Good morning, friends, and happy hump day. As has been the case for most of this month, we have a packed issue for you this morning, led by a whole lot of M&A news, fresh Chinese investments, TMG’s expansion into another Gulf country, and Beltone’s leasing arm closing its second securitization issuance.

PSA-

WEATHER- It’s another sunny day in Cairo today, with a high of 31°C and a low of 18°C, according to our favorite weather app.

It’s cooler in Alexandria, with a high of 25°C and a low of 17°C.

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EGP WATCH-

The EGP strengthened against the USD to a 2025 high, with the greenback dipping below the EGP 50 mark for its buy price for the first time since December 2024. Public and private banks were offering EGP 49.99-50.00 for the USD, with a sell price of EGP 50.09-50.10.

Hot money inflows helped drive up the value of the EGP, with USD 1.5 bn being channelled toward local debt in the past week, a government source told EnterpriseAM. Behind the uptick in foreign investor appetite for Egyptian debt were expectations that the Central Bank of Egypt (CBE) may cut rates when its Monetary Policy Committee meets on Thursday.

The government aims to maintain an average of USD 20 bn in foreign investment in public debt annually while hedging against the volatility of “hot money” by keeping it separate from the CBE’s foreign currency reserves, according to a government document seen by EnterpriseAM.

WATCH THIS SPACE-

#1- Samurai bond issuance incoming? The African Development Bank is set to provide the government a USD 400 mn partial credit guarantee — or its equivalent in the Japanese JPY — to support the issuance of sustainable Samurai bonds in the Japanese market worth up to USD 500 mn, the bank’s Country Manager for Egypt Abdourahmane Diaw told Al Arabiya. The proposal will be presented to the bank’s board in September for the final rubber stamp.

REMEMBER- The planned issuance would mark the country’s third ever Samurai bond issuance after a November 2023 issuance that raised USD 500 mn and the country’s maiden samurai bond issuance in March 2022 that also raised USD 500 mn.

#2- We’ll see a dip in our imports of Israeli gas throughout the summer months, with imports expected to see a 20% y-o-y drop to around 800 mn cubic feet per day between June and September thanks to an uptick in Israeli demand, a government official told Asharq Business. The Israeli side is also carrying out regular maintenance on its gas facilities for 15 days this month — a move slated to contribute to the reduced flow of gas exported in the coming months, the source added.

REFRESHER- Egypt has been looking to up its imports of Israeli gas by 58% by the middle of 2025 — the planned increase would have taken daily imports of Israeli gas to 1.5 bn cubic feet per day, equivalent to around a quarter of domestic demand.

Fertilizer players are already feeling the squeeze: The government has cut natural gas supplies to local fertilizer and methanol factories by 50% for a 15-day period starting Monday, four government officials told Asharq Business. The Egyptian Natural Gas Holding Company aims to cut gas supplies by around 400 mcf/d, from the 770 mcf/d typically consumed by fertilizer and methanol factories. These factories normally account for 35-40% of industrial gas usage, which represents roughly a quarter of Egypt’s total domestic gas consumption.

Deja vu: At around the same time last year, fertilizers industries were facing operationaldisruptions and even complete shutdowns as gas shortages led to companies temporarily closing down operations.

INTEREST RATE WATCH-

Make that six of nine… HSBC Global Research thinks the Central Bank of Egypt has room to cut interest rates by 200 bps when it meets on Thursday. Our friend Simon Williams, the bank’s chief economist for CEEMEA, and MENA economist Ryan Walter wrote in a note to clients that without a fuel price increase, sequential inflation in April would have slowed, helped along by a month-on-month drop in average food prices. Add in sluggish growth and tight fiscal policy against a backdrop of FX stability and it’s hard to justify a high real policy rate.

Notably: “Core inflation has fallen more quickly than the headline number, printing some 3.5ppts below the overall measure in April. This suggests that underlying price pressures are relatively well contained, and we note that without the one-off rise in fuel prices, sequential inflation would have slowed by around 1ppt,” Williams and Walter write.

HSBC thinks the CBE might take a breather after Thursday, writing that “a payse [in easing] may be required” to allow the central bank to “gauge underlying price trends, with the stance likely to be influenced in part by global risk appetite and the strength of capital inflows.”

Most analysts we polled now expect a cut on Thursday, penciling in 100-200 bps as reasonable. The central bank kicked off its easing cycle last month with a 225 bps cut, citing cooling inflation in 1Q 2025 as it brought the overnight deposit rate down to 25.0%. The IMF, now conducting its fifth review of our extended fund facility program, has warned against premature easing. April’s fuel cuts are a key part of the IMF-backed reform program.

HAPPENING TODAY-

#1- El Khatib is in Berlin: Investment Minister Hassan El Khatib is in Berlin to drum up investments, according to a statement. During his time in Germany, the minister will pitch potential investments to German companies and take part in the Arab-German Business Forum.

#2- For our fellow tech nerds: The Google I/O developer conference kicks off in about 12 hours’ time and Microsoft’s Build gathering is running in parallel. Look for AI to be the star of both shows. Apple, which is struggling with generative AI, will hold its WWDC conference on 9 June, with a big overhaul of the look-and-feel of macOS, iPadOS and iOS likely headlining.

THE BIG STORY ABROAD-

Two stories are competing for top billing in the international business press this morning: US President Donald Trump’s announcement that Russia and Ukraine will begin “immediate” ceasefire talks, and Israel saying that it plans to take over the entirety of the Gaza Strip.

Russia and Ukraine will reportedly begin negotiations for a ceasefire and an end to the war between the two countries “immediately,” Trump said in a post on Truth Social following what he says was a two-hour-long phone call with Russian President Vladimir Putin. It remains unclear who — if anyone — will mediate the talks, with Trump adding that “the conditions for [the ceasefire] will be negotiated between the two parties, as it can only be, because they know details of a negotiation that nobody else would be aware of.”

No new US sanctions on Russia (for now): The EU is set to enact fresh sanctions on Moscow to ramp up the pressure to end the war, but Trump is holding back from following suit, saying that increasing sanctions-related pressure on Russia could have an adverse outcome on the negotiations, Reuters reports. The story is also getting ink from the Wall Street Journal, Bloomberg, and the Financial Times.

In our neck of the woods: Israel is planning to take control of all of Gaza, Israeli Prime Minister Benjamin Netanyahu said yesterday as he announced an upcoming “unprecedented attack” on what he says are Hamas targets. The IDF ordered Palestinians in Khan Younis and two other areas to evacuate the area yesterday, with Netanyahu saying Israel is looking for a “complete victory.” Meanwhile, his Finance Minister Bezalel Smotrich said yesterday that the military’s new “operational method is completely different: not raids, but rather occupation, cleansing and holding the territory until Hamas is destroyed.” The IDF will “[destroy] everything that is left” of Gaza, Smotrich said. The story is getting ink from Bloomberg, Reuters, and the Financial Times.

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: We dive into Egypt’s emerging beverage carton recycling sector.