Fuel prices rise, Israeli gas back (sort of) + extended budget cuts

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What We're Tracking Today

FTX’s Sam Bankman-Fried found guilty in crypto trial of the decade

Good morning, friends, and welcome to a business-heavy morning. The big stories today center on energy and FX, with cabinet extending budget cutbacks through June 2024 at the same time as it raised the price of petrol at the pumps by 14%. Notably, the oil ministry held back from raising the price of diesel, suggesting consumers will not be paying more for mass transport or goods including fruits and vegetables.

The energy theme continues with suggestions that imports of natural gas from Israel are back up to c. 25% of their pre-war levels. That’s progress, but does little to suggest we’re about to see planning power outages dialing back to one hour per day.

HAPPENING TODAY-

#1- It’s PMI day. Look for the S&P Global PMI for Egypt here at around 7:15am CLT. Soaring inflation and shortages of raw materials led the contraction in private-sector activity to deepen in September after slow and gradual improvements over the previous five months. Saudi and Qatar gauges are also due out today.

#2- The Senate will reconvene today after a two-week break to discuss a report that recommends setting up a voluntary carbon market on the EGX to “stimulate industries to reduce carbon dioxide emissions and encourage clean sources of production and the creation of a low carbon economy.” FRA boss Mohamed Farid met with some 35 company representatives last month to discuss how to pick up the pace on establishing what would be Africa’s first carbon credit platform, initially expected to launch earlier this year.

PSA- Foreign residents of Egypt have until 15 December to sort out their legal status in the country, including making sure they have not overstayed their visas, the state-run MENA news agency reported on Thursday, citing an unnamed security source.

WATCH THIS SPACE-

#1- Calling the EGP : USD exchange rate: Fitch Solutions' director of MENA country risk, Ramona Moubarak, tells us that she expects to see the EGP drop to between 40-45 against the greenback in 1Q 2024. Société Générale Bank, meanwhile, sees the EGP sliding to 37 against the greenback by the end of year, from the current official rate of EGP 30.96, according to Asharq Business. Pundits expect the EGPto devalue against the greenback when it is floatedafter the December presidential election. The USD is now changing hands at about EGP 47.00 on the prallel market.

#2- NDP HQ developer to be revealed “within days”: The consortium of developerstasked with revamping the site of the former National Democratic Party headquarters in downtown Cairo will be announced within days, Sovereign Fund of Egypt CEO Ayman Soliman told Asharq Business on Thursday.

ICYMI: A consortium of Saudi Egyptian Developers (SED) and the UAE’s Al Shafar GeneralContracting (ASGC) Group is reportedly poised to work on the USD 5 bn development.

#3- Three int’l offers for Wataniya: We’ll know before the end of the year who is buying a stake in filling station owner Wataniya, Soliman said, adding that three offers from international investors have been submitted to buy the military-owned company.

We previously counted six bidders: Shell and China’s North Petroleum recently joined TaqaArabia, Abu Dhabi National Oil Company (Adnoc), Emirates National Oil Company (ENOC), and Saudi firm Petromin as the companies that have reportedly submitted offers for the Wataniya stake. Bids range between USD 250 mn and USD 280 mn, Asharq Business reported in August.

THE BIG STORIES ABROAD-

Gaza is still dominating the world’s attention this morning as the conflict enters its fifth week. US Secretary of State Antony Blinken’s (so-far) unsuccessful trip to the region is making the headlines after both Israel and Arab diplomats rebuffed his call for a “humanitarian pause” during talks in Tel Aviv and Amman. Blinken now heads to Turkey where he’ll try to convince an increasingly hostile Erdogan that continuing the bombing is the best route to solving the conflict.

It wasn’t a one-off: A group of UN experts have joined with the now-resigned UN rights offici al Craig Mokhiber to warn that “the Palestinian people are at grave risk of genocide … Israel’s allies also bear responsibility and must act now to prevent its disastrous course of action.”

FTX founder Sam Bankman-Fried was found guilty of stealing from his cryptocurrency exchange’s customers in New York on Thursday. The rise and fall of the once well-respected and influential figure in cryptocurrency may mark the beginning of a new wave of regulation against the mostly unregulated industry.
Financial Times | Wall Street Journal | Bloomberg

HELP GAZA-

Want to support relief efforts in Gaza, but don’t know how? We’ve got you. More than 1 mn people in Gaza have been thrown from their homes and every human being there lacks access to food, water, and fuel amid the most intense bombardment any population has endured this century.

The folks at Talabat are processing donations for a range of Gaza relief appeals by charities including the Egyptian Food Bank and Misr El Kheir. Pay in EGP using your credit card.

Or check out our list of charities to which you can make direct donations via bank deposit and / or Fawry.

Egypt hikes fuel prices by up to 14%

Your petrol bill is going up: The Madouly government hiked fuel prices by 9-14% on Friday, according to decisions published in the Official Gazette. Prices at the pumps now stand at:

95-Octane is EGP 12.50 per liter, up 9% from EGP 11.50;
92-Octane is EGP 11.50 per liter, up 12% from EGP 10.25;
80-Octane is EGP 10.00 per liter, up 14% from EGP 8.75.

The price of compressed natural gas for automobiles has risen 22% to EGP 5.5 per cubic meter, up from EGP 4.50 previously.

Don’t expect much of an impact on the price of food and other goods — or public transport. The fuel pricing committee left the price of diesel unchanged, the Oil Ministry said.

This is the second time this year the government has raised fuel prices: Gasoline prices rose 16-25% in March.

The rationale: Disruptions in the energy market from the wars in Gaza and Ukraine have had a “direct and indirect impact on global oil prices, sending Brent crude over USD 90 per barrel over the last few months,” the ministry said. Crude prices have also been pushed upwards by tightening global supply from OPEC+ production cuts and rising demand in Asia.

The hike comes as we look to reduce our import bill from refined oil products: TheEgyptian General Petroleum Corporation reportedly plans to increase the country’s crude imports by 40% starting in FY 2024-2025. By bringing monthly crude imports to 7 mn barrels from 5 mn currently, the government hopes to start refining more petroleum products locally to reduce our import bill from refined oil products.

Remember: The Finance Ministry increased fuel subsidies by 24% to EGP 35.9 bn for FY2023-24 as it penciled in oil prices of USD 85 per barrel for the fiscal year, up from USD 80 per barrel this fiscal year.

El SISE TELLS GOV’T TO CUT CONSUMPTION

“Cut your fuel consumption by half,” El Sisi tells gov’t: President Abdel Fattah El Sisi directed the government to reduce its consumption of fuel by 50%, according to local media (watch: runtime, 0:25). A government source told Enterprise that the new hikes will raise the government fuel bill to EGP 6.6 bn, up from EGP 6 bn.

More gov’t expenses cuts on their way: El Sisi’s directive coincides with the cabinet giving their approval to a series of initiatives to reduce government spending. We have the full rundown on the state’s plan to cut its spending in Cabinet Watch, below.

ICYMI- The Madbouly government has purchased hedging contracts in September covering 35% of its estimated oil imports for the current fiscal year that ends in June 2024, locking in crude purchases at around USD 75-80 per barrel, below the USD 85 budget benchmark. The government expects Egypt to import around 100 mn barrels of crude this year.

Israeli gas imports to Egypt increase to fraction of former supply

Are Israeli natural gas deliveries ramping back up? Israel’s natural gas imports to Egypt have partially picked up after a sudden slump in supply following the outbreak of the war on Gaza, reports Reuters, citing an official from the Oil Ministry. Israel halted production at Chevron’s second-largest field Tamar for security reasons, which reduced our gas imports by c. 20%, and other fields had most of their supplies diverted to prioritize Israel’s domestic needs.

How much are we talking? Israeli gas imports picked up last week to 250 mn cubic feet per day — a little more than a quarter of the 800 mn cubic feet per day recorded before the war, according to Bloomberg, citing a source with direct knowledge of the matter. “The giant Leviathan field is exporting the fuel after another Israeli field, Karish, returned from an outage, allowing domestic demand to be met,” the business information service reports. Asharq Business, meanwhile, says we’re back up to 350 mn cubic feet per day from Israel.

Did exports ever completely stop? The Madbouly cabinet said last week that imports of gas had fallen to zero, but an official at the Leviathan gas field told Reuters that deliveries to Egypt had never fully stopped. Asharq Business similarly reported that natural gas imports from Israel never dipped below 150 mn cubic feet per day, citing an unnamed Egyptian government official. An Oil Ministry official declined to comment to Enterprise yesterday when asked about whether gas imports had fallen to zero.

How low had imports from Israel fallen? To maybe 100 mn cubic feet per day, according to one industry insider we spoke with last Thursday, “but with significant fluctuations.” Production from Tamar stopped entirely, while gas from Leviathan was redirected through Jordan and the Arab Gas Pipeline to satisfy Israeli and Jordanian clients first.

There are rumors that we are importing a shipment of LNG, Bloomberg (citing shipping data) writing on Friday that we were due to receive in Ain Sokhna our first LNG consignment since July.

CLARIFICATION- In our energy roundup on Thursday, we were unclear in our characterization of Eni’s Orion X1 project. Drilling on the project started approximately two weeks ago, a few weeks after Eni had initially targeted. The later start to the drilling is not a significant delay in a project with a development time of three years (give or take). Eni hopes to find that the offshore field has c. 10 tn cubic feet of natural gas.

Egypt extends budget cutbacks through to June 2024 amid FX crisis

Gov’t budget cutbacks are making a comeback: Ministers last week approved in principle fresh cutbacks to government spending through the end of the current fiscal year due to the ongoing FX crunch, according to a cabinet statement.

Limits on FX spending: Under the decision, spending on any new project that requires FX and is yet to begin will be delayed, alongside any “unnecessary” FX spending. The Finance Ministry will need to sign off on any exceptions.

Cut any unnecessary spending: The decision will also require all government entities to delay any spending that doesn’t fall under the “extremely necessary” criteria, the cabinet statement said, without explaining how this is being defined.

The government is also ending all “non-essential” spending, including the travel budget for government personnel and spending on marketing, attending conferences, and hosting work events.

The exception: The decision pinpoints a single exemption from the budget cuts — investments approved by the Planning Ministry.

Carry your own weights: State institutions will be required to work to boost their revenues and become less dependent on the already-strained state budget for funding.

We’ve seen this before: The Madbouly government in January directed ministries to make budget cutbacks until the end of the fiscal year in June. The move came in a bid to address a shortage of hard currency and tamp down inflation.

ِALSO GREENLIT BY THE CABINET:

An education investment fund: The Higher Education Ministry and the Sovereign Fund of Egypt (SFE) to establish a joint education investment fund — dubbed the Egypt Fund for Education Support and Development — to help drum up education investments from private sector players.
Easier licensing for MSMEs: Amendment to the micro, small, and medium enterprises (MSMEs) executive regulations, which would allow for easier licensing for MSME projects.

Egypt takes USD 500 mn samurai bond issuance to market

Our second samurai bond issuance has hit the Japanese market: Egypt raised JPY 75 bn (c. USD 500 mn) in a JPY-denominated bond sale in Japan on Thursday in what was the country’s second samurai bond sale, the Finance Ministry said in a statement.

The specs: The five-year bonds were priced at a 1.5% annual rate. The ministry was able to cover the targeted subscription, the statement reads, without disclosing the subscription rate.

It’s all about diversification: The ongoing currency crisis and rising global rates have all but shut Egypt out from western capital markets over the past year, forcing the government to turn to more unconventional types of debt such as sukuk and Panda bonds. The samurai bond issuance comes less than two weeks after the ministry closed its maiden CNY 3.5 bn panda bond issuance in China.

Remember: Egypt closed its maiden samurai bond issuance in March 2022, when it sold JPY 60 bn (c. USD 500 mn) of the securities.

ADVISORS- SMBC Nikko Securities managed and promoted the issuance. It also guaranteed the issuance alongside the Bank of Japan, Sumitomo Mitsui Banking Corporation, and the Africa Finance Corporation.

Central Bank of Egypt keeps interest rates steady

The Central Bank of Egypt (CBE) kept interest rates steady at its next-to-last policy meeting of the year. The Monetary Policy Committee (MPC) on Thursday kept its overnight deposit rate at 19.25% and overnight lending rate at 20.25%, it said in a statement (pdf ) following the meeting, despite inflation continuing to run hot. The main operation and disc. rates were both held at 19.75%. The announcement comes as pundits expect the central bank to fully float the EGP after the presidential election scheduled for next month.

What they said: The MPC said that it will base future policy decisions on inflation forecasts rather than recent data, but noted that annual core inflation has eased for the past three months. Inflation soared to a fresh record high in September on the back of a succession of currency devaluations and seasonal factors.

Analystssaw this coming: Six out of nine analysts we surveyed last week predicted that rates would remain stable. Interest rates have become a less effective policy tool to curb inflation and felt that relatively stable inflation would factor into the CBE’s calculus. After big hikes last year, the central bank has brought rates up by by just 100 bps over the past seven months.

Devaluation looming, rate hikes might follow: “The Central Bank of Egypt will hike more aggressively closer to the currency adjustment, likely in 1Q 2024,” Ramona Moubarak, Fitch Solutions' director of MENA country risk, told Enterprise. Headline inflation is expected to slow between October 2023 and February 2024 ahead of the devaluation, she added.

The war in Gaza may also slow the economy + curb inflation: We may be looking at a “deflationary shock” from a declining natural gas supplies and a potential drop-off in tourism stemming from the war on Gaza, Bank of America Middle East and North Africa economist Jean-Michel Saliba told Bloomberg. This will contribute to the central bank leaving interest rates on hold until the devaluation, which he also expects to take place in 1Q 2024.

The international press also had the story:Bloomberg | Reuters.

Fitch joins Moody’s, S&P in downgrading Egypt’s credit rating

And Fitch makes three: Fitch Ratings followed in the footsteps of S&P Global Ratings and Moody’s in downgrading our sovereign credit rating deeper into junk on Friday, voicing concerns about our debt sustainability. In a statement Friday, Fitch said it had cut our credit rating to B- from B due to “increased risks to external financing, macroeconomic stability and the trajectory of already-high government debt” in addition to slow reform progress and FX constraints.

Things could improve in the months ahead: Fitch revised its outlook to stable from negative on the expectation that the government will accelerate reforms — including on the exchange rate, privatization and reduced infrastructure spending — after the presidential election in December. This will “likely pave the way for a new and potentially larger IMF program and additional support from the GCC.”

Currency uncertainty: “The Central Bank of Egypt's (CBE) ability to restore exchange rate and monetary credibility is uncertain,” Fitch said. “Floating the EGP, without rebuilding confidence and FX availability in the official market, may be associated with significant overshooting of interest rates and inflation … Delays in adjustment aggravate these risks, in our view.”

We’ve got a lot of debt due this year and the next — and it’ll probably get more expensive to service — and our financing options are limited, noting that we are “increasingly reliant on FDI” to cover our current account deficit.

FinMin reax: “The Egyptian economy is still capable of facing challenges and providing external financing needs,” Finance Minister Mohamed Maait said yesterday. Maait highlighted that we can access USD 5 bn annually from international development banks with easy terms and argued that this reflects the confidence of these institutions in the country’s economic trajectory. Egypt has identified sources for external financing of USD 4 bn until the end of FY 23-24, Maait added, including a recent CNY-bond issuance and a JPY-denominated offer that was completed on Thursday.

The international press also had the story: Reuters | Bloomberg.

Egypt economic growth almost halves to 3.8% in 22-23 –Planning Ministry

Economic growth almost halved to 3.8% in FY 2022-23 from 6.6% the year prior, according to figures announced by Planning Minister Hala El Said during a cabinet meeting on Thursday. That’s a drop from preliminary figures in July that had put growth at 4.2%. The state’s fiscal year runs from 1 July to 30 June.

The why: Our economy had to grapple with the effects of the war in Ukraine on supply chains and the “exacerbation of the external debt crisis in emerging markets and developing countries,” the statement said. The government had initially penciled in 5.7% growth for its FY 2022-23 state budget one month before the war in Ukraine broke out. We expect to know more when the government publishes figures for the April-June quarter.

Gov’t expects a better year this year: Growth is expected to rise to 4.2% in the current fiscal year ending June 2024, El Said said — that’s a 0.1 percentage point increase from July’s 4.1% forecast. Egypt is looking to gradually accelerate growth over the next two years to reach 6% in FY 2024-25, Finance Minister Mohamed Maait previously said.

S&P and the IMF see slower growth, with S&P Global Ratings penciling in 3.5% this fiscal year and the IMF having lowered its forecast for the same period to to 3.6% from its previous forecast of 4.1%.

Blinken rebuffs Arab calls for ceasefire in Gaza as humanitarian crisis grows

Pause, not ceasefire, Blinken insists during talks with Arab leaders: US Secretary of State Antony Blinken rejected demands for an immediate ceasefire in Gaza during talks with Arab foreign ministers in Jordan yesterday. Blinken, who is on a multi-day trip to the region to push for greater humanitarian relief efforts in the besieged enclave, told the foreign ministers of Egypt, Jordan, the UAE, Saudi Arabia, and Qatar that a ceasefire will allow Hamas to regroup and reiterated the Biden administration’s support for “humanitarian pauses.”

Remember: Following global outcry over the brutal nature of Israel’s assault on Gaza, the Biden administration has in recent days pivoted its rhetoric away from full-throated support for the Israeli bombardment to a focus on humanitarian aid. Both Biden and Blinken have come out in support of humanitarian pauses though the specific proposals remain unclear. Egypt and Qatar have reportedly suggested daily ceasefires lasting 6-12 hours so humanitarian aid can be distributed and casualties can be evacuated.

Public divisions: The disagreements between the two sides were on public display yesterday at a joint press conference, which saw Egyptian Foreign Minister Sameh Shoukry and Jordanian FM Ayman Safadi reject Blinken’s suggestion for “pauses” in the violence, and his insistence that Israel’s military campaign constitutes self-defense. “Israeli actions in Gaza cannot be justified as self-defense in any way,” Shoukry told reporters, before calling out what he said were the “double standards” of Western nations (watch, runtime: 4:57). “The whole region is sinking in a sea of hatred that will define generations to come,” Safadi said, imploring Washington to use its diplomatic heft to bring the violence to an end.

Blinken leaves Tel Aviv empty-handed: In talks with Blinken the previous day, Israeli PM Benjamin Netanyahu rejected the idea of a ceasefire or humanitarian pause until Hamas releases the roughly 240 hostages it took captive during its rampage on 7 October. “I made clear that we are continuing full force and that Israel refuses a temporary ceasefire which does not include the release of our hostages,” Netanyahu said in a statement following the meeting.

More bombing, no hostages, Qatar warns: Israel’s continued bombardment of Gaza is “complicating” the ongoing negotiations to secure the release of more of the hostages, Qatari PM / Foreign Minister Mohammed bin Jassem Al Thani told Blinken yesterday. Last week, Egypt and Qatar mediated the release of two hostages.

MEANWHILE- Turkey recalls ambassador to Tel Aviv: Turkey has followed in Jordan’s footsteps and yesterday recalled its ambassador from Tel Aviv due to Israel’s refusal to agree to a ceasefire and allow the entry of aid. President Recep Tayyip Erdogan said that severing diplomatic ties would be “impossible” but that he had “written off” Netanyahu.

AND- Hezbollah is not planning imminent escalation: Hezbollah chief Hassan Nasrallah avoided committing the militant group to full-scale war with Israel during his first public speech since the Hamas attack on October 7, but warned that all options remain on the table. The Lebanese Iranian-backed armed group has been engaged in cross-border fire with the Israelis for almost a month but has so far avoided escalating the clashes.

ON THE GROUND-

Israel is bombing everything: Over the weekend Israel carried out attacks all over Gaza, killing more innocent civilians and destroying more homes. During the past couple of days, Israel has attacked an ambulance convoy outside of Al Shifa hospital, two refugee camps —-

Al Maghazi camp and the Bureij refugee camp both located in central Gaza — four UN schools serving as shelter for refugees, the AFP’s Gaza bureau, and the French Institute in Gaza. The ambulance bombing triggered global outcry, including from the UN secretary-general and the World Health Organization, while the French foreign minister expressed her “astonishment” and “incomprehension” at the attack on the French Institute.

The death toll: Almost 9.5k Palestinians have been killed by Israeli airstrikes, 3.9k of whom were children, over the past four weeks, according to the latest figures from the Gaza Health Ministry. Nealy 24.2k are wounded.

The real toll is likely significantly higher: Another 2k people, including almost 1.3k children, are missing and thought to be trapped under the rubble, the ministry said.

The volume of aid entering the strip is gradually increasing: The Palestinian Red Crescent has received 77 trucks of aid at the Rafah border crossing over the past two days, it said (here and here) in X (formerly Twitter) yesterday. The organization has now received 451 trucks since the conflict started, equivalent to 17 per day. The enclave was receiving 500 trucks per day prior to the war.

“Progress” in talks to allow fuel into Gaza: There has been “some progress” in ongoing negotiations with Israel to ease its blockade of fuel, the UN’s humanitarian chief Martin Griffiths said Friday, according to Reuters. Israel has prevented fuel from entering Gaza since the start of the war, forcing the UN to scale back its aid relief efforts and forcing the closure of most of its hospitals and bakeries.

The evacuation effort continues: More than 1k foreigners and 84 injured Gazans crossed the Rafah border crossing into Egypt between Wednesday and Friday, the Wall Street Journal reported this morning, citing Egyptian officials. An agreement between Egypt, Israel and the US last week allowed foreigners to begin leaving the strip and for seriously injured Palestinians to receive medical treatment at Egyptian hospitals.

At least it was: A border official claimed yesterday that Israel was preventing more wounded Palestinians from crossing the border to receive medical treatment in Egypt, and that Hamas had suspended the evacuation of foreign nationals in response, according to AFP. “No foreign passport holder will be able to leave the Gaza Strip until wounded people who need to be evacuated from hospitals in north Gaza are transported through the Rafah crossing,” the official was quoted as saying. No foreigners or Palestinians crossed the border yesterday, according to the WSJ.

SFE inaugurates four new schools at educational hub Cosmic Village

School is in session at Cosmic Village: The Sovereign Fund of Egypt (SFE) on Thursday inaugurated four schools part of the first phase of the Cosmic Village development project, according to a press release (pdf ). The schools were set up under private-public partnerships between the SFE and private players in the education sector.

EEP is operating two schools: EFG Hermes-backed Egypt Education Platform (EEP) is managing two Mobica-constructed schools — Westview International Language Schooland Scholars International Language School. Mobica broke ground on the projects back in December 2021.

The other two schools are branches ofFutures Tech and Regent British School, which were set up by the Cairo Egypt for Education — a joint venture between our friends at CIRA Education and Elsewedy Capital (pdf) — with investments of EGP 350 mn.CIRA will manage the branch of Futures Tech, while the branch of Regent British School will be managed by Eduhive.

The Cosmic Village? The village sits on a once unutilized state-owned piece of real estate spanning 190 acres in Sixth of October. The SFE intends to turn the village into an “integrated educational hub” with the first phase consisting of establishing five schools and a sports club, the statement said. The Cosmic Village was put on the SFE’s investment menu in April 2021, after the fund added the land on which the village was built to the assets under its education sub-fund. Some 1k students have already begun attending the four schools within the complex, with a target of 10k students within the project’s first phase.

What about school five? The SFE will soon ink a partnership contract for the establishment of the first phase’s fifth school — a French institution.

More to come? The Madbouly government wants to support the development of 300 schools using the PPP model and is ready to make land available across Egypt’s governorates or provide already existing buildings, Prime Minister Moustafa Madbouly said during the inauguration.

CIB + Juhayna earnings jump in 3Q, 9M 2023

CIB saw its net income surge 89% y-o-y in 3Q 2023 to EGP 8.4 bn on the back of an increase in net interest income, the EGX-listed lender said in its latest earnings release (pdf). Net interest income jumped 71% to almost EGP 8.1 bn, pushing revenues to EGP 8.5 bn, up 64% y-o-y.

A strong year so far: The bank’s net income rose 84% y-o-y to EGP 22.4 bn in the first nine months of 2023, while revenues jumped 70% y-o-y to EGP 39.3 bn. CIB’s gross loan portfolio increased 15% over the nine months to record EGP 255 bn, while deposits in local and foreign currencies grew 26% to reach an equivalent of EGP 666 bn.

What they said: “Notwithstanding the outlook beset with challenges, CIB was able to sustain its comfortable solvency, largely fueled by its typical strong financial performance, as well as its robust liquidity and asset quality levels,” the bank’s management said.

JUHAYNA NET INCOME SURGES-

Dairy giant Juhayna’s net income rose 108% y-o-y in 3Q 2023 to EGP 323 mn, according to the company’s earnings release (pdf). The company’s revenues rose 50% y-o-y for the quarter to EGP 4.5 bn on the back of strong demand and an increase in prices. The quarter also saw exports jump 79% y-o-y to EGP 265 mn.

Strong growth for 9M 2023: Juhayna’s net income rose 85% y-o-y during the first nine months of the year to EGP 879 mn, while revenues grew by 43% y-o-y to EGP 11.7 bn. The company attributed the growth to its “ability to pass on price hikes, vertical integration, and strategic relationships with its suppliers,” as well as its cost reduction strategy. The company has responded to rising inflation by hiking prices by more than 30% during the nine-month period. Exports almost tripled y-o-y in 9M 2023 to EGP 931 mn, making up 8% of the company’s revenues.

Juhayna to merge subsidiaries: The company’s board last week approved a decision to merge its six subsidiaries, it said in a regulatory filing (pdf) on Thursday. The board also greenlit a decision to tap Zilla Capital as financial advisor for future acquisitions amid the company’s search for new investments. The disclosure didn’t provide any details about its future plans.

US Senate confirms Herro Mustafa Garg as new ambassador to Egypt

Herro Mustafa Garg has been appointed as the US ambassador to Egypt,the Senate confirmed last Thursday. Garg is a career diplomat and most recently served as the US Ambassador to Bulgaria. She also served as deputy director of the Afghanistan Office and as the director for Iran, Israeli-Palestinian affairs and Jordan at the National Security Council. US chargé d’affaires Elizabeth Jones has been acting as the interim ambassador.

FYI: She speaks Kurdish, Arabic, Farsi, Greek, Hindi, Bulgarian and Portuguese. A documentary called American Herro was made about her family story in 2009.

War crimes and the boycott movement were the topics of conversation on last night’s talk shows

It was a very opinionated night on the airwaves, with the nation’s talking heads giving their two cents on the latest political developments in Israel’s war on Gaza and the boycotts against Israel-supporting companies.

What’s the IHRC doing in response to the Israeli attacks on Gaza? “War crimes include displacement, targeting places like hospitals and UN offices, and Israel is guilty of them,” International Human Rights Commission (IHRC) official Haissam Said Bou Said told Kelma Akhira’s Lamees El Hadidi (watch,runtime: 11:37). Israel is deliberately targeting civilian locations to frighten civilians and force them to flee Gaza, he added. We have the latest on the situation in Gaza in this morning’s War Watch, above.

Your boycott is doing more harm than good, says Adib: El Hekaya’s Amr Adib criticized the ongoing boycott of brands believed by some consumers to have voiced support for Israel (watch, runtime: 18:08). The boycott causes local franchises of international brands to see a significant dip in sales, which in turn pushes them to lay off workers, he explained. “There are hundreds of thousands of people working for these local franchises … you are standing with the people of Palestine, but who is standing with the people of Egypt?” he asked.

Moussa voices criticism of Hamas head over border comments: Ala Maso’uleety’s Ahmed Moussa (watch, runtime: 3:10) attacked Hamas leader Ismail Haniyeh calling him a liar for his comments calling on Egypt to open the Rafah border to let in Gazans. “The border is open, we’re taking in tens of wounded Gazans every single day,” Moussa said, adding that “Egyptians are more concerned about the people of Gaza than Haniyeh.” The Hamas leader wants the Egyptian-Palestinian border to open up to all Gazans seeking to flee, while Egypt has only opened the border for injured Gazans and foreign-passport holders.

No one is happy with Nasrallah’s speech: Most analysts have reached the same conclusion on Hezbollah head Hassan Nasrallah’s recent speech that “he should’ve stayed silent,” Middle East Forum for Strategic Studies head Samir Ghattas told Adib (watch, runtime: 9:27). “Nasrallah hasn't been making public appearances since 2006, and that is not a sign of power,” Ghattas said and added that “Nasrallah has gone from the leader of a strong political power to a subpar political analyst.” Ahmed Moussa also jumped in and argued that Nasrallah’s “main concern was clearing his name and Iran’s name from the events of 7 October.” (watch, runtime: 6:50).

ALSO- Israeli protests against Netanyahu: Thousands of Israelis gathered yesterday in opposition to the war on Gaza and called on Israeli Prime Minister Benjamin Netanyahu to resign. (Masa’a DMC | watch, runtime: 0:37)

Busy day for El Sisi: President Abdel Fattah El Sisi yesterday met up with Lebanese PM Najib Mikati and World Food Program Executive Director Cindy McCain. (Masa’a DMC | watch, runtime: 2:48 | 0:42)

More funding for Cairo Metro Line 4?

DEBT-

Tunnels authority wants more financing for Cairo Metro Line 4: The National Tunnels Authority (NTA) is looking to secure an EGP 17 bn loan from a consortium of local banks, led by Banque Misr and the National Bank of Egypt, to fund the construction of the Cairo Metro Line 4, Asharq Business reported, citing three sources with knowledge of the matter. The authority is looking to finish up the necessary paperwork in 1Q 2024 for disbursement to start in April.

Refresher: The first, 19-km phase of the fourth line will connect Cairo, Giza and Sixth of October City. It is expected to take six years to complete. The second, 23.5-km phase, will connect to New Cairo. The project is being financed by a JPY loan provided by the Japanese International Corporation Agency (JICA).

US stocks have best week in almost a year on interest rate hopes

US stocks continued the post-Fed meeting bounce on Friday: US stocks closed up on Friday to record their best week since early November 2022 after the Federal Reserve’s decision last week reignited investor confidence, the Financial Times wrote.

The Fed on Wednesday left interest rates unchanged for the second consecutive meeting, pushing investors to believe that it has reached the end of its aggressive tightening cycle, which has pushed rates to 22-year highs. The S&P 500 and Nasdaq 100 both gained c. 6% last week, recording their best weekly performance all year long, Bloomberg reported. This comes after a couple of tough months for US stocks, which pushed both the S&P 500 and Nasdaq Composite into correction. Investment-grade and junk bonds also saw increases, a welcome sign after a particularly tough year for bonds.

Stocks rise, yields fall. Investors ditched their government debt in favor of stocks, pushing the yields on US government debt down 25 bps for the week, marking their biggest weekly drop since March. This comes less than two weeks after the rate on the 10-year note hit a 16-year high.

EGX30	22,640	+0.9% (YTD: +55.1%)
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	10,853	+0.4% (YTD: +3.6%)
ADX	9,510	+0.3% (YTD: -6.9%)
DFM	3,930	+0.4% (YTD: +17.8%)
S&P 500	4,358	+0.9% (YTD: +13.5%)
FTSE 100	7,418	-0.4% (YTD: -0.5%)
Euro Stoxx 50	4,175	+0.1% (YTD: +10.0%)
Brent crude	USD 84.89	-2.3%
Natural gas (Nymex)	USD 3.52	+1.2%
Gold	USD 1999.20	+0.3%
BTC	USD 34,830.92	+0.6% (YTD: +110.8%)

THE CLOSING BELL-

The EGX30 rose 0.9% at Thursday’s close on turnover of EGP 2.9 bn (20.4% above the 90-day average). Foreign investors were net sellers. The index is up 55.1% YTD.

In the green: Qalaa Holdings (+7.6%), Juhayna (+5.6%) and CIRA Education (+3.8%).

In the red: AMOC (-2.0%), Abu Qir Fertilizers (-1.1%) and Credit Agricole (-1.0%).

CALENDAR

NOVEMBER

5 November (Sunday): Senate back in session.

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

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

12 November (Sunday): House of Representatives to reconvene.

12 November (Sunday): Deadline for technical and financial offers for Misr Aluminium Company rehabilitation project (extended from 12 October)

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

14-15 November (Tuesday-Wednesday): Egypt VC Summit, Conrad Hotel.

15 November (Wednesday): Deadline for MTO to buyback Dice Sports and Casual Wear’s 46.9% Stake.

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.

Signposted to happen some time in November:

Bidding deadline for 5 gold mine concessions in the Eastern Desert (TBC).

DECEMBER

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

4-7 December (Monday-Thursday): Egypt Defence Expo, Egypt International Exhibition Center.

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 stake sale for military-owned fuel retailer Wataniya.
Gov’t expects to finalize sale of Zafarana wind farm
Kenyan trade conference in Egypt.

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.

Q1 2024: Opening of the new developed Pyramids Plateau in Giza.

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.

2H 2024: Gov’t to launch the Cairo Ring Road BRT buses.

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.

2024

JANUARY

7 January (Sunday): Coptic Christmas.

17 January (Wednesday): A delegation of Egyptian companies to visit Istanbul.

25 January (Thursday): Revolution day.

APRIL

9 April (Tuesday): Eid El Fitr (TBC).

25 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC).

MAY

1 May (Wednesday): National holiday in observance of Labor Day (TBC).

5 May (Sunday): Coptic Easter.

6 May (Monday): Sham El Nessim (TBC).

JUNE

15-19 June (Saturday-Wednesday): Eid El Adha (TBC).

30 June (Sunday): June 30 Revolution Day.

JULY

7 July (Sunday): National holiday in observance of Islamic New Year (TBC).

23 July (Tuesday): Revolution Day.

SEPTEMBER

2-5 September (Monday-Thursday): Egypt International Airshow, El Alamein International Airport.

15 September (Sunday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER

6 October (Sunday): Armed Forces Day.

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