No ceasefire in sight in Gaza + EU reportedly looking to close an aid pact with Egypt soon

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What We're Tracking Today

Shoukry to call for Gaza ceasefire at UN Security Council + EU officials race to seal migration agreement with Egypt

Good morning, wonderful people. The US has categorically ruled out a ceasefire in Gaza, where fuel is on track to run out tomorrow and about two-thirds of all residents have now been forced out of their homes.

As you might expect, the war continues to be the big story at home and abroad, as Gaza braces itself for the eighteenth day of Israel’s brutal air campaign.

US and Israeli media are setting up expectations of a larger hostage release by Hamasthat could impact how Tel Aviv prosecutes its war against Gaza, as we report in this morning’s War Watch, below.

ECONOMIC IMPACT ON EGYPT-

#1- Fearing a wave of refugees, the EU is said to be scrambling to “accelerate” a package of aid for Egypt: The EU is trying to get a financial agreement with Egypt over the line as fast as possible as it wakes up to the potential for a new refugee crisis on its doorstep. The Financial Times reports that European officials held talks in Cairo over the weekend over a package that would fund job creation and the green transition, rather than pay the country to keep migrants within its borders. “The issue here is stabilizing the country,” said one of the people involved in the talks. “[Egypt] is doing a good job with migration but is facing economic headwinds. This is about shoring up.”

#2- War isn’t great for tourism: The conflict in Gaza could take the wind out of Egypt’s recent tourism boom as travelers shun the region amid the possibility of a wider conflict, the head of Virgin Atlantic Airways told Bloomberg yesterday

#3- EGP WATCH- The EGP is now trading at 44-45 per USD in the parallel market, almost 50% above the official rate, Al Borsa reports.

Blame the war in Gaza and recent sovereign downgrades from Moody’s and S&P, the newspaper speculates. The official USD-EGP exchange rate has remained pegged at 30.96 since March.

HAPPENING TODAY-

#1- Shoukry to call for ceasefire at UN Security Council: Foreign Minister Sameh Shoukry is in New York today to attend an emergency ministerial session of the UN Security Council called by Brazil to continue discussions aimed at de-escalating the conflict. Shoukry will reiterate the need for an immediate ceasefire and acceleration of aid deliveries to the besieged territory.

Don’t expect a ceasefire while the US is still dead against it: White House spokesperson John Kirby yesterday reiterated Washington’s opposition to a ceasefire in an interview last night. A proposal for a temporary humanitarian ceasefire was shot down by the US at the Security Council last week because it didn’t mention Israel’s right to self defense (yes, really).

Washington isn’t alone: Its European allies have stopped well short of calling for a ceasefire, and Canada’s foreign minister yesterday called for both Israel and Hamas to “act with greater restraint to avoid large-scale deaths and alleviate the humanitarian crisis in Gaza.”

#2- Day one of “Davos in the Desert”: Business leaders, investors, and policymakers the world over have been heading over to Riyadh for the Future Investment Initiative (FII) — commonly referred to as “Davos in the Desert” — set to kick off this morning. The conference’s busy schedule is set to wrap on Thursday.

Expect to hear a lot more about China this conference: Days before the conference in Saudi Arabia had even kicked off, Reuters was already reporting the number of Chinese attendees was doubling this year as Saudi and Chinese relations continued to warm. This is the first FII after Saudi Arabia was formally invited to join Brics in August.

Who to look out for: IMF Managing Director Kristalina Georgieva’s upcoming and World Bank President Ajay Banga are set to make speeches. Big names on Wall Street like JP Morgan CEO Jamie Dimon and Goldman Sachs CEO David Solomon are also reportedly set to take to the stage.

#3- GERD talks are back: A third round of talks between Egypt, Ethiopia, and Sudan over the filling and operation of the Grand Ethiopian Renaissance Dam (GERD) started in Cairo yesterday, the Irrigation Ministry said.

This is the third round of talks since August: The three sides have met twice over the past two months in a bid to reach an agreement. President Abdel Fattah El Sisi and Ethiopian Prime Minister Abiy Ahmed pledged in July to finalize an agreement within four months.

PSA- Get ready to turn your clocks back an hour at the end of the week: Daylight savings time will end in Egypt on Thursday 26 October.

MARKET WATCH-

#1- The sell-off in the US bond market shows no signs of slowing: Yields on US government debt hit a fresh 16-year high yesterday as investors continued to ditch their bonds after Fed chair Jerome Powell hinted that further rate hikes could be on the table, the Financial Times wrote. The rate on the 10-year note surpassed 5% for the first time since 2007 before dipping later in the session.

What happens in the US matters in Egypt: Higher yields on US treasuries put pressure on emerging-market assets such as Egyptian debt, which become less attractive to foreign investors. Egypt in particular isn’t being helped by record-breaking inflation, which has pushed its real interest rate deep into the red. Rising yields have also helped send the USD to its highest level in 10 months, increasing Egypt’s import bill and raising debt repayments.

#2- Oil prices dip as Middle East conflict fears ease: Oil prices fell more than 2% yesterday as the weekend’s developments in Gaza eased concerns about a broader conflict. Brent futures slipped 2.5% to end the session at USD 89.83 as traders reacted to the breakthrough in negotiations to deliver aid to Gaza, and Israel’s hesitation over its anticipated ground offensive.

COP28 WATCH-

A loss and damage fund was a landmark achievement for COP27, but it’s a sticking point for COP28: Countries involved in ironing out the finer details of the loss and damage fund left a meeting on Saturday without coming to terms on the fund’s future overseer or which countries would pay in / which would receive payouts, reports Reuters.

The key sticking points, according to the newswire:

Who leads: Developing countries want to establish an independent UN-run body to take charge of the fund, while Western countries want the US-led World Bank to oversee proceedings.
Who pays: Which countries should be called upon to contribute to the fund is a key bone of contention, with disagreements about where to draw the line between developing countries.
When it pays out: There’s little agreement about what the money will be used for, including within the developed world. The EU wants the fund to be targeted at the most vulnerable countries but the US is pushing for it to be used for “slow-onset climate impacts such as sea-level rise,” Reuters says.

The success or failure of COP278 could hinge on this: The group of two dozen countries will now meet at the beginning of November in Abu Dhabi in an attempt to draft a list of recommendations for implementing the fund before COP28 negotiations begin at the end of the month. “The entire COP28 negotiations could get derailed if developing countries’ priorities on funding for loss and damage are not adequately addressed,” senior adviser at the World Resources Institute Preety Bhandari told Reuters.

CIRCLE YOUR CALENDAR-

The Senate is in recess: Senators will reconvene on 5 November.

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

*** 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: Egypt’s nascent EV sector is classified as a “starter market,” but there’s good news.

Hamas releases another two hostages as Israel’s war on Gaza intensifies

Could a third hostage release by Hamas help change the direction of Israel’s war against Gaza? That’s the suggestion that runs through Israeli and US media reports overnight after negotiations led by Egypt and Qatar saw Hamas release two hostages yesterday.

Israeli media expects that the Red Cross could “in the hours ahead” receive “about 50” hostages who hold dual citizenship.

How this plays out could have an outsized impact on the direction of the war: The US has been leaning on Israel’s war cabinet to hold off its anticipated ground offensive into Gaza until negotiations to secure the release of the hostages have run their course.

Stop the bombing, get all of the hostages, says Meshaal: Hamas would consider releasing all 200+ hostages should Israel meet its conditions, which include stopping its bombing campaign, the former head of the armed group, Khaled Meshaal, told Sky News in an interview yesterday. “Let them stop this aggression and you will find the mediators like Qatar and Egypt and some Arab countries and others will find a way to have them released and we'll send them to their homes,” he told the British broadcaster.

The push on the hostages comes after two elderly Israeli women were handed over to the Red Cross yesterday. Al Qahera News reported late last night that the two women had arrived at the Rafah border crossing and were receiving medical treatment (watch, runtime: 11:12). “We thank Egypt for its assistance, and the Red Cross for its important role as lifesavers,” CNN Arabic quoted an Israeli government spokesperson as saying. A Hamas spokesperson said the group had decided to release them for “compelling humanitarian and health reasons.”

Hamas has now released four hostages since Saturday.The IDF said yesterday (prior to the agreement) that Hamas had 222 captives.

GAZA WILL RUN OUT OF FUEL TOMORROW-

Gaza’s fuel reserves could run out on Wednesday, the UN has said, as Israel’s near-total blockade of Gaza threatens to derail the humanitarian relief effort and prevent hospitals and bakeries from functioning.

Is the EU finally getting the message? EU leaders plan this week to call for a “humanitarian pause” to allow aid to be delivered to Gaza, Reuters reported yesterday. EU Commission President Ursula von der Leyen and other senior EU officials have so far been outspoken in their support for Israel’s war on Gaza and some are said to remain reticent about pushing for a temporary truce despite the devastating humanitarian crisis.

No fuel means no aid distribution and no hospitals: Without fuel supplies, hospitals across the territory will no longer be able to operate and the UN will not be able to distribute aid. “Without fuel, there will be no water, no functioning hospitals and bakeries. Without fuel, aid will not reach those in desperate need,” the head of the UN’s agency for Palestinian refugees, Philippe Lazzarini, said Sunday.

Third aid convoy makes it to Gaza: Another 20 aid trucks carrying food and medical aid made it into Gaza via the Rafah border crossing yesterday, Reuters quotes a UN spokesperson as saying. This takes the total number of trucks to have crossed the border since Saturday to 54.

Far more is needed: The UN has said that 100 trucks of aid are needed every day to stave off the growing humanitarian crisis. Egypt is working with the UN, the US and Israel on a “sustained delivery mechanism,” the US State Department spokesperson said yesterday, without going into details. The US’ Middle East humanitarian envoy said Sunday that he expects a “continuous flow” of aid to enter as of this week.

NO CEASEFIRE, SAYS WHITE HOUSE-

The US is still not willing to consider a ceasefire: “We don’t believe that this is the time for a ceasefire,” White House spokesperson John Kirby told CNN last night (watch, runtime: 7:53). “Israel has a right to defend themselves … We’re gonna keep supporting them… our focus is on making sure that they have what they need to carry on this fight.” The US shot down a UN Security Council resolution last week that called for a temporary humanitarian ceasefire because it didn’t mention Israel’s right to self defense.

China: There are limits to the right to self defense, Chinese Foreign Minister Wang Yi told his Israeli counterpart yesterday. “All countries have the right to self-defense, but they should abide by international humanitarian law and protect the safety of civilians,” Wang said, according to a Chinese readout. “The top priority is to prevent the situation from escalating further and leading to a more serious humanitarian disaster.”

Shoukry, Iran talk regional war, aid: Shoukry and Iranian Foreign Minister Hossein Amir Abdollahian agreed on the need to prevent a wider regional war and accelerate the distribution of aid during a phone conversation on Sunday evening, Egypt’s Foreign Ministry and Iran’s state news agency said yesterday. Abdollahian also backed Egypt’s position on ethnic cleansing, telling Shoukry that the displacement of Palestinians from Gaza and the West Bank is Israel’s ultimate goal, according to IRNA.

Remember: Tehran’s regional proxies have threatened to attack Israel and US forces in the region should it escalate the conflict and stage a ground offensive into Gaza.

Malaysia backs Egypt on Gaza issue: Malaysia “completely rejects” attempts to displace Palestinians into Egypt, and urges the international community to facilitate the entry of humanitarian aid into Gaza, Malaysian Prime Minister Anwar Ibrahim told President Abdel Fattah El Sisi during talks in Cairo yesterday, Ittihadiya said yesterday.

West not doing enough: The two leaders agreed that Western nations have to apply pressure to the Israelis to end its bombing campaign, Ibrahim said at a press conference after the meeting, according to Malaysian me dia.

MORE DEAD CHILDREN-

Almost two-thirds of Gaza’s population is now homeless:About 1.4 mn Gazans have been displaced by Israel’s devastating bombing campaign, the UN said Sunday. That’s more than 60% of Gaza’s total population. Almost 600k of these people are sheltering in 150 UNRWA facilities.

Israeli military kills another 436 kids, mothers, fathers: As of yesterday afternoon, almost 5.1k Palestinians had been killed by the Israeli military since it began bombing the strip on 7 October and almost 15.3k people had been wounded, according to figures from the Gaza Health Ministry.

The toll is stark:

More than 40% of those killed in Gaza were children — some 2,055 kids and counting.
Israel has now killed 35 UN workers over the past 17 days, with the UN reporting yesterday that another six have lost their lives.
At least 23 journalists have been killed so far, the Committee to Protect Journalists said Sunday.

Tax incentives and policy stability will be hallmarks of FinMin’s upcoming tax policy framework

SMART POLICY- The Finance Ministry is looking to lure investors with tax incentives — and to make domestic businesses happy with policy stability —under a new, five-year tax policy framework now in the works. The first draft is complete and it could be finalized and ready for public review as early as next month, a ministry official told Enterprise. The tax reform plan is currently in legal review and will be put to the business community for feedback.

Stability in tax policy and alongside clear incentives are the name of the game: The new policy aims to reassure investors and promote investment, our ministry source told us. Here’s a rundown of what we know about the draft policy so far:

Fixed, much lower rates ensure stability for foreign investors: A fix 5% wage tax rate and 10% tax on commercial profits will be used in special economic zones, replacing the previous 22.5% corporate income tax rate;
Tax deductions for new projects: Some investors will be able to claim tax deductions of 30% to 50% of spending on new projects, with the scale sliding depending on the size of the investment;
Modernization overhaul:The proposed tax policy will keep up to date with developments in modern tax systems and technological advancements in the economy at large, we’re told.

REMEMBER- Tax policy changes, including adjusting excise duties and simplifying value-added tax, are on the Madbouly government’s agenda as part of its commitments to the IMF under its USD 3 bn loan agreement. The state has been working to drum up more investment after 2022 saw almost USD 20 bn in outflows as rising interest rates around the world and soaring inflation triggered a global risk-off and sent Egypt’s real interest rate into negative territory.

A new EGX trading system, real estate exchange incoming for 2024

We have plenty of capital market news for you this morning, with the local business press picking up statements from EGX boss Ahmed El Sheikh on overhauling the EGX trading system, the planned launch of a new real estate exchange, and efforts to boost the short selling market. Plus, we heard more from the Financial Regulatory Authority (FRA) about the voluntary carbon market it aims to launch.

#1- A new EGX trading system? The EGX is looking to overhaul its trading system by the end of 2024 as part of a wider strategy to upgrade the bourse, Ayman Taha, the media advisor to the EGX’s chairman, told Enterprise. The exchange is currently in talks with three unidentified international companies providers of trading systems in search of the most compatible and cost-effective platform to adopt.

The rationale: The current trading system is over 15 years old, El Sheikh has told reporters, making a new system necessary to increase the EGX’s compatibility with regional and international stock exchanges.

#2- A real estate exchange is launching in 1H 2024: The EGX’s real estate exchange could launch as early as the first half of 2024, Taha told us. The bourse is working on finalizing the legislative and regulatory framework ahead of the launch, El Sheikh told Asharq Business. The EGX is also working to establish a real estate registration unit that is responsible for transferring the ownership of assets and marketing them, El Sheikh said.

FYI- For all things real estate index, you can check out our Hardhat on the new initiative.

#3- Short selling to get a shot in the arm? The exchange is also looking to boost short selling activity over the “coming period,” El Sheikh has told reporters. The EGX, alongside the Financial Regulatory Authority and Misr for Central Clearing and Depository (MCDR), held talks last year with experts and foreign investors looking into the best practices to promote short selling in the country.

#4- Checking in on the upcoming carbon market: FRA boss Mohamed Farid met with some 35 company representatives to discuss the planned voluntary carbon market and how to speed up its launch, according to an FRA statement released yesterday. The EGX was initially expected to launch the market during the middle of the year.

#5- A new launch date for the sharia-compliant index: The EGX is now looking to launch its sharia-compliant index during 1Q 2024, Al Sheikh told reporters. We were expecting the index to launch over the summer.

EGX-listed EIPICO wants USD 70 mn from local banks to build third biopharma factory. PLUS: GYPTO Pharma signs EGP 4 bn worth of agreements with Saudi firm

EIPICO seeks local funding for third pharma factory: EGX-listed Egyptian International Pharma Industries Company (EIPICO) is looking to borrow USD 70 mn in funding from Qatar National Bank (QNB) and Banque du Caire to fund the construction of its third factory, chairman and managing director Ahmed Kelani told Asharq Business. The local drugmaker plans to begin production at the new factory by the end of 2024.

Funding breakdown: The plant will cost c. USD 100 mn to build, Kelani said. QNB will provide a loan of USD 60 mn, while Banque du Caire will provide USD 10 mn. Kelani did not disclose where the remaining USD 30 mn will come from.

Rowad will handle the construction: EIPICO awarded Elsewedy Electric subsidiary Rowad Modern Engineering an EGP 418 mn contract to construct the three factories in September 2022.

ALSO IN PHARMA-

GYPTO Pharma is heading to Saudi Arabia: State-owned medical city complex GYPTO Pharma signed EGP 4 bn worth of agreements with Saudi Arabia’s Med City Pharma to develop drug manufacturing tech in the kingdom, reports Ahram Online, citing a statement from GYPTO Chairman Amr Mamdouh. A group of unnamed local pharma firms were also party to the agreement.

Egyptian meds in Saudi: The agreement will also see GYPTO registering and producing some of its branded meds in Saudi Arabia, Mamdouh added.

Refresher: At 180k sqm GYPTO Pharma is considered the largest pharma production hub in the Middle East, and is hoped to transform Egypt into a regional center for safe and affordable meds.

BP Egypt has a new VP

BP Egypt welcomes a new VP: Global energy giant BP has appointed Wail Shaheen(LinkedIn) as vice president for BP Egypt effective 1 November, according to a statement (pdf). Shaheen has over 30 years of industry experience working in Canada, Indonesia, Italy, Oman, Trinidad and Tobago, USA, and Egypt. He has been with BP for 27 years in commercial, technical, and leadership roles, the latest of which was VP of subsurface operations in Trinidad and Tobago, where he led the Cypre Gas project.

The conflict in Gaza continued to dominate last night’s talk shows

Israel’s war on Gaza remains the focus of the nation’s talk shows, as another aid convoy entered the territory amid continuing airstrikes.

New aid enters Gaza: Twenty trucks loaded with food, water, and medicine entered Gaza on Monday, Palestinian Rafah crossing official Wael Abu Mohsen, told Kelma Akhira, noting that the enclave needs around 100 trucks per day (watch, runtime: 4:52). The deliveries of aid received coverage on every channel, including on Masaa DMC (watch, runtime: 5:07), Al Hayah Al Youm (watch, runtime: 7:30), El Hekaya (watch, runtime: 3:22) and Ala Masouleety (watch, runtime: 15:30).

“What is happening in Gaza [is like] Hiroshima and Nagasaki, but filmed in slow motion,” Amr Adib said on El Hekaya, describing the intensification of bombardment on Gaza on Sunday night that killed at least 600 people (watch, runtime: 3:45).

Egypt mediates hostage release: The talk shows highlighted the release of two hostages by Hamas following mediation efforts by Egypt, including on Ala Masouleety (watch, runtime: 1:43), Kelma Akhira (watch, runtime: 00:57), Al Hayah Al Youm (watch, runtime: 7:04), and Masaa DMC (watch, runtime: 4:55). Hamas spokesperson Taher El Nono told El Hekaya that the release of further hostages will depend how talks unfold (watch, runtime: 1:56).

El Sisi receives US Senate delegation: President Abdel Fattah El Sisi met with a delegation from the US Senate led by Senator Lindsey Graham yesterday to discuss the situation in Israel and Palestine. The meeting got extensive coverage on the airwaves, including from Al Hayah Al Youm (watch, runtime: 4:26), Masaa DMC (watch, runtime: 4:00), and Ala Masouleety (watch, runtime: 3:00).

Also on talk shows last night:

How is the war in Gaza affecting the economic crisis in Egypt? El Hekaya’s AmrAdib called on officials to stand before the House to clarify where we stand with our debt obligations, initiatives to reduce the price of food commodities, the status of our FX reserves, and the rise of the parallel market for greenbacks (watch, runtime: 3:02 | 1:22).

US Senator Bob Menendez pleads not guilty to Egyptian foreign agent charges

Dominating the non-Gaza news on Egypt in the foreign press this morning: Menendez says he didn’t do it. US Senator Bob Menendez yesterday pleaded not guilty to federal charges alleging that he illegally acted as an agent of the Egyptian government while serving as chairman of the Senate Foreign Relations Committee. The embattled New Jersey senator has been hit with two federal indictments that involve his relationship with Egypt (among other charges). The story is getting plenty of ink, but has been pushed off the front pages by the war in Gaza: Associated Press | Reuters | Bloomberg | CNN | New York Times.

Network of food logistic hubs across Egypt planned for 2024. PLUS: Honeywell x Egypt aviation fuel

COMMODITIES-

Egypt to launch network of “green food centers”: The Madbouly government will establish 17 logistics hubs for the wholesale of fruit and vegetables — which the government has dubbed “ green food centers ” — in concert with the private sector. The centers will provide refrigeration, packing, and sorting facilities and be aimed at both export and the local market, the Supply Ministry said in a s tatem ent yesterday. Private-sector firms will be involved in the design, building, and opertations of the new hubs, according to the statement.

What’s so green about them? The centers developed in partnership with the French Development Agency will minimize food waste by implementing a more contained and sustainable supply chain. The centers will also recycle food waste using renewable energy.

The first center will be built in Ismailia, and require investments estimated at around EGP 3-4 bn, according to what the Supply Ministry and its vice minister, Ibrahim Ashmawy, said yesterday (watch, runtime: 5:52). The first phases of the project will kick off in 2024 and is expected to be completed within two years, Ashmawy added.

ENERGY-

Honeywell could produce sustainable aviation fuel in Egypt: US conglomerate Honeywell is considering building a sustainable aviation fuel production facility in Alexandria under a public-private partnership (PPP) with state-run Egyptian Petrochemicals Holding Company and local private companies, according to an Oil Ministry statement on Friday. The ministry expects the facility to produce 120k tonnes of the fuel per year using edible oils as a feedstock. Feasibility studies are being carried out for the proposed facility.

FYI- If you don’t know your blue hydrogen from your green hydrogen or your biodiesel from your sustainable aviation fuel, you can check out our explainer on green fuels.

Capital is leaving China at the fastest pace since 2016

Investors are ditching the Chinese market: China has suffered aboutUSD 75 bn in net outflows in September as the country continues to struggle through an escalating crisis in its property sector, according to Bloomberg. This is the biggest monthly outflow since 2016 and an 80% jump from August. Onshore banks sold a net USD 19.4 bn of FX during the month, a high not seen since November 2018. All of this is putting pressure on the CNY, which is inching closer to its 2023 low at the beginning of September.

AND- Another huge acquisition in the fossil fuel industry. US energy giant Chevron will acquire rival Hess Corporation in a USD 53 bn all-stock transaction, it announced yesterday. The transaction is one of the largest global acquisitions this year, and is expected to wrap up in 1H 2024. (Associated Press | Reuters | Bloomberg | Financial Times | Wall Street Journal)

Consolidation in the oil and gas industry is a thing right now: Exxon Mobil is looking to acquire US shale producer Pioneer Natural Resources for nearly USD 59.5 bn.

ALSO WORTH NOTING-

PIF-backed Nupco IPO in the cards? Saudi wealth fund PIF is looking to IPO the country’s largest medical procurement firm Nupco as early as next year. (Bloomberg)
Nvidia sets its sights on the PC chips industry: Chipmaker Nvidia is designing central processing units to run Microsoft’s Windows operating system via tech from Arm, in a challenge to Intel's dominance in the personal computer chip market. (Reuters)

EGX30	22,572	+2.0% (YTD: +54.6%)
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	10,293	-1.9% (YTD: -1.8%)
ADX	9,276	-0.3% (YTD: -9.2%)
DFM	3,730	-0.6% (YTD: +11.8%)
S&P 500	4,217	-0.2% (YTD: +9.8%)
FTSE 100	7,375	-0.4% (YTD: -1.0%)
Euro Stoxx 50	4,042	+0.4% (YTD: +6.5%)
Brent crude	USD 90.50	-1.8%
Natural gas (Nymex)	USD 2.93	+0.9%
Gold	USD 1,987.80	-0.3%
BTC	USD 31,582	+5.8% (YTD: +91.4%)

THE CLOSING BELL-

The EGX30 rose 2.0% at yesterday’s close on turnover of EGP 4.63 bn (107.2% above the 90-day average). International investors were net buyers. The index is up 54.6% YTD.

In the green: Mopco (+20.0%), Alexandria Mineral Oils Company (+8.3%) and Abu Qir Fertilizers (+7.7%).

In the red: Oriental Weavers (-2.0%), Eastern Company (-1.8%) and CIB (-1.6%).

Asian markets are in the red again this morning as the global equity sell-off continues on the back of concerns about the conflict in Gaza and rising interest rates. European markets look set to follow them later this morning while US futures currently have shares on Wall Street rising at the opening bell.

Egypt’s nascent EV sector classified as “starter market,” but there’s good news

Egypt ranks 28 out of 35 countries in relative preparedness + progress toward e-mobility roll out: Egypt’s electric mobility sector was classified as a “starter market” in a readiness index report (pdf) by US consulting firm Arthur D. Little on how favorable an electric vehicle (EV) transition is in 35 countries. Egypt scored 32 points out of 100 in the index — called the Global Electric Mobility Readiness Index (GEMRIX) — placing it in 28th place amongst the 35 markets included in the study. The countries selected are located across all continents and have varied standings with regards to demographics, economics, motorization, and energy generation. Out of the 12 MENA region countries in the index, Egypt came in 10th place.

What are the variables in question? GEMRIX evaluates five major categories that can determine market readiness for EV adoption:

Macro factors can substantially impact EV readiness including higher GDP per capita, more disposable income for emerging technologies, renewable energy production, and smart grids.
The state of the EV market and competitive landscape, evaluated through EV product offering, market share and 5-year sales forecast.
Customer preparedness for EV adoption, which is usually influenced by price and charging accessibility.
Public charging infrastructure, determined by forecasts of network deployment and its level of availability and dependability.
Effective government incentives are in place to compensate for EVs economic disadvantages. Based on how countries perform on those categories — which are weighted based on their importance for EV adoption — they are classified under four clusters: global benchmark, ambitious followers, emerging EV markets, and starter market, which Egypt falls under.

Why a starter market? Starter electric mobility markets are characterized byhaving high consumer interest and readiness, that is not yet matched by execution and implementation at scale due to major challenges in terms of costs and infrastructure readiness, the report explains. According to how Egypt scored across the five categories outlined above, the contributing factors responsible for “laggard EV adoption” are its low GDP per capita — one of the lowest in the region — the absence of an adequate charging infrastructure, and the country’s current FX crunch.

Our regulation is on track: Egypt scored the highest in the government regulation category due its plans to ban traditional petrol and diesel cars by 2040, the report notes. The plan comes as part of its Egypt Vision 2030, which aims to reduce 10% of greenhouse emissions from the energy sector, including oil and gas, by 2030.

And accelerated manufacturing and assembly are helping: In July, Egypt’s parliament approved the establishment of the Supreme Council for Vehicle Manufacturing, a new regulatory body tasked with setting policy for the local automotive industry — including EV assembly — and the launching of a new fund offering incentives to companies responsible for assembling environmentally-friendly cars.The council approved in June two initiatives proposed by local startups ShiftEV and BluEV aimed at the adoption of electric vehicles in Egypt. Earlier in 2020,Egypt’s government expanded the list of importers eligible for customs discounts of up to 90% provided local content accounted for a minimum of 30% of the finished product, to include companies involved in the manufacture and assembly of EVs. At the same time, they decided to lower the threshold to 10%, and in a move designed to encourage local assembly of EVs.

We have plans for public charging infrastructure: The Electricity Ministry got things off to a promising start in February, setting the tariffs motorists will pay to charge their EVs in Egypt. Soon after, the government launched a bid for private sector firms to join a soon-to-be-established state-owned EV charging firm, with 14 companies including Hassan Allam Utilities, Infinity, and Huawei reportedly registering their interest.

And the private sector is jumping on the bandwagon: Our friends at Infinity have built at least 115 charging stations so far nationwide, part of a plan with the government to set up 6k vehicle charging points at 3k stations across the country. Private players from KarmSolar to Elsewedy Electric took steps to enter the local EV charging sector.

EV manufacturing companies are responding to the incentives: Al Mansour Automotive recently announced it is looking to set up a USD 35 mn car assembly and spare parts plant that is likely to include EVs. Emirates’ M Glory Holding earmarked USD 550 mn in February to establish three EV factories with production and assembly lines in the UAE, Egypt, and Jordan. State-owned El Nasr Automotive has been looking for an international partner to form a joint venture for locally-made electric vehicles for the past couple of years. After talks with Chinese firm Dongfeng fell through in 2021, the government began discussing a partnership with Ashok Leyland, a subsidiary of Indian conglomerate Hinduja Group. In February Chinese auto firm Dongfeng’s E70 500 Pro EVs began selling in the Egyptian market.

How our neighbors are faring: The majority of the MENA region countries were classified as having emerging EV markets, with the UAE coming in 7th on the overall index and 1st regionally — bordering the stage of becoming an ambitious follower. Qatar came in 9th place, followed by Jordan in 13th, Kuwait in 14th, Bahrain in 18th, Oman in 19th, Algeria in 20th, Morocco in 22nd, and Saudi Arabia in 23rd place. Lebanon and Iraq are the only MENA countries that ranked lower than Egypt.

Trade agreements could also give EVs a needed push: African countries might have a better shot at becoming global leaders in EV manufacturing if they consolidate their efforts and position themselves as one regional market, rather than individual countries, industry experts suggested earlier this year.

REMEMBER- Enterprise readers signaled that they’re ready to get on board. Some 90% of those who responded to our October 2022 EV survey are planning to buy an EV within the next 10 years — and one in five they’ll make a purchase in the next 12 months.

Your top green economy stories for the week:

Green is the new black when it comes to energy: The SCZone inked agreements for green manufacturing and green energy investments with Chinese companies worth a combined USD 14.75 bn.
EBRD could be directing USD 325 mn to local SMEs and green projects: The European Bank for Reconstruction and Development (EBRD) is considering lending USD 325 mn to four local banks for on-lending to local SMEs and green projects before the end of 2023.
More green bonds to come in 2024? The government is reportedly mulling over issuing green bonds worth USD 700 mn next year to fund an unnamed green project.
Panda bonds for a green cause: Egypt closed its maiden panda bond issuance worth USD 478.7 mn last week. The proceeds will fund clean transport projects, healthcare, sustainable water use, and more.

CALENDAR

OCTOBER

Late October-14 November: 3Q2023 earnings season.

24-26 October (Tuesday-Thursday): Future Investment Initiative, Riyadh, Saudi Arabia.

26 October (Thursday): Daylight saving time ends.

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

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

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

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

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

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

Signposted to happen some time in October:

Deadline for ins. providers to link their databases with the FRA
Egyptian-Jordanian Business Council, Amman, Jordan
Gov’t expects to finalize sale of Gabal El Zeit wind plant
October or November: Gov’t expects to finalize stake sale for military-owned fuel retailer Wataniya
Saudi and Egyptian officials will meet to follow up on the project to connect the national power grids of Egypt and Saudi Arabia

NOVEMBER

November: Egypt to issue Samurai bonds.

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

3 November (Friday): Fitch to review Egypt’s sovereign credit rating.

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): 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.

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

DECEMBER

December: Kenyan trade conference in Egypt.

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 sale of Zafarana wind farm

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

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

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

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

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

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

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

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

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

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.

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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