{"id":579275,"date":"2023-02-01T04:15:29","date_gmt":"2023-02-01T04:15:29","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/02\/01\/this-morning-the-new-month-should-bring-big-privatization-news\/"},"modified":"2023-02-01T04:15:29","modified_gmt":"2023-02-01T04:15:29","slug":"this-morning-the-new-month-should-bring-big-privatization-news","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/02\/01\/this-morning-the-new-month-should-bring-big-privatization-news\/","title":{"rendered":"THIS MORNING: The new month should bring big privatization news"},"content":{"rendered":"

Good morning, wonderful people, and welcome to <\/strong>the first day of February<\/strong>. <\/strong>It\u2019s another macro-heavy kind of news day here at home, with plenty on the state of our economy \u2014 and more speculation about the government\u2019s privatization plans.<\/p>\n

<\/a> DRIVING THE CONVERSATION here at home this morning: The Madbouly government is <\/strong>teasing a big <\/strong>announcement on its privatization plans.<\/strong> Cabinet will \u201csoon\u201d hold a press conference to announce the details of the state-owned firms it plans to offer to strategic investors and on the EGX, Prime Minister Moustafa Madbouly said at a meeting yesterday<\/a>.<\/p>\n

Key words: \u201cStrategic investors.\u201d <\/strong>Madbouly noted that \u201ca part of the offering will be on the EGX, and another part will be to strategic investors.\u201d As Lamees El Hadidi noted on the airwaves last night, these words \u2014 and the makeup of yesterday\u2019s meeting, which included Sovereign Fund of Egypt officials but no EGX reps \u2014 suggest that stake sales to strategic investors could be the first order of the day. We have more in Last Night\u2019s Talk Shows, below.<\/p>\n

When will we know more? <\/strong>Madbouly remained tightlipped on when the announcement would be made, but had earlier this week<\/a> said to expect it in two weeks\u2019 time.<\/p>\n

A quick take: <\/strong>The talk in recent days about asset sales is very welcome. With no IPOs now in the market, cabinet should have a bias toward stake sales to strategics, retaining modest stakes that they could monetize in a later IPO after the new strategic partner improves corporate and financial performance at the asset. If the investment bankers get mandates soon, there will be a post-Ramadan window lasting until early June in which to go to market with IPOs before the summer slowdown. The next window would then be in September.<\/p>\n

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EGX WRAP- <\/strong>The benchmark EGX30 fell for the second day in a row yesterday, ending the trading session 3.4% in the red. Foreign and institutional investors were net sellers on a high turnover of EGP 2 bn. CIB \u2014 the largest component of the index \u2014 lost 5.7%. The benchmark index has fallen 5.5% since Monday.<\/p>\n

Only six companies saw gains yesterday<\/strong>, with Telecom Egypt leading the pack closing 5.4% up. Alexandria Containers was the worst performer, losing 7.9%.<\/p>\n

Don\u2019t panic, says EGX board member Rania Yacoub \u2014 this is a natural wave of profit-taking. <\/strong>The EGX30 was up nearly 20% YTD by the close of trading on Monday. \u201cIt\u2019s natural for institutional investors in particular to close out profitable positions\u201d Yacoub told us. She says yesterday\u2019s dip is \u201cnothing to worry about so long as it\u2019s part of an upward trend and doesn\u2019t coincide with negative announcements on macro indicators.\u201d<\/p>\n

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EGP WATCH- The EGP slipped <\/strong>0.<\/strong>6% against the greenback yesterday<\/strong> to 30.23.<\/p>\n

DATA POINT- Good news on NFAs: <\/strong>Egypt\u2019s net foreign assets (NFAs) position improved for the second consecutive month, standing at a negative EGP 494.3 bn in December. That\u2019s an EGP 47.3 bn narrowing of the gap from EGP 541.5 bn the month before, Reuters<\/a> reports citing central bank data. The newswire puts the improvement down to the October devaluation. \u201cChanges in the amount of NFAs represent net transactions of the banking system with the foreign sector, including those of the central bank,\u201d Reuters says, citing the CBE.<\/p>\n

DATA POINT- Good as gold: <\/strong>Gold purchases in Egypt surged 83% y-o-y in 2022 as Egyptians flocked to the metal amid the FX crunch, according to the World Gold Council\u2019s full-year report. Egyptian investors bought 4.4 tons of gold during the year as the precious metal became the go-to asset to hedge against the falling EGP.<\/p>\n

The Central Bank of Egypt is MENA\u2019s biggest goldbug:<\/strong> The CBE bought 47 tons of gold during the year, above second-placed Qatar which purchased 37 tons. Both are dwarfed by Turkey\u2019s central bank, which was the world\u2019s biggest gold buyer among central banks at 148 tons, Bloomberg<\/a> notes.<\/p>\n

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It\u2019s the start of a new month:<\/strong> Here are the key news triggers over the coming weeks.<\/p>\n