Turkey is facing further currency volatility, including a trading range of 10% for the lira
For our top talks abroad, it is worthy to highlight that last week was about central bank meetings for those interested in the global economy and markets. This week is about Omicron and data, with the US being in the spotlight with: President Biden’s speech on Covid; GDP and consumer confidence; and, most notably, the PCE report. A currency crisis is bad enough for Turkey. A full-blown economic crisis would be much worse. The country moved a little closer to one on Friday, but it can still avoid the worst-case scenario if it acts quickly to contain the spreading financial instability and maintain its considerable economic potential. The rest of the emerging world has a stake in this, too. Friday was a particularly difficult day for the Turkish financial system. Further currency volatility, including a trading range of 10% for the lira, was accompanied by an additional daily depreciation of more than 4%. The stock market lost 8% in a hectic session that triggered two circuit breakers.
- The Egyptian Finance Minister, Mohamed Maait. Stated that the first quarter of the fiscal year did not witness a primary surplus. The first deficit in the first quarter of 2021-2022 amounted to about 7.23 billion EGP,
representing 0.1% of GDP, compared to a primary surplus of about 200 million EGP in the first quarter of 2020-2021. The primary surplus means that the state's revenues cover its expenses without calculating the interest on the debt, and it was expected that Egypt would achieve such a surplus during the mentioned quarter, similar to the last quarters that preceded it. The fiscal year in Egypt begins on the first of July until the end of June. (Bloomberg Asharq News)
- In a similar context, Russia’s Federal Service for the Oversight of Consumer Protection and Welfare has stopped the supply of various types of vegetables and fruits to the Russian capital’s market from producers in several countries including Egypt, China, and Iran.
The authority’s decision stated that import has been suspended in order to prevent large-scale infectious diseases among the population. The ban includes a number of producers of oranges, tangerines, grapes, peppers, lemons and pomegranates in Turkey. The ban list also includes producers from Egypt, Iran and China, meaning that the ban did not affect the country as a whole, but rather was imposed on specific producers. (Arab Finance)
- Moving to our investments talks, Telecom Egypt (ETEL)has signed a cooperation agreement with the Egyptian Hotel Association to boost the efficiency of the telecommunication infrastructure at hotels in Egypt.
Under the agreement, the telecom company will provide integrated services and high-speed internet connection at the hotels in Egypt to encourage tourism. This agreement will be implemented in four stages, starting from Cairo, Giza, and Sharm El-Sheikh, passing the United Nations Climate Change Conference (COP27) to be hosted by the country in 2022, to the rest of the governorates. (Al-Mal)
- Saudi Arabia’s United Electronics Company (eXtra) announced establishing a new subsidiary in Egypt.
The new fully-owned subsidiary will be its first expansion step outside the GCC region and will inject 1 billion EGP (63.6 million USD) into the Egyptian market through initial direct investments. The region’s largest consumer electronics company is targeting a 10% market share in Egypt over the next 10 years. eXtra will fund the initial investment through a mixture of self-financing and borrowing. The company generally targets a 1:1 debt-to-equity ratio in its investments. The company currently has 42 stores across Saudi, a store in Bahrain, and another in Oman, and will also be adding four stores in Saudi Arabia and Oman. It’s also investing in a new distribution center for its e-commerce business. (Arab Finance)
- Turing to our EGX and companies talks, Heliopolis Housing and Development (HHD) (HELI) is close to teaming up with two companies operating in the telecom and gas sectors to establish the infrastructure of New Heliopolis City.
The real estate developer is currently choosing between three telecom companies and two gas companies to implement the aforementioned works, with Telecom Egypt (ETEL) and Cairo Gas among the candidates. HHD has already completed the development of the wastewater and sewage treatment plant and has started to run tests at the power plant within the city, paving the way to commence its actual operation soon. It is worth noting that the new power plant has been set up with around 515 million EGP in investment. On the other hand, HHD is likely to award the partnership tender of Heliopark project to one of the three bidding companies by early January 2022. These companies are Hassan Allam Properties, Majid Al Futtaim Properties, and Mountain View. (Al-Mal)
- Integrated Diagnostics Holdings (IDH) (IDHC) has signed a sale and purchase agreement to acquire a 50% stake in Base Consultancy FZ LLC UAE,
the holding company of Islamabad Diagnostic Centre (Private) Limited (IDC) from Evercare Group, managed by TPG and backed by the Rise Fund. The acquisition transaction is set to be closed in the first half (H1) of 2022 at a value of 72.35 million USD. The deal is subject to the approvals of the Competition Commission of Pakistan (CCP). Once completed, IDC will be fully consolidated on IDH’s accounts. IDH will fund the transaction through a mix of existing cash and committed debt facilities, which includes the 45 million USD facility secured in May 2021 from the International Finance Corporation (IFC) and an additional 15 million USD syndicated facility from Mashreq Bank. (Arab Finance)
- The National Bank of Egypt (NBE) and Misr Life Insurance, one of the Misr Insurance Holding companies, announced launching the “Al-Ahly Life” investment fund under the management of Al-Ahly Financial Investment Management Company.
Launching the new fund falls in line with the bank’s efforts to activate financial inclusion and provide comprehensive insurance services to all segments of society, where the subscription is done through the NBE’s branches. (Arab Finance)
- Atlas for Investment and Food Industries (AIFI) has denied the news claiming it would invest EGP 44.1 million in new projects.
It is worth noting that the company incurred a consolidated net loss after tax attributable to the parent company of 3.052 million EGP in the nine-month period ended September 30th, 2021. Atlas, established in 1997 and listed in 2012, has four subsidiaries focusing on real estate, farm development, and agricultural processing. (EGX)
- Misr Cement Group has signed joint cooperation agreements with four public universities, namely Minya University, Luxor University, South Valley University, and Assiut University.
The agreements were particularly signed with the faculties of science and engineering to support knowledge exchange and help young researchers to connect their academic life with the experiences of the cement industry’s personnel. The recently signed agreements tackle all the fields related to the cement industry, including geology studies, mining plans along chemical and quality analysis, to all complementing processes, mechanical and electrical works, cement tests, as well as environmental science. (Arab Finance)
- Eastern Company (EAST) has decided to suspend production at its Muharram Bek Cigarette Factory in the meantime until future needs are calculated.
This decision was made based on the availability of the finished-manufactured product due to the improvement of the work systems and higher production efficiency of machines over the past period, resulting in achieving surpluses in production. As a result, the inventory has seen growth beyond the required level as per the company’s policy that ranged from seven to 15 days. It is worth noting that the production volume of the Muharram Bek factory accounts for 3% to 5% of Eastern Company’s total production volume. (Bloomberg Asharq News)
- And finally, for our startups latest talks, Trella, the fastest growing digital freight marketplace in MENAP, plans to expand its footprints to include multiple new market entries in the GCC, plus M&A during the first quarter (Q1) of 2022.
The company is working on cementing its position as regional market leader, and a direct contributor to the region’s economic growth and prosperity. The MENAP Road Freight market is a significant one - worth 50 billion USD. It is worth mentioning that the company announced its expansion into the UAE in October 2021, extending its ability to seamlessly support trade and trucking across the GCC, especially between the UAE and Saudi Arabia, and help regional MENA economies grow via a more efficient transportation of goods. (Arab Finance)
- Flat6Labs, in collaboration with ESLSCA University, has launched a new innovation and entrepreneurship incubation program to empower undergrad students to develop viable and sustainable businesses upon graduation.
The program is set to provide capacity building for the business undergrads and equip them with primary knowledge and tools, enabling them to develop competitive products and companies. (Arab Finance)
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