You win some (CBE eases credit card restrictions) and you lose some (it looks like blackouts may be getting longer)

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What We're Tracking Today

The blackouts aren’t going away — they look to be getting worse

Good morning, friends. Welcome back to another workweek — one in which we’re leading with two quality-of-life announcements: First, the CBE is making it a tiny bit easier to use your credit card abroad. We have the rundown on that in this morning’s news well, below. Second:

We expected the blackouts to be over by now, but they may actually be getting worse. The Electricity Ministry has begun extending the duration of daily power cuts to 90 minutes from one hour, several local news outlets (here, here) reported yesterday, citing anonymous ministry sources. It isn’t clear to us whether this is a change in policy or a one-off prompted by something new in the mix — nor is it clear what has prompted the change.

A few of us at Enterprise HQ can testify to this: From Alexandria to Maadi, several of us noticed a longer-than-usual blackout yesterday.

Remember: The ministry began reducing the electrical load in late July onthe back of an extended heatwave and challenges to domestic natural gas production. While temperatures have now fallen below peak, officials have noted that the cut saves the country some USD 300 mn per month. Egypt’s gas supply was dealt another blow earlier this month when Chevron halted shipments of Israeli gas from its Tamar field due to the ongoing war in Gaza.

HAPPENING TODAY-

The city of a thousand minarets and endless conferences:

Energy professionals are heading to Egypt Energy for the region’s biggest energy conference. The gathering wraps on Tuesday;
The people over at Cairo Water Week are also kicking off their sixth edition of their annual conference running until Tuesday to tackle our most pressing water issues.

IN THE HOUSE-

The House of Representatives is back in session today following a two-week break. MPs will discuss and vote on a USD 500 mn loan from Deutsche Bank and the Arab Banking Corporation to support the state budget. MPs will also look into two draft laws, one establishing the Egyptian Export and Investment Guarantee Agency to promote Egyptian exports — replacing the Export Credit Guarantee Company of Egypt — and one establishing a new National Council for Childhood and Motherhood.

On the agenda tomorrow: The House will discuss and vote on three draft bills authorizing the Oil Ministry to contract ExxonMobil and Pico Petroleum to explore for oil in the Mediterranean and Gulf of Suez in partnership with various local players. MPs will also vote on a EUR 670k grant from the Spanish Agency for International Development Cooperation to help overhaul how the agriculture sector uses water.

HAPPENING THIS WEEK:

#1- The CBE’s Monetary Policy Committee will meet on Thursday to review rates. The bank kept interest rates unchanged during its September meeting in response to a slight decline in core inflation. We’ll be out with our customary pre-MPC poll later this week.

#2- The CBE will be keeping a close eye on what happens in Washington on Wednesday, when the Federal Reserve concludes its penultimate policy meeting of the year. The market is pricing in a 99.5% chance that the Fed keeps rates on hold as inflation tempers and the war in Gaza triggers fresh uncertainty for the global economy.

#3- A third downgrade in the cards? Fitch Ratings will publish its review of our sovereign credit rating on Friday, 3 November. Moody’s and S&P Global Ratings both downgraded our rating deeper into junk territory in recent weeks due to our foreign-currency shortage and mounting debt problems.

#4- Egyptian tech bros need to look toward DC this week as the White House prepares to release an executive order regulating AI. A “sweeping” new order (which doesn’t require asset from Congress) will “deploy numerous federal agencies to monitor the risks of artificial intelligence and develop new uses for the technology while attempting to protect workers,” Politico writes.

#5- Apple is promising a “scary fast” Mac event tomorrow night. Don’t expect to watch it stream live unless you’re a serious night owl: It starts at 2am CLT.

WATCH THIS SPACE-

#1- Is a carbon tax on its way? The Madbouly government is drafting legislation that would introduce a carbon tax, reports Al Borsa, citing anonymous sources. The bill is expected to be presented to the House of Representatives within days, according to the newspaper. No further details about the cost of the tax or its mechanism for implementation were reported.

Good for the climate, good for the public purse: Global tax receipts from carbon taxes and emissions trading have reached about USD 95 bn, the World Bank said earlier this year.

#2- Linking up Greece Egypt’s grid could soon receive funding: The EU may include the plan to link the power grids of Greece and Egypt on a list of “projects of mutual interest”, which would help the project secure licensing and funding, Bloomberg reports. Local renewable energy developer Infinity Power signed an agreement with Greece’s Copelouzos Group in May to conduct a feasibility study into the proposed 950-km, 3-GW link.

There could be more to come: GREGY is among five proposed projects to link Egypt’s power grids to Europe, which if implemented, would see Egypt exporting its surplus to Italy, Cyprus, and Greece.`

#3- State-funded factory construction boom on the way? The state is ready to support factory construction projects by building the core structure of factories for companies to then fit with their own production lines, President Abdel Fattah El Sisi said on the sidelines of the second annual International Industry Forum (watch, runtime: 1:54). The initiative is hoped to stimulate local industry, El Sisi added.

THE BIG STORY ABROAD remains Israel’s war on Gaza.

Israel says the “second stage” of the war has begun as it lays siege to Gaza: The Israeli military has sent forces into Gaza and is subjecting the besieged territory to the most devastating aerial bombardment yet. Stopping short of announcing a ground invasion, the country’s prime minister, Benjamin Netanyahu, said yesterday that the “second stage” of the war has begun, a day after a total communications blackout was imposed over Gaza as Israeli jets pounded the territory and tanks rolled over the border.

Global condemnation is growing, but don’t expect Israel to listen: Netanyahu reiterated yesterday that it will be a “long war” and vowed to completely destroy Hamas.

The Arab world is not happy: Egypt, together with Arab nations including Saudi Arabia, the UAE, and Oman slammed Israel’s decision to send troops into the strip. The Foreign Ministry warned of “the grave risks and unprecedented humanitarian and security repercussions” of the invasion and said it amounts to “a new flagrant violation” of international law.

Erdogan is even less so: Turkish president Recep Tayip Erdogan labeled Israel a “war criminal” and blasted Western countries for being “the main culprit behind the massacre” taking place in Gaza. “Israel, we will also declare you as a war criminal to the world,” Erdogan told thousands of protesters at a pro-Palestine rally, according to Turkish media.

Turns out that speech wasn’t great for Turkish-Israeli relations: Israel will “reevaluate” its relationship with Turkey and has withdrawn all diplomatic staff from Ankara in response to Erdogan’s speech, Foreign Minister Eli Cohen said yesterday.

The UAE has called for an emergency session at the UN Security Council in light of Israel’s escalation, the Jerusalem Post reported anonymous diplomats as saying yesterday.

THE BIG BUSINESS STORY ABROAD-

SBF takes the stand. FTX’s Sam Bankman-Fried gave testimony to a New York court on Friday alleging that he had little to no information regarding the financial relationship between the collapsed crypto exchange and its affiliated hedge fund Alameda Research. Bankman-Fried — who is facing a hefty list of criminal charges following the implosion of the exchange — denied having defrauded customers, though admitting “a lot of people got hurt. Customers. Employees…I made a number of small mistakes and a number of large mistakes.” (Reuters | New York Times | Financial Times | CNN | Axios)

ALSO- Sudan’s two warring parties meet in Riyadh: Sudan’s warring factions announced that they have resumed the latest round of Saudi and US-mediated peace talks in Jeddah, reports AFP. The negotiations, which restarted on Thursday last week, are held “in partnership” with the African Union and the Intergovernmental Authority on Development, a Saudi Foreign Ministry statement on X said. Saudi Arabia called for the Sudanese army led by General Abdel Fattah Al Burhan and the Rapid Support Forces to abide by the Jeddah Declaration to protect civilians and a short-term ceasefire deal, both of which were signed by both sides in May.

CBE loosens credit card restrictions for Egyptians abroad

The Central Bank of Egypt (CBE) has eased its restrictions on credit card use abroad that triggered a flight to the greenback and caused the EGP to weaken significantly in the parallel market.

What’s changing: Credit card users will no longer need to submit proof of travel prior to leaving the country but will need to notify their banks of their intention to travel. The new rules instead require users to provide proof that the card was used while abroad — by sending their bank arrival and departure stamps on their passports — within a 90-day period. Failing to do this will get you a black mark on your credit rating.

Remember: Earlier this month, the CBE began limiting the amount of FX credit card users could spend per month to the equivalent of USD 250. Under the rules, account holders are able to access their normal maximum limit only if they are outside of Egypt and provide proof of travel before leaving the country.

Cue a rush to the greenback: When first announced, the restrictions sent the EGP plunging against the greenback in the parallel market as people rushed to acquire FX. The USD / EGP exchange rate weakened to 48 from 42 in less than a week, Bloomberg reported Thursday, citing data from what it said was a number of traders.

The USD weakened against the EGP on Thursday following the announcement, according to traders, who said that the currency was changing hands to 43-44 / USD compared to 48 on Wednesday.

Remember: The credit card restrictions came a few days after most banks began blocking the use of EGP debit cards abroad as the central bank moved to stem outflows of FX.

What they said: “Egypt is in a catch-22 situation. USD shortages are prompting policymakers to restrict access to foreign currency … But these restrictions could prompt people to hoard USD, increasing their scarcity, and weakening the EGP in the black market,” Bloomberg’s chief EM economist Ziad Daoud said.

Egyptian private-sector minimum wage to rise 17% in 2024

The private-sector minimum wage will rise by 17% starting January 2024after the National Council for Wages (NCW) decided to raise the threshold for the third time in less than a year to support workers amid soaring inflation. In a statemen t on Friday, the Planning Ministry said that private-sector firms will have to pay their employees a gross wage of at least EGP 3.5k a month from January, up from EGP 3k currently.

Cushioning the blow: Inflation reached an all-time high in September as the impact of the foreign-currency shortage and a series of devaluations continued to stoke price pressures.

This is the third time the council has hiked the minimum wage in less than a year: With the latest increase of the private-sector minimum wage, those on the minimum wage will have seen their monthly income rise 46% from EGP 2.4k to EGP 3.5K in less than a year’s time.

This is still less than the public-sector: The public-sector gross minimum wage was raised to EGP 4k this month as part of a package of measures announced in September aimed at easing the burden of soaring inflation on low-income households.

Annual salary increase minimums will also double: New rules introduced in January obliged private-sector firms to increase annual salary wages equal by at least 3% of the employee’s ins. From 1 January, the minimum annual salary increase will double to EGP 200.

Refresher: The private-sector minimum wage is relatively new in Egypt, and was introduced at the beginning of FY 2021-2022 at EGP 2.4k a month. It hasn’t been met with unanimous support from the business community, with some complaining that they can’t afford to cover the higher wage bill.

Middle East a “ticking time bomb,” says El Sisi, as Israel escalates Gaza war

President Abel Fattah El Sisi warned against the potential widening of the conflict after two drones crashed in Taba and Nuweiba on Friday morning, causing explosions and injuring six people, the spokesperson for the Egyptian Armed Forces said. The Israeli military blamed the incident on the Yemen-based Houthi movement, accusing it of launching the unmanned vehicles “with the intention of harming Israel.” The Egyptian military said the drones had been launched from the south of the Red Sea; the armed forces targeted one of them while it was still outside Egyptian airspace.

“I have warned of the expansion of the conflict, regardless of where [the expansion] comes from. The region will become a ticking time bomb that impacts us all,” El Sisi said at an event on Friday (watch, runtime: 15:57). “We are capable of protecting our homeland and we are making significant efforts to achieve de-escalation.”

This was the second border incident in less than a week: On Sunday, as many as nine Egyptian troops were injured when an Israeli tank accidentally shelled a border post. The IDF apologized for the incident and said they would investigate what happened.

UN BACKS CEASEFIRE-

World calls for immediate humanitarian truce: Israel and the US were left diplomatically isolated at the UN General Assembly on Friday after just 14 countries voted against a resolution brought by Jordan that called for an “immediate, durable” humanitarian truce. The final tally saw 121 countries vote in favor of the resolution and 44 abstain. Among them were close US and Israeli allies France, which voted in favor, and the UK, which abstained. The assembly rejected an amendment tabled by Canada to specifically condemn Hamas for the violence.

“Enough is enough”: “We can no longer bear what is happening to the Palestinians,” Egypt’s ambassador to the UN, Osama Mahmoud Abdelkhalek, said in his address to the assembly. “No to targeting civilians, no to terrorism, no to violating international humanitarian law, no to bombarding hospitals and medical centers … No to genocide — all people are equal.”

Remember: Jordan spearheaded the emergency session at the UN in a bid to break the impasse at the Security Council, where the US has twice voted down resolutions that would have called for an immediate ceasefire. Russia and Brazil have both put forward resolutions to bring an end to the fighting, though the US will only countenance a “pause” in the fighting and has insisted that the council recognize Israel’s right to self-defense.

Arab Leaders release joint statement following Cairo Peace Summit: The foreign ministers of the nine Arab countries that attended this month’s Cairo Peace Summit issued a joint statement condemning the targeting of civilians on both sides and the forced displacement of Palestinians in Gaza. It rejected self-defense as a justification for the “flagrant violations of international law” and called for an immediate ceasefire. Egypt, Jordan, the UAE, Saudi Arabia, Bahrain, Qatar, Oman, Kuwait and Morocco all signed the statement.

Remember: The summit ended without a joint communique due to EU leaders’ insistence to condemn Hamas for the escalation. Egypt released a strong statement following the gathering calling out Western leaders’ “incomprehensible” refusal to condemn Israel’s attack on Gaza.

A diplomatic disaster for the West: “We were heavily criticized in [the Cairo peace summit]. It was as if all the outreach we have done over the last two years [to Arab nations] has been pissed up against the wall,” the Guardian quoted one EU source as saying.

Plenty of talks: El Sisi spoke this weekend with Indian Prime Minister Narendra Modi and Cypriot President Nikos Christodoulides. Foreign Minister Sameh Shoukry spoke to his Saudi counterpart Prince Faisal bin Farhan and British Foreign Secretary James Cleverly.

ON THE GROUND-

Israel plunged Gaza into a communications blackout on Friday as it stepped up its bombardment, raising fears among rights groups that the IDF could use it as cover for committing mass atrocities. All phone and internet connections were severed, making communication with the outside world impossible, and preventing ambulances and aid relief teams from coordinating.

Egyptian companies are helping out:Orange, Etisalat, and Vodafone are all preparing to send mobile stations to the Gaza border to try to boost connectivity in the strip.

Musk to offer Starlink to help aid effort: Elon Musk will make Starlink’s satellite internet services available to “internationally-recognized aid organizations” in Gaza, he said on X (formerly known as Twitter) yesterday.

Cue a predictably furious response:Israel’s communications minister said his office will “cut any ties” with Starlink if it is made available in Gaza. “Israel will use all means at its disposal to fight this,” he wrote on X.

Death toll: More than 8k Palestinians have now been killed by Israeli airstrikes, half of whom are children, the Gaza Health Ministry told AFP.Israel’s indiscriminate air campaign has also damaged 178k residential buildings, while more than 260 healthcare facilities and 42 UN buildings have been hit, according to figures released by the Palestinian Health Ministry earlier yesterday.

US dismisses Gaza death toll after Health Min publishes list of names:Gazan health authorities on Friday published the names of more than 6.7k people killed by Israel after US president Joe Biden sought to discredit the figures released by the Health Ministry. Following the release, White House spokesperson John Kirby again expressed doubt about the figures, telling reporters that “we can't take anything coming out of Hamas, including the so-called Ministry of Health, at face value.”

AID-

Just 84 trucks have made it from Egypt into Gaza since the conflict began on 7 October, the Palestinian Red Crescent said yesterday. A sixth convoy of 10 trucks crossed into the besieged enclave yesterday carrying food, water and medical supplies, but no fuel. Israel is preventing fuel from entering the strip, driving hospitals to collapse and preventing bakeries and the desalination plant from operating, exacerbating food and water shortages.

Israel obstructing aid entry, says Egypt: The humanitarian relief effort is facing “major logistical problems” because of Israeli demands to search the cargo, Egypt’s Foreign Ministry said yesterday. Trucks are having to travel 100km to the Nitsana crossing on the Egypt-Israel border for inspection by Israeli officials, causing aid delivery to be “significantly delayed,” the ministry said.

And the bombing of Rafah isn’t stopping: Egyptian state broadcaster Al Qahera News reported on Friday that Israeli jets again bombed the Rafah crossing. This is the fifth time the border has been struck by the IDF.

Guterres follows up with El Sisi on aid:El Sisi discussed the relief efforts with UN Secretary-General Antonio Guterres over the phone yesterday, Ittihadiya said. The UN chief held talks with El Sisi in Cairo earlier this month and traveled to the Rafah crossing.

Eni says it will soon resume LNG exports from Egypt. Plus: Another China Energy project in the works.

Italian energy giant Eni expects to resume LNG exports from Egypt when seasonal demand eases even as Israel’s war in Gaza curbs our imports of Israeli gas, Eni’s deputy COO for natural resources Cristian Signoretto said on an earnings call, according to Bloomberg. “Consumption in [Egypt] is decreasing substantially due to the normal seasonal effect … we will see exports resuming once this effect will be notable,” he said.

ICYMI- Egypt has barely exported any LNG since the start of the summer due to declining local production and rising domestic demand. These two factors together have put pressure on local supply and triggered months of daily blackouts across much of the country. Shipping data show that Egypt has exported just two cargoes this month.

This has dealt a blow to exports:The value of the country’s LNG exports fell almost 60% y-o-y to USD 2.3 bn during the first seven months of the year. Shipments of Egyptian gas to Europe have fallen to 2% of the continent’s total imports so far this year, down from 4% in 2022.

Gaza war throws another wrench into the works: Egypt has seen its imports of Israeli gas curbed by 20% after Chevron suspended production at its Tamar field.

Chevron is shipping us less gas than we’ve contracted: That’s according to Chevron CFO Pierre Breber, who told Bloomberg that the company is increasing production at Leviathan to offset the loss of Tamar. “We continue to supply Jordan customers and we continue to supply part of our Egyptian contracts, but not all of our contracts for our Egyptian customers.”

CHINA ENERGY WANTS TO SET UP HYDRO POWER PLANT

Another China Energy project brewing: China’s state-owned China Energy will start working on feasibility studies for a 2-GW pumped hydroelectric energy storage plant under an MoU inked with the Electricity Ministry, according to a ministry statement. The project will be established under a build-own-operate contract, the statement said, without giving any details regarding the value or timeline of the project.

China Energy loves Egypt: Earlier this month, the company inked a framework agreement with the SCZone to set up a USD 6.75 bn green hydrogen plant that could produce some 1.2 mn tons of green ammonia and 210k tons of green hydrogen each year.

Citigroup turns bullish on Egyptian debt on our newfound geopolitical importance in finance negotiations

Citigroup likes Egyptian debt: Bulge bracket stalwart Citigroup thinks our geopolitical importance (we’re ‘too big to fail’) and an accelerating privatization program mean it is worth taking a punt on our USD-denominated debt, Bloomberg writes, picking up on a Citi note by strategists Nikola Apostolov and Luis Costa.

Too important to fail: “While geopolitical risks are likely to weigh on the region in the coming months, in our view Egypt’s geostrategic position may reinforce its bargaining power with its multilateral and Gulf Cooperation Council creditors and catalyze increased new financing,” Apostolov and Costa write.

“Egypt sovereign risk sentiment might be at an inflection point,” they note, despite recent sovereign credit downgrades and delays in the IMF’s review of our USD 3 bn assistance program. Citi is going overweight on Egypt, Bloomberg’s Mirette Magdy reports, “while reducing its exposure” to underperforming Jordanian debt. The bank is recommending Egyptian bonds maturing in 2031 and 2050.

Egypt’s USD debt has been the region’s best performer since the outbreak of violence in Palestine and Israel on 7 October, according to the business information service.

But, there’s a caveat: Regional escalation of the war on Gaza or the failure of talks to secure additional funding wouldn’t be positive for our debt, Citigroup warned.

LAZARD ISN’T AS BULLISH-

Wealth managers at Lazard are investing an “unusually low” portion of their assets in high-yield bonds from emerging markets, describing debt in Egypt, Argentina, Kenya, and Nigeria as “of particular concern,” it said in a statement this month. The firm noted the surge in US bond yields and geopolitical uncertainty amid Israel’s war on Gaza as factors placing pressure on the EM asset class.

Sentiment is a pretty important gauge to watch right now: The government is reportedly seeking to increase its USD 3 bn loan program with the IMF to more than USD 5 bn, and there are growing expectations that the UAE and Saudi Arabia will at least roll over some USD 5 bn worth of deposits they have at the central bank.

Next to play the “Egypt sentiment” game: Fitch. The ratings agency is set to weigh in on 3 November, following S&P Global (which downgraded us last week), citing FX shortages and rising uncertainties about the sustainability of our debt sustainability, and Moody’s .

NBFI players say there’s no bubble about to burst

Consolidate or go bust — is Egypt’s NBFI industry a bubble that’s about to burst?The past five to seven years has witnessed an explosive rise of non-bank financial services in Egypt.

We brought together a panel of experts from Egypt’s NBFI industry to discuss the current landscape during the Enterprise Finance Forum. Joining us were Hazem Moussa (co-founder and chairman of Contact Financial Holding), Amro Abouesh (who founded and led microfinance player Tanmeyah, and who now leads Maseera), and Tamer Elemary (CEO of GB Capital).

Setting the scene: There is considerable overlap between banks and NBFIs as consumer lenders, Moussa said. “NBFIs are an extension of the [banking] system and a core part of the development of the market. Egypt has a low banking concentration and very low credit mark, so NBFIs can fill the gap to reach more people in a different way and help banks extend their services and their balance sheets,” he added. “[They] should work together to support each other, it’s one ecosystem.”

Customers are led by need: “When you're looking at the larger corporate side of the equation, [banks and NBFIs] are competing for maybe under 200 companies out there in the market. When you get to the consumer side of the equation, it's probably quite complementary,” said Elemary. NBFIs have a chance to extend into geographies and certain sectors of the consumer business that banks don’t want to play in — the choice is up to the customer with considerations given to reputation, fees, rates, timing needs and pace among other things, he added.

Cooperation, not competition: Banks are the primary providers of funding to non-bank financial institutions — and so a major reason why the sector has grown so fast, Abouesh said. “Most banks have an NBFI arm or are venturing into digital banking as we are addressing the same target. Securitization provides one avenue for cooperation, although it depends on who buys the securities. If you’re securitizing to a bank, it’s the same thing — different books, but the same entity. You can achieve diversification on the funding source when it comes to securitization by allocating assets on different types of institutions.”

The case for overlending: “There’s a credit market cycle that people must be aware of,” Abouesh said. The NBFI market has grown, but players are cramming into a small space with vanilla offerings to sell money quick, he explained. “What happens in this situation is there have been valuations for NBFIs, and it drew the attention of a lot more money wanting to come in with a very high level of overconfidence in the market and that everything will sell,” Abouesh said. This leads to oversupply and multiple lending to the same borrower. “In microfinance there are at least two loans per borrower. The CAGR of growth — the measurement of future economic activity that demonstrates the potential for rapid growth — on the microfinance outstanding portfolio in the past six or seven years is tenfold that of the active borrowers,” he said.

Does this lead to consolidation? “There is a correction that's going to happen, and it's happening already. The overfunding that was available in the market recently has made too many players extend too many loans very quickly and this signals some form of correction. Consolidation is one way, bankruptcy is another — or a combination of both,” Abouesh said.

Not by choice: “Consolidation can come when you have a mature market with companies that have grown well organically and are now struggling to continue at the same rate, or when you have a stressed market impacted by pressure from a liquidity standpoint. I think that’s what we are probably seeing — not only in Egypt, but on a global level,” Elemary said. “It’s a case of consolidation not by choice, but because of the market dynamics. Small companies in particular are going to have to find some way to get bailed out. They can look to bankruptcy or M&A becomes one of those ways that it happens.

Are NBFIs taking on too much risk? The number of people with access to credit remains very small, Moussa said. In terms of risk, those that struggle may not have the right strategy. “It really depends on what your strategy is in terms of market penetration — are you looking at the customer or a product, are you looking at trying to maximize your value or are you building more long term?” he asked.

There’s room to grow, but you need to innovate: “Now is the time to be more innovative and work harder to be able to customize and tailor make products that serve people and tackle the rest of the market niches,” said Abouesh. While the market is massively underserved, it is congested as NBFIs have flooded into parts of the market where traditional banks were not reaching the majority of people, he added.

SMEs hold untapped potential: “SMEs are such a large market and the market is completely untapped. So what better combination for a business plan to grow?” Elemary said. Plus, this wouldn’t be stepping on the toes of banks. “I don’t think we're doing anything necessarily to bump into each other on the SMEs side, being that it's a very nascent space,” he added.

Take a hybrid approach: “We used to think about SMEs as companies that behave more like consumers because they were owned by an individual and we tended to put the SME businesses in the consumer divisions. Coming into lending now, I see that it needs to be a little bit more of a hybrid. We need to approach the SMEs with a consumer mindset, but we need to assess the SMEs with more of a corporate perspective in terms of creditworthiness,” Elemary said.

Thinking ahead: “A paradigm shift in technology has affected people's expectations of the kind of service that they need,” Abouesha said. The generations coming up in the market don’t expect to physically go to a bank branch to conduct transactions. “We need to develop the right kind of empathy level for client needs, whether or not they know they need a service that exists to fulfill those needs.”

Serving the underbanked: “Technology has provided a lot of analytics that were not possible before,” Abouesha said. New innovations in tech allow made-to-fit services to be accessible and delivered to the low income groups, he explained. “Banks never took private banking services to low income groups, it was simply too expensive. But now the cost of client acquisition is dramatically cut by the availing of technology,” he added.

Gaza war continues to top talk show coverage in Egypt + 34 die in horrific accident on Cairo-Alexandria Desert Road

Talk shows are yet to shift their attention away from the war in Gaza. As we enter week four of the war, the nation’s talking heads continued to chew over the latest developments in Gaza, the fate of its children, and bids for a ceasefire.

The experts weigh in: Maj. Gen. Samir Ragheb joined El Heyaka’s Amr Adib (watch,runtime: 1:50) and Arab League Assistant Secretary-General Hossam Zaki joined Ala Maso’uleey’s Ahmed Moussa (watch, runtime: 5:50) to bring us the latest developments. Meanwhile, Kelma Akhira’s Lamees El Hadidi interviewed UNICEF Egypt’s Jeremy Hopkins (watch, runtime: 8:43) on what children in Gaza are going through.

Why would Arab nations object to a humanitarian truce in Gaza? Iraq and Tunisia were the only two Arab countries to abstain from voting on a nonbinding resolution calling for a humanitarian truce in Gaza in the UN General Assembly. Iraq later voiced its support for the resolution, blaming a “technical fault” for making it seem like it had abstained from voting. Tunisia abstained from voting because it doesn’t see the resolution as enough to put an end to the violence in Gaza, Arab League representative to the UN Maged Abdel Fattah told El Hadidi (watch, runtime: 1:33).

The resolution was passed by a vote of 120-14 with 45 abstentions. “This vote reflects a consensus on the matter,” Abdel Fattah told Masaa DMC (watch, runtime: 7:45). Fattah added that “It reflects the anger of the international community about the ongoing situation.” Al Hayah Al Youm (watch, runtime: 7:45) also had coverage. We have the details in the news well, above.

Also on the airwaves last night: Tragic car crash leaves 34 dead: A deadly collision on the Cairo-Alexandria Desert Road yesterday resulted in 34 casualties and left 64 injured, Health Ministry spokesperson Hossam Abdel Ghaffar told Masaa DMC (watch, runtime: 3:28). The collision happened between a number of vehicles during a period of heavy fog that lowered visibility, former interior ministry official Medhat Koraitam told Ala Maso’uleety (watch, runtime: 10:08). El Heyaka also had the story (watch, runtime: 13:27).

The deaths on the Sahrawy got extensive coverage in the international press: Reuters | Associated Press | BBC | The National | Xinhua.

Egyptian auto spare parts importer wants to set up car engine filter factory

INVESTMENT-

#1- Sea Port wants to set up a USD 30 mn car engine filter factory: Auto spare parts importer Sea Port will invest at least USD 30 mn to build an car engine filter factory in Tenth of Ramadan as part of its efforts to localize its operations, the company’s vice chairman for strategies and business development, Ibrahim Mostafa, told Al Borsa last week. The company hopes to receive a golden license to establish the factory before the end of the year, enabling it to start construction in 1Q 2024 and start rolling out products in 4Q 2024, he said. The factory will have three production lines with a production capacity of 3-5 mn filters a year. Sea Port has been operating in the Egyptian market since 2009, importing and distributing spare parts for European trucks.

#2- Egyptian Swiss Group unveils EUR 6 mn expansion plan: Egyptian pasta-maker Egyptian Swiss Group is looking to invest some EUR 5-6 mn into developing new products and increasing its production capacity, with a EUR 1 mn investment earmarked for next year, Al Borsa reported last week, citing General Manager Ahmed El Sebaie. The company wants to step into the biscuits and cakes market as well as expand its mills, which are currently running at 70% capacity. El Sebaie didn’t disclose a time period for the rest of the planned investment, explaining that the company is waiting for the “right time.”

TOURISM-

Air Cairo adds new routes between Red Sea resorts and Russia: Low-cost air carrier Air Cairo announced new flights between a number of Russian cities and Egypt’s Red Sea resorts, the Civil Aviation Ministry said in a statement last week. The budget airline began operating flights between Sharm El Sheikh and Moscow, Saint Petersburg, and Yekaterinburg on Thursday, and will launch new routes between Hurghada and the three cities in mid-November.

S&P 500 slips into correction + US stocks are looking at their worst October since 2018

Fears of further rate hikes, geopolitical tension push US stocks into correction: The escalations in Gaza, soaring bond yields, and disappointing 3Q earnings have triggered a “slow-motion selloff” in US stocks that has pushed the benchmark S&P 500 into correction after losing more than 10% from its peak in July, the Financial Times wrote. This comes only days after the tech-dominated Nasdaq Composite slipped into correction following a series of less-than-optimistic earnings from tech giants. This is putting US stocks on course or their worst October in five years, according to Bloomberg.

Benefiting from the volatility are safe haven assets, like gold which is on track for its biggest monthly gain since 2020, breaking the USD 2k / oz threshold over the weekend, according to Bloomberg. Investors have also been looking at the USD — which saw a 0.4% increase against basket currencies over the past week — and government bonds — which last week saw yields jump to a 16-year high.

Don’t lose all hope: “Sentiment is generally negative . . . but stress metrics haven’t moved that much, it’s been relatively orderly,” Citigroup’s Stuart Kaiser said. “It’s easy to get distracted by some of the moving parts … but the bottom line is that the underlying macro picture is still strong.”

EGX30	23,262	+0.6% (YTD: +59.4%)
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	10,409	-0.9% (YTD: -0.7%)
ADX	9,237	-0.1% (YTD: -9.5%)
DFM	3,787	+0.1% (YTD: +13.5%)
S&P 500	4,117	-0.5% (YTD: -7.2%)
FTSE 100	7,291	-0.9% (YTD: -2.2%)
Euro Stoxx 50	4,014	-0.9% (YTD: +5.8%)
Brent crude	USD 90.48	+2.9%
Natural gas (Nymex)	USD 3.48	+0.2%
Gold	USD 1,998.50	+0.1%
BTC	USD 34,186	+1.0% (YTD: 106.6%)

THE CLOSING BELL-

The EGX30 rose 0.6% at Thursday’s close on turnover of EGP 5.1 bn (122.5% above the 90-day average). Foreign investors were net buyers. The index is up 59.4% YTD.

In the green: TMG Holding (+9.3%), Heliopolis Housing (+6.1%) and Palm Hills Development (+5.6%).

In the red: Mopco (-6.0%), Abu Qir Fertilizers (-4.4%) and Oriental Weavers (-4.1%).

Egypt, Turkey discuss freight line, bilateral trade, and cross-border banks

More Turkish-Egyptian economic cooperation in the offing? Trade Minister Ahmed Samir met with his Turkish counterpart Ömer Bolat to discuss promoting bilateral trade and investment, a Trade Ministry statement said yesterday. The two agreed to work to reduce barriers to agricultural trade and to tackle other, unspecified obstacles to trade and investment. The also agreed Cairo and Ankara will look into local currency-denominated trade and opening banks in each other’s country. The Trade Ministry also made reference to the possibility of opening a roll-on, roll-off freight line between the two nations.

REMEMBER- Egypt wants to boost trade volumes with Turkey by 50% to USD 15 bn in the next five years, the Trade Minister said in August. There were also rumors from local media last week that Egypt and Turkey will likely finalize an agreement to use local currencies for bilateral trade in 2024. This economic and political rapprochement comes only months after the two countries restored diplomatic ties and reappointed ambassadors in July, bringing to an end a decade of tensions.

CALENDAR

OCTOBER

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
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.

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.

Signposted to happen some time in November:

Egypt to issue Samurai bonds.
Bidding deadline for 5 gold mine concessions in the Eastern Desert (TBC).

DECEMBER

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 stake sale for military-owned fuel retailer Wataniya.
Gov’t expects to finalize sale of Zafarana wind farm
Kenyan trade conference in Egypt.

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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