US August’s slightly disappointing inflation print should not alter expectations of a pause in rate hikes at this week’s Fed meeting
US August’s slightly disappointing inflation print should not alter expectations of a pause in rate hikes at this week’s Fed meeting. However, Fed officials may reiterate their existing ‘dot-plot’ projection of another hike before year-end and signal that rates will stay higher for longer in Inflation rises faster than expected in August. CPI inflation rose to 3.7% y/y in August from 3.2% in July, slightly above the 3.6% expected. On a monthly basis, inflation accelerated to 0.6%, the fastest increase since June 2022, mainly on an 11% m/m rise in gasoline prices. Core inflation eased to 4.3% y/y from 4.7%, matching forecasts, but quickened to an above-consensus 0.3% m/m, after consecutive 0.2% rises in the previous two months. (Financial Times) (Al Mal)
- The government plans to open a 1 billion USD flat steel production complex in cooperation with an unnamed international company.
The production will be exported and used for the local market. The two-phase steel production complex will have an annual production capacity of 1.8 mn tons and directly employ 2k people. The complex has already gotten the greenlight from the Suez Canal Economic Zone to operate as a special economic zone, though it’s not yet clear where it will be located. (Asharq Business)
- It’s worth noting that the proposed complex will make forms of flat steel that have not previously been manufactured domestically.
The aim is that the locally produced flat steel plates, coils, and slabs will replace imported components used to build bridges, trains, electric cars, electrical transformers, ships, energy infrastructure, and household appliances. Russia-based steel maker Novostal M is reportedly planning to spend 400-500 million USD to set up a factory in Egypt. (Asharq Business)
- In addition, the government is planning to issue six more pellet steel production licenses to major foreign investors or local-foreign consortiums in 2024.
Prior to the war in Ukraine, steel licenses were granted to local firms, but the government is now prioritizing foreign companies to attract FX into the country. Many steel producers are struggling amid soaring production costs, slowing demand, and raw material shortages prompted by both the slowdown in the economy and the FX crunch. (Asharq Business)
- SCZone’s revenues hit fresh record high in FY2022/23.
The Suez Canal Economic Zone (SCZONE) has recorded total revenues of 6.065 billion EGP for the first time in its history during the elapsed fiscal year (FY) 2022/2023, compared to 3.490 billion EGP during 2021/2022, with an annual growth rate of 78%. The authority also achieved a general surplus of 4.077 billion EGP in 2022/2023, up from 2.214 billion EGP in the FY before. Total assets amounted to 86.6 billion EGP last FY, compared to 33.9 billion EGP during FY 2021/2022. (Al Mal)
- It’s worth mentioning that the SCZone’s investment and promotional plan for FY 2022/2023 included contracts in industrial zones and ports worth 3.57 billion USD for 60 projects,
53 of which were in industrial zones worth 2.23 billion USD and 7 projects in affiliated seaports worth 1.34 billion USD. A total of 55 industrial projects received initial approval at a total investment cost of 1.7 billion USD during FY 2022/2023, while 68 companies were established in the region with an issued capital of 44 million USD. The authority also penned nine framework agreements with a total investment of 83 billion USD, targeting the production of about 15 million tons of green fuel annually. (Al Mal)
- NBE injects 2.8 billion EGP into vehicle replacement initiative as of end-2022.
The National Bank of Egypt (NBE), in cooperation with the Central Bank of Egypt (CBE), has pumped around 2.8 billion EGP for 11,138 clients as of December 2022 under the Presidential initiative for the replacement of obsolete vehicles. Earlier this year, Minister of Finance Mohamed Maait announced that Egypt’s public treasury afforded more than 650 million EGP as green incentives to replace 26,450 old cars with new natural gas-run ones. (AL Mal)
- Arab, Chinese companies could invest 600 million USD in wind plants.
Three unnamed firms hailing from the Arab world and China are looking to invest 600 million USD to build wind farms here. The firms are expected to submit official offers within weeks, in hopes of breaking ground on the projects in Q1-2024. The companies are interested in acquiring part of the Zafarana wind farm.
- The US will suspend at least USD 85 mn in military assistance to Egypt this year on human rights grounds.
The State Department has decided to withhold 85 million USD and will soon make a decision on whether to suspend another 235 million USD. Some 320 million USD of the 1.3 billion USD the US gives to Egypt in military aid each year is contingent on the country making improvements to its human rights situation. (Reuters)
- Abu Dhabi wealth fund ADQ’s acquisition of a 27% stake in state-owned Egyptian Ethylene and Derivatives Company (Ethydco) could mean that a mandatory tender offer (MTO) is triggered when Ethydco merges with EGX-listed Sidi Kerir Petrochemicals (Sidpec).
ADQ is buying into Ethydco. The Abu Dhabi wealth fund will pay 280 million USD for a 27% stake in Ethydco currently held by the state-owned National Investment Bank and GASCO, local media reported over the summer. Ethydco and Sidpec will merge. EGX-listed Sidpec’s board in July signed off on the all-share merger after approving a fair value study by financial advisor Baker Tilly. (Al Mal)
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