{"id":584890,"date":"2023-04-07T00:00:00","date_gmt":"2023-04-07T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/04\/07\/no-ramadan-news-slowdown-in-sight-inflation-figures-come-out-next-week\/"},"modified":"2023-04-07T00:00:00","modified_gmt":"2023-04-07T00:00:00","slug":"no-ramadan-news-slowdown-in-sight-inflation-figures-come-out-next-week","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/04\/07\/no-ramadan-news-slowdown-in-sight-inflation-figures-come-out-next-week\/","title":{"rendered":"No Ramadan news slowdown in sight + Inflation figures come out next week"},"content":{"rendered":"

Good morning, ladies and gents. <\/span>And if your week has been as busy and as active as the <\/span>news has been this week, then you\u2019ve earned the chance to settle in this weekend with some friends and family. <\/span><\/p>\n

May we suggest a game night with some Banoffee pie\u2026but with a twist: <\/span>Tired of charades, <\/span>Uno, Monopoly and Mafia? We recommend that your next azzouma come equipped with some brand new games to spice things up. We break down some of our favorite new games in his week\u2019s Enterprise Guide. And while we\u2019re spicing up game night, why not try a Yemeni Banoffee pie? <\/span><\/p>\n

We\u2019re officially past the halfway point of Ramadan<\/span> and can start counting down to the <\/span>much-needed relief of the Eid break, which is expected to land on Friday, 21 April. It follows the Sham El Naseem holiday on Monday, 17 April. <\/span><\/p>\n

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

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

<\/span> What Ramadan news slowdown? <\/span>We got hounded last week with updates on <\/span>privatization, M&A and the latest in economic headwinds. Indicators this week showed that Egypt\u2019s debt reached a new record high, while private sector non-oil activity continued to decline for the 28th straight month. And while we\u2019ve gotten no indication of another devaluation, Egypt\u2019s banking sector is once again out with CDs. Let\u2019s just say we\u2019re thankful we\u2019re seeing progress and positive news coming out of the privatization program. Let\u2019s dive into it. <\/span><\/p>\n

LESS THAN IDEAL ECONOMIC HEADWINDS-<\/span><\/p>\n

#1- External debt hit a record high of USD 162.9 bn in 2Q FY 2022-2023, <\/span>up 5.1% q-o-q <\/span>during the quarter, <\/span>Planning Ministry figures show<\/a><\/span>. A stronger USD, higher interest rates, and turmoil in financial markets have all had a hand in weakening Egypt\u2019s external position in recent months and have made it harder to repay debts to multilateral lenders and debt markets. <\/span><\/p>\n

Meanwhile, Egypt\u2019s net foreign liabilities rose by USD 1.3 bn in February<\/span> as continued <\/span>pressure on the EGP pushed net assets further into the red, according to calculations based on central bank figures. Net foreign assets slipped to a negative USD 23.02 bn from negative USD 21.70 bn in January. <\/span><\/p>\n

In light of all this, Goldman Sachs issued a warning: <\/span>Our external adjustment program, <\/span>which has seen the EGP lose 50% of its value and strict restrictions on imports implemented, have been insufficient at addressing our payments imbalance, <\/span>Goldman Sachs<\/a><\/span> said. <\/span>In the investment bank\u2019s view,<\/span> decisively putting an end to potentially runaway currency devaluation and higher inflation requires<\/span> accelerated policies aimed at increasing exports and drawing in more investment.<\/span> <\/span><\/p>\n

#2- On the bright side, Egypt\u2019s net foreign reserves <\/span>continued to inch up<\/a><\/span> to USD 34.45 bn <\/span>in March<\/span> from<\/span>USD 34.35 bn in February<\/a><\/span>. Reserves have been on a gentle upward slope the past seven months and are now up by more than USD 1.3 bn since the end of August. Reserves fell <\/span>20 %<\/a><\/span>last year on the back of the war on Ukraine and tougher financial conditions.<\/span><\/p>\n

#3- Private-sector activity contracted in March for the 28th consecutive month: <\/span>We saw <\/span>continuing contraction<\/a><\/span> in non-oil private sector activity last month due to high inflation, depreciation of the EGP, and import restrictions suppressing demand in Egypt. S&P Global\u2019s purchasing managers\u2019 index reported worsening private sector performance with the most recent PMI reading inching down to 46.7 from a reading of 46.9 in February. <\/span><\/p>\n

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

The Big Three state-owned banks issued new high-yield CDs: <\/span>State-owned banks <\/span>Banque<\/a><\/span>du Caire<\/a><\/span>, <\/span>Banque Misr, and the National Bank of Egypt<\/a><\/span> are offering high-interest certificates of deposit (CDs) following the Central Bank of Egypt\u2019s <\/span>200 bps rate hike<\/a><\/span> last week. The three banks are offering fixed, three-year CDs at a 19% rate and a three-year declining-rate certificate that starts at 22% before falling to 18% in the second year and 16% in the third year. Appetite was <\/span>robust<\/a><\/span> over the past week, with savers pouring some EGP 41 bn into Banque Misr\u2019s CDs alone as of Tuesday.<\/span><\/p>\n

Private banks also jumped on the bandwagon: <\/span>EGX-bellwether CIB <\/span>followed suit<\/a><\/span> with <\/span>three <\/span>new three-year certificates of deposit<\/a><\/span>. All offering monthly payouts, the CDs have a fixed interest rate of 18%, 19%, 20%, with minimum deposits ranging from EGP 10k to EGP 1 mn. It also offered a 22% fixed-interest rate CD with a minimum deposit of EGP 3 mn earlier in the week, but withdrew it last night.<\/span> Al Baraka Bank Egypt also introduced its <\/span>three-year CD<\/a><\/span> at a variable interest rate of at least 19%, disbursed monthly. Finally, EFG Hermes\u2019 aiBank <\/span>introduced<\/a><\/span> its three-year CD with a fixed interest rate of 17.25% for monthly payouts, 17.5% for quarterly payouts, and 18.0% for annual payouts. <\/span><\/p>\n

PRIVATIZATION IS MOVING ALONG-<\/span><\/p>\n

#1- Kuwait\u2019s sovereign fund is looking into growing its stake in state-owned AAIB: <\/span>Kuwait <\/span>Investment Authority (KIA) has appointed advisors <\/span>to look into acquiring<\/a><\/span> a larger stake in Arab African International Bank (AAIB), potentially putting the fund on track to become the state-owned bank\u2019s single biggest shareholder. <\/span><\/p>\n

#2- Offers roll in for the new hotels company:<\/span> Investors <\/span>have started submitting bids<\/a><\/span> to pump <\/span>money into the state\u2019s newly-established hotels company through a capital increase. The SFE is filtering the offers before sending them to Prime Minister Moustafa Madbouly and the relevant authorities to make a final choice. <\/span><\/p>\n

#3- The Battle for Pachin continues:<\/span> The bidding war for EGX-listed Paint and Chemical <\/span>Industries (Pachin) continued last week after Eagle Chemicals again upped its offer in response to the <\/span>improved bid<\/a><\/span> by National Paint Holding (NPH) lodged last week. The local chemicals company is now offering to purchase at least 75% of state-owned Pachin for EGP 39.00 per share, up c.5% from its previous <\/span>EGP 37.00 per-share bid<\/a><\/span> \u2014 a 3% premium to NPH\u2019s offer. <\/span><\/p>\n

MORE M&A MOVES-<\/span><\/p>\n

#1- Gig-Egypt <\/span>could soon acquire<\/a><\/span>at least 95% of AIG Egypt<\/span> after the latter\u2019s largest <\/span>shareholder, AIG Limited Holding, agreed to sell its stake in an upcoming mandatory tender offer (MTO) approved by the Financial Regulatory Authority (FRA).<\/span><\/p>\n

#2 DPI and Amethis acquired a minority stake in Egyptian pharma firm Marcyrl: <\/span>Development Partners International (DPI) and Amethis <\/span>acquired<\/a><\/span> a \u201csignificant minority stake\u201d in local pharma player Marcyrl. Details about the acquisition were not disclosed but \u201ca combination of primary and secondary capital to fund the company\u2019s growth plans,\u201d were used to make good on the transaction.<\/span><\/p>\n

#3- <\/span>Fine gets Easy:<\/span> Amman- and Dubai-headquartered hygiene products manufacturer <\/span>Fine<\/a><\/span>Hygienic Holding (FHH)<\/a><\/span> has <\/span>acquired<\/a><\/span>Alexandria-based health and beauty company <\/span>Easy<\/a><\/span>. <\/span><\/p>\n

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

<\/span><\/p>\n

Legislators are back in session:<\/span> The Senate reconvenes on Sunday, 9 April, and the House is <\/span>back in session on Tuesday, 11 April.<\/span><\/p>\n

We\u2019ll find out how inflation is faring: <\/span>The CBE and Capmas will be out with March inflation <\/span>data on Monday, 10 April. Headline inflation hit a <\/span>five-and-a-half-year high of 31.9%<\/a><\/span> in February, while food prices and core inflation both rose at their fastest rates ever.<\/span><\/p>\n

The IMF and the World Bank kick off their <\/span>annual Spring Meetings<\/a><\/span>on<\/span>Monday<\/span>. <\/span>Policymakers, private sector execs, civil society reps, and academics will converge on the lenders\u2019 headquarters in Washington DC to discuss the state of the global economy. Expect central banks\u2019 struggle to balance bringing down inflation and protecting growth to dominate the agenda, amid uncertainty in the global financial markets triggered by the US banking crisis. The meetings run until Sunday, 16 April.<\/span><\/p>\n

The IMF will also on Monday release <\/span>chapters two and three<\/a><\/span>of its April World Economic <\/span>Outlook<\/span>, which tackle rising interest rates and public debt.<\/span><\/p>\n

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

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