Most of the market expectations go to the need for the MPC of the central bank to raise interest rates within 100-200 bps during its next meeting

Newsletter

22 Sep 2022

Today is the interest rate day. Most of the market expectations go to the need for the monetary policy committee of the central bank to raise interest rates within 100-200 bps during its next meeting on September 22, but we tend to believe that the central bank will go to fixing interest rates. This is for the following reasons; Stability in high rates of inflation, especially since most of the shock caused by external data has already been reflected in the domestic inflation rate. Moreover, the nature of Egypt’s economy, the shape of its trade balance and budget deficit, and the rate of borrowing to GDP (at the level of individuals or institutions, not the government) make the effect of raising interest rates in calming inflation very small in Egypt. External variables with regard to oil prices and the food price index may indicate that the worst in terms of “imported inflation” has passed, which may be a positive indicator of the inflation pattern during the coming period. (Zilla Capital)

Limited capital account impact, the foreign investor remains conservative with regard to entering emerging markets in general.
The exchange rate in Egypt occupies the largest part of the investment decision, as it does not wait for a movement of interest upwards as much as it waits for clarity regarding the exchange rate. Here, it should be noted that raising the interest will not attract foreign investors to buy the Egyptian pound and will not support the cash reserve, because the return on the Eurobonds of different terms is currently at 15%, which will represent an obstacle to investing in treasury bonds in the Egyptian pound with a return close to 12%. (Zilla Capital)
Andersen values Alex Medical some 8% higher than Tawasol-LimeVest’s acquisition bid.
Alexandria Medical Services is worth 52.80 EGP per share, according to the fair value study the healthcare provider commissioned from financial advisors Andersen. The figure is some 7.8% higher than the ongoing mandatory tender offer (MTO) from the Tawasol Holdings-LimeVest consortium at 49.00 EGP, and 8.6% more than Yas Holding’s competing bid of 48.62 EGP per share. Andersen values the entire company at 822.2 million EGP. (Hapi Journal)
CIB’s planned capital increase gets the all clear.
CIB will go ahead with its plans to issue 10 billion EGP in new shares to shareholders, raising its capital to 29.82 billion EGP from 19.85 billion EGP currently. The bank will issue 1 bn shares at 10 EGP apiece to be covered by the general reserves for the period ended 31 December 2021, after the bourse greenlit the move. (EGX)
EGX announces execution of 511.6 million EGP MTO on Domty’s shares.
The Egyptian Exchange (EGX) on September 21st announced the execution of an 511.59 million EGP mandatory tender offer (MTO) on the shares of Arabian Food Industries Company (Domty) (DOMT). The transaction was executed on 93.016 million issued shares. On August 16th, the Financial Regulatory Authority (FRA) approved the submitted offer by Expedition Investments to acquire up to 34% stake in Domty at a price of 5 EGP per share. (EGX)
Taiwan’s Rechi, Elaraby Group to build 33 million USD factory in Beni Suef.
Taiwan-based Rechi Group will set up a factory for the production of air conditioning (AC) compressors in Egypt, in partnership with Elaraby Group, with 33 million USD in investments. The new project will be built on an area of 60,000 square meters (sqm) at the industrial zone of Kom Abu Rady in Beni Suef, and is planned to have a production capacity of six million compressors per annum. The factory is set to be operational in 2024, with an initial production capacity of two million units that reach six million units within five years. (Arab Finance)
Direct Japanese investments in Egypt rose by 52% in 2021.
The Egyptian government is aiming to attract further Japanese investments in the county to double this figure. The government is also considering the issuance of green Samurai bonds over the coming period after its first successful offering of 60 billion JPY bonds in the Japanese market. Also, the government is looking forward to seeing Japanese investments double in Egypt in line with the bilateral cooperation between the two countries in various projects, including the Japanese university and schools, Cairo Metro, the comprehensive health insurance, oil and gas projects, and other programs backed by Japan International Cooperation Agency (JICA) in Egypt. These programs cover renewable energy generation programs and Abu Al-Rish Japanese Hospital. (Arab Finance)
Mastercard expands Advisors Client Services Hub in Egypt.
Mastercard has expanded its Advisors Client Services Hub to support regional and global markets from Egypt. This move will help reinforce Egypt’s position as a regional financial hub that contributes to luring strategic investments into the country. This will also support Mastercard’s Advisors Client Services Hub team in Egypt to lead innovative financial and payment solutions, such as Buy-Now-Pay-Later (BNPL), open banking, cybersecurity, and data monetization. (Hapi journal)
Egypt records 100.1 billion EGP primary surplus in FY 2021/2022.
Egypt has recorded a primary surplus of 100.1 billion EGP in fiscal year (FY) 2021/2022, representing 1.3% of the gross domestic product (GDP). Moreover, the overall deficit dropped to 6.1% of the GDP as per the FY 2021/2022 indicators, compared to a deficit of 6.8% of the GDP in the FY before. As per FY 2021/2022 budget, all the required allocations for different sectors, particularly healthcare and education, along with Decent Life initiative, have been fulfilled, as well as the settlement of monthly dues to insurance and pensions funds. (Arab Finance)