Egypt, UAE ink USD 1.4 bn currency swap agreement

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What We're Tracking Today

The House is back in session

Good morning, wonderful people, and happy October to you all. We’re in a particularly chipper mood for a Sunday because:

We’re getting another long weekend: This Thursday will be a national holiday for both business and government as the private and public sectors alike observe Armed Forces Day, which falls on Friday. Prime Minister Moustafa Madbouly made it official in a statement last week.

MEANWHILE- The state’s rolling power cuts did not come to an end on Friday, contrary to reports carried by a number of local press outlets over the long weekend. A senior official at the Electricity Ministry with whom we spoke said it has not received any instructions to cease the nation-wide schedule of rolling blackouts in place since mid-July. The ministry will “continue the schedule of approved load reductions,” he said.

When could we see a return to 24/7 power? The Electricity Ministry is awaiting further information from the cabinet about bringing the blackouts to an end, the official told us. We were told that the decision largely depends on the Oil Ministry, which determines the volume of supplies provided to power stations. Local media reported last week that the power cuts could continue until at least the middle of October, citing sources at the Electricity Ministry.

It’s the beginning of a new month- Among the customary news triggers to watch out for in the coming weeks:

PMI: S&P Global will publish Egypt’s PMI figures for September this Tuesday, 3 October.
Foreign reserves: The central bank will release September’s foreign reserves figures next week.
Inflation: Capmas and the CBE will publish the latest inflation data on Tuesday, 10 October.
Interest rates: The Central Bank of Egypt will meet for its penultimate policy meeting of 2023 on 2 November.

ALSO HAPPENING THIS MONTH- Ins. providers face a deadline to link their databases with the Financial Regulatory Authority (FRA), and the Madbouly government has said it expects to finalize the sale of a stake in military-owned filling station operator Wataniya this month or next.

HAPPENING TODAY-

#1- The House is officially back in session : The House of Representatives is reconvening today for its fall legislative season, with the Senate set to follow suit on 3 October.

And it has packed legislative agenda: Heading into the 2023-2024 parliamentary cycle, the House of Representatives is set to discuss a raft of new government-drafted laws from raising the minimum wage-tax exemption from EGP 36k to EGP 45k to contracting Russia’s Lukoil to explore the Eastern desert for oil alongside state-owned GEPCO, extending the expat car import initiative, and building a centralized government database that would give properties a unique digital ID.

There’s also plenty of proposals carried over from the last legislative cycle to address: The House will be kept busy with the Senate-approved Labour Law and amendments to the 2008 Unified Building Law to reconcile building violations. Updates to the Penal Code to address [redacted] harassment are also set to be discussed as are draft laws regulating drinking water, the rights of refugees, and incentives to encourage green hydrogen projects.

#2- Emergency support measures are in effect: A minimum wage hike for public-sector workers, a higher one-off bonus payment for pensioners and the public sector, and more generous pension payouts announced in September are set to come into effect today.

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

WATCH THIS SPACE- Could the US Senate’s new Foreign Relations Committee chair take a harder line on Egypt? Democrat Senator Ben Cardin has been named as chairman of the Senate Foreign Relations Committee, replacing the indicted Senator Bob Menendez who faces felony bribery charges for allegedly accepting bribes to covertly aid Egypt and help a friend sidestep criminal charges. Cardin, a known human rights advocate, this year condemned the Biden administration’s decision to provide USD 235 mn in aid to Egypt, overriding a human rights prohibition.

Cardin has made no decisions yet: As chairman, Cardin can place holds on some funding, which could include the annual US military aid to Egypt. He is said to be studying his options, with the possibility of holding a hearing on the issue before reaching a final decision. “If we want to show the world that respect for human rights is a core dimension of US national security interests, we need to do more in holding wayward governments accountable,” Cardin said in a statement. (Associated Press | Reuters)

Menendez pleads not guilty: Menendez pleaded not guilty on Wednesday to charges of taking bribes from three US businessmen, the Associated Press reports. Charges against Menendez have also prompted US congressmen to call on the Biden administration to rethink the USD 235 mn in military aid to Egypt, according to Reuters.

ELECTION 2023-

Three presidential hopefuls secure a spot on the ballot. The Al Wafd Party’s Abdel-Sanad Yamama (watch, runtime: 0:27) and the Egyptian Social Democratic Party’s Farid Zahran (watch, runtime, 8:16) secured the minimum number of signatures from MPs to be listed as candidates in December’s presidential election. Hazem Omar of the Republican People’s Party, which has some 50 members in the House of Representatives, was able to collect 44 endorsements from MPs (watch, runtime, 0:35).

President Abdel Fattah El Sisi has not yet announced a bid for reelection, but has already secured the endorsement of hundreds of members of the House of Representatives. Presidential hopefuls are required to secure 25k endorsements from eligible voters across at least 15 governorates or the endorsement of 20 MPs to be put on the ballot.

Remember: Egyptians living abroad will vote between 1 and 3 December at Egyptian embassies and consulates, while the rest of us will head to the polls in Egypt between 10 and 12 December. The results will be announced on December 18 with a runoff in early 2024 if there is no clear winner.

DATA POINTS-

#1- FDI inflows up 10% in FY 2022-2023: General Authority For Investment (GAFI) CEO Hossam Heiba said on Saturday that foreign direct investment (FDI) inflows climbed 10% y-o-y in FY 2022-2023, according to Ahram Online. Heiba did not put an exact figure for the fiscal year, but by our math a 10% jump from USD 8.9 bn the year prior, should put us around the USD 9.8 bn mark.

#2- FRA-regulated financial institutions lent EGP 200 bn to support capital-market activities and non-banking financial services in 2Q 2023, the regulator said in a quarterly report (pdf). Almost half of this went to funding share issuances, while EGP 45.4 bn went to SME financing.

WATCH THIS SPACE -

EGX to roll out IR digital registry: The EGX is setting up a digital registry for investor relations officers at listed companies on the bourse, it said in a statement Wednesday. The registry will be designed to raise the quality of disclosures in terms of timing, content, and improving the communications with market stakeholders. The statement did not specify when the registry will be launched, but said that the EGX will begin procedures for setting up the database and registering IR officers after they pass interviews, tests, and training programs conducted by the EGX.

MARKET WATCH-

Oil output will likely remain unchanged amid an ongoing oil price rally when OPEC+ leaders meet on Wednesday, reports Reuters, citing four unnamed sources from the organization. Rising demand and a lack of supply has driven an oil price rally and caused Brent crude prices to edge towards USD 100 a barrel, up 30% since June.

ALSO ON THE OPEC+ AGENDA- Russia and Saudi’s decision to cut oil production: The upcoming meeting will likely review the commitment Russia and Saudi Arabia made on 15 September to cut oil production by around 1.3 mn barrels per day until the end of the year, according to the newswire.

THE BIG STORIES ABROAD-

The US federal government is not shutting down: US lawmakers passed a last-minute stopgap funding bill on Saturday, averting what would have been the fourth partial shutdown in a decade. The bill, which received overwhelming Democratic support, saw Republican Speaker Kevin McCarthy abandon hardline demands from his party that any bill pass the chamber with only Republican votes. Senators voted through the bill, which funds the government until 17 November. (Washington Post | Reuters | Financial Times | WSJ | New York Times | Bloomberg)

Apps and updates are the culprits behind iPhone 15 overheating, says Apple: The software giant is in talks with app developers to fix overheating issues in their newly-released iPhone 15 Pro, Apple officials told Bloomberg. Users have reported their devices overheating as they work overtime to set up and restore data due to a bug in the most recent iOS 17 software and as a result of third-party apps overloading the system. Apple has denied that the problems are related to the hardware of the new line, which includes a titanium frame, and denied that the issue poses safety concerns.

Together: Three days of music set against the stunning backdrop of Somabay by the Red Sea. From 5-7 October, two events organizers at the forefront of Egyptian nightlife, ByGanz and Nacelle, will bring together world-famous electronic music DJs such as Birds of Mind, Richy Ahmed, Henrik Schwartz, Hunee, and Guti, as well as regional and local artists. Together is a full three-day experience with beach activities from sunset to sunrise.

Egypt, UAE sign currency swap agreement

EGP for AED: The Egyptian and Emirati central banks reached a currency swap agreement on Thursday worth almost USD 1.4 bn, the two sides said in a joint statem ent. Under the agreement, the Central Bank of Egypt (CBE) will be able to obtain up to AED 5 bn (USD 1.36 bn) in return for EGP 42 bn.

“It seems again that the UAE is providing Egypt with financial support,” James Swanston, emerging-markets economist at Capital Economics, told the Associated Press. “Egypt's central bank needs more ammunition to prop up its currency.”

Another lifeline from our GCC neighbor: The nominal value of the agreement has an implied exchange rate of EGP 8.40 for every AED, in line with the official rate, economist Mona Bedeir told Enterprise yesterday. The timing of the agreement is important as we continue to grapple with securing FX liquidity to meet import needs, including oil and debt obligations, Bedeir added.

What they said: This currency swap “contributes to facilitating and increasing trade exchange between the two countries,” said CBE governor Hassan Abdalla. The agreement “represents an opportunity to develop economic and financial markets between the two sides,” said Khaled Balama, governor of the Central Bank of the UAE.

Next up: A CNY swap? The Egyptian and Chinese central banks discussed a potential swap line during talks in Beijing last week, the CBE said Wednesday. The delegation, led by Abdalla, also talked about Egypt’s plans to issue USD 500 mn of CNY-denominated panda bonds in China.

Egypt, China could expand the use of RMB in future projects: The president of the China Development Bank (CDB), Tan Jiong, agreed to explore increasing the use of the RMB in local projects as well as joint financing activities during talks with Abdalla, according to a separate CBE statement. Hossam Heiba, head of the General Authority for Freezones and Investment (GAFI), floated the idea last month, saying talks were ongoing that could see RMB-denominated investment in Egypt.

Remember: The CBE signed a three-year agreement with China in December 2016 that saw China deposit CNY 18 bn against the equivalent in EGP, which expired at the end of 2019. The government had considered renewing the agreement in 2020 before the outbreak of covid-19.

Egypt faces possible demotion on FTSE stock indexes amid FX crunch

Global index provider FTSE Russell is adding Egypt to a watchlist for possible demotion in its suites of equity indexes amid reports of foreign investors having difficulties repatriating capital from the country, it said in a statement (pdf) on Thursday. Egypt is at risk of being demoted from “secondary emerging market” to “unclassified,” a move which could see Egyptian equities deleted from the provider’s indexes.

We have a few months to turn things around: FTSE will share its update of Egypt’s watchlist status in March 2024 as part of its Equity Country Classification Interim Review, it said in an announcement (pdf).

The rationale: FTSE says “market participants and index users have reported ongoing delays on their ability to repatriate capital from Egypt since March 2023,” adding that it had conveyed these concerns to “the Egyptian authorities.” The index provider will try to assess the length of the delays and the issues faced by international investors when trying to repatriate capital. You can find FTSE’s full criteria here (pdf).

It’s all because of the FX crunch: The country remains in the grip of an ongoing hard currency shortage, triggered in part by major foreign portfolio outflows as global economic conditions tightened following the outbreak of the Russia-Ukraine war. A sharp shortage of FX is making it difficult for investors to repatriate capital when exiting a position here.

FTS E isn’t the only one: Global index provider MSCI in June said it could consider reclassifying its Egyptian indices from “emerging” to “frontier” or “standalone” status, citing the FX liquidity crunch. Moody’s in August extended its review of a potential downgrade for our sovereign credit rating, while JPMorgan last week put Egypt on review for potential removal from its widely-tracked suite of emerging-market sovereign bond indexes.

And neither is Egypt: FTSE has also put Pakistan and Vietnam on the watchlist. Pakistan could drop to “frontier market” from “secondary emerging market” while Vietnam will remain on the watchlist for a possible upgrade to secondary emerging from frontier.

Bond investors are “wary of committing capital” here on concerns about debt service after two delays have seen us (so far) fail to unlock funding from our USD 3 bn program with the International Monetary Fund, Bloomberg writes. This comes as we face what Goldman Sachs warns is a USD 11 bn funding gap in the next five years and a wall of interest and principal due over the coming decade.

“I don’t think the risk of default is imminent, but the status quo is clearly unsustainable,” emerging-markets money manager Carlos de Sousa told Bloomberg. London-based analyst Gordon Bowers notes that “barring another dramatic external shock,” we’re unlikely to default on our debt over the next year. The fund manager holds overweight positions in Egypt’s debt in its “unconstrained” accounts.

Pulse check on the debt market: Our USD debt has lost around 9.7% this year, making us the worst EM performer after Bolivia and Ecuador, according to Bloomberg. Meanwhile, many bonds have entered distressed territory, with yield spreads between Egyptian USD bonds and US treasuries climbing to 1,165 basis points. Bonds trading at more than 1,000 bps above treasuries are considered to be distressed.

Could be looking up on the IMF front? The Madbouly government’s recent efforts to sell down state assets has reportedly left the IMF feeling positive about our commitment to privatization, potentially easing the path towards a review of our USD 3 bn loan program, Bloomberg reported last week. Hurdles remain, however, with the two sides yet to agree on a pathway to floating the currency or curb government spending on infrastructure projects.

EBRD cuts Egypt growth outlook for 2024

The European Bank for Reconstruction and Development (EBRD) has cut its Egyp t growth forecast for 2024 by 0.7 percentage points to 4.5%, it said in its latest Regional Economic Prospects report (pdf). The bank cites “structural constraints in non-resource sectors, high inflation and limited fiscal space” as contributing factors to the country’s economic slowdown. The EBRD’s 2023 growth forecast for Egypt saw a slight 0.1 percentage-point increase to 4.3% in its last forecast in May.

The bad outweighs the good: The bank points to thedeceleration in construction and manufacturing activities and the contraction in natural gas output — which reached a three-year low during the first half of the year — as big obstacles to GDP growth. “Foreign exchange reserves stabilized, partly thanks to an IMF-supported program that improved access to finance, but the currency remains under pressure and a significant differential remains between the official and black-market exchange rates,” the report said.

It’s not just the EBRD: Over the summer, the IMF revised its 2024 growth forecast for Egypt to 4.1%, down from its 5.0% forecast a few months prior, citing the lack of exchange-rate flexibility and the FX crunch. Morgan Stanley also recently lowered its FY 2023-2024 growth forecast to 4.2%, from 5.0%.

Fiscal year growth forecast unchanged: The EBRD maintained its growth forecast for the current fiscal year at 4.8%, picking up from FY 2022-2023’s growth of 4.1%.

This is higher than government forecasts: Projections in the government’s new budget see economic growth slowing to 4.1% in the current fiscal year, from 4.2% the year prior.

The slowdown dragged down the region’s outlook: The SEMED region — which spans developing countries in the southern and eastern Mediterranean, emerging Europe, and central Asia — is now looking at 3.9% growth for 2024, down 0.5 percentage points from previous forecasts, triggered by the slowdown in Egypt and Morocco. The multilateral lender cut its growth for Morocco by 0.2 percentage points to 3.0%.

China to lend Egypt USD 400 mn for electric light rail train

The Export-Import Bank of China (China Eximbank) is lending Egypt USD 400 mn to finance the third phase of the electric light rail train (LRT), Asharq Business reports, citing people it says have knowledge of the matter. The loan would finance completion of the delayed project, adding 20.4 km and four additional stations to the line that extends from Nativity Cathedral to the Central Capital station, where it converges with the high-speed rail train in the administrative capital. The report carried no detail on the tenor or cost of the funding.

Supporting expansion: The fresh money will be used to put in place mechanical and electrical systems including the project’s central control, ticket gates, and other signaling and communications equipment, all of which will be implemented by Chinese company AVIC, the project’s main contractor, Asharq quotes one of the sources as saying.

The timeline: Paperwork on the facility could be completed before the end of this year, after which the disbursement proposal will be presented to the House for approval by 2024, the source added.

This is the second time China Eximbank has supported the project: The Chinese lender agreed back in 2019 to extend a U SD 1.2 bn loan for the initial phases of the LRT’s construction.

Egypt’s Eva Pharma inks agreement for Saudi pharma complex

Eva Pharma is expand ing in Sau di: Local drugmaker Eva Pharma has inked an agreement with the Saudi Authority for Industrial Cities and Technology Zones (Modon) to build a SAR 500 mn (USD 133 mn) industrial complex for pharma research and manufacturing in the Saudi Sudair Industrial City, the Saudi Press Agency reports.

In detail: The complex will include a research and development center and five pharma factories including one for biopharma and oncology treatment, one for tablets, one for vaccine production, and one for immunosuppressants. The company aims to produce some 150 pharma products, and roll out 990 mn units a year.

The timeline: The complex will kick off the first phase of operations in April 2025 and will reach full operational capacity the following year. The complex will eventually create over 800 new jobs in the Saudi market.

This is the second local pharma firm to set up shop in Saudi this year: Pharco Pharma and Saudi-based Ajlan & Bros Holding are currently working on a USD 150 mn meds manufacturing complex in the Saudi city of Medina, with production scheduled to start next year.

Egypt buys 170k tons of wheat in int’l tender + Onion export ban starts today

More sugar, more wheat and no exports of onions are the three big themes on the commodities front this morning as the Madbouly government looks to maintain stability in the domestic market while grappling with an FX crisis. (With apologies to the late Louis Prima.)

#1- Bulgarian, Romanian wheat incoming: GASC has bought 170k tons of wheat in an international tender on Wednesday, Reuters reported Friday, citing a statement from the state grains supplier. Some 60k tons will be sourced from Romania for delivery between 10-20 November 2023, while the rest will be sourced from Romania and Bulgaria for delivery between 21-30 November 2023. The International Islamic Trade Finance Corporation is providing the finance.

#2- Sugar imports to boost reserves: The Supply Ministry is working towards importing 200k tons of raw sugar in the coming months to maintain at least six months worth of supply in reserve, the ministry said in a statement on Wednesday. Following the announcement, the state-owned Egyptian Sugar and Integrated Industries Company issued a tender for the import of 50k tons of sugar and will be receiving offers until 7 October, according to a statement picked up by Reuters. The Trade Ministry decided last week to extend the current ban on sugar exports until 20 December.

#3- A three-month ban on the export of onions starts today. The Trade Ministry announced the ban last month in response to soaring local prices that surged as high as EGP 35 per kilo, part of a wave of record-high inflation that saw food prices accelerate at a record rate of 71.4% y-o-y in August.

Egyptian gives the thumbs up to “clearance platform” for businesses + Health Council Law regs + UNESCO agreement

Imagine you have a single account called “What the Government Wants from Us.” That’s what some businesses may find going forward after Cabinet signed off in principle on a directive from Prime Minister Moustafa Madbouly to set up an electronic clearing system. The idea is that the system will show the sum total of what the state wants from individual businesses (taxes and the like) — and what those businesses are owed by the state (incentives, tax breaks, and more).

What’s next: The Finance Ministry will write up a draft of the executive regulations that would govern the platform, cabinet said in a statement following its weekly meeting last Wednesday. The statement provided no additional detail.

Remember: This was one of the decisions greenlit by the Supreme Investment Council in May.

ALSO- Cabinet signed off on executive regs for the Egyptian Health Council Law, which was ap proved by the Hou se in February last year. The council aims to improve healthcare services provided to citizens and to regulate medical training and licensing.

AND- Egypt x UNESCO: The cabinet approved Egypt's participation in an amended UNESCO agreement focused on recognizing higher education qualifications in Arab countries. This could make it easier for Egyptian students to have their qualifications assessed and accepted by other member states, opening doors for postgraduate studies and job opportunities.

Taqa Arabia reshuffles board following stake sale. PLUS: New cabinet spokesperson, e-Aswaaq has a new CEO

New look Taqa Arabia board: Six new board members have joined Taqa Arabia, following a board shuffle, the Qalaa Holdings subsidiary said in an EGX disclosure (pdf) on Wednesday.

The breakdown: The military’s National Service Projects Organization (NSPO), which acquired 20% of the firm in July, now has three board seats, with Lt. Gen. Ahmed El Shazly, Maj. Gen. Mamdouh Shahin, and Maj. Gen. Maher Mohamed Youssef all joining as directors. Meanwhile, former CBE assistant sub-governor Ghada Kandil (LinkedIn) and Zaki Hashem & Partner managing partner Yasser Zaki Hashem (LinkedIn) joined as independent board members. Joseph Iskandar (LinkedIn) was appointed to represent Nile Energy, a Ugandan firm that pur chased 7.5% of the company’s shares in August.

New cabinet spokesman: Sameh El Kheshen has been named the Madbouly cabinet’s new spokesperson, succeeding Nader Saad who has been appointed as Egypt’s new ambassador to Bulgaria and North Macedonia, according to a cabinet statement on Wednesday. El Kheshen, who has been a diplomat since 2004, holds an MA in political science from the American University in Cairo, and worked previously in the Egyptian diplomatic missions to the UN, the Central African Republic, and Iran.

And a new CEO at e-Aswaaq: e-Finance’s e-commerce subsidiary, e-Aswaaq Misr, has named Ahmed Samir Kamel (LinkedIn) as its CEO, according to a statement (pdf). Kamel joins the state-owned firm after serving as the managing director at Contact Financial’s consumer finance arm Contact Creditech. He has also held senior positions at several leading international banks in Egypt, heading up the digital banking operations at Mashreq, Abu Dhabi Islamic Bank, and Credit Agricole Egypt.

Egypt’s talking heads wax lyrical about the “Homeland” conference, El Sisi

President Abdel Fattah El Sisi was at center stage last night after he inaugurated a three-day conference titled “Story of Homeland: Between Vision and Achievement” in the new capital yesterday (watch, runtime: 14:19). In his remarks, El Sisi addressed reducing imports, developing local industries, and encouraging Egyptian and foreign investors to work with the government on some 150 projects that could raise USD 25 bn for the state.

In vestors want land — and Egypt will provide it, El Sisi said: “If we need more [industrial complexes] we will create a second, third and fourth. We will employ people, increase the local product, and reduce the import bill, because it is the only way to keep the country moving forward,” El Sisi told the conference.

Everyone and their mother was commenting on the speech last night: Conference coverage was highlighted by Kelma Akhira (watch, runtime: 2:34), El Hekaya (watch, runtime: 3:08), Ala Masouleety (watch, runtime: 3:17) Al Hayah Al Youm (watch, runtime: 7:20) and Qahira News (watch, runtime: 8:48).

E lection 2023: El Sisi — who is still yet to announce his candidacy for the election — told the crowd: “This is what we did. You have the opportunity for change in the upcoming elections. It’s all up to God.”

New candidates: Three party leaders have announced their intentions to run for office after receiving the required number of recommendations from House of Representative members, including head of the Egyptian Democratic Party, Farid Zahran ; head of the Wafd Party, Abdel Sanad Yamama; and head of the Republican People’s Party Hazem Omar, Ahmed Moussa said on Ala Masouleety (watch, runtime: 2:59). Masaa DMC’s Osama Kamal interviewed Omar to discuss the details of his electoral campaign (watch, runtime: 2:52 | 5:06 | 4:47), including his vision for the private sector’s role in the economy, and his plans for tax, education and health.

Also from the conference:

Budget deficit to widen: The budget deficit is expected to widen to 6.9% of GDP in the current fiscal year before narrowing to 4.7% by FY 2027-2028, Finance Minister Mohamed Maait said (watch, runtime: 27:12).
Oil + gas exploration: Oil Minister Tarek El Molla announced a plan to drill 110 exploratory oil and gas wells by 2030, with investments amounting to USD 4.8 bn (watch, runtime: 31:17).

Telecom Egypt to extend cross-Mediterranean Medusa subsea cable to Egypt’s Red Sea + ADIB’s new sukuk move

TELECOMS-

Telecom Egypt is bringing the Medusa cable to the Red Sea: Telecom Egypt and submarine infrastructure operator Medusa Submarine Cable System have inked an agreement to extend the cross-Mediterranean Medusa subsea cable to the Red Sea, the state-owned company said Thursday. The 8.8k km-long cable will reach Port Said by the end of 2025 and connect over land to landing stations in the Red Sea in Suez, Zafarana, and Ras Ghareb.

Remember: Telecom Egypt signed an agreement with Africa-focused telecommunications operator AFR-IX Telecom in March last year to extend the Medusa cable to Port Said. The cable, which will become operational in the Western Mediterranean in 2025, will connect 10 countries in North Africa and Europe.

CAPITAL MARKETS-

ADIB is opening up a new sukuk venture: The Financial Regulatory Authority (FRA) has given the go-ahead to Abu Dhabi Islamic Bank to establish a company to issue sukuk, according to an EGX disclosure (pdf). The Abu Dhabi Islamic Taskeek Company will be 98%-owned by the bank.

The decision comes as authorities look to develop the local sukuk market: The FRA recently relaxed capital markets regulations last month to make it easier for companies to issue the shariah-compliant securities.

Bond sell-off accelerates, sending yields to “unthinkable” highs -Bloomberg

Bond markets are reckoning with the end of easy money: The sell-off in the US and European bond markets accelerated last week, pushing yields towards their highest levels in years, as the reality that interest rates are staying high over the long term sinks in, Bloomberg reports. Yields on US 10-years are inching closer towards 5%, a rate that hasn’t been seen since mid-2007, while 10-year German bunds — which were either close to or below zero for a large part of the previous decade — are at 12-year highs and approaching 3%. “The selloff has been so extreme it’s forced bullish investors to capitulate and Wall Street banks to tear up their forecasts,” the news outlet writes.

What analysts are saying: “What happened over the last few months was basically markets were wrong because they thought inflation would come down quickly and central banks would be very dovish,” one asset manager told the news outlet. “Everything will depend about how inflation lands over the medium to long run, but it’s fair to say that we have changed from the ultra low-yield regime.”

The higher the yields, the worse for Egypt: Higher yields on US treasuries put pressure on emerging-market assets such as Egyptian debt, which become less attractive to foreign investors (Egypt’s case is made worse by the fact that its real interest rates are also deeply negative due to the soaring rate of inflation). Rising yields have also helped send the USD to its highest level in 10 months, increasing Egypt’s import bill and raising debt repayments.

EGX30	20,174	-0.9% (YTD: +38.2%)
USD (CBE)	Buy 30.83	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	19.25% deposit	20.25% lending
Tadawul	11,056	-0.2% (YTD: +5.5%)
ADX	9,785	-0.3% (YTD: -4.2%)
DFM	4,164	+0.5% (YTD: +24.8%)
S&P 500	4,288	-0.3% (YTD: +11.7%)
FTSE 100	7,608	+0.1% (YTD: +2.1%)
Euro Stoxx 50	4,175	+0.3% (YTD: +10.0%)
Brent crude	USD 92.20	-1.0%
Natural gas (Nymex)	USD 2.93	-0.5%
Gold	USD 1,866.10	-0.7%
BTC	USD 27,078	+0.7% (YTD: +63.7%)

THE CLOSING BELL-

The EGX30 fell 0.9% at Wednesday’s close on turnover of EGP 2.1 bn (0.6% below the 90-day average). Local investors were net buyers. The index is up 38.2% YTD.

In the green: Orascom Construction (+3.7%), AMOC (+3.1%), and Palm Hills Developments (+2.9%).

In the red: Fawry (-4.1%), Juhayna (-4.0%), and Abu Qir Fertilizers (-3.6%).

Qatar appoints new ambassador to Egypt

Doha has a new man in Cairo: Qatari Emir Sheikh Tamim bin Hamad Al Thani on Wednesday named Tariq Al Ansari (LinkedIn) as the country’s ambassador to Egypt, according to the Qatar News A gency. The move makes Al Ansari the second ambassador Qatar has appointed to Egypt after the two countries re-established diplomatic ties in 2021, following their severing in 2017 over Doha’s continued support for the Ikhwan. Al Ansari follows in the shoes of Salem bin Mubarak Al Shafi.

CALENDAR

OCTOBER

1 October (Sunday): Public-sector minimum wage hike, other financial support measures come into effect.

1 October (Sunday): Onion export ban goes into effect.

1-3 October (Sunday-Tuesday) International Expotec for water economics management, Egypt International Exhibition Center, Fifth Settlement, Cairo.

2-5 October (Monday-Thursday): ADIPEC 2023, Abu Dhabi National Exhibition Center.

2 October (Monday): Government meeting with investors to look into liberalizing electricity grid.

4 October (Wednesday): OPEC+ meeting.

6 October (Friday): Armed Forces Day.

7 October (Saturday): HHD shareholders to consider NOSI’s offer to acquire Heliopark land.

9 October (Monday): The Narrative PR Summit, Somabay Red Sea.

9-11 October (Monday-Wednesday): Arabs Savings and Financial Literacy Conference, Four Seasons Hotel.

10-12 October (Tuesday-Thursday) Ceramica Expo, Cairo International Convention Center.

12 October (Thursday): Egyptian-Italian Business Forum.

13 October- 20 October (Friday-Friday): The sixth edition of El Gouna Film Festival (GFF).

Late October-14 November: 3Q2023 earnings season.

15-17 October (Sunday-Tuesday): Egypt Automotive Aftermarket Exhibition, Cairo International Convention Center.

20 October (Friday): Deadline for applying for Dar Venture’s Dare incubator.

26 October (Thursday): Daylight saving time ends.

27 October (Friday): Deadline for bidding in tender for five solar plants on north coast.

29-31 October (Sunday-Tuesday): Egypt Energy, Egypt International Exhibition Center.

29 October - 2 November (Sunday- Thursday): Cairo Water Week.

30-31 October (Monday-Tuesday): Intelligent Cities Exhibition and Conference, Dusit Thani LakeView, Cairo.

30-31 October (Monday-Tuesday): Global Business School Network (GBSN), American University of Cairo.

31 October - 1 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

Signposted to happen some time in October:

Deadline for ins. providers to link their databases with the FRA
Egyptian-Jordanian Business Council, Amman, Jordan
Gov’t expects to finalize sale of Gabal El Zeit wind plant
October or November: Gov’t expects to finalize stake sale for military-owned fuel retailer Wataniya

NOVEMBER

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

8 November (Wednesday): Turkish-Arab Economic Forum 2023, Istanbul.

9-15 November (Thursday-Wednesday): Intra-African Trade Fair, Cairo.

14-15 November (Tuesday-Wednesday): Destination Africa, Royal Maxim Palace Kempinski Hotel.

15-24 November (Wednesday-Friday): Cairo International Film Festival, Cairo.

19-22 November (Sunday-Wednesday): Cairo ICT, Egypt International Exhibition Center.

22 November (Wednesday): Deadline to apply to FRA for credit rating license.

23 November (Thursday): Worldview Education Fair, Cairo. (Register here)

30 November-12 December (Thursday-Tuesday): COP28, Dubai.

DECEMBER

1-3 December (Friday-Sunday): Egyptian expats vote in the presidential election.

9-15 December (Saturday-Friday) :The Engineering Export Council of Egypt’strade mission to Saudi Arabia.

10-11 December (Sunday-Monday): eGlobe Expo, St. Regis Almasa Hotel, Cairo.

10-12 December (Sunday-Tuesday): Voting in presidential election takes place in Egypt.

12-13 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

12-14 December (Tuesday-Thursday): Food Africa Expo, Egypt International Exhibition Center.

20 December (Wednesday): End of sugar export ban.

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

Signposted to happen sometime in December:

Gov’t expects to finalize sale of a stake in military-owned bottled drinks company Safi
Gov’t expects to finalize sale of Zafarana wind farm

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

2H 2023: Egyptian government expected to sign agreements with a consultant for the EuroAfrica electricity interconnector.

2H 2023: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan expected to hold a summit.

3Q 2023: E-Finance to launch in Saudi Arabia.

4Q 2023: EGX to launch its new futures exchange.

4Q 2023: EGX to launch a shariah-compliant index.

End of 2023: A Developments’ first phase of the Lazoghly development completed.

2024: Standard Chartered Bank to open a branch in Egypt.

25 February 2024 (Sunday): Deadline for bidders for oil and gas expansion in the 23 new regions.

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

1H 2024: Gov’t expects to finalize sale of four water desalination plants.

End of 2024: The launch of the high-speed train line linking Ain Sokhna with Al Alamein City.

November 2024: Egypt to host the 12th session of the World Urban Forum (WUF12).

2Q 2025: Safaga Terminal 2 to start operations.

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