Inflation beats analysts forecasts and falls to nearly two-year low of 25.5%

Wednesday, 11 Dec 2024

Inflation beats analysts forecasts and falls to nearly two-year low of 25.5%

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Today at a glance

Economy

Inflation falls to its lowest level in nearly two years in November.

M&A WATCH

Africa50 eyes 42.9% stake in Raya Data Center with USD 15 mn investment to fund new data center.

IPO

United Bank’s shares rise 3.2% in EGX debut.

What We're Tracking Today

United Media Services enters into an alliance with Tarek Nour Communications and taps Tarek Nour as new chairman.

What We're Tracking Today

Egyptian begin rolling out Apple Pay.

Also on our Radar

Hassan Allam Utilities to invest in and develop King Abdullah Economic City off-port terminal.

PLANET FINANCE

Complex finance hit its highest level since before the 2008 financial crisis.

HARDHAT

Could the National Smart Cities Strategy change how we go about urban development?

What We're Tracking Today

Egyptian banks begin rolling out Apple Pay

Good morning, friends. In addition to United Bank officially arriving on the EGX, Apple Pay is also making its debut, with the service beginning to be rolled out by private and public banks alike. Today is a day of firsts, but also of important M&A news, infrastructure updates, encouraging inflation data, and much more.

BUT FIRST, you may rejoice: Apple Pay has come to Egypt. The service has rolled out to many cards from several issuing banks. Others are expected to launch support for Apple Pay in the coming days and weeks.

Want to add your card? Some banks’ mobile apps will prompt you to add a card the next time you log in. (Make sure you have the latest version of the app installed.) Don’t sweat it if you’re not prompted or you dismissed the prompt without acting — adding your card is easy:

Open the “Wallet” app
Tap the “+” symbol at the top right
Choose “Debit or Credit Card”
Tap “Continue”
Add your card by scanning it or tapping “Enter Card Details Manually”
Accept the terms and conditions
Wait for an OTP verification via SMS

And then you should be good to go. We’ve successfully added both credit cards and debit cards without issue.

Want to pay for your coffee this morning by Apple Pay? Just double-click the power button and put your phone up to the POS machine.

Apple Pay and eSIMs in less than a week? Kinda feels like we’re starting to catch up on a decade of technological progress… (Apple Pay launched in October 2014, for those of you keeping track at home.)

MEANWHILE- United Media Services, the state-owned media giant, has entered analliance with our friends at Tarek Nour Communications (TNC), with Tarek Nour stepping in as chairman. Television broadcaster El Mehwar is also part of the restructuring. The alliance said in a statement yesterday that it aims to “develop a forward-looking strategy to improve the media industry.”

Others from the private sector are joining Tarek on UMS’ board, including our friends Sherif El-Kholy from Actis (who EnterpriseAM readers will know from his frequent appearances on our stage and in our pages) as well as TNC co-CEO Ahmed Tarek. Also joining the newly reconstituted board: Saif El Wazery, Mohamed El Saadi, Tamer Morsi, Amr El Feky, and Amro Al Khayyat.

Private-sector in the driver’s seat? We’re still reporting this one out and expect to have more to say soon, but color us interested (and hopeful for reasons to be optimistic). Private-sector involvement in UMS has the potentially to be a fundamentally good thing. Tarek Nour invented the modern Egyptian advertising market, and TNC has proven adept over the years at managing multiple forms of industry and technology shifts in advertising, communications, broadcast, and TV production. Stay tuned.

WEATHER- The sun is out in Cairo today, with a high of 22°C and a low of 13°C, according to our favorite weather app.

It’s overcast and a tad warmer in Alexandria, with a high of 23°C and a low of 11°C.

Like yesterday, heavy fog is forecast for nearly the whole country, so take care on the roads.

** DID YOU KNOW that we now cover Saudi Arabia and the UAE?

** Were you forwarded this email? Tap or click here to get your own copy delivered every weekday before 7am Cairo time — without charge.

WATCH THIS SPACE-

Egypt’s largest solar power plant will officially open this Saturday, with Prime Minister Moustafa Madbouly and other officials set to head south to the 560 MW Abydos plant in Kom Ombo for an opening ceremony, Al Mal reports, citing unnamed Electricity Ministry officials. The project built by AMEA Power is already feeding the national grid from at least October, according to unconfirmed reports, and will supply power to 256k homes under a 25-year offtake agreement with the Egyptian Electricity Transmission Company.

Remember: The government wants to see 3-4 GW-worth of renewable energy projects go live and start feeding the national grid by next summer to fill the energy supply gap. This push is part of a broader plan to secure the country's energy needs amid declining natural gas production and expanding electricity interconnection projects to enable exports to surrounding countries. Egypt plans to source 42% of its energy from renewables by 2030.

HAPPENING TOMORROW-

Attention, handicraft fans: The annual MSMEDA-organized Turathna kicks off tomorrow at the Egypt International Exhibition Center, running until 21 December, according to a statement from the agency. The exhibition is set to host 1k+ exhibitors representing crafts and heritage arts from across the country.

CIRCLE YOUR CALENDAR-

The Egypt Economic Summit will take place on 14 January, bringing together “key ministries, government leaders, and top business minds” to discuss Egypt’s position and role in the global economy, according to an announcement from the summit. The event — which will be held under the theme Redefining Economic Excellence: A Bold Vision for Egypt’s Growth — will also focus on local efforts to achieve sustainable development, long-term growth, and global competitiveness.

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

THE BIG STORY ABROAD-

Syria is once again front and center in the news this morning, with Israeli airstrikes and incursions into the country continuing to pick up after the collapse of the Assad regime earlier this week. In just the last 48 hours, Israel conducted over 350 airstrikes that hit weapons stores, missile stores, fighter jets, navy vessels, and sites it claims could be holding chemical weapons. While over in the southwest of the country, Israel also expanded its already illegal occupation of the Golan Heights to create in confunction with its airstrikes what it terms a “sterile defence zone.” (Financial Times | Bloomberg | Reuters | Associated Press | New York Times | Guardian)

The country’s delicate political transition is also getting close attention from the world’s press, with Mohammed Al Bashir appointed as interim prime minister to lead the caretaker government until 1 March. The relatively unknown figure outside Idlib — where headed a comparatively miniscule rebel-held administration — now has a monumental task ahead of him as he tries to navigate the complexities of a post-Assad Syria. (Reuters | Guardian)

While over in the US, President-elect Donald Trump is doubling down on deregulation with a pledge to fast-track permits for investors committing USD 1 bn or more to US projects. While some hail it as a boon for large-scale infrastructure and manufacturing, critics argue it sidelines smaller projects and risks undermining environmental protections. (Financial Times)

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: We dive into Egypt’s National Smart Cities Strategy and how it can change how we go about urban development.

Tags:

Apple Fintech

Somabay, every reason to fall in love.

Economy

Inflation falls to its lowest level in nearly two years in November

Inflation decelerates for the first time since July: Annual headline urban inflation dropped a full percentage point from the month before to 25.5% in November, marking the first fall in inflation in three months and Egypt’s lowest inflation reading since December 2022, according to data from state statistics agency Capmas.

Driving the decline: Food and beverage price inflation — the largest component of the basket of goods and services used to calculate headline inflation — fell 2.7 percentage points throughout the month to an annual rate of 24.6%, their slowest pace in over two years. On a monthly basis, F&B prices fell to negative 1.9% — marking a three percentage point drop and the first time in the red since May.

November’s numbers were well below expectations: The one percentage point drop was well below the median forecast of 15 analysts polled by Reuters last month, who anticipated inflation decelerating only 0.1 percentage points from October’s reading to 26.4%. Most of the nine analysts polled by EnterpriseAM in mid-November were even more pessimistic, with the majority expecting the full impact of fuel price hikes and rising tobacco prices to be reflected in worsening inflation in November.

Annual core inflation — which excludes volatile items like food and fuel — fell 0.7 percentage points from October’s reading of 24.4%, recording 23.7% in November, according to the Central Bank of Egypt. On a monthly basis, core inflation fell 0.9 percentage points, registering 0.4% in November.

Some expect inflation to drop back to single digits in 1Q 2025: Capital Economics’ James Swanston is penciling in continued small decelerations in December and January before a more significant drop back into single digits through the rest of 1Q 2025. This would come as the year-on-year comparisons begin to reflect previous falls in the EGP, Swanston noted.

What does this mean for interest rates? Despite the better-than-expected inflation readings, a majority of analysts are standing by their conviction that the Central Bank’s Monetary Policy Committee will keep rates stable when it meets next on 26 December, according to Bloomberg. Analysts are on the whole staying with their prediction that the central bank will begin its rate easing cycle in the first quarter of the year. The CBE left interest rates unchanged at its last Monetary Policy Committee meeting late last month, with the bank stating that “the current policy stance remains appropriate until a significant and sustained decline in inflation materializes” and citing continued upside risks.

Lower-than-expected inflation could impact our negotiations with the IMF: The new data could undercut our case for delaying planned fuel subsidy cuts under our current IMF program, with lower-than-expected inflation possibly indicating that another fuel price hike might not have as much of an impact on inflation as expected. Negotiations between the government and the Fund and expected to wrap up before the end of the year.

The unexpected drop also caught the attention of the int’l press: Reuters | Bloomberg.

Tags:

CAPMAS economy inflation interest rates

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M&A WATCH

Africa50 eyes 42.9% stake in Raya Data Center with USD 15 mn investment to fund new data center

Africa50 has another Egypt acquisition in its sights: Raya Holding’s board of directors has voted to preliminary approve an offer from African infrastructure investment platform Africa50 to acquire a 42.9% stake in Raya IT subsidiary Raya Data Center for USD 15 mn, according to an EGX statement (pdf).

Where will the money go? The investment will be used to finance the establishment of a new Tier III data center in Egypt, with construction set to begin in early 2025, Raya Holding CEO Ahmed Khalil told EnterpriseAM. The new center will “address the pressing need for reliable, scalable, and certified digital infrastructure in Egypt and Africa,” Khalil noted in a company press release (pdf).

Raya IT and others will also be putting their money where their mouth is for the USD 35 mn project: Wholly owned Raya Holding subsidiary Raya IT will be contributing an additional USD 10 mn for the data center. The company also plans to raise an additional USD 10 mn through undisclosed financing institutions, bringing the combined total investments to USD 35 mn, Khail told us.

Africa50? Africa50 is an infrastructure investment platform established by African governments and the African Development Bank that targets projects in the power, transport, IT, midstream gas sectors, and has recently broadened its remit to include fintech, health, and education-focused projects. The platform has already invested in Scatec’s 400-MW solar plant at the giant 1.5-GW Benban project.

Up next: The board has authorized the appointment of an independent financial advisor to assess Raya Data Center’s fair value. The board also greenlit efforts to study the offer, negotiate terms, and to start putting together final contracts.

Some Saudi IT acquisitions could be in the pipeline, too: Raya Holding is also planning to acquire two companies in Saudi Arabia operating in the IT and data center sectors by 3Q 2025 as part of its larger plan to grow its business in the Kingdom, Khalil said in comments to EnterpriseAM. Raya’s IT arm Raya IT has a three pronged approach to KSA, with the company focussing on expanding data centers and its cloud and digital solutions to banks, expanding its outsourcing operations, and expanding in the fintech sector by obtaining a license from the Saudi Central Bank to practice consumer finance through its fintech arm Aman Holding. Aman Holding is also set for a further EGP 1 bn in investment next year, as part of a wider EGP 2 bn investment plan for the year, the company’s CFO Hossam Hussein told Al Borsa..

There are also some expansion plans closer to home in the works: Raya’s manufacturing subsidiary Raya Electric will open a production line for products from De’ Longhi Group — owner of household name brands Kenwood and Braun, among others — next year, Khalil told us. Also in the pipeline is an agreement with Korean home appliance giant LG to locally manufacture 100k LG-branded residential air conditioners annually after three years with over 60% locally sourced components. The group also plans to apply for a digital bank license for its Aman arm by year-end from the Central Bank of Egypt, Khalil told Asharq Business.

But any upcoming IPOs from Raya are on hold — for now at least: “We have no plans to list any of our subsidiaries on the EGX under the current circumstances, and the matter is constantly under discussion to determine the appropriate time,” Khalil said at the event. Khalil’s comments reiterated the company’s position that it will wait for more favourable market conditions before offering up Raya IT, Raya for Trade and Distribution, and Aman Holding that have been earmarked for offerings for some time now.

Africa50 also plans to ramp up its digital infrastructure investments in Egypt, with over seven deals in the pipeline over the next two years, says Managing Director Raza Hasnani to Asharq Business, with investment tickets ranging from USD 20-40 mn.

Advisors: CI Capital acted as Raya Holding’s financial advisor, while Helmy, Hamza & Partners — Baker McKenzie’s Cairo office — acted as the company’s counsel. Herbert Smith Freehills LLP served as financial advisor for Africa50, while Matouk Bassiouny & Hennawy offered legal counsel on the agreement.

Tags:

Africa50 Data Centers M&A Watch Raya Holding Raya IT

IPO

United Bank’s shares rise 3.2% in EGX debut

United Bank’s shares rose 3.2% to EGP 14.29 per share by the time the markets closed yesterday on their first day of trading. During trading, the company’s shares under the ticker UBEE.CA rose by as much as 10.0% to change hands at EGP 15.23, before pairing back gains, according to market data. This put the bank’s market capitalization yesterday at EGP 15.7 bn.

This marks only the second post-IPO EGX debut this year, after Act Financial began trading on the EGX in late July and saw its shares jump 29.7% on the first day of trading. It also marks the first IPO of a bank on the EGX in 28 years, according to the offering’s sole global coordinator and bookrunner CI Capital in a statement.

Remember: The Central Bank of Egypt-owned bank offered up a 30% stake in the IPO — equivalent to 330 mn shares — at a share price of EGP 13.85 each, raising some EGP 4.57 bn. United Bank’s retail offering, which closed last week, was overs ubscribed 59x, while the offering’s private placement was covered 6x. The offering as a whole was more than 8.6x oversubscribed.

More IPOs of state-owned companies could soon be on their way: Prime Minister Mostafa Madbouly told reporters last week that his government plans to offer three to four companies affiliated with the military on the bourse, which was followed by unconfirmed reports naming two of the companies as Wataneya and Safi with listings pencilled in for 1Q 2025.

What they said: “The offering coverage figures reflected a great thirst for new subscriptions and offerings, and increased confidence in the EGX, and increasing confidence in the bourse to accommodate all subscriptions and offerings, whether coming from the government of the private sector,” EGX head Ahmed El Sheikh said at the ringing of the bell to mark the entrance of the stock, according to a statement (pdf) from the central bank.

Advisors: CI Capital was the sole global coordinator and bookrunner for the offering, while Helmy, Hamza & Partners — Baker McKenzie’s Cairo office — acted as counsel. Baker Tilly was the offering’s independent financial advisor and Ernst & Young (EY) the auditor.

United Bank’s EGX debut also caught the attention of the int’l business press: Bloomberg

Tags:

economy EGX IPO watch Madbouly Cabinet MENA IPOs United Bank

Manufacturing

Madbouly follows up on localization efforts in Port Said factory tour

Localization, investment and expansion was the theme of Prime Minister Moustafa Madbouly’s trip to Port Said yesterday, where he toured the city’s industrial zones and factories.

MOAMEN PERFUMES PLANS EGP 200 MN AEROSOL FACILITY-

Moamen Perfumes will invest EGP 200 mn to establish Egypt’s first aerosol manufacturing plant, the company’s factory director Mohamed Moustafa Saad told Madbouly during his visit. The project will create 200 jobs and reduce the country’s import bill, Saad added. The company’s existing EGP 110 mn factory already employs 200 people and exports USD 800k worth of products a year and generates EGP 43 mn in local sales.

SOUDANCO TO LAUNCH EGP 250 MN JUICE EXPANSION-

Soudanco plans to expand its investments in its juice factory from EGP 350 mn to EGP 600 mn by next year and launch an orange concentrates factory in partnership with an unnamed Moroccan company at a cost of USD 7.5 mn, according to a statement by the MP.

EBM TEXTILE EYES 3X PRODUCTION BOOST BY 2025-

Egyptian-Turkish textile venture EBM Textile plans to triple its production capacity to 75k pieces per month by 2025 and grow its workforce from 100 to 400 employees, factory manager Mahmoud Ismail told the prime minister during his visit to the Port Said facility.

Tags:

investment watch Manufacturing

LAST NIGHT’S TALK SHOWS

Egypt condemns Israel's seizure of Syrian buffer zone, urges international action

Last night’s talk shows zeroed in on Israeli airstrikes on Syria — with the Israeli military claiming to have wiped out around 70% of Syria’s military capabilities, including army bases, the naval fleet, and air defense systems, the Times of Israel reports.

“This is the greatest catastrophe to occur in the past 50 years. What Israel achieved in just three days, it hasn’t achieved over the past 50 years,” said military commentator Samir Farag in a phone call with Ahmed Moussa (watch, runtime 17:52). He pointed out that Israel exploited the collapse of the Syrian army to seize the remaining areas of the Golan Heights, already occupied since 1967, including the demilitarized zone and Mount Hermon. He also noted that Israel annulled the disengagement agreement signed between the two countries in 1974.

“The occupation of Mount Hermon gives Israel a strategic advantage, as it enables it to strike Damascus with ease due to its high elevation. This is Israel’s greatest victory in 50 years,” Farag added, explaining that “Mount Hermon is the key to Syria.” With Israel’s expansion of its presence into Syria, its forces are now only “within 25 kilometers of Damascus,” he added.

However, there was little to no sympathy for Assad on the airwaves, with political thinker Mostafa El Feki telling that Sherif Amer that “the oppressive Bashar al-Assad regime is not to be mourned, as it hasn’t fired a single shot at Israel since 1973” (watch, runtime at 21:58).

“The United States had no prior knowledge of Israel’s intention to launch military strikes on Syria,” said Michael Mitchell, the regional spokesperson for the U.S. State Department told Sherif Amer (watch, runtime 6:01). “Israel did not notify us of its intention to carry out the strikes,” Mitchell added.

The nation’s hosts also touched on Egypt’s condemnation of Israel’s actions in its buffer zone with Syria, stating that Israeli forces’ seizure of Syrian land constitutes “an occupation of Syrian territory,” a “blatant violation” of sovereignty, and a breach of the 1974 disengagement agreement between the two countries, according to a Foreign Ministry statement.

Tags:

LAST NIGHT’S TALK SHOWS Middle East politics

Also on our Radar

Hassan Allam Utilities to invest in and develop King Abdullah Economic City off-port terminal. PLUS: Madinet Masr, EFG Hermes, Majid Al Futtaim + Empower, ABB Group

INFRASTRUCTURE-

Hassan Allam Utilities to develop an off-port terminal in Saudi’s King Abdullah Economic City: Local energy and infrastructure leader Hassan Allam Utilities has signed a strategic partnership agreement with Saudi-based Nesma Holding’s logistics subsidiary Defaf United for Logistics to invest in and develop an advanced off-port terminal in King Abdullah Economic City, the company said in a statement (pdf). The terminal will include “container yards and warehousing facilities, delivering flexible and integrated logistics solutions tailored to a wide range of customers,” the statement reads.

Strategic placement: The new terminal aims to serve clients across Saudi Arabia, the GCC, and East Africa, establishing the King Abdullah Economic City as a key logistics hub to support regional trade.

What they said: “The off-port terminal in KAEC will play a crucial role in strengthening the region's logistics infrastructure. Together, we are committed to providing cutting-edge solutions that meet client needs and drive economic growth in the Kingdom,” Hassan Allam Holding Co-CEO Amr Allam said.

REAL ESTATE-

Madinet Masr wants to speed up the construction of Taj City: Real estate player Madinet Masr has signed an MoU with local construction company El Hazek Construction to “execute infrastructure works” and build villas in Taj City’s Elect development with planned investments exceeding EGP 900 mn, the company said in a statement (pdf ).

CAPITAL MARKETS-

EFG Hermes has now run nine IPOs on GCC bourses in 2024: EFG Hermes has officially closed Talabat Holding’s USD 2 bn IPO on the Dubai Financial Market and Lulu Group International’s USD 1.7 bn listing on the Abu Dhabi Securities Exchange, acting as joint bookrunner for both offerings. This brings EFG Hermes’ total number of GCC IPOs this year to nine. Talabat’s debut — involving a 20% stake in Delivery Hero — marked the largest global tech deal this year, raking in USD 2 bn, while Lulu’s IPO came in 25x oversubscribed with total demand exceeding USD 37 bn.

TRADE-

Speedier customs clearance between Egypt and KSA: Egypt and Saudi Arabia agreed to slash customs clearance time from three days to 3-4 hours, Deputy Finance Minister for Taxes Sherif Al Kilani told Asharq Business. “We are working to introduce custom facilities for trade between Egypt and Saudi Arabia,” he said.

Remember: Earlier this month, the Egyptian Customs Authority and Saudi Zakat, Tax and Customs Authority inked a mutual recognition agreement for the Authorized Economic Operator program to enhance economic cooperation, streamline customs procedures, reduce costs, and boost trade through benefits like priority clearance and lower fees. The agreement will double trade between the two countries, according to Al Kilani.

ENERGY-

President Abdel Fattah El Sisi met with representatives from several Norwegian companies during his official visit to Norway, according to Ittihadiya statements here and here. The meetings focused on boosting investment cooperation, particularly in renewable energy, green investment, and African development projects.

The companies: El Sisi met with officials from renewable energy firms Empower and Scatec, as well as gas liquefaction company Golar, fertilizer giant Yara, Norwegian development agency Norfund, and the Norwegian-African Business Association. Discussions extended to potential tripartite cooperation in Africa, with Norwegian businesses expressing their interest in expanding their portfolios in Egypt.

The meetings were followed by an MoU between Empower and the UAE’s Majid Al Futtaim to build a solar project that will power an industrial project, one of the statements said without providing any further details.

EDUCATION-

Seven new centers for students with disabilities to be set up at public universities: The Education Ministry has signed cooperation protocol agreements with AMIDEAST to establish student disability service centers in seven public universities as part of the third phase of the project’s implementation, according to a ministry statement. The protocols cover supervising the centers’ implementation, financing training activities, and following up on center activities.

Where will the centers be? The seven centers will be established in Minya University, Benha University, Menofia University, Port Said University, Aswan University, and Kafr El Sheikh University.

MANUFACTURING-

ABB Group launches new production line for power distribution units: Industry and Transport Minister Kamel El Wazir oversaw the inauguration of a production line for power distribution units in Swiss-Swedish power company ABB Group’s factory in Tenth of Ramadan City, according to an Industry Ministry statement. The final products will all be earmarked for export.

PRIVATIZATION-

The Finance Ministry is offering up six public-private partnerships (PPPs) with a total investment cost of EGP 29 bn, Ater Hanoura, head of the Finance Ministry’s Private Partnership Unit, told Asharq Business. The first of the projects is sludge treatment facility with an investment ticket of between EGP 9-10 bn and the second is for a wastewater treatment station, Hanoura said. The six projects are part of a wider offering of 12 projects with investments totalling EGP 61 bn.

Tags:

ALSO ON OUR RADAR capital markets customs Education energy Fintech Hassan Allam Utilities infrastructure logistics Madinet Masr Manufacturing real estate Saudi Arabia trade

PLANET FINANCE

Complex finance hit its highest level since before the 2008 financial crisis

Could Wall Street be headed toward another financial crisis? Complex financial products are seeing a boom the likes of which has not been seen since 2007, with global structured finance transaction volumes hitting USD 380 bn this year, the Financial Times reports. The surge, which has seen transaction volumes surpass their 2021 post-financial crisis peak, is being driven by investor demand for higher yields and bonds — including in significantly riskier assets, the salmon-colored paper writes.

Bonds backed by… wings? This year’s transactions have included bonds backed by unconventional revenue sources, with recent transactions involving fast food chain Wingstop franchise fees and the music catalogues of Shakira, Bon Jovi, and Fleetwood Mac. Transactions involving the more obscure parts of the market have risen 50% y-o-y to USD 63 bn, with analysts expecting further growth. Investments in niche markets rose by 50% y-o-y to USD 63 bn in 2024.

Higher yields are a big part of the appeal: Structured financial products offer higher yields than traditional bonds, making them particularly attractive to investors seeking to channel a growing stream of retiree assets into income-producing investments amid rising borrowing costs.

It also comes as other segments of Wall Street’s business remain sluggish, with the investment banking industry’s fees still below their historic highs. The underwriting fees for structured financial products outstrip those for more conventional activities, like government bonds and corporate debt — no small part of their attractiveness to financiers.

The question is — are the risks being contained? Some investors are raising concerns that investment managers are not properly vetting structured financial products, with some saying that certain buyers are purchasing these products indiscriminately. While analysts cited by the FT claim that the market is as of yet too small to constitute a “systemic risk,” a large portion of these transactions are backed by consumer credit products like credit card loans — which have seen rising default rates since the US Federal Reserve began lifting interest rates in 2022.

One — possibly bad — sign is that investors have shown increasing appetite for the riskiest ends of structured product transactions. Strong demand for low-risk “senior” tranches of this debt has seen banks issue ever-riskier slices of debt — a narrative that bears striking parallel with the risk spiral in mortgage-backed securities that precipitated the 2008 financial crisis.

MARKETS THIS MORNING-

Asian markets are mixed as traders look ahead to China’s annual economic work conference later today, with Hong Kong’s Hang Seng up 0.7%, China’s CSI 300 flat, and Japan’s Nikkei down 0.3%. Wall Street futures are flat once again after another day of losses on S&P 500 and Nasdaq.

EGX30	30,618	-1.3% (YTD: +23.0%)
USD (CBE)	Buy 50.39	Sell 50.53
USD (CIB)	Buy 50.40	Sell 50.50
Interest rates (CBE)	27.25% deposit	28.25% lending
Tadawul	12,194	+0.8% (YTD: +1.9%)
ADX	9250	0.0% (YTD: -3.4%)
DFM	4794	-1.1% (YTD: +18.1%)
S&P 500	6035	-0.3% (YTD: +26.5%)
FTSE 100	8280	-0.9% (YTD: +7.1%)
Euro Stoxx 50	4952	-0.7% (YTD: +9.5%)
Brent crude	USD 72.19	+0.07%
Natural gas (Nymex)	USD 3.19	+0.9%
Gold	USD 2718.40	+1.2%
BTC	USD 96,673.20	-0.3% (YTD: +129.5%)

THE CLOSING BELL-

The EGX30 fell 1.3% at yesterday’s close on turnover of EGP 4.2 bn (0% above the 90-day average). Regional investors were the sole net buyers. The index is up 23.0% YTD.

In the green: Fawry (+0.7%), Edita (+0.5%), and B Investments Holding (+0.4%).

In the red: ADIB (-4.0%), Faisal Islamic Bank -EGP (-4.0%), and Credit Agricole (-3.8%).

Tags:

debt Finance Financial Markets Planet Finance

Diplomacy

Egypt calls for a unified Syrian-led political solution

Egypt’s Foreign Ministry stressed the urgency of a Syrian-owned political process free from external interference — aligned with UN Resolution 2254 — to safeguard the country’s unity and stability, a statement from the ministry read. Egypt pledged to support efforts for a political resolution that ends exploitation of the crisis, paves the way for reconstruction, and ensures the safe return of refugees and displaced Syrians.

Foreign Minister Badr Abdelatty also held a phone call yesterday with his Turkish counterpart Hakan Fidan to discuss developments in Syria, according to a separate statement. The two officials underscored the importance of a Syrian-led political process free from external interference to safeguard the country’s sovereignty and territorial integrity. They also called for intensified regional and international efforts to stabilize Syria, ensure its unity, and alleviate the humanitarian suffering of its people.

Tags:

DIPLOMACY Middle East politics Syria Turkey

HARDHAT

Could Egypt’s National Smart Cities Strategy change how we go about urban development?

What does the National Smart Cities Strategy mean for urban development? The Madbouly government last month unveiled the country’s National Smart Cities Strategy, sparking a new wave of real estate development, with a focus on sustainability, urban modernization, and improved quality of life for residents. But what does it all mean for urban development and the real estate sector?

First things first, what makes a city smart? A smart city is one that operates using intelligent methods and strategies to improve residents’ quality of life, strengthen the economy, solve social challenges, and preserve the environment and its resources. This is achieved by leveraging the latest technologies. Smart cities rely on data analysis to optimize resources, improve road quality, regulate traffic, and enhance utilities and other services.

Smart cities need to follow international standards in communication, housing, solid waste management, safety, urban planning, governance, energy, environment, and much more.

National Smart Cities Strategy? Launched in November during the World Urban Forum, the strategy is a “comprehensive roadmap designed to transform Egypt's urban landscape and propel the country towards a more sustainable, equitable, and technologically advanced future.” The strategy aims to position Egypt as a “global leader in smart city development.”

The strategy puts a lot of weight on private projects as it comes during a time when the state is working to step away from national projects — for the coming fiscal year state-funded investments will focus on ongoing national projects that are at least 70% complete and expected to enter the operational phase within a year or two at most. New national projects will also only get funding if they get the go-ahead from the cabinet.

We’re no strangers to smart cities: Egypt already houses 22 smart cities, including fourth-generation cities such as the new capital, New Alamein, Galala, and New Mansoura, one government source in the housing sector told EnterpriseAM. He explained that the state aims to push the number of smart cities to 37 nationwide.

The global drive for smart cities: Smart cities are gaining momentum worldwide, as they present a more environmentally friendly alternative to urban areas which make up 60-80% of global energy consumption and over 70% of annual carbon emissions. Tech spending on smart cities more than doubled between 2018 and 2023, jumping from USD 81 bn to USD 189.5 bn, according to data from Statista.

A growing market: The global smart cities market was valued at USD 998.7 bn in 2022 and is expected to reach USD 5.2 tn by 2030, according to a 2024 glob al strategic business report on smart cities.

Smart cities are an intricate web that utilize ICT and smart applications to improve the quality of life of its citizens, our source said, explaining that it is about a lot more than infrastructure and green spaces.

5G and advanced technologies enable infrastructure development: The entrance of 5G services into the Egyptian market has opened the door for real estate developers to utilize tech in their developments, head of the Federation of Egyptian Industries’ (FEI) real estate division, Osama Saad El Din, told EnterpriseAM. Other developers have started using AI in their projects.

What does an AI-reliant project look like? “We have a compound that relies on AI in the new capital. We use AI to control energy consumption, water consumption, security systems, and maintenance, among other things that help raise the efficiency of the area,” Chairman of Sigma for Smart Cities Ahmed El Zayat told us.

In line with sustainability goals: The strategy also aims to cut down on the consumption of energy and water and improve the use of resources, which will have a direct impact on enhancing air quality and public health. The strategy aims to raise the efficiency of public services all with the aim of improving the quality of life.

It’s about more than just technology: The development of smart cities largely relies on specific construction standards that help reduce emissions and energy use in homes, head of the Federation of Egyptian Industries’ Refractories and Bricks division Ali Singer told EnterpriseAM. He pointed to the use of clay bricks in construction and how they can provide thermal resistance.

Looking ahead: The government is currently holding meetings with inventors who have patents for energy-efficient, low-investment construction designs including those that reflect sunlight, reducing the need for air conditioning. These designs also ensure regular airflow into units and focus on building materials suitable for the Egyptian environment, Saad El Din added. “We have started working on consultancy offices on new smart designs,” he said, adding that “we will soon start developing workshops for real estate developers to push them to adopt smart construction.”

Don’t worry — smarter cities won’t come with a higher price tag, Saad El Din told us, explaining that the main goal is to utilize sustainable materials and minimize costs.

Just scratching the surface: Over the next few years, Egypt will enter the era of the Internet of Things in smart cities and we’ll see cities using platforms to tie all their facilities together, El Zayat said, adding that this will increase the efficiency of infrastructure networks and cut down on maintenance costs.

Tags:

Hardhat real estate smart cities urban development

CALENDAR

2024

DECEMBER

12-21 December (Thursday-Saturday): Turathna handicrafts and heritage exhibition, Egypt International Exhibitions Center, Cairo

15 December (Sunday): MPs will reconvene in the House

15-17 December (Sunday-Tuesday): Nebu Expo for Gold & Jewelry, Cairo, Egypt

16-17 December (Monday-Tuesday): Mining World Conference 2024, London, UK

22 December (Sunday): The Nahda University Economic Forum’s third edition is set to take place

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

EVENTS WITH NO SET DATE

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

2025

January: CBE to launch InstaPay remittances for Egyptians abroad

February: Orascom Pyramids Entertainment to bring total investments in the Pyramids Plateau to EGP 1.5 bn

1 January (Wednesday): The minimum pension will increase to EGP 1.5k, and the maximum to EGP 11.6k

14 January (Tuesday): The 4th edition of the Egypt Economic Summit will take place.

28 January (Tuesday): Nigeria to inaugurate the USD 5 bn Africa Energy Bank in Abuja

18-19 February (Saturday-Sunday): German-Egyptian Joint Economic Committee meetings, Cairo, Egypt

7-10 April 2025 (Monday-Thursday): EFG Hermes One on One conference, Dubai, UAE

May 2025: Egyptian Exporters Association (Expolink) exhibition, Italy

July 2025: The first operational trail of Egypt-KSA electricity interconnection line.

March 2025: Operation of phase one of the Amotope wind farm

EVENTS WITH NO SET DATE

Early 2025: The Communications Ministry will unveil the second edition of its national AI strategy in early 2025

1H 2025: Digital Financial Identity Company will launch an electronic bank account opening service

1Q 2025: Eipico’s biopharma plant to begin operations

1Q 2025: Finance Ministry to launch public consultations on its tax policy document

2Q 2025: Financial Regulatory Authority (FRA) to introduce derivatives on the EGX

2Q 2025: Safaga Terminal 2 to start operations

Mid-2025: The Administrative Capital for Urban Developments to roll out the second phase of offering industrial plots to investors

2025: The InterAcademy Partnership assembly

2025: Nile Basin States Summit, Cairo, Egypt

2025: Release of the government’s Startup Charter document

2027

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

EVENTS WITH NO SET DATE

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

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

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