The rise in global oil prices warns of a new increase in gasoline prices in Egypt during the next few days

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30 Jan 2022

For our top talks today, the rise in global oil prices warns of a new increase in gasoline prices in Egypt during the next few days, coinciding with the upcoming meeting of the automatic pricing committee for petroleum products, which is held on a quarterly basis. In its decision, the pricing committee relies on the average prices of Brent crude in the global market, and the exchange rate of the dollar against the pound for the period from October to December 2021, taking into account the inflation rate in the transport sector. Noting that the maximum price increase that the committee is likely to take will not exceed 10% of the current prices. The average price of Brent crude increased in the fourth quarter of last year by about 9% to 79.65 USD per barrel, compared to 73.26 USD per barrel in the third quarter. While the exchange rate stabilized at about 15.75 pounds to the dollar. (Zilla Capital)

We believe that If the oil continues at this level for a longer period, we will certainly see another rise in the price of gasoline by at least 25 piasters per liter. However, the most important focus of anticipation is the possibility of raising diesel prices, as this has a direct and significant impact on the inflation index.
Analysts polled by "Al-Sharq" earlier this month expected inflation in Egypt during 2022 to rise between 7 and 7.9%, under the weight of the rise in global commodity prices, including oil, and the gradual lifting of subsidies on goods and services locally. (Zilla Capital)
Egypt’s parliament has approved five important economic laws, including the General Unified Planning Law which aims to engage the private sector in economic development projects. Topping the list are two laws on the General Unified Planning and the General Unified Finance.
The General Unified Planning Law aims to streamline the process of preparing Egypt's economic policies and engage the private sector in economic development projects. Minister of Planning and Economic Development Hala El-Saeed told MPs that the law states that a Higher Council for Planning and Sustainable Development will be set up to help create coordination among all state authorities, the private sector, and civil society organizations when it comes to forging economic planning policies, and that the Council will make sure that no development projects are implemented without making sure first that they are economically feasible. (Al-Mal)
The Egyptian government is planning to sell stakes in state-owned companies every month or two, Planning Minister Hala El Said told Reuters. “We're trying to select the right companies that can attract good institutional and good private sector [investors], and at the same time help in deepening the capital market in Egypt,” the minister said.
“We're almost targeting a company every month, or every two months,” El Said added. The minister did not give further details regarding the companies the government is considering offering to investors. (Arab Finance)
The International Monetary Fund (IMF) upgraded Egypt’s real GDP growth by 0.4% in 2022 to 5.6%, compared to the fund’s October 2021 projections, according to Petya Koeva Brooks, the IMF’s deputy director of the research department.
Brooks noted that Egypt managed to do well amid the pandemic compared to oil-importer countries, adding that the impact of COVID-19 on the Egyptian economy has been well managed so far. She also pointed out that there is stronger data coming in terms of Egypt’s economic performance that drove the revising up of its real GDP growth without giving further details. She further noted that the Omicron variant and its impact on the economy may bring uncertainty, especially for Egypt’s tourism sector. (IMF)
It is worth noting that the World Bank also rose its projection for Egypt’s real GDP growth in 2022, according to its global economic prospects report that was issued in January.
Accordingly, the World Bank upgraded its forecasts for Egypt’s real GDP growth to 5.5% in FY 2021/2022 while maintaining the country’s outlook for FY 2022/2023 at the same rate of 5.5%. (World Bank)
Countries in the Middle East and North Africa may need to raise interest rates to face the wave of inflation, according to Jihad Azour, Director of the Middle East and Central Asia Department at the IMF.
In addition to Corona, Azour believes that there are other negative factors that play a key role this year for the region, the first of which is inflation, especially with regard to the rise in food prices. As well as the process of change in global interest policy, which will have an impact on emerging countries that need the flow of funds. In addition to the decline in the Chinese economy "due to the great interdependence between it and the economies of the region." (Bloomberg)
And for our top stories abroad, it is expected that the rise of the US dollar will continue after the US Fed two days meeting, noting that last Wednesday, its index recorded a strong rise against other currencies, coinciding with several developments that affected its performance, especially investors' anticipation of the US Federal Reserve's decision related to the pace of monetary tightening.
Markets are awaiting the pace of raising interest rates and tightening monetary policy, amid expectations that the Fed will keep interest rates unchanged, but the focus will be on the interest statement and the press conference of US Federal Reserve Governor Jerome Powell amid expectations that it will be hinted at raising interest rates soon, specifically at the next March meeting, by a quarter of a basis point, in addition to three more for 2022, coinciding with the rising inflation, which has become a great burden on citizens, and therefore, the upcoming Fed decisions will have a very strong impact on the dollar’s movements. (Bloomberg)
On the other hand, wheat prices jumped to their highest level in two months after it spar ked strained relations between the United States and Russia over Ukraine Concerns about future shipments of grain from Eastern Europe.
The United States and its allies say, Russia It may prepare for military action against Ukraine, despite Moscow's denials of its intention to invade. Russia and Ukraine together account for nearly a third of global wheat and barley shipment. The chance of not exporting wheat from both countries in the event of a war will raise prices,” Jack Scoville, vice president of Price Futures Group in Chicago. (Bloomberg)
In addition, the Food and Agriculture Agency (FAW) of the United Nations has warned of the continued rise in food prices this year, after the FAO index, which tracks its prices worldwide, jumped to about 134 points, recording the highest level in more than 10 years, when it reached 132 points in 2011.
The FAO believes that the expected rise in food prices during the current year will greatly harm developing and poor countries that depend on importing most of the main foodstuffs such as wheat and rice, especially since prices have been rising during the four months leading up to last December due to the poor grain harvest in many major producing countries. And the demand for it increased compared to the year of the epidemic. (Reuters)
Moving to our EGX and companies talks, Cairo Investment and Real Estate Development (CIRA) and Al-Ahly Capital Holding Company announced launching Al-Ahly CIRA Educational Services Company.
The venture (51% owned by CIRA, 49% by Al-Ahly Capital) launched the first private university project of its kind, Cairo Saxony University for Applied Sciences and Technologies, and will continue establishing new projects either by utilizing Al-Ahly Capital’s assets or acquiring new ones. The company’s target to launch the Cairo Saxony University and the New Damietta University by 2023 is still part of the plan, as the papers for Cairo Saxony University have already been presented in December 2021, while the papers for New Damietta University will be presented by February 2022. (Arab Finance)
GB Auto revealed that the CAPEX budget for 2022 is expected to be within the range of 550 million EGP and will be focused mainly on complete knock-down (CKD) lines to prepare for the government incentives program. The total passenger car market in Egypt witnessed strong growth during 2021, growing by 25.2% Year on Year (YoY) from 167,792 units in 2020 to 210,000 units in 2021.
GB Auto’s Management expects the passenger car market in Egypt to grow by 10-15% in 2022, bringing units sold to approximately 240,000 units. The company expects their passenger car sales to reach 55,000 units during 2022, bringing their market share up to 22.8%. The semi-conductor chip shortage is expected to continue throughout the first half of 2022 and start easing gradually over the second half. GB Auto have somehow overcome this shortage by contacting five brands from four different countries — Korea, China, Czech Republic, and Japan — to help them diversify their suppliers. (Daily News)
The board of directors of Arab Dairy Products Co. Arab Dairy’s (Panda) (ADPC) has approved raising the company’s issued capital to EGP 290 million from 160 million EGP, distributed over 290 million shares at a nominal value of 1 EGP per share.
Arab Dairy is an Egypt-based company engaged in the dairy industry. The company exports its products to Middle Eastern countries, such as Lebanon, Jordan, Libya, the United Arab Emirates, Saudi Arabia, Palestine, Bahrain, Oman, and Kuwait. (EGX)
Orascom Investment Holding (OIH) has completed the sale process of its shares in its subsidiary Trans World Associates (TWA) in Pakistan after fulfilling the precedent conditions. The sale's net proceeds recorded around 35 million USD (550 million EGP), according to a press release on Wednesday.
OIH is currently searching for various opportunities to invest the sale proceeds and raise its profits and the shareholders' value. It is noteworthy to mention that during the first nine months (9M) of 2021, the company incurred consolidated net losses of 46.07 million EGP, an increase of 157.5% year-on-year (YoY) from 17.89 million EGP, including minority shareholders' rights. (Mubasher)