking, and international business communications. If four days did that kind of damage, an eight-week permitting delay in a corridor carrying 90% of Europe-Asia traffic is a balance-sheet problem nobody has priced yet.

The cost of routing around Egypt is exactly why no operator does it. The report puts the “diversity premium” — the added cost of routing a secondary cable along an alternative geographic path — at 15-25%, driven by the need to bypass existing landing stations and build new terrestrial infrastructure. More than 80% of new investment continues flowing into established routes.

Concentration is a strategy until it’s a vulnerability, and Egypt is trying to manufacture its way into staying on the upside. Egypt has been working to improve its digital infrastructure, including expanding its subsea cable capacity. Then-ICT minister Amr Talaat told EnterpriseAM in March 2025 the state spent roughly USD 6 bn building “strong infrastructure,” but ministry data shows that figure isn’t for subsea cables specifically. It also covers fixed internet coverage, mobile network buildout, and postal system development more broadly.

Whatever the exact split, the buildout hasn’t slowed. The number of subsea cables passing through Egypt rose to 21 in 2025 from 13 in 2018, Talaat previously told us. Landing stations have grown to 11 from six, and the government has linked the country’s two coasts through a 2.7k-km cross-border terrestrial network, backed by a parallel 2.6k-km network, to keep service running if one line goes down, he added.

Local connectivity and internal infrastructure are the real value drivers, former Benya Cables CEO Mohamed Khalil tells EnterpriseAM. The links between landing points and data centers are what let a country move “from a transit point to a hub,” he says. Localizing cable manufacturing is part of that pitch, and it’s now underway: Elsewedy Electric is building a USD 500 mn subsea cable factory, as we reported earlier, in the newly announced Damietta Port zone — the first facility of its kind in the region and only the sixth in the world.

This is where infrastructure investment intersects with digital sovereignty. Sovereignty does not mean isolation, Mohamed Hegazy, digital legislation consultant and former head of the ICT Ministry’s legislation committee, previously told us. It means having the local capacity to maintain and develop systems by owning the talent, code, and products needed to avoid exposure to sudden external decisions to suspend services, he said.

Striking a balance between global scale and local control is what foreign investors are watching for. Microsoft Egypt General Manager Mohamed Qassem tells EnterpriseAM that the company’s cloud strategy is built around offering the “global scale” of cloud services while giving institutions “full local control” over their data to ensure compliance with regulatory requirements.

What’s next: The ITU report’s fix is a single point of contact (SPOC) to speed up repair permits and reduce barriers facing cable-repair vessels. Other countries have already proven the model works: Singapore’s Maritime and Port Authority cut repair permitting from about a week down to three to five working days, and the UK now averages eight days to start repairs against the global average of 50 — both through the same SPOC approach the report is recommending for everyone else. Cairo hasn’t adopted it yet, as far as we can confirm.

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digital infrastructure Hardhat

CALENDAR

JULY

28-30 July (Tuesday-Thursday): EduGate, Egypt International Exhibition Center, Cairo.

AUGUST

19 August (Wednesday): Connected Banking Summit, Fairmont Nile City Hotel Cairo.

20 August (Thursday): Monetary Policy Committee’s fifth meeting of 2026.

26 August (Wednesday): Prophet Muhammad’s birthday.

SEPTEMBER

8-10 September (Tuesday-Thursday) El Alamein International Airshow, El Alamein International Airport.

10-12 September (Thursday-Saturday): Egyptian Entrepreneurship Sector Diagnostics Report Summit, El Gouna.

15 September (Tuesday): IMF to hold its eighth review of Egypt’s USD 8 bn EFF arrangement.

24 September (Thursday): Monetary Policy Committee’s sixth meeting of 2026.

27-29 September (Sunday-Tuesday): Global Conference on Population, Health, and Human Development.

28-29 September (Monday-Tuesday): Egypt Mining Forum, St. Regis Hotel New Capital.

30 September - October 3 (Wednesday-Saturday): Cityscape, Egypt International Exhibition Center, Cairo.

OCTOBER

5 October (Monday): The EnterpriseAM Egypt Forum.

6 October (Tuesday): Armed Forces Day.

10-11 October (Saturday-Sunday): Egypt Women’s Health Summit (EWHS), Cairo Marriott Hotel.

26-28 October (Monday-Wednesday): IEX Egypt, Egypt International Exhibition Center, Cairo.

29 October (Thursday): Monetary Policy Committee’s seventh meeting of 2026.

NOVEMBER

6-8 November (Friday-Sunday) : Global Entrepreneurship Festival, JW Marriott Hotel, New Cairo.

8-11 November (Sunday-Wednesday): Cairo ICT Forum.

DECEMBER

7-10 December (Monday-Thursday): Food Africa, Egypt International Exhibition Center, Cairo.

17 December (Thursday): Monetary Policy Committee’s eighth meeting of 2026.

EVENTS WITH NO SET DATE

Mid-August: IMF Board expected to decide on the seventh review of the loan program.

2H 2026: Operations at Deli Glass Co’s new USD 70 mn glassware factory kick off.

2026: The Egyptian-American Economic Forum.

4Q 2026: Banque du Caire IPO.

2027

20 January-7 February: Egypt to host the African Games.

1-3 February (Monday-Wednesday): Agri Expo, Cairo International Convention Center.

April 2027: Tenth of Ramadan dry port and logistics hub to begin operations.

EVENTS WITH NO SET DATE

2027: Egypt to host EBRD’s annual meetings.

2027: Egypt-EU Summit 2027.

End of 2027: Trial operations at the Dabaa nuclear power plant expected to take place.

September 2028: First unit of the Dabaa nuclear power plant begins operations.

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