{"id":584004,"date":"2023-03-24T00:00:00","date_gmt":"2023-03-24T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/03\/24\/its-day-2-of-ramadan-all-eyes-are-on-the-cbe-next-week\/"},"modified":"2023-03-24T00:00:00","modified_gmt":"2023-03-24T00:00:00","slug":"its-day-2-of-ramadan-all-eyes-are-on-the-cbe-next-week","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/03\/24\/its-day-2-of-ramadan-all-eyes-are-on-the-cbe-next-week\/","title":{"rendered":"It\u2019s Day 2 of Ramadan + all eyes are on the CBE next week"},"content":{"rendered":"

Good morning, everyone, and Ramadan Kareem to you all. <\/span>We hope this second day of the<\/span> holy month is being good to everyone who is observing \u2014 and that either way, you\u2019re spending this weekend catching up on some downtime with your loved ones. <\/span><\/p>\n

We launched our brand new website this week \u2014 take a look here.<\/a><\/span>It\u2019s beautiful (if we don\u2019t say so ourselves), loads fast, and packs lots of new features. If you have a suggestion (or a bug report) hit reply to this email. <\/span><\/p>\n

Enterprise Weekend comes out each Friday at 9:00am CLT.<\/span> We\u2019ll be back on Sunday at 6am with EnterpriseAM. Until then: Enjoy the weekend.<\/span><\/p>\n

LAST WEEK IN 3 MINS-<\/span><\/p>\n

Last week was \u2014 once again \u2014 heavy on privatization news<\/span>,<\/span>giving us plenty of updates on <\/span>the timeline and shape that some of the stake sales will take. <\/span><\/p>\n

#1- GOING TO MARKET: <\/span>Egyptian Linear Alkyl Benzene (Elab) <\/span>will be the first company<\/a><\/span> to go <\/span>to market via the Sovereign Fund of Egypt\u2019s (SFE) pre-IPO fund, our friend Ayman Soliman was reported as saying. Six of the first eight companies set to debut on the EGX are energy and petchem firms, he reportedly added. <\/span><\/p>\n

#2- BUT NOT BEFORE EID: <\/span>The SFE <\/span>expects<\/a><\/span> it will start taking companies in its pre-IPO fund <\/span>to market after Ramadan, with the eight companies included in the fund currently being promoted to potential investors ahead of the sales. <\/span><\/p>\n

#3- NOT LIKELY TO SELL SHARES ANYTIME SOON: <\/span>Telecom Egypt, where the sale of a <\/span>stake presently held by the state was <\/span>indefinitely put on ice<\/a><\/span>, ostensibly <\/span>due to volatility in markets after turmoil roiled the global banking sector in the wake of SVB\u2019s meltdown in the United States. <\/span><\/p>\n

#4- OTHER COMPANIES ARE LOOKING TO LURE STRATEGICS: <\/span>State-owned, EGX-listed <\/span>Egypt Aluminium<\/a><\/span> (EgyptAlum) <\/span>is in early-stage talks<\/a><\/span> with <\/span>Emirates Global Aluminium (EGA)<\/a><\/span> for a capital increase. State-owned real estate companies <\/span>El Nasr Housing and Development<\/a><\/span> and Maadi for Development and Construction are also reportedly planning to seek capital from strategic investors through capital increases rather than seeing existing shareholders sell stakes. <\/span><\/p>\n

SMART POLICY- Our friends at the SFE have been championing capital increases over straight-up sales of existing equity. <\/span>This makes great sense: Fresh money injected by a new shareholder will (with the right management team in place) help the company grow. A payout to a state entity in return for shares does nothing to create new value at the companies in question. <\/span><\/p>\n

#5<\/span>- THE BIDDING WAR FOR PACHIN IS HEATING UP AGAIN: <\/span>The Financial Regulatory <\/span>Authority (FRA) <\/span>approved<\/a><\/span>Dubai-based National Paints Holding\u2019s (NPH) <\/span>takeover bid<\/a><\/span> to paintmaker Pachin, giving <\/span>shareholders<\/span> until 3 April to decide whether to sell <\/span>their<\/span> shares. On the same day, Eagle Chemicals \u2014 a <\/span>rival bidder \u2014 <\/span>upped its offer<\/a><\/span>to Pachin <\/span>shareholders<\/span> by 20%, valuing the EGX-listed company at some EGP 840 mn. <\/span>At EGP 35.00 per share, <\/span>Eagle Chemicals is offering EGP 1.00 per share more than the UAE\u2019s NPH. <\/span><\/p>\n

LOGISTICS-<\/span><\/p>\n

It was also heavy on logistics news:<\/span> Abu Dhabi Ports (ADP) <\/span>will develop and operate<\/a><\/span> a <\/span>container terminal at Safaga Port under a USD 200 mn, 30-year concession agreement signed with the government. Meanwhile, Mercedes-Benz, local shipping firm Kadmar and two Chinese companies <\/span>inaugurated<\/a><\/span>new logistics zones and factories in the Suez Canal Economic Zone.<\/span><\/p>\n

ALSO- Jushi Group inaugurated a new USD 320 mn production line at its factory in the TEDA trade zone. <\/span>That brings Jushi\u2019s total investment in the plant to<\/span> USD 920 mn.<\/span><\/p>\n

INFLATION-<\/span><\/p>\n

The Sisi administration pushed ahead with new measures to lessen the impact of <\/span>inflation on low income earners, <\/span>including through an announcement of <\/span>plans to raise<\/a><\/span> the personal income tax exemption threshold to EGP 36k from EGP 24k currently. MPs also <\/span>approved<\/a><\/span>a new round of <\/span>wage and pension hikes<\/a><\/span>. Government employees and public-sector workers will see raises starting 1 April, while <\/span>pension payouts will rise 15%. The government also announced new earmarks for social protection programs.<\/span><\/p>\n

DIPLOMACY-
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We <\/span>reached a diplomatic breakthrough<\/a><\/span> with Turkey.<\/span> Egypt and Turkey\u2019s top diplomats <\/span>pledged to put aside their differences and normalize relations for the first time in over a decade during talks in Cairo. <\/span><\/p>\n

Is that enough to pave the way for a summit between President Abdel Fattah El Sisi and his Turkish counterpart? <\/span>That\u2019s the suggestion in this <\/span>unconfirmed report from Al Arabiya<\/a><\/span>. <\/span><\/p>\n

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WHAT\u2019S HAPPENING NEXT WEEK-<\/span><\/p>\n

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It\u2019s decision time for the CBE:<\/span> Economists are expecting the Central Bank of Egypt (CBE) to <\/span>raise interest rates by 200-300 bps when it meets on Thursday, 30 March, <\/span>Bloomberg<\/a><\/span> reports<\/span>. The central bank has already raised rates by 800 bps in the past year, but will need to go further to curb <\/span>soaring inflation<\/a><\/span> and contain downward pressure on the currency, <\/span>pundits suggest<\/span>. <\/span><\/p>\n

The Fed went on Wednesday for a smaller-than-expected rate hike amid the still-brewing <\/span>banking crisis<\/span>, <\/span>raising rates by 25 bps<\/a><\/span>. It also pulled a united front, saying that the US \u201cbanking system is sound and resilient,\u201d and signalling that it isn\u2019t too worried about industry following the fallout from the <\/span>Silicon Valley Bank collapse<\/a><\/span>. <\/span><\/p>\n

Here at home, we\u2019ll also be keeping an eye out for news from the Senate<\/span>,<\/span>which<\/span>will <\/span>reconvene on Sunday.<\/span><\/p>\n

Check out our full business calendar on the web<\/a><\/span> for a comprehensive listing of upcoming <\/span>news events, national holidays and news triggers.<\/span><\/p>\n

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