Zilla Capital expects that the CBE is likely to leave interest rates on hold when it meets this Thursday
For our top talks today, Zilla Capital expects that the Central Bank of Egypt (CBE) is likely to leave interest rates on hold when it meets this Thursday despite forecasts for rising inflation at home and higher interest rates abroad. We expect the Monetary Policy Committee to maintain the benchmark rate at 8.25%, adding that the Egyptian pound carry trade won’t face immediate pressure from rising US rates, and that inflation is unlikely to rise above the central bank’s target range. Additionally, inflation will continue to rise in the coming months, with most forecasting the headline urban rate to average between 7-7.5% during the first six months of 2022 as rising oil and food prices filter through to the local economy. Also, it is expected that the central bank could consider raising rates later this year as global rates tick higher. (Zilla Capital)
- Moreover, the Arab Monetary Fund (AMF) will provide Egypt with 368 million USD loan to strengthen the country’s financial position and meet emergency needs amid challenges caused by COVID-19.
Currently, the fund is studying financing requests from other member countries, and is processing the requests through expedited procedures, through which the borrowing member countries can meet financing needs and enhance their financial positions to face various challenges. In August 2021, the AMF handed Egypt the second tranche of the Fund’s loan agreed in July 2020 as part of a structural adjustment facility in the public finance sector. The 282 million USD tranche of the 639 USD million loan is meant to avail resources to help Egypt implement economic and financial reforms and strengthen its resilience to various challenges amid the COVID-19 pandemic. (Mubasher)
- On a positive note, Alexandria Container and Cargo Handling Company (ALCN) reported a 14.80% year-on-year (YoY) growth in net profit after tax for the first half (H1) of fiscal year (FY) 2021/2022.
Net profit after tax reached 717.76 million EGP in H1 FY 2021/2022, up from 625.23 million EGP in the same period of FY 2020/2021. Meanwhile, the company generated a revenue of 1.119 billion EGP for the six-month period ended December 31st 2021, increasing by 2.04% from 1.096 billion EGP in H1 FY 2020/2021. It is worth noting that the company has achieved a net profit after tax of 573.11 million EGP during the period starting July 1st until November 30th, 2021, up from 465.136 million EGP in the first five months of FY 2021/2022. (EGX)
- Likewise, medical insurance is considered the winning horse in the Egyptian insurance market during the current period due to its high growth rates and high volume of premiums, followed by the supplementary car insurance branch and credit insurance, especially for medium, small and micro enterprises.
The pandemic of the emerging Corona Virus “Covid-19” contributed to increasing awareness of the importance of medical insurance in institutions and among individuals, which increased the growth of that insurance branch, in addition to the low interest rate and exemption of European cars from taxes, which increased car loans and vehicle sales in the market, and thus the high demand Supplemental car insurance. (Zilla Capital)
- And for investments talks, Ashraf El-Kady, Chairman of the Board of Directors of The United Bank, said that the volume of his financing for the benefit of the industrial and contracting sectors within the initiative of the Central Bank, with a return of 8%, amounted to 1.7 billion EGP.
He pointed out that the initiative of the Central Bank for Industry, Agriculture and Contracting at an interest rate of 8% is one of the important initiatives put forward by the bank to support the private sector, as the interest rate is very competitive compared to the market interest rate. (Al-Mal)
- Also, Medhat Khalil, Chairman of the Board of Directors of Raya Holding for Financial Investments, revealed that the "Taqa Aman" business plan aims to pump investments worth 300 million EGP within 3 years.
It is noteworthy that "Raya Holding" - which owns 76% of "Aman Holding" - announced last Wednesday the establishment of a new company under the name "TAQA Aman" in partnership with "TAQA Arabia" with 51% of "Aman Holding" and 49% of "TAQA Arabia. TAQA Aman” will pump 300 million EGP targeted in attracting human cadres, purchasing and launching electronic applications that serve the new company’s activities, which include in its priorities facilitating payments for “TAQA Arabia” customers, noting that the company will start work next June. (Al-Mal)
- And for our top stories abroad, the Fed left policy rates unchanged but hinted strongly that rate lift-off will commence in March. Importantly, with respect to balance sheet reduction, holdings will be allowed to run-off gradually (by adjusting the reinvestment amount) as opposed to outright sales.
Meanwhile, driven by inventory builds, GDP in Q4-2021 beat expectations, rising 6.9% q/q (annualized), sharply up on 2.3% in Q3 and bringing 2021 growth to 5.7%. Core PCE, the Fed’s preferred inflation measure, though in line with expectations, accelerated to 4.9% in January, the highest since 1983, while the headline rate edged up to 5.8% y/y from 5.7% the month before. Finally, the employment cost index, which is closely followed by the Fed, increased by a lower-than expected 1% in Q4 following a 1.3% rise in Q3. (Bloomberg)
- On the other hand, global equities were mixed, with the MSCI ACWI down 0.6% w/w but the S&P500 up 0.8% w/w on good earnings and investor dip-buying despite rate hike concerns and geopolitical tensions.
The MSCI EM index fell 3.7% on China regulatory concerns, while the MSCI GCC was little changed (-0.5%) as higher oil prices offset adverse global developments. Kuwait’s All-Share lost 0.5% w/w. Brent closed on Friday at 90 USD/bbl (+2.4% w/w; +15.7% ytd) for the first time since October 2014 on continued market tightness and heightened Russia-Ukraine geopolitical risk. Markets are increasingly setting their sights on 100 USD. (Economist)
- Moving to our EGX and companies talks, Fawry for Banking Technology and Electronic Payment (FWRY) announced that it has led the digital payment sector in Egypt through a series of successes over 2021.
The services provided by Fawry have become essential on a daily basis for both corporates and individuals. These services include e-payment solutions via Fawry Accept, which was launched in 2018, as well as online payment via Fawry points of sale (PoS), which was initially launched in 2015. Both solutions facilitate all the digital payment process approved by the Central Bank of Egypt (CBE). The volume of non-cash transactions through Fawry Accept jumped during the period from 2020 to 2021, with Fawry processing a sum of 6 billion EGP at the end of 2021. Fawry Accept also recorded an estimated surge of 232% in the value of transactions, as compared to 2020. (Arab Finance)
- Marseilia Almasreia Alkhalegeya for Holding Investment (MAAL) announced that its board of directors has approved to sign a memorandum of understanding (MoU) with a strategic partner in the field of medical investment.
Through this MoU, the company aims at making greater use of its owned assets. Moreover, the board has agreed on discussing the report submitted by the independent legal advisor regarding the disbursement through the managing directors at the nearest general meeting to be held. The board also approved the memorandum submitted regarding the investment opportunity of a 207-feddan land plot in El Dabaa area. (EGX)
- Obour Land for Food Industries (OLFI) posted a consolidated net profit attributable to the parent of 350.68 million EGP for the full-year ended December 31st 2021.
This marks an increase from the recorded net profit of 310.36 million EGP for the year ended December 31st 2020. Consolidated sales amounted to 3.006 billion EGP in 2021, up from 2.73 billion EGP in 2020. As for the company’s standalone financial statement, standalone net profit stood at 350.78 million EGP in 2021, up from a profit of 310.41 million EGP. (EGX)
- VC firm TLcom Capital plans to enter Egypt with its new fund, which hit a first close of 70 million USD.
The firm, whose portfolio companies are all based in Nigeria or Kenya, is looking to use the fund to branch out to other areas of the continent, with Egypt as one of its prime targets. The firm also plans to raise 150 million USD in the fund’s final close by November. The company will use the fund to add 20 early-stage startups to its portfolio, with individual investments ranging from 500,000 USD to 15 million USD. (TechCrunch)
- Abu Dhabi Islamic Bank Egypt (ADIB) announced that its board of directors has approved the proposal of raising issued and paid-up capital.
Under the proposal, the bank’s issued and paid-up capital is set to be raised to 4 billion EGP from 2 billion EGP. The capital increase amounts to 2 billion EGP distributed over 200 million shares at a nominal value of 0.10 EGP per share, with issuance expenses of EGP 0.25 per share. Moreover, the board approved the sale of the bank’s and its partners’ ownership of 50.88% in El Kahera El Watania Investment’s (KWIN) total capital. (EGX)
- And finally, El Ezz Dekheila Steel – Alexandria (EZDK) (IRAX) announced that the ownership transfer process of the 18% stake owned by businessman Ahmed Hamdy Abou Hashima in Egyptian Steel Group to EZDK has been completed.
The board of directors of EZDK previously approved the FV study conducted by the independent financial advisor (IFA) on the Egyptian Steel Group’s stock, in order to purchase Abou Hashima’s 18% stake in Egyptian Steel Group at a total value of 2.5 billion EGP. (EGX)
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