We strongly believe that the Monetary Policy Committee will keep interest rates unchanged when it meets today, 28 October 2021 and until the end of FY21/22
So, first, we strongly believe that the Monetary Policy Committee (MPC) will keep interest rates unchanged when it meets today, 28 October 2021 and until the end of FY21/22. As uncertainties remain high regarding the global epidemic situation and the commodity prices surge, the CBE will closely monitor both the quarterly GDP growth and inflation developments to take the appropriate actions when needed. GDP growth rate rallied to 7.7% in Q4 FY 2020/2021 (mostly due to the favorable base effect), up from 2.9% in Q3 FY 2020/2021, recent preliminary figures show. We believe the favorable effect of COVID-19 shock will fade out as time goes on, leading to a gradual normalization of growth rates throughout FY 2021/2022, averaging at 5.5%. Risks to the growth prospects include new outbreaks of COVID-19, especially as Egypt lags behind many emerging economies and regional peers in vaccination rollouts. Therefore, we believe the CBE will not prefer to impede the ongoing recovery by a “too early” rate hike. (Zilla Capital)
- Second, after a 6-year hiatus, the first EgyptAir flights between Sharm El-Sheikh and Luxor were launched.
The price of a flat ticket, round trip, including taxes, is 1800 EGP which will continue to operate once a week, subject to increase according to supply and demand. It is worth mentioning that this is the first time that this line has been operated since December 2015. This move’s aim is to provide an integrated tourism product by integrating the beach and leisure tourism product with the cultural tourism product so that the tourist can visit more than one tourist destination while in Egypt, thus enriching his tourism experience by linking the Nile Valley cities with the coastal tourist cities via through the development of domestic airlines linking all tourist province. (AL-Mal)
- Equally important, official sources in the Agricultural Export Council revealed that the council succeeded in increasing exports during the last season by about 200 million USD, by opening 4 new markets represented in Japan, Brazil, Argentina and New Zealand.
Agricultural crops exports increased by about 200 million USD to record 2.4 billion USD during the last season 2020/2021, compared to 2.2 billion USD during the previous season 2019/2020. The export season for agricultural crops begins in September and continues until the end of August of the following year. It is worth mentioning that the Arab countries acquired the lion’s share of agricultural exports in the season that ended last August, to record 842 million USD, followed by European countries outside the union with 592 million USD, then the European Union countries with 584 million USD. (AL-Mal)
- Moreover, the Ministry of Electricity and Energy revealed that Egypt's total exports of electric energy to the State of Libya amounted to about 772 gigawatts per hour, during the period from January 2020 to the end of February 2021.
It is noteworthy that Egypt's electrical network has been linked to its Libyan counterpart since the beginning of 2006, with a capacity of about 200 megawatts, and it seeks to double the line even more during the coming period. It is noteworthy that the Libyan market needs great energy during the coming period, especially with the reconstruction plan due to be launched soon, with Egyptian participation, through entities, companies and employment. (Al-Mal)
- Turning to one of the top talks abroad, Russia is looking to make the Arctic route a major shipping corridor and a competitor to trade routes between Asia and Europe, especially the Suez Canal.
The administration led by Vladimir Putin has attracted huge international investments to develop marine infrastructure such as ports, icebreakers and refueling facilities. A number of international reports confirmed that there is a significant growth in shipments on Russia’s Arctic route, as figures issued by the Russian Federal Agency for Maritime and River Transport showed that freight volumes along the Northern Sea Route amounted to 24.22 million tons in the period from January to September 2021, an increase 3.5% over the same period last year. Russian reports added that by the end of 2021, the volume of cargo will reach 35 million tons, compared to 32.97 million tons in 2020, as part of an effort to implement President Putin’s request to target 80 million tons by 2024. (Al-Mal)
- Here, it is worthy to focus on the impact of the Northern Corridor on the transit trade movement in the Suez Canal.
We must stand in front of several main points, the most important of which is that the transit movement in the North Pole is compared to the size of the transit through the Canal Suez in terms of tonnage and numbers, as well as transit times, as the Suez Canal operates 365 days a year, compared to the North Pole, which operates a specific period of the year. The regular shipping lines that cross to and from the Suez Canal mainly operate in the Suez Canal to transport its trade from South Asia to Europe, noting that these lines will not sacrifice safe passage to cross the northern passage - high transit costs - referring to the volume of services provided by the Suez Canal to ships. Compared to the expensive services for ships transiting the North Pole, where the costs of snow breakers are prohibitive, while the Suez Canal secures transit for ships through an accompanying tugboat and its cost is on the shipping agency. The Suez Canal must study the advantages of competing corridors so that the canal raises its competitiveness by taking advantage of its marketing tools when the upcoming competition intensifies. (Zilla Capital)
- Moving to our top EGX & companies talks, EFG Hermes announced today the successful completion of the 795 million USD public offering of Fertiglobe on the Abu Dhabi Securities Exchange, one of the largest the market has ever seen, and the first of its kind for a company operating according to the free zone system in the UAE.
Fertiglobe, which was established through a strategic partnership between ADNOC and OCI NV, today offered 1,145.582,011 shares - or 13.8% of its shares - with an offering price of 2.55 AED per share, with a market value of 21.2 billion AED equivalent to 5.8 billion USD. It is worth mentioning that Fertiglobe is the largest marine export company for urea and ammonia in the world and the largest nitrogen fertilizer producer in the Middle East and North Africa region, with a production capacity of 6.5 million tons of urea and ammonia ready for sale. (Al-Mal)
- With this in mind, state-owned sports club Ghazl El Mahalla could debut on the Egyptian Exchange (EGX) in November 2021.
This comes a month after fintech firm e-Finance completed the exchange’s largest IPO in six years. Prime’s investment banking arm has begun promoting the share sale to institutional players and hopes to initiate the offering on the exchange at the beginning of next month. The sale is expected to raise 135 million EGP, which would be done via newly-issued shares that would see up to two-thirds of the club listed on the exchange. Prime will place 37 million EGP worth of shares in a sale to institutional investors, while another 98 million EGP will be earmarked for sale to individual retail investors. (Masrawy)
- Furthermore, "Tana Africa Capital - Asafra Hospitals" alliance decided to officially withdraw from the race to acquire "Alexandria Medical Services" - the new medical center - four months after it submitted a purchase offer.
It is noteworthy that the "Tana Capital - Asafra" consortium deposited in mid-June a draft of a compulsory purchase offer - through its subsidiary company TAT Medical Services Company - to purchase about 14.27 million shares, or 100% of the shares of Alexandria Medical Services Company (New Medical Center) with a minimum execution of 51%, at a price of 49.04 EGP per share. (Arab Finance)
- Likewise, investors welcomed the recent developments in Egypt’s as the Egyptian President lifted the state of emergency.
The stock market indices responded strongly to the new decision. All of the EGX indices and the trading volume rebounded significantly in the morning of Tuesday, October 26th, amid strong purchases by investors, especially on major and leading stocks. The market cap of the shares of companies listed on EGX achieved profits of 10 billion EGP in morning trading, reaching 752 billion EGP, amid strong share activity. President Abdel Fattah El-Sisi’s decision to lift the state of emergency in the country sends promising and reassuring messages to investors
- In addition, the board of directors of the Egyptian International Pharmaceutical Industries (EIPICO) approved to assign the construction of the EIPICO 3 plant building structure to the Swedish company Pharmadule Morimatsu for a total amount of 43.5 million USD with a margin of +/- 5%.
The decision came after negotiating and studying the offers submitted by major international companies operating in this field. The EIPICO 3 plant is the largest and first factory in Egypt and the Middle East to produce biologicals and biosimilars alternatives and medicines in the 10th of Ramadan City over an area of 10,000 square meters and with investments of 1.2 billion EGP. (EGX)
- Also, the Italian oil and gas giant Eni has made three new discoveries in its Meleiha and South West Meleiha concessions in the Egyptian Western Desert.
The three discoveries add over 6,000 barrels of equivalent oil per day, while the preliminary estimates of the resources associated to these discoveries are at 50 million barrels of oil equivalent. Eni, through its subsidiary IEOC, owns a 76% of the contractor’s participating interest in the Meleiha concession, while LUKOIL owns the remaining 24%. The two companies are parties in this concession with the Egyptian General Petroleum Corporation (EGPC) and the Egyptian government. (Arab Finance)
- By the same token, Talaat Moustafa Group Holding (TMGH) is planning to close a securitization issuance as part of a multi-issue program worth 6 billion EGP before the end of 2021.
The company is set to offer an issuance tranche, under the 6 billion EGP three-year term multi-issuance program, at an expected value of around 700 million EGP. FG Hermes Holding (HRHO) will act as the financial advisor, arranger, general coordinator, issuance manager, and underwriter of the program, while Dreny & Partners Law Firm (D&P) will act as the legal advisor. (Al Borsa Newspaper)
- And finally, for our COVID vaccine watch, Egypt has completed the vaccination of 23-24 million people against COVID-19 with no serious side effects from the vaccines recorded.
The country did not record any deaths from the vaccines. Egypt targets to vaccinate 40 million citizens by the end of the year, allocating around 1,100 vaccination centers nationwide. Various types of imported vaccines are administered in Egypt: Sinovac, AstraZeneca, Sputnik V, Johnson & Johnson, and Pfizer, in addition to the locally-made Sinovac/VACSERA vaccine. (Egypt Ministry of Health)
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