Egyptian stocks are above pre-float USD valuations: Healthcare and pharma stocks are poised to be the hottest picks on the EGX in 2018, CI Capital Asset Management money manager Khaled Darwish tells Bloomberg. Egyptian stocks have already surpassed the pre-EGP float valuations and the EGX30 advanced more than any other in the Middle East in 2017. Darwish is bullish on healthcare and pharma stocks as Egypt expands its universal healthcare program and, overall, “positive sentiment toward equities will continue this year as many stocks trade at attractive valuations, while conditions in the Egyptian economy are supportive.” In comparison, Darwish is a bit more cautious on real estate and banking stocks.

IPO WATCH- BPE submits documents for February IPO: BPE Partners has submitted the paperwork for initial public offering to the Financial Regulatory Authority (FRA) for approval, Chairman Hazem Barakat said yesterday, Al Mal reports. The company is planning to list around 35% of its shares on the EGX by the second half of February to raise c. EGP 450 mn in liquidity to use for a number of investment and expansion plans in fields including renewable energy and non-banking financial services, Barakat added. BPE has tapped Sigma Capital to manage the listing, Grant Thornton to conduct a fair value assessment, and Zaki Hashem & Partners as legal counsel. BPE is hoping to start trading on the stock exchange by early March.

IPO WATCH- El Garhy Steel’s planned IPO of 25% of its shares has been pushed back to 2H2018, Chairman Gamal El Garhy told Amwal Al Ghad on Sunday. The company had initially been gunning for sometime in 1Q2018, according to statements from El Garhy last year. It would appear that the company had settled on an investment bank to manage the listing, but El Garhy did not name the firm. The company plans to use the proceeds of the listing to boost its production capacity to 2.4 mn tonnes. “We’re keen to pump new investments in the local market to best benefit from the Ministry of Trade’s ongoing decree to impose temporary anti-dumping duties on rebar from China, Turkey, and Ukraine,” said El Garhy. He had previously stated that the company hopes to raise around EGP 3.6 bn from the listing.

Abraaj hires EFG, Citigroup to manage IPO or sale of its North African hospital business: In a confirmation that Abraaj Group is indeed planning to divest stakes in its regional healthcare companies, the Dubai-based private equity firm has tapped EFG Hermes and Citigroup Inc. “to manage an initial public offering or sale of its North African hospitals business,” unnamed sources with knowledge of the matter tell Bloomberg. The company plans to pursue either an IPO or a direct stake sale with the hopes of finalizing procedures in 1H2018, they add. Abraaj Group owns “a dozen hospitals and clinics in Egypt, Tunisia, and Morocco” worth a collective USD 500 mn. We had noted previous reports that the company was mulling a listing in either London or the New York.

Egypt can once again become an energy exporter and “build on its existing role as one of the most important trading hubs in the region, ideally placed to link western and eastern markets,” Nick Butler writes for The Financial Times. “Egypt’s opportunity is that it finds itself at the crossroads of the emerging international trade in natural gas,” Butler writes. The potential collaboration on natural gas export between Egypt, Cyprus, Israel, and even potentially from Lebanon leaves Turkey as the loser regionally after having “destroyed its opportunity to provide an export route for gas from Cyprus by trying to link trade to a settlement of the island’s longstanding territorial division.” Butler insists that Egypt’s role will be vital in any major development, saying “in the Middle East nothing is ever simple and there will many a slip before the new pattern of trade is in place. But if the eastern Mediterranean is to be developed, Egypt’s role as the new regional trading hub looks indispensable.”

On a related note, EGAS is preparing to hold a tender for LNG shipments this month, EGAS sources tell Al Shorouk on Monday. The shipments are expected to cover Egypt’s LNG needs for 2Q2018, said the source. No word from the source on the number of LNG shipments or the date of the tender. Egypt had bought 12 LNG shipments for 1Q2018 — a significant drop from its usual rate as the country looks to become a net energy exporter by the end of the year. The state is expected to buy 80 shipments by the end of FY2017-18.

Egypt’s non-oil exports rose 12% y-o-y to USD 20.5 bn in 2017, according to a report from the Trade and Industry Ministry’s General Organization for Export and Import Control picked up by Youm7. Chemicals and fertilizer exports saw the biggest gain during the past 12 months, growing 32% to USD 4.4 bn, followed by exports of ready made clothes (growing 13%) and engineering and electronics exports (up 11%).

Russian carrier Aeroflot will begin operating two weekly flights from Moscow to Cairo as of 3 February, Youm7 reports. The airline will offer the flights every Wednesday and Saturday, while EgyptAir will operate three weekly flights between the two capital cities on Sundays, Tuesdays, and Thursdays, a Cairo Airport Company source tells the newspaper. Russian President Vladimir Putin had authorized the resumption of air travel between Moscow and Cairo earlier this month, after the two countries signed a civil aviation security protocol. The status of charter flights, the resumption of which is contingent on additional security measures, will be discussed at an April 2018.

“Egypt doesn’t conspire or meddle in anyone’s internal affairs,” President Abdel Fattah El Sisi said in a public address yesterday, where he attempted to send a reassuring message to both Ethiopia and Sudan that Egypt is unwilling to see tensions escalate further into conflict, keen as it is on “maintaining good relations” with its neighbors (watch, runtime 3:58). “We are not prepared to go to war against our brethren or anyone else for that matter. I am saying this as a clear message to our brothers in Sudan and Ethiopia,” he added. El Sisi also had a message to the talking heads who have been inflaming the situation since Sudan and Ethiopia refused to ratify the impact studies on the Grand Ethiopian Renaissance Dam late last year. El Sisi’s comments are making the rounds in international media, with coverage from The Associated Press, Reuters, Xinhua, and Business Recorder.

His statements come as he is due to meet with Ethiopian Prime Minister Hailemariam Desalegn on Wednesday, who is in town for a three-day visit that wraps up on Friday. On the agenda is an Egyptian-Ethiopian Joint Committee meeting on Thursday that will tackle the issues with the dam. Desalegn will be accompanied by Foreign Minister Workneh Gebeyehu, who was in Khartoum earlier this week to meet with his Sudanese counterpart Ibrahim Ghandour to discuss, among other things, the ongoing dispute with Cairo over border territories.

Meanwhile, Eritrean President Isaias Afwerki reaffirmed that Egypt has not mobilized its troops to Eritrea’s border with Sudan after Khartoum ordered the closure of the border, Sunatimes reports. Afwerki also took note of the Suakin island agreement, saying that Turkish President Recep Erdogan “needs to make his intentions clear as he widens a Red Sea presence.”

Is the Cold War on the Nile a symptom of the GCC crisis? It is evident that “the GCC crisis has already spread to the Nile basin and the Horn of Africa,” SOAS research associate Ahmed Adam writesfor the The Sudan Tribune. Egypt and Saudi Arabia categorize Turkey’s agreement with Sudan regarding the Suakin island as another move by the “Turkey-Iran-Qatar axis” to undermine the stability and security of the so-called “Sunni moderate alliance,” which includes Saudi Arabia, Egypt, and the UAE. Adam notes that Ethiopia, just like Sudan, has become closer to Qatar, while Eritrea, Ethiopia’s regional rival, has taken the side of Saudi Arabia, Egypt and UAE. “Consequently, the region may be pushed into new proxy conflicts in the near future,” he says.

A subsidy cut by any other name? The Electricity Ministry will introduce a new maintenance fee to users’ monthly bills as of July, unnamed officials tell Daily News Egypt. Proceeds will then be allocated to the support and development of the power sector, and particularly to improving energy efficiency in public buildings. The energy efficiency fee will be calculated based on the price per kWh once its implementation is approved by the Egyptian Electrical Utility and Consumer Protection Regulatory Agency. It is no secret that the government is planning to continue moving forward with energy subsidy cuts when the new fiscal year rolls around in July, and the move could be a harbinger of higher prices to come.

And just so we no longer have excuses for not paying our bills,  the Electricity Holding Company plans to introduce online payments for electricity bills, according to Al Bawaba.

President Abdel Fattah El Sisi signed into law on Monday the Universal Healthcare Act, the government’s EGP 600 bn health coverage plan and a key piece of social policy for the Ismail cabinet. The bill will set premiums for employers of 4% of each employee’s monthly salary, while employees will pay premiums of only 1% of their salary into the system. It also sets a 0.25% tax on sales revenues for every company operating in Egypt to fund the system. Implementation of the law, which was published on the Official Gazette yesterday, is expected to begin in July and will span the Canal cities, according to previous statements by Finance Minister Amr El Garhy.

LEGISLATION WATCH- The House of Representatives’ Legislative Committee completed yesterday its review of amendments to the Criminal Procedures Act, Ahram Gate reports. The committee postponed to a later date its discussion and vote on contentious articles of the legislation pertaining to pre-trial detention. The amendments, which Cabinet had approved in October, introduce new avenues of mediation outside the court system, including for murder cases. Other issues addressed include witness protection and the regulation of no-fly and airport arrival watchlists.

The House general assembly also signed off on the third USD 1.15 bn tranche of the World Bank’s USD 3 bn facility to support Egypt’s economic reforms, Al Shorouk reports. Also rubber-stamped was a EUR 186 mn loan from the European Bank for Reconstruction and Development to help upgrade sewage and wastewater systems in Fayoum, Ahram Gate reports.

House Speaker Ali Abdel Aal also referred a basket of legislation and agreements to sub-committees for review, Al Masry Al Youm reports. These include amendments to an agreement Egypt signed with the International Civil Aviation Authority in 2016 to reduce carbon dioxide emissions from the aviation sector, which was referred to the Civil Aviation and Tourism Committee, an agreement signed with the UN Food and Agriculture Organization to use solar power in running irrigation networks.

Gov’t announces USD 2 bn textiles city: Trade and Industry Minister Tarek Kabil announced plans yesterday to establish Egypt’s largest textile project on a 3.1 mn sqm area in Sadat City, Al Mal reports. The project is expected to cost USD 2 bn to develop and will house 568 factories. 87% of the factories will be geared towards foreign investors, with the project expected to generate some USD 9 bn in annual revenues once it’s fully operational and completed by 2020, according to Kabil. President Abdel Fattah El Sisi also commented on the textile city, saying that the government could foot up to 50% of funding for the project.

The Higher Education Ministry is looking to attract EGP 35 bn in investments to finance the construction of new private and public universities, Higher Education Minister Khaled Abdel Ghaffar said, according to Al Borsa. The move is meant to sate demand for universities as the number of students enrolled in universities is expected to reach 4.2 mn by 2030, up from 3 mn currently. The government has recently been taking steps to attract foreign universities and diversify the educational system through new legislation.

Mohamed Anwar Sadat announced he will not be running in the presidential elections in March, The Associated Press reports. Sadat says the political “climate” isn’t conducive to campaigning and that he “‘will not contest a lost battle’ while also citing emergency laws and a ban on demonstrations as further reasons for his decision.” Sadat’s political party, Reform and Development, will consider supporting other candidates, he told reporters. Sadat hinted that he is mulling a “full campaign in 2022,” granted President Abdel Fattah El Sisi is re-elected this year and therefore ineligible to run for a third term, The Guardian says.

Meanwhile, he National Elections Commission (NEC) set yesterday a cap on campaign donations to presidential candidates of up to 2% of the total allowed campaign expenditures, Al Mal reports. The NEC had set a ceiling of EGP 20 mn on campaign spending for the first round and EGP 5 mn for the runoffs, meaning donations must not exceed EGP 400k and EGP 100k for the two rounds, respectively. The NEC also selected Banque Misr and the National Bank of Egypt as the two banks where candidates may set up the special accounts through which they are required to do all their campaign spending. All contributions must be deposited in these accounts, and the banks and candidates are required to inform the NEC of all transactions through the accounts to allow the NEC to monitor spending.

Separately, a group of lawyers have filed a legal complaint requesting the extension of the deadline by which presidential hopefuls are required to submit their nomination documents, Al Shorouk reports. The lawyers say that the 10-day window the NEC has set is insufficient to allow would-be candidates to gather the 25,000 signatures required to be eligible for nomination, and claim that the time limit is hindering their ability to qualify for the race.

British construction firm Carillion collapsed yesterday after banks refused the firm further financing, Reuters reports. The 200-year-old firm went into mandatory liquidation after banks refused to restructure liabilities upwards of GBP 2 bn. Carillion becomes the first corporate giant to fail in the UK in 10 years. The UK government was forced to guarantee some of their ongoing public works.