S&P downgrades Egypt’s credit rating + Cairo peace summit underlines Western double standard on Gaza war

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What We're Tracking Today

Egypt, Israel relations at “boiling point” as tensions over Gaza war escalate

Good morning, friends. Before we get underway this morning, a kind reminder that we have at least one thing to look forward to this week: An extra hour of sleep. Daylight saving time comes to an end this Thursday, meaning we’ll all have to turn our clocks back an hour.

The conflict in Gaza continues to dominate the attention of everyone in Egypt, the region and the world: The slight sense of optimism we got yesterday with the delivery of 20 (yes, 20) trucks of aid to Gaza has been replaced with dread as Israel says it will step up the pace of its indiscriminate bombing campaign from today.

For context: The Israeli military boasted one week into the war that it had dropped almost 1k bombs per day on the tiny enclave.

DIPLOMACY- An insight into the state of Egypt-Israel relations: Israel’s push to resettle Palestinians in Egypt isn’t doing wonders for bilateral relations, with the Associated Press describing tensions between the two countries as “reaching the boiling point.”

Egypt-Israel ties at risk: Former Israeli defense official Amos Gilad said that Israel is risking blowing up its relations with Egypt over the matter, and said that Prime Minister Benjamin Netanyahu needs to speak with the leaders of Egypt and Jordan and publicly disavow the idea of resettling Palestinians in either country.

But the cheerleading continues in many quarters of the west for what would amount to ethnic cleansing. How else to describe a podcast (Planet Money’s The Indicator, no less) bluntly asking how to turn our current economic challenges into a lever to force us to let Palestinians into Sinai? (Listen, runtime: 9:00)

ENERGY SECURITY- A reminder of how the conflict is disrupting our energy sector:There are signs that the closure of the Tamar gas field and the suspension of the EMG gas pipeline between Israel and Egypt is now disrupting our LNG exports. A tanker waiting to load up on the liquefied fuel at the Idku LNG terminal was forced to head instead to Algeria due to the reduced production, Reuters reports, citing shipping data and analysts.

Remember: Egypt’s gas imports from Israel have fallen by around 20% since Chevron was told to halt production at the Tamar gas field in the Mediterranean. The US company also halted gas flows through the EMG pipeline and instead began shipping gas via the Arab Gas Pipeline which runs via Jordan.

And at least one major energy investment is looking shaky: Adnoc and BP’s USD 2 bn bid for Israel’s NewMed Energy may be on ice thanks to the conflict, Bloomberg reports.

THE GLOBAL ECONOMY- Geopolitics is the new boogeyman for the global financial system, according to the US Federal Reserve, which warned on Friday that the eruption of the conflicts in Gaza and Ukraine could trigger “broad adverse spillovers to global markets.” “Escalation of these conflicts or a worsening in other geopolitical tensions could reduce economic activity and boost inflation worldwide, particularly in the event of prolonged disruptions to supply chains and interruptions in production,” the central bank wrote in its biannual Financial Stability Report (pdf).

^^ Head down to the news well for the updates on the weekend’s events, including yesterday’s summit in the new capital and the delivery of food and medical aid to the besieged enclave.

Really, Cairo? As if we didn’t have enough going on right now, yesterday we were treated to the sight of one of the city's tallest buildings, the abandoned hotel in Zamalek (aka: Zamalek’s Tower of Shame), going up in flames. Thankfully, the emergency services got to it before it got out of control but not before it blanketed nearby residents with thick plumes of smoke.

WATCH THIS SPACE-

#1- Has TMG bought an additional stake in a portfolio of iconic, state-owned hotels? A sharq Business is out with a report saying the EGX-listed real estate and hotels giant has upped its stake in the portfolio to 51%. Icon Investments, a TMG unit, led a group of investors back in July in taking a 37% stake in a USD 700 mn transaction. The portfolio includes properties including the Cairo Marriott, Marriott Mena House, the Winter Palace, and the Cecil. We’ll have more on the story tomorrow.

#2- Amoun Pharma might soon no longer be Amoun Pharma: Abu Dhabi sovereign wealth fund ADQ is planning to merge Amoun Pharma and its other pharma companies to create what would be one of the largest companies of its kind in the region, Bloomberg reports, citing sources it says are in the know. The fund is planning to combine Amoun with Emirati firm Pharmax Pharma, Switzerland’s Acino, and Turkey’s Birgi Mefar Group into a single company within the next 12-18 months ahead of a potential IPO, the people said.

#3- EGP for TRY next year? Egypt and Turkey will likely finalize an agreement to use local currencies for bilateral trade in 2024, according to Al Shorouk, which cites a single anonymous government source. The countries’ trade ministries have come to an agreement over the use of the EGP and TRY for trade and the central banks are now in discussions, which according to the source will likely wrap up next year.

The two countries could use local currencies to settle 25-30% of bilateral trade following an agreement, an Egyptian government official said earlier this month. Central bank officials began their discussions last week.

Dedollarization: Egypt is looking to reduce its exposure to the greenback, and since last year has held talks with a number of countries including China, Russia and India about reducing its use in bilateral trade.

#4- Netflix to hike prices in Om El Donia? The streaming service just raised prices on some of its subscription plans for users in the US, UK and France following strong subscriber growth, according to Reuters.

UPDATE-

This is what we’re spending the USD 500 mn in Panda bond proceeds on, according to the Asian Infrastructure Investment Bank, which covered more than half of the issuance:

Expanding household fiber connections
Upgrading metro lines 1 and 2
Upgrading tramway line 1 in Alexandria.

ICYMI- Egypt closed its maiden issuance of CNY-denominated bonds last week, selling USD 500 mn worth of three-year securities at a 3.51% yield.

HAPPENING TODAY-

The Senate is back following a two-week break: Committees will discuss the war in Gaza, foreign investment, post-university medical education and the cotton industry. Senators will hold a two-day debate about a report by the Senate Agriculture Committee on the chemical fertilizers industry.

ALSO- French President Emmanuel Macron will visit Cairo “soon” to talk about Israel’s war on Gaza, Al Hayah Al Youm reported last night (watch, runtime: 7:22). Macron will be the latest in a conveyor belt of world leaders to head here after speaking with President Abdel Fattah El Sisi on Thursday, according to an Ittihadiya statement.

MARKET WATCH-

Global markets are beginning to take notice of what’s going on in Gaza: Global stocks fell, bonds rallied and gold neared USD 2k as unease over the trajectory of Israel’s war on Gaza accelerated risk-off sentiment on Friday. It was a sea of red on equity gauges around the world, with US stocks falling more than 1% to suffer their worst week in a month and the VIX “fear gauge” jumping to its highest level in seven months.

What they’re saying: “The ongoing situation in the Middle East has triggered a surge of volatility in the oil and stock markets, compelling investors to re-evaluate their strategies and shift their focus from riskier assets to ‘safer’ investments,” one analyst told Bloomberg.

Could mounting debt in developed nations cause a financial crisis? Large developed economies are edging closer to a financial market crisis as they juggle to battle high levels of debt, high interest rates, and increased spending which caused a surge in government borrowing costs, Reuters reported. “You can take many, many countries today, and you will see that we are not far away from a public finances crisis,” former European Central Bank economist Peter Praet said. Developed economies saw their debt levels rise to a record USD 307 tn during the first half 2023, according to data from the Institute of International Finance.

CIRCLE YOUR CALENDAR-

The Egyptian Trilogy comedy tour is in London on Wednesday, 25 October. Catch Fady RIzk, Ahmed Ahmed, and Mohamed Salem at the Leicester Square Theater, brought to you by our friends at Somabay.

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

Get ready to embark on a sensational journey of entertainment. From October through December, London will be illuminated by the brilliance of three remarkable events sponsored exclusively by Somabay. The laughter will be unstoppable at the uproarious Egyptian Trilogy comedy tour, followed by the enchanting Samar Tarik. Brace yourselves for a captivating finale with the mesmerizing Farah El Dibany. Somabay brings you an unforgettable trifecta of events that will leave you utterly captivated and eagerly anticipating each spectacular moment.

S&P downgrades Egypt’s credit rating on FX crunch, debt concerns

S&P Global Ratings has become the second rating agency this month to downgrade our sovereign credit rating, announcing on Friday that it had lowered its long-term rating to B- from B on the back of the FX shortage and rising uncertainties about debt sustainability. The rating agency revised its outlook to stable from negative because of the possibility of the government delivering on structural reforms; it also left our short-term sovereign credit rating at B.

We were warned this may be coming: The rating agency changed its outlook to negative in April, warning us that “policy measures implemented by the Egyptian authorities may be insufficient to stabilize the exchange rate and attract foreign currency inflows.”

Moody’s downgraded our credit rating to Caa1 from B3 earlier this month. This is one grade deeper into junk than S&P’s B- rating.

Fitch is next: The rating agency’s review is scheduled to come out on Friday, 3 November.

FinMin reax: The Madbouly government is already working on implementing more structural reforms to address S&P’s concerns,Finance Minister Mohamed Maait said yesterday, highlighting recent moves to eliminate tax exemptions for state companies and progress in the privatization program.

THE RATIONALE-

Slow progress on reforms = less international financing: The IMF has delayed two reviews of our USD 3 bn assistance program after we failed to meet several conditions of the loan, including a commitment to implement a fully flexible exchange rate. S&P also warned that our Gulf allies may not be so generous going forward as they’re beginning to focus more on “greater conditionality and achieving economic returns” for their investments.

And less international financing = less money to service our debts: “We have less confidence that additional financing will be forthcoming in a timely manner to cover all external funding gaps,” S&P said. Egypt will need to marshal some USD 29.2 bn to meet its debt-service obligations in 2024 — that’s equal to almost a fifth of our total external debt and almost 85% of foreign reserves.

DECISION TIME-

What S&P says we should do: The rating agency said it could backtrack on its downgrade provided “Egypt reduces net government debt levels and gross external financing needs, via an acceleration of reforms that support competitiveness, growth, and fiscal outcomes.” S&P added that “under such a scenario, we would expect renewed bilateral and multilateral financial support.”

And what we shouldn’t: S&P warned it “could lower the ratings if the authorities fail to implement the macroeconomic reforms required to reduce Egypt's economic imbalances and to unlock multilateral and bilateral funding.” The rating agency added that if interest costs rise further and increase the risk of a distressed debt exchange, we could also face another downgrade.

More from S&P:

GDP: Economic growth will slow to 3.5% this fiscal year from an estimated 4.0% in FY 2022-23, before inching back up to 3.8% for FY 2024-25.
Budget deficit: The budget deficit will widen to 6.8% of GDP this year from an estimated 5.8% the year before. That’s markedly more optimistic than the IMF, which expects a 10.7% deficit this year.
Debt: Debt will fall to 89.8% of GDP this year from an estimated 95.2% in FY 2022-23. The ratio is projected to further shrink to 82.3% in FY 2024-25 and 79.4% the year after.

The global press has the story:Bloomberg | Reuters.

Arab leaders condemn Gaza assault, Western response at Cairo summit

Arab leaders condemn Israeli assault on Gaza, Western double standards: Arab leaders condemned Israel’s war against Gaza in the strongest terms yet at yesterday’s international summit in Cairo and accused Western countries of selectively applying international law to the conflict. Egypt organized the gathering as part of a drive to get an agreement on a ceasefire and a lasting solution to the Palestinian issue.

No joint statement: The summit ended without a joint statement due to disagreements over condemning Hamas. A diplomatic source told AFP that Arab leaders refused Western demands for “a clear condemnation placing responsibility for the escalation on Hamas,” leaving Egypt to release a statemen t on its own.

Western response “incomprehensible”: Egypt’s statement, reportedly approved by other Arab nations, called Western leaders’ failure to condemn Israel’s indiscriminate bombing campaign “incomprehensible” and accused them of selectively applying international law. “We even see attempts to justify this killing, as if the life of the Palestinian human being is less important than that of other people,” the statement read.

Who attended: Most of our allies in the region, with the leaders of the Palestinian Authority, UAE, Jordan, Qatar, Libya, Kuwait Iraq, and Bahrain all in attendance, as well as Saudi Foreign Minister Prince Faisal bin Farhan. South African President Cyril Ramaphosa as well as senior diplomats from China and Russia were present, as well as major European nations who mostly sent their foreign ministers, with the exception of Spain and Italy, whose prime ministers were in attendance. Representing the UN was Secretary-General Antonio Guterres and the EU, Charles Michel.

Who didn’t: The US declined to send senior officials to the gathering while Hamas and Israel were not present.

Egypt is “vehemently” opposed to Palestinian displacement, El Sisi says: “Egypt is reiterating its vehement rejection of the forced displacement of the Palestinians and their transfer to Egyptian lands in Sinai, as this will mark the last gasp in the liquidation of the Palestinian cause,” President Abdel Fattah El Sisi said in his opening statement. “Two-and-a-half mn Palestinians in the Gaza Strip are being subjected to collective punishment. They are living under siege and facing starvation and ferocious pressure of forced displacement.”

Strong words:In their speeches, Arab officials criticized in harsh terms Israel and the West’s behavior in the conflict:

Jordan’s King Abdullah said that Israeli forces were committing a “war crime” in their bombing of Gaza and said the world’s response shows that international law is optional. Abdullah said that Palestinian displacement is a “red line for all of us.”
Saudi FM calls out double standards: “We reject the double standards and selectivity practiced by some in the international community,” said Saudi Foreign Minister Prince Faisal bin Farhan. “We call on the international community to pressure the Israeli side to lift the siege and stop the military operations.” He also expressed “categorical rejection” of attempts to displace the population.
UAE calls for immediate ceasefire: The UAE “stands unwavering in its calls for the utmost protection of civilian lives, unimpeded access for humanitarian aid, and an immediate end to hostilities in the Gaza Strip,” said UAE President Sheikh Mohamed bin Zayed.
Israel committing genocide -Iraqi PM: “The Palestinian people are facing genocide and a grave humanitarian crisis” due to the ongoing conflict, said Iraqi Prime Minister Mohamed Shia Al Sudani. He called for an immediate ceasefire and for international law to be upheld.
Gazans subject to collective punishment -Guterres:Hamas’ attack on Israel “can never justify the collective punishment of the Palestinian people,” said UN Secretary-General Antonio Guterres, calling for an immediate end to the conflict.

WEEKEND PROTESTS-

Protests at home: Tens of thousands of Egyptians took to the streets after Friday prayers to condemn Israel’s war on Gaza. Demonstrations took place at 27 state-approved locations around the country as well as downtown Cairo (watch, runtime: 1:12) and Al Azhar (watch, runtime: 1:47). The National Dialogue and pro-government party Mostaqbal Watan had called on Egyptians to protest the potential displacement of Palestinians into the Sinai, a day after El Sisi said that Egyptians will “go out and protest in their mns … if called upon to do so.”

And abroad: Hundreds of thousands of demonstrators protested the war across the Muslim world on Friday. Large rallies took place from Turkey and Tunisia to Indonesia and Malaysia, while thousands of Iraqis staged a sit-in at the border with Jordan. Demonstrations also took place in the West, including in London, where 100k people took part in a rally, and Los Angeles.

AID DELIVERED + SOME HOSTAGES FREED-

Limited aid has arrived in Gaza, much more is needed: Twenty trucks carrying vital supplies of aid crossed the border at Rafah on Saturday, the first to do so since the conflict in Gaza broke out two weeks ago, state TV showed yesterday (watch, runtime: 7:48).

Remember: Israel has imposed a total siege on the enclave, triggering a shortage of water and food and leaving hospitals on the verge of collapse. The government last week agreed to allow a small number of trucks to enter following talks with US President Joe Biden but is continuing to impose a blockade on fuel, which is vital for keeping hospitals operational.

A drop in the ocean: The Palestinian Red Crescent welcomed the delivery but said the “miniscule” amount is just a “drop in the ocean” of what is needed to prevent a humanitarian catastrophe. “Furthermore, without fuel entering the Gaza Strip to support generating electricity, thousands of Palestinian lives are at risk of death in hospitals,” it said in a statement on X.

More could enter today:More aid trucks could cross Egypt’s Rafah border into Gaza today, UN humanitarian chief Martin Griffiths said yesterday, according to Reuters.

Two hostages released: Hamas on Friday released two American hostages for what it said were “humanitarian reasons” following Qatari mediation, according to Reuters. The hostages, a mother and daughter from Chicago, are the first of the 200+ hostages taken by the armed group two weeks ago to be released.

GEARING UP FOR INVASION-

Israel to increase bombing intensity ahead of ground invasion: “We will deepen our attacks to minimize the dangers to our forces in the next stages of the war. We are going to increase the attacks from [Sunday],” an IDF official told reporters last night, according to the Associated Press.

A three-phase conflict: Israeli Defense Minister Yoav Gallant said on Friday the military is aiming to remove Hamas from Gaza in three phases, starting with an air and ground offensive followed by a period of low-intensity combat. “The third step will be the creation of a new security regime in the Gaza Strip, the removal of Israel’s responsibility for day-to-day life in the Gaza Strip,” he told reporters.

“New security reality”? It’s not clear what the IDF’s post-war plans are in the event that it defeats Hamas. The country’s foreign minister last week became the latest government official to suggest it will annex part of the territory. Another minister has said it could create a large demilitarized zone. Meanwhile, Bloomberg reported yesterday that US and Israeli officials are discussing setting up a UN-sponsored interim government in coordination with some Arab states.

DIPLOMACY-

Egypt won’t be a party to ethnic cleansing: El Sisi told UK PM Rishi Sunak on Friday that there is no way Egypt will allow Palestinians to be displaced into Sinai (watch, runtime: 4:46). UK Foreign Secretary James Cleverly was in town the day prior for talks with Shoukry. Turkey is taking our side, with President Recep Tayyip Erdogan telling El Sisi on Friday that Ankara doesn’t want to see Gazans resettled in Egypt (Ittihadiya | Turkish president’s office).

Israel is withdrawing from the region: The country withdrew its ambassador and diplomatic staff from Turkey yesterday, a few days after it did the same with its diplomatic representation in Egypt, Jordan, Bahrain and Morocco. The government also told its citizens to leave Egypt and Jordan as soon as possible, and to avoid travel to Morocco.

ALSO- China has called for a ceasefire and Iran wants an oil embargo on Israel (IRNA | Reuters).

ECONOMIC FALLOUT FOR ISRAEL?

Fitch Ratings has put Israel’s credit rating on notice for a downgrade and currency speculators are heaping pressure on the ILS as the impact of the war triggers concerns about the economy. (Fitch Ratings | Financial Times)

Egypt inks debt swap pact with China

Egypt inks debt swap agreement with China: The International Cooperation Ministry inked a memorandum of understanding on a debt swap with the China International Development Cooperation Agency (CIDCA) at the Belt and Road Forum on Thursday, the ministry said in a statem e nt. The statement didn’t disclose any specifics, including the value of the agreement.

About 5% of our total external debt is owed to the Chinese: Egypt owed USD 8.2 bn to China as of the end of March, according to central bank figures (pdf). This includes USD 5.3 bn in long-term debt and a USD 2.6 bn currency swap agreement with the Chinese central bank. The country’s total debt was USD 165.4 bn as of 1Q 2023.

We already have two debt swap programs in progress worth about USD 730 mn: a EUR 240 mn program with Germany — USD 116 mn of which went towards the energy pillar of the government’s Nexus for Water, Food and Energy (NWFE) program — and an agreement with Italy. The two programs have been used to fund 120 local development projects, said a separate ministry stateme nt.

CHINA LIKES EGYPT-

China wants to expand in Egypt, Xi tells Madbouly: China is looking to increase its economic footprint in Egypt, namely in the infrastructure, energy,aviation, tourism, renewables, and healthcare sectors, Chinese President Xi Jinping said during his meeting with Prime Minister Moustafa Madbouly on the sidelines of the forum. The two sides also discussed expanding the TEDA zone and attracting more Chinese investments to Egypt in green hydrogen and EV production.

More CNY in Egypt:The debt swap “will encourage Chinese investments in Egypt in local currency,” cabinet quoted Madbouly as saying during a meeting with CIDCA head Luo Zhaohui. Egyptian and Chinese authorities have recently entered talks to allow Chinese companies to use CNY to invest in local projects, rather than the USD.

LRT funding confirmed:Luo announced that CIDCA will provide soft financing for the third and fourth phases of the electric light rail train, cabinet said, without detailing the value or tenor of any loans. Local media reported earlier this month that China Eximbank will lend Egypt USD 400 m n for the third phase of the project.

ICYMI- Chinese and Egyptian companies signed a raft of agreements last week on the sidelines of the Belt and Road Forum that could see up to USD 15.5 bn invested in energy and manufacturing projects in Egypt.

New sustainable bond regulations are in the works

A new framework is in the works for sustainable bonds: We’re working with the OECD to work out a framework for issuing green, blue, infrastructure, and other sustainable bonds on behalf of government entities, a government official told Enterprise. The new regulations that will allow government entities to sell bonds tied to sustainability projects should be out in time for a green bond issuance set to happen next year, our source told us.

More green bonds to come in 2024: The government is reportedly mulling over issuing green bonds worth USD 700 mn next year, Al Borsa reports, citing sources it says have knowledge of the matter. The issuance, which is still under study, will be carried out by an Electricity Ministry-affiliated body and the proceeds will be used to fund an unnamed green project, either by the private sector or through a public-private partnership (PPP), according to the local outlet.

Who’s involved? The International Finance Corporation will act as an advisor to the offering and may also subscribe to the issuance itself, Al Borsa reported. It was reported that the Organisation for Economic Co-operation and Development (OECD) will support the issuance, but the exact details of how the issuance will be guaranteed were not laid out.

This wouldn’t be our first green bond sale: We closed our second green bond issuance earlier this month with a CNY 3.5 bn (USD 478.7 mn) trove of Panda bonds. In 2020, our maiden green bond issuance brought in USD 750 mn and was almost 5x oversubscribed, attracting some USD 3.7 bn worth of orders for the bonds, pointing to growing appetites for climate-friendly securities worldwide.

I see your USD 700 mn, and raise you USD 5 bn: The Madbouly government is planning to bring in USD 3-5 bn from sovereign green issuances over the next five years, a government official told us.

5G mobile network could soon make its debut in Egypt

5G licenses could soon be up for grabs: The National Telecommunications Regulatory Authority (NTRA) is planning to issue a tender for Egypt’s first licenses to provide 5G services as early as December, A sharq Busines s wrote on Thursday, citing sources it says are in the know. The regional outlet reported that the 5G licenses will begin at USD 500 mn, but a source at one of the mobile network operators, who confirmed the when we spoke, told us that the value of the license had not yet been agreed on by the authorities.

A nice source of FX if there is appetite: Telecom license fees have traditionally been paid for in FX.

The industry expects the license tenders to be unveiled in December — or early next year at the latest, our source told us. There’s enough spectrum on offer for all four incumbents — Orange, Vodafone, Etisalat, and Telecom Egypt’s We — to bid.

What is 5G? Really, really fast internet — and the successor to the 4G standard we use now in Egypt. In theory, it can deliver speeds up to 100x faster than 4G with ultra-low latency that could allow everything from remote surgeries to super-fast downloads and a “true” internet of things. It’s slowly rolling out in developed markets, and when it works (and it’s not chewing up your battery), it’s amazing.

Do we have the capacity for it? Egypt has the infrastructure to introduce 5G, but its accessibilityand efficiency will largely depend on how much telecom providers are willing to pay and how they will price the service to customers, former Communications Minister Khaled Negm told Enterprise.

Egypt is a whole generation behind: Egypt has only tapped 10% of the 4G services available,Negm said, adding that the government needs to invest in expanding these services, increasing their effectiveness, and increasing its governance of the activities carried out using these services.

The conflict in Gaza heads into its third week

The Cairo Peace Summit dominated last night’s talk show coverage, with the nation’s hosts unpacking the day’s events.

El Sisi “expressed what Palestinian citizens want,” Palestinian presidential advisor Mahmoud Al Habbas said on Ala Masouleety (watch, runtime: 9:26) while discussing the president's speech to the Cairo Peace Summit. Al Habbash appeared on several other programs through the night including Masaa DMC (watch, runtime: 4:28) and Al Hayah Al Youm (watch, runtime: 10:07).

But why no final statement? “A number of countries insist on condemning one party with the utmost force and not condemning the other party. … Some believe that there is now no room to talk about a ceasefire,” Egyptian presidential spokesperson Ahmed Fahmy told Sky News Arabia (watch, runtime: 1:04). Fahmy also discussed the summit on Ala Masouleety (watch, runtime: 2:03 | 9:07). Lamees El Hadidi also touched on the subject during Kelma Akhira (watch, runtime: 8:34).

The president of the European Council got caught in El Hadidi’s crosshairs: The queen of late-night talk demanded that president of the European Council Charles Michel respond to accusations of double standards in dealing with the war in Gaza. “We have a clear position,” Michel responded, adding that “we condemned the terrorist attack carried out by Hamas against the Israeli people. Israel has a right to defend itself but in accordance with and within the limits of international humanitarian law. We reach out to the American administration to urge Israel to respect the rules of International law.” (Watch, runtime: 2:19 | 2:02 | 4:23).

“Famine will begin in Gaza” if more aid does not pour in, UN World Food Program spokesperson Abeer Atifa told Kelma Akhira, adding that “what has so far entered the Gaza Strip is a drop in the bucket of what the population needs” (watch, runtime: 6:45). UNICEF Egypt’s Jeremy Hopkins told El Hekaya that the UN “is trying to provide safe passage for food and aid to reach the Gaza Strip” (watch, runtime: 7:45). The WHO’s regional director said that Gaza is heading towards a catastrophic situation that may be difficult to control (watch, runtime: 9:22).

Rumors of Qatar’s early exit denied: “The Qatari Emir participated in the Cairo Peace Summit and left, normally,”the Egyptian presidential spokesperson said on Ala Masouleety, denying rumors of fraught disagreements and tensions (watch, runtime: 3:10). Amr Adib noted that a video circulating of Sheikh Tamim bin Hamad Al Thani exiting the summit prior to the Secretary-General of the League of Arab’s speech was from 2019 (watch, runtime: 4:24).

ALSO- S&P downgrade: S&P Global Rating downgraded our sovereign credit rating to B- from B due to the delay in financial and structural reforms along with the threat of rampant inflation on Egypt’s growth expectations, economist Medhat Nafie told El Hekaya (watch, runtime: 9:26).

Saudi Bashayer could deploy an initial EGP 1 bn to develop industrial land in Egypt. PLUS: Japanese investment, Re.life, AirArabia, Drive Finance

INVESTMENT-

#1-SBC to invest up to EGP 1 bn in industrial land development: Saudi engineeringand construction contractor Saudi Bashayer Company (SBC) is studying a project to develop industrial land in Egypt with an initial investment of up to EGP 1 bn, according to a statement by the Trade Ministry. Trade Minister Ahmed Samir and SBC General Manager Mohammad Elsekaily discussed the potential investment on Thursday. Samir proposed a number of industrial zones that the company could look into, including the industrial zone in Sadat City.

The company has an experienced German partner: SBC is set to collaborate on land development with an unnamed German partner who is looking to invest in sustainable energy, recycling, and waste treatment, Elsekaily said, adding that the move could attract major German companies and manufacturers into the country. The investor has “extensive experience and a history of global work” in these fields and wants to commence operations in Egypt, the statement reads.

#2- Planning Ministry discusses investments with Japanese delegation: A review of the progress of Egypt Vision 2030’s sustainable development strategy, investment promotion, and the role of the private sector in the economy were on the agenda as Planning Minister Hala El Said met yesterday with a group of Japanese investors, a statement from the Planning Ministry reads. The Japanese delegation, headed by Kanazawa Kiyokyo, the owner of Japanese real estate firm Titan Capital, met with El Said and Sovereign Fund of Egypt head Ayman Soliman, among other officials.

DEBT-

Drive Finance eyes fresh credit facilities: GB Auto’s car finance arm Drive Finance has entered negotiations with six private and state-owned banks to obtain credit facilities worth some EGP 1.5 bn to support its factoring and consumer financing services, Managing Director Ahmed Osama told Al Masdar. The banks in question are the National Bank of Egypt, Banque du Caire, CIB, EG Bank, FABMisr, and Abu Dhabi Commercial Bank, he added.

The details: Drive Finance, which is a subsidiary of GB Corp’s financing arm GB Capital, will obtain more than 50% of the facilities by the end of October, Osama said. The company wants to develop its new car market and expects to double sales volumes in 2023 compared to the year before as a result of expanding its reach across Egypt.

It’s a tricky market at the moment: Despite a month-by-month uptick in car sales in September, sales still remained 40% lower than the 13.3k vehicles sold in the same month last year. Sales across the first eight months of the year were 66% lower than in the same period in 2022.

TAX-

We’ve signed off on a double taxation agreement with Qatar: President El Sisi ratifieda treaty scrapping double taxation between Egypt and Qatar, the Official Gazette reported on Thursday. The agreement, which was first inked in February and approved by the House in July, will scrap double taxation and also crack down on tax evasion. The treaty covers capital gains, income, corporate profits, interest and dividends.

This should help with investment: Qatari Prime Minister Khalid Bin Khalifa Bin Abdulaziz Al Thani said in February that the double taxation agreement will help create a “tangible” impact on boosting and encouraging Qatari investments in Egypt.

MINING-

Online platform for mineral and gold mining projects in the works: An online platform that connects mining projects in Egypt with potential investors in a bid to drum up local and foreign investment will launch its trial phase in the next few months, according to an Oil Ministry statement on Thursday

The details: Users will be able to view geological data, maps, exploration rights and track available licenses for any given area. Users will also be able to apply for a permit via a single portal in an attempt to streamline the investment process. The platform will also allow for communication between potential investors, the Egyptian Resources Authority (EMRA), current license holders, and the public, according to the statement.

Who’s behind the project? An alliance between industrial tech firm Trimble, digitization and geospatial firm MSA South Africa, mining producer Gold Pyramid Group, and tech solutions company New Smart will jointly head the project.

AVIATION-

AirArabia to begin Sharjah-Giza route in December: The UAE’s low-cost carrier AirArabia will begin regular flights between Sharjah International Airport and Sphinx International Airport on 6 December 2023, according to the company’s website. The airline will make five flights a week between Sharjah and Giza.

TECHNOLOGY-

Re.life expands across MENA: UAE-based company Re.life has set up a new office in the Saudi city of Dammam and is planning new offices in Egypt, Turkey, Jordan, and Jeddah, the company said in a press release picked up by Zawya. The company runs digital platforms for the trading of recyclables as well as for logistics services.

Rising interest income drives FAB’s record earnings in 3Q

UAE’s FAB notches record earnings in 3Q: First Abu Dhabi Bank (FAB), the UAE's biggest bank by assets, saw its net profits climb 46% y-o-y to AED 4.3 bn in 3Q 2023, it said in a statement (pdf). The quarter’s net income topped the c. AED 3.7 bn dirhams forecasted by analysts, Reuters reports, citing LSEG data.

OpenAI could offer up USD 86 bn worth of shares: Artificial intelligence startup OpenAI — the parent of AI-powered language model ChatGPT — is apparently considering selling shares of its existing employees worth an estimated USD 86 bn, Bloomberg wrote on Thursday, citing unnamed sources it says are in the know. Following the sale, the company, which is 49%-owned by Microsoft, would stand alongside Elon Musk’s SpaceX and ByteDance’s TikTok as one of the most valuable privately held companies, Bloomberg notes.

EGX30	21,617	-2.3% (YTD: +48.1%)
USD (CBE)	Buy 30.83	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	19.25% deposit	20.25% lending
Tadawul	10,655	-0.6% (YTD: +1.7%)
ADX	9,307	-1.3% (YTD: -8.9%)
DFM	3,752	-1.5% (YTD: +12.5%)
S&P 500	4,224	-1.3% (YTD: +10.0%)
FTSE 100	7,402	-1.3% (YTD: -0.7%)
Euro Stoxx 50	4,025	-1.6% (YTD: +6.1%)
Brent crude	USD 92.16	-0.2%
Natural gas (Nymex)	USD 2.90	-2.0%
Gold	USD 1,994.40	+0.7%
BTC	USD 30,051	+1.4% (YTD: +81.7%)

THE CLOSING BELL-

The EGX30 fell 2.3% at today’s close on turnover of EGP 3.52 bn (57.8% above the 90-day average). Foreign investors were net sellers. The index is up 48.1% YTD.

In the green: AMOC (+2.4%), TMG Holding (+2.1%) and Palm Hills Development (+1.0%).

In the red: Mopco (-10.1%), Sidpec (-5.4%) and Eastern Company (-4.8%).

CALENDAR

OCTOBER

Late October-14 November: 3Q2023 earnings season.

26 October (Thursday): Daylight saving time ends.

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

27 October- 2 November (Friday-Thursday): Gouna Film Festival.

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

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

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

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 (TBC)..

JULY

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

23 July (Tuesday): Revolution Day (TBC).

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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