17 Oct 2019

Real Estate Stocks Lift EGX for 1st Time This Week

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Real estate stocks drove the Egyptian Stock Exchange's benchmark higher for the first time this week, led by Madinet Nasr Housing and Development (MNHD). 

The EGX30 index gained 1.1 percent, closing the session at 14,209.23 points, with a turnover of around EGP 834.2 million ($51.4 million). 

MNHD shares attracted more than 15 percent of the market's liquidity, as its stock skyrocketed 9.91 percent to EGP 4.99 ($0.31) per share, recording a volume of 22.44 million shares.  

SODIC also delivered a stellar performance, gaining 4.83 percent and reaching EGP 15.19 ($0.94), amid expectations that the company will report robust results in the second half of 2019. 

The "rise is a natural response to a set of recent measures and positive data that the government has revealed recently, namely the premier's comments to the new IMF chief that the private sector will be boosted to lead the growth vehicle in Egypt," Ayman Sabry, the CEO of Osool and vice chair of the Egyptian Market Association, told Delta Digest.

"The current upward movement could mark the beginning of a series of further rises in light of the state's continuous reassuring messages about further reforms and empowerment of the private sector," he added. 

International market analyst at Naeem Brokerage Sherif Nabawy said closing in the green should be normal for the Egyptian market, thanks to improved macroeconomic data, including the deceleration of the inflation rate and the decrease in interest rates for the third time this year. 

"The market is likely to go up further," he told Delta Digest, ruling out the possibility that the rise could be a "false move."


Business

Mastercard Plans to Inject $31 Mn Into Egypt in 2020

Mastercard is seeking to invest EGP 500 million ($30.8 million) in Egypt in 2020, according to its MENA division President Khalid El-Gibali. 

Over the past five years, the payments company pumped in EGP 1.5 billion ($92.4 million), raising the total value of its investments in the Egyptian market to EGP 2 billion ($123.2 million), El-Gibali said on the sidelines of the Egypt Can conference. 

It is also closing in on the launch of an initiative for farmers that will attempt to integrate them into Egypt’s digitally transforming system, as they represent 25 percent of the country’s population, the Mastercard official added.

United Banks Agrees to Lend EGPC $40 Mn

The United Bank agreed to sanction $40 million in loans to the Egyptian General Petroleum Corporation (EGPC), announced Chairman Ashraf El-Kady. 

The EGPC will use the funds to import oil goods from Saudi Arabia in cooperation with International Islamic Trade Finance Corporation (ITFC), El-Kady added. 

Egypt's petroleum sector struck deals worth a total of $8 billion with the ITFC between 2008 and mid-2019, according to a previous statement by the investment minister.

Egypt to Invest $232 Mn in Converting Rice Straw to Wood Planks

Egypt will invest 210 million euro (about $232 million) in the country's first timber company that converts rice straw into medium density wood (MDW) panels, the Ministry of Petroleum announced in a statement.

The new plant is set to have an annual production capacity of 205 thousand cubic meters, using nearly 245 thousand tons of rice straw as feedstock and based off technology from German firm Simple Camp.

Petroleum Minister Tarek El-Molla added that the project, funded by Egyptian investors, will be based in the Nile Delta governorate of Beheria.

It is intended to help reduce carbon emissions and meet the domestic market’s growing need for MDF panels, and El-Molla added that he hopes it will support and encourage the establishment of new, complementary home furniture, decoration and kitchen.

Egypt to Rent State-Owned Weaving Factories to Private Firms

Egypt is planning to rent ten state-owned weaving plants to private firms for ten-year periods, Public Enterprises Minister Hesham Tawfik announced.

The factories will be operated by readymade garment factories, with deals reached for two plants in downtown Cairo and Fayoum governorate, he added.

According to the minister, the move is designed to ramp up revenues amid new government strategy aimed at reviving the country’s once-flourishing cotton industry.

Egypt has committed to an EGP 21 billion ($1.2 billion) scheme to boost local cotton production and implement a total upgrade of weaving plants.

It involves a new auction system, currently in a trial phase in the govenorates of Fayoum and Beni Suef, which allows farmers to get the highest price for their cotton in line with international prices.

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Fawry's CEO Ashraf Sabry

Fawry Customers Number 23 Mn, Daily Transactions Reach 2.5 Mn: CEO

Fawry's customer base has reached 23 million people, while its daily transactions hit 2.5 million, CEO Ashraf Sabry said during the World Bank forum for fintech companies.

According to a company press release issued at the forum, which focused on the ways fintech companies foster financial inclusion and the role of financial regulation, Fawry operates through a network of 33 banks and 110,400 retailers. 

The digital bill payments platform is also looking to add new financial services to its Fawry Plus branches and expand their numbers alongside the company’s network of banks, Managing Director Mohamed Okasha told Al Borsa.

He added that Fawry is currently waiting for Central Bank of Egypt (CBE) approval, expected to come by the end of 2019 or the first quarter of 2020.

Golden Pyramids Plaza Net Profit Jumps 40% YoY in H1 2019

Golden Pyramids Plaza (GPPL) announced that its net profit jumped 40.5 percent year on year in the first half of 2019, hitting $21.98 million thanks to a marked decline in expenses.

This is a year-on-year jump from first-half net profit of $15.64 million in 2018.

However, in standalone financial statements, the Egypt-based entertainment and hospitality management company wrote that revenue dropped 15.2 percent year on year the same period, from $63.5 million to $53 million.

Its expenses plunged 99.3 percent in the first half of the year, posting $121,000 at the end of June, down from $18.73 million in 2018. Financial leasing expenses specifically dropped from $4.24 million to $2.88 million. 

The statements showed that financing expenses also saw a slight year-on-year decline to $4.1 million during the first half of 2019, down from $4.9 million.

Former Footballer Zidan Taps Into Real Estate With AGD Partnership

Former footballer Mohamed Zidan has tapped into the Egyptian real estate market by signing a contract with El-Attal Global Developer (AGD) for a residential project called ZEN in Cairo’s 5th Settlement district.

AGD chair Mohamed El-Iraqi said during a press conference that other collaborations with Zidan are expected to follow as part of the company’s expansion plans.

He added that AGD, a subsidiary of El-Attal Holding, aims to expand its investments to EGP 150 million ($9.2 million) by the end of this year and reach EGP 250 million ($15.4) sales in the next.

FRA Threatens to Suspend 41 Firms for Non-Compliance

The Financial Regulatory Authority (FRA) announced that it has issued warnings to 41 firms with suspension for changing their headquarters without informing the authority, but none of them responded.

In a statement to the stock exchange, the FRA added that it also warned these firms for not reporting their financial statements or paying the authority's required fees.

The firms, all of which have been named by the FRA, have a 15-day grace period starting yesterday in which to comply with the regulations before their licenses are revoked.

Egypt News

Govt to Issue Mineral Wealth Law Executive Regulations Next Month: Report

The government will finish drafting the executive regulations of the mineral wealth law by the beginning of November, according to Al-Masry Al-Youm. 

Almost 80 percent of the provisions have been drawn up, unnamed sources at the petroleum ministry told the outlet. 

The new regulations are flexible and remove some of the complications that may hinder potential investments in the sector, the sources added. 

Business tycoon Naguib Sawiris previously announced his plans to make new investments in gold and copper mining in Egypt, once the provisions of the law, intended to facilitate investments in the field, were available.

The law aims to promote investment by easing some of the existing restrictions on mining in the country.

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PM Madbouly Meets US Foreign Affairs Rep to Discuss Egypt's Economic Progress

Prime Minister Mostafa Madbouly met with senior member of the US House Foreign Affairs Committee Michael McCaul during a visit to Washington, DC, to participate in the annual World Bank Group and International Monetary Fund (IMF) meetings.

According to a statement released by the cabinet, Madbouly and McCaul reviewed Egypt's economic developments over the last few years.

It added that the cabinet has worked to provide social protection to the groups most in need through cash and commodity transfers and social housing, among other programs. 

McCaul, praised Egypt's economic successes, the statement affirmed, stressing that Egypt will remain an indispensable partner to the US.

France Makes Lowest Offer at Egypt Wheat Purchase Tender

French firm Glencore presented the lowest offer at an Egyptian state wheat purchase tender on Wednesday, making an offer of $210.86 per ton for 60,000 tons, Reuters reported, citing traders.

State grain buyer the General Authority for Supply Commodities (GASC) launched an international tender to purchase an unspecified quantity of wheat for shipment on November 21-30.

The authority bought 295,000 tons of Ukrainian and Russian wheat at its previous purchase tender earlier this month. Russian and Ukrainian firms also took part in Wednesday’s tender.

Egypt's wheat production in the 2017/2018 fiscal year edged up 1.6 percent to 8.6 million tons, the country’s official statistics agency previously announced, attributing this to an increase in the area of wheat farms.

Egypt, France Carry Out Joint Naval Exercises: Military

Egyptian and French naval forces commenced joint military drills off the Egyptian Mediterranean coast on Wednesday, according to an Egyptian Armed Forces statement.

The French multi-mission frigate Auvergne and Egyptian multi-purpose frigate Tahya Misr took part in the military training exercises, the statement added.

The training exercises involved fast hostile launches, anti-submarine drills, transport training and aircraft landings on ships. The drills are an effort to to boost cooperation between the two countries' armed forces and "support naval security and stability efforts in the region," the military said.

In recent years, Egypt has conducted a series of military exercises with other countries including the United States, Russia, Saudi Arabia and the United Arab Emirates, all with the intent of strengthening military-to-military relations.

Science and Technology

Libra Co-Creator Defends Cryptocurrency as Corporations Withdraw

David Marcus, the co-creator of Facebook's Libra, defended the global cryptocurrency after prominent companies backtracked on investing millions in the project.

His comments come after Visa, Mastercard, Stripe, eBay, Mercado Pago and Booking Holdings, who each would have invested $10 million, abandoned the digital coin. 

"It wasn't a tough week," said Marcus, despite the withdrawals. 

A non-profit association will run the currency (not Facebook), with transactions operated through the Calibra digital wallet, which Marcus heads. 

He added that he understands the concerns companies whose shareholders are critical about the currency’s operations, which use blockchain to global money transfers, asserting that the currency will be safer than other prominent cryptocurrencies like Bitcoin. 

Despite Facebook's confidence, however, governments are also concerned about Libra. 

Facebook CEO Mark Zuckerberg is set to appear before congress next week to answer questions about Libra, which is set to launch in the first half of 2020.

"It's kind of odd that all of this is happening at the stage of this project because it’s a project. It’s an idea. It’s a whitepaper. Nothing is operating yet," Marcus said about the growing concern from different quarters, including the US government. 

World

Moody's Warns Chance of Global Recession in Next 12-18 Months 'Uncomfortably High'

Moody's said there is an "uncomfortably high" chance that a recession could hit the global economy in the coming year or so, its chief economist Mark Zandi warned. 

"I think risks are awfully high that if something doesn't stick to script then we do have a recession," CNBC reports Zandi as saying. 

He added that even if a recession doesn’t come in the next 12-18 months, the global economy will be weaker nonetheless.

The economist said that to avoid a deceleration in economic activity, actors need to "stick to the script," referring specifically to a non-escalation of the US-China tariff war, a solution to Brexit and global central banks maintaining their monetary stimulus. 

Moody's warning comes one day after the International Monetary Fund (IMF) downgraded its outlook for global growth in its latest World Economic Outlook report, projecting the world economy to only grow by 3 percent in 2019 and 3.4 percent next year. 

The IMF's forecasts are lower than its July projections of 3.2 percent and 3.5 percent. 

The fund pointed fingers at rising trade restrictions and growing geopolitical conflicts. 

"Monetary policy cannot be the only game in town and should be coupled with fiscal support where fiscal space is available and where policy is not already too expansionary," the IMF wrote.

Huwaei Revenues Jumped 24% in 9M 2019 Despite US Ban

Huawei’s revenue increased 24 percent in the first nine months of 2019, despite US bans aimed at hampering the company's success.

The world's biggest telecoms manufacturer and second largest smartphone manufacturer reported revenue of $86.1 billion between January and September.

The company said in a statement that it shipped over 185 million smartphones in the first three quarters, marking a 26 percent year on year increase.

Although the trade conflict between the Trump administration and the Chinese tech giant drags on, a new report confirmed that Huawei is still making profits from smartphones sales, contrary to analysts' expectations.

Trump Has 'No Issue' With Russia Helping Syria Repel Turkish Offensive

US President Donald Trump said he had no issue with Russia helping Syria repel Turkish offensive against Kurdish forces in the country's northeast, as he dispatched aides to convince Ankara to end the assault. 

Trump told reporters during a press conference with Italian President Sergio Mattarella in the Oval Office Russian-supported Syria and Turkey may need to "fight it out," adding that the Kurds are "not angels," according to Reuters. 

Turkey launched a military operation against Kurdish forces last week -- a move that has garnered widespread international criticism.  

The US president also rebuked those criticizing his decision to pull American troops from the area ahead of the Turkish offensive, describing it as "strategically brilliant." 

Critics have argued that the US abandoned the Kurdish forces that previously helped it combat Islamic State militants in the region. 

According to the Syrian Observatory for Human Rights, both Syrian and Russian forces have proceeded to the strategic border city of Kobani, signaling a wider conflict with Turkey.

Trump's statements come few hours after he sent top officials to Turkey to convince Ankara to end the offensive. 

US Vice President Mike Pence and Secretary of State Mike Pompeo hope to meet today with Turkish President Recep Tayyip Erdogan, despite earlier reports to the contrary. 

Erdogan affirmed there would no ceasefire, warning that he would cancel a visit to the US in November over the "very big disrespect" shown by US officials. 

Washington announced sanctions on Turkey in response to its attack, including a steel tariff hike and the suspension of trade talks. 

The US has charged Turkey’s mainly state-owned Halkbank of being involved in a plan to sidestep US sanctions on Iran. The bank denies the charges, and Erdogan slammed Washington for taking an "unlawful, ugly step" against the bank.

GM, Union Leaders Draw Up Labor Deal to End 1 Month Strike

General Motors (GM) and union leaders have drawn up a tentative labor arrangement, after one month of striking by members of United Auto Workers' (UAW), CNBC reported. 

The 48,000 union members employed by GM are set to receive raises and bonuses as part of the agreement

The automobile manufacturer’s shares rose by around 2.5 percent following UAW's announcement. 

"The number one priority of the national negotiation team has been to secure a strong and fair contract that our members deserve," UAW Vice President Terry Dittes, also the director of the UAW GM department, said. 

GM is set to invest around $7-7.7 billion in its manufacturing operations, creating thousands of hourly union jobs in the coming years. The firm also previously agrees to maintain workers' health insurance.

Union leaders are set to meet on Thursday in Detroit to review the proposed arrangement, with GM saying that the details of the deal "will be provided at the appropriate time."

The strike, which began on September 16, debilitated GM’s North American operations. Bank of America analysts estimated the losses at more than $2 billion, while shares plunged by the double digits earlier in October.

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European Council President Donald Tusk (courtesy of Tusk's Facebook page)

Anticipated Final Brexit Deal Not Reached

A final Brexit deal was not announced on Wednesday as some had anticipated, an unnamed UK government source told BBC political editor Laura Kuenssberg. 

"Government source has just told me there will not be a deal tonight [Wednesday]," Kuenssberg said on Twitter.

She added that it is "simply not clear if that means there’s no way forward yet or just a case of extending talks into tomorrow cos they need a bit more time."

The political editor of The Sun newspaper echoed these sentiments, saying that a government source confirmed to him that no deal will revealed, as there are unresolved issues between the European Union and the Northern Irish Democratic Unionist Party (DUP).

Tom Newton-Dunn tweeted "Govt source says no Brexit deal tonight, because of unresolved issues with both the DUP and EU: 'Everyone will be working into the night but there won’t be a deal this evening'."

European Council President Donald Tusk had told Polish media earlier yesterday that a Brexit agreement could be reached by Thursday morning.

"The main framework of the agreement is ready," he added, saying, "we could accept this agreement tomorrow [Thursday] and avoid the chaos and misfortune that were associated with the chaotic exit of the UK."

Tusk noted, however, that though he was certain on Tuesday that a deal had been reached, the situation changed on Wednesday, as "some doubts appeared from the British side" and that the situation in the British Parliament is "complicated."

Oil Prices Shore Up Amid Optimism Around US-China Trade Deal

Oil prices saw a bullish performance yesterday, amid optimism that the United States and China may reach a trade deal soon, winding down the protracted dispute between the two. 

However, US President Donald Trump said it is unlikely that a trade deal will be signed until he meets Chinese President Xi Jinping in November at the Asia-Pacific Economic Cooperation summit in Chile. 

Meanwhile, futures rose by as much as 1.6 percent on Wednesday in New York, and West Texas Intermediate (WTI) for November delivery gained 72 cents to $53.53 a barrel at 11:32 a.m. on the New York Mercantile Exchange.

Brent crude's settlement for December was up 66 cents to $59.40 a barrel on the London-based ICE Futures Europe Exchange, while the global benchmark traded at a premium of $5.80 to WTI for the same month.

"The encouraging headlines surrounding the U.S.-China trade war and Brexit, seem more optimistic," said Pavel Molchanov, a Houston-based analyst at Raymond James & Associates Inc. 

"In that sense, it’s perfectly reasonable for oil prices to show a bit of a bounce," he added. 

The oil market is waiting this week for the American Petroleum Institute's update on the market and the Energy Information Administration report on domestic stockpiles that will be published next Wednesday and Thursday, respectively.

US Executed Cyber Strike Against Iran Following Strike on Saudi Oil Facilities

The United States executed a secret cyber strike against Iran following the September 14 attacks on Saudi Arabian oil facilities -- which Washington and Riyadh pinned on Tehran -- two US officials told Reuters.

The sources added that the operation targeted Iran’s ability to spread "propaganda," with one adding that it affected physical hardware, without providing further details.

However, Iran's Minister of Information and Communications Technology Mohammad Javad Azari-Jahromi said, "they must have dreamt it," Fars News Agency reported, while the Pentagon declined to comment on the alleged cyber strike.

While the effects of the cyber attack have not been made immediately clear, commentators consider it to be less provocative than an armed response.

"You can do damage without killing people or blowing things up; it adds an option to the toolkit that we didn’t have before and our willingness to use it is important," James Lewis, a cyber expert with the Washington-based Center for Strategic and International Studies, told Reuters.

The US, Saudi Arabia, the United Kingdom, France and Germany have all publicly blamed the September 14 attacks on Iran, which has denied any involvement, though the Iran-aligned Houthi militant group in Yemen did claim responsibility.

The Pentagon responded to the attack by sending thousands of additional troops and equipment to Saudi Arabia to help reinforce its defenses.

Tensions have escalated between the US and Iran since Trump pulled out of the 2015 nuclear deal with Iran in May last year.

Arab Markets
Egypt EGX30 14,209.23 +1.06%
KSA TASI 7,518.37 +0.49%
UAE ABU DHABI ADX 5,086.81 +0.10%
UAE DUBAI DFM 2,825.69 +0.06%
World Markets
US Dow Jones IA 27,001.98 -0.08%
NASDAQ-100 8,124.18 -0.30%
S&P 500 2,989.69 -0.20%
UK FTSE 100 7,167.95 -0.61%
Germany DAX 12,670.11 +0.32%
France CAC 40 5,696.90 -0.09%
Japan Nikkei 225 22,472.92 +1.20%
China HANG SENG INDEX 26,664.28 +0.61%
Currencies
US Dollar 16.18 16.28
Euro 17.86 17.97
Sterling 20.69 20.81
Saudi Riyal 4.31 4.34
UAE Dirham 4.40 4.43
Kuwaiti Dinar 53.24 53.62
Swiss Franc 16.23 16.33
Commodities
Oil Brent USD/bbl. 59.13 +0.66%
Wheat USD/bu. Jul 2019 513.25 +1.23%
Gold USD/t oz. 1,490.11 0.00%
Gold Egypt LE/ oz. 1,489.58 +0.81%
Silver Egypt LE/ oz. 17.40 +0.52%

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