Saudi-Egyptian reconciliation at Arab Summit: With the cameras rolling, Saudi Arabia's King Salman invited President Abdel Fattah El Sisi to visit the Kingdom in a public show of good relations following months of tension. El Sisi welcomed the invitation and in turn invited Salman back to Egypt, according to a statement from Ittihadiya on Wednesday picked up by Reuters. The Saudi Foreign Minister said that the trip will take place in April, according to Youm7. Both leaders denied the existence of tensions. The public show of brotherly love came at a joint summit between the two heads of state on the sidelines of the Arab Summit in Jordan, where the two discussed coordinating on mutual regional issues.

Meanwhile in Egypt, there appears to be headway on funding projects pledged by the Saudi Fund for Development as a delegation from the fund concluded talks with Investment and International Cooperation Minister Sahar said yesterday, AMAY reports. The projects include USD 1.5 bn in development aid for Sinai, an USD 120 mn upgrade of Qasr El Aini Hospital, and USD 80 mn in irrigation and wastewater projects.

Also coming from the Arab League Summit: President Abdel Fattah El Sisi (read or watch: runtime 17:25) stressing the need to resolve regional conflicts, support the fight against international terrorist organizations, and refusing foreign intervention in the region. El Sisi and other Arab leaders reaffirmed their backing for a Saudi-led peace initiative to recognize Israel in exchange for a return to the 1967 borders, Bloomberg reports. El Sisi also met with his Yemeni, Sudanese, and Tunisian counterparts to discuss enhancing cooperation in addition to holding a joint Egyptian-Jordanian-Palestinian summit, according to statements from Ittihadiya.

Among all the expressions of brotherly Arab love and rejections of foreign hands we’ve come to expect of these summits, there was plenty of drama to go around. El Sisi and King Salman began their one-on-one session right in the middle of the Qatari Emir’s speech (watch, runtime: 0:51) — you know our longstanding views on Qatar, so you know we approve rather heartily. The opening was also marked by Lebanese President Michel Aoun taking what looked like a hard fall (watch, runtime 0:21) before the first session.

Economic optimism has increased and foreign investors are attracted to Egypt following the stabilization of EGP, according to real estate consultancy JLL’s Q1 Cairo report. Highlights:

The hotel and tourism industry has in particular benefited from the devaluation, as Egypt has become a more affordable destination for international tourists, the report says. Demand for hotels in Cairo is picking up significantly as security issues are addressed, travel bans removed, and tourism promotion campaigns increased. Occupancy rates have already increased significantly to reach 69% in the year to January 2017 as market-wide average daily room rates dropped to USD 89 over the past year, but are expected to recover throughout 2017.

For Cairo’s office market: New Cairo continues to be the most active location in terms of new office supply. “Banks are the most active participants in the offices sector at present, while FMCGs are negotiating their lease terms in order to reduce their market exposure. Oil & gas occupiers are generally reducing their activities due to current market conditions, but are expected to show increased demand in the medium term on the back of new field explorations.”

The residential market continues to see strong demand for units through 1Q2017 and “is expected to remain steady.”

Cairo’s retail market is adapting to economic pressures and, following the EGP devaluation, “landlords have revised their contractual terms to assist tenants. After correction for prime units’ rents and accounting for the applied capping mix, the average rental rate has dropped to USD 800 per square meter per annum.”

IPO WATCH- Raya Contact Center (RCC) announced its intention to float (pdf) on the EGX. The company is just under 49 mn shares equivalent to about 49% of outstanding shares. The transaction will include international offer to institutional investors and an Egyptian retail offer. Raya Holding for Financial Investments, the selling shareholder, will effectively reinject EGP 100 mn of the proceeds from the IPO back into RCC to fund growth. “RCC is a leading provider of business process outsourcing, serving multiple clients in Europe and the Middle East with 77% of revenues generated is denominated in foreign currency, predominantly in USD,” the ITF reads. EFG Hermes is sole global coordinator and bookrunner for the IPO. Dechert LLP is international counsel to the issuer, Zaki Hashem and Partners is local counsel to the issuer, Matouk Bassiouny is local counsel to the sole global coordinator and bookrunner.

Ridesharing service Careem is looking for acquisition opportunities and is considering an initial public offering but has no timeframe in mind, founder Mudassir Sheikha told Reuters. Asked if 2019 was a target date, he said “it is hard to predict,” noting that the company has not hired bankers or advisors.

Egypt will repay half of everything it owes international oil companies “within weeks,” Oil Minister Tarek El Molla said, according to Reuters. Egypt’s overdue arrears to IOCs are estimated to be USD 3.5 bn. A source told Al Shorouk the payments will be made using the African Development Bank’s and World Bank’s second tranches of their loans to Egypt. El Molla also said the agreement to import about 1 mn barrels of crude from Iraq should be completed within a month. He also said Egypt will look into exporting natural gas from 2019.

The Trade and Industry Ministry sees Egyptian exports rising to USD 34 bn by 2020 from a current figure of USD 19 bn, Reuters reports. The Ministry says it has completed a strategy to grow exports “through implementing specific export plans and policies and targeting new export markets,” according to a statement.

House committee to study port fee hike: The House Transport Committee formed a committee to coordinate with maritime companies in studying the repercussions of the Transportation Ministry’s decision last year to hike port fees by as much as 100%, Al Borsa reports. The committee will send its first report to the House within the next two weeks. As we noted earlier this month, five major shipping lines pulled out of East Port Said Port and transferred their activities to Greece in response to the fee hikes. Meanwhile, port workers have called on President Abdel Fattah El Sisi to roll back the fee hikes, Al Mal reports.

Egypt will not ban the private sector from importing wheat while it buys up the local harvest, according to a statement from the Supply Ministry picked up by Reuters. The move appears to contradict statements made by Supply Minister Ali El Moselhy earlier this week in which he said imports of wheat will be restricted to the General Authority for Supply Commodities during the local harvest procurement season this year to avoid mixing locally sourced wheat with imported wheat. The ministry added that it will focus on monitoring private sector imports closely during the procurement period.

EARNINGS WATCH- Cheese maker Obour Land recorded a net profit of EGP 162 mn in 2016, up from EGP 92 mn in 2015. The company says it key financial indicators are all, and reported robust sales volume growth, and overall enhancement in margins, despite macroeconomic challenges. The company’s revenues grew by 24% y-o-y to EGP 1.45 bn in 2016.

Cabinet decided yesterday to suspend government-issued school meals for the remainder of the academic year and will bring back the program at the beginning of the upcoming academic year, according to a statement. Prime Minister Sherif Ismail met with the committee tasked with reviewing the school meal program after hundreds of school children fell ill due to food poisoning from the meals, which said that samples taken from the meals did not conclusively determine the cause of the outbreak. According to the committee’s report, the food poisoning cases affected one out of every 100,000 students nationwide.

The Finance Ministry and Social Solidarity Ministry also signed an agreement to restructure the Finance Ministry’s EGP 56 bn debts to the government employees’ pension fund.

Moody’s believes the pace of economic reforms in Egypt will continue to show gradual improvements but the recovery could be slower than expected, according to an emailed report. "The implementation of the IMF program's targets, including reductions in fiscal deficits and government debt levels, as well as improvements in Egypt's external liquidity position, will help address Egypt's key credit challenges … However, ambitious fiscal consolidation targets will be challenging to achieve and could face implementation risks in a scenario of mounting public discontent,” said Steffen Dyck, a Moody's Senior Credit Officer and co-author of the report. Moody’s also believes the IMF’s economic projections for Egypt are too optimistic and assumes “somewhat lower growth assumptions and potential fiscal slippage, both in the near- and medium-term.” The report suggests the fiscal deficit will hit 11% of GDP in FY2016-17 dropping to 8.5% of GDP by FY2018-19, higher than the IMF’s forecasts 10% and 6.1% of GDP for the two years, respectively. It also anticipates that the current account deficit as a percentage of GDP will rise in the fiscal year ending this June, but start falling a year after.

However, Moody’s expects the structural reforms to lead to “slow but steady improvements for the sovereign credit profile beyond the timeframe of the IMF program” and sees incoming funding to Egypt through investments and the IMF as supporting the balance of payments and international reserves position. Dyck says “even if all reforms are successfully implemented and notwithstanding the significant improvement we expect, Egypt's credit profile will still be marked by very weak fiscal strength. Credit improvements are likely to occur in the longer term, subject to sustained reforms and (geo)political stability, which would in turn support a return to higher growth rates.”