Fwd: Naeem NewsStand - 22 September 2013

Mohamed E. Shaheen from iphone

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From: "NAEEM Research" <research@naeemholding.com>
Date: 22 September 2013 09:36:38 AM EET
Subject: Naeem NewsStand - 22 September 2013

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MPC cuts interest rates by 50bps

Ahmed Ezz released on EGP100m bail

Egypt returns USD2bn to Qatar after talks to securitise it fail, Kuwait to transfer USD1bn in a week

Yields on 12-month T-bills fall over 1pps ahead of CBE rate cut

UAE mulls EGP20bn financing for investments in Egypt

CBE sells USD38.9m in FX auction; pound strengthens

Verdict on Muslim Brotherhood dissolution case set for 23 September

Friday pro-Morsi demos in Egypt lead to minor clashes

51 arrested in raid on Islamist-dominated district near Cairo

Egypt sees 0.5% drop in tourists in first 8 months of 2013

German tour operators resume Egypt trips

Egypt reduces curfew hours

Court postpones case review against El Baradei

Ahmed Emam, Minister of Electricity: 6,000MW of power capacity to be added to the national electric grid, El-Ain El-Sokhna power station to be opened next March

USD100m from the World Bank for the development of railway workshops

The opening of three factories at Kom Abu Radi in Beni Suef with investments worth EGP1bn

Arab Contractors wins USD168m housing projects in Algeria

Raya to launch new arm to operate restaurants by 1Q14

ESGI soars 10%, sees biggest volume in 4 months

Orascom Telecom Media and Technology (OTMT) denies Mena cable extension approval

TMG affirms talks with three banks for EGP1.8bn loan

Palm Hills to hold EGM to discuss capital top-up

 

KEY STORIES

MPC cuts interest rates by 50bps

In its meeting held on September 19, 2013, the Monetary Policy Committee (MPC) decided to cut the overnight deposit rate, overnight lending rate, and the rate of the Central Bank of Egypt (CBE's) main operation by 50bps to 8.75%, 9.75%, and 9.25%, respectively. The discount rate was also cut by 50bps to 9.25%. (Source: CBE)

Our take:

*      The rate cut comes more or less in line with what was widely expected by the market and economists in general

*      This is the CBE's second rate cut since Morsi's ouster on July 3rd. At the previous MPC meeting on 1 August the central bank had cut rates by 50bps

*      Both the CBE and the interim government seem aligned towards one goal;  to instill growth and liquidity into the economy, rather than just taming inflation

*      T-bill and government bond yields have dropped by more than 250bps since the ouster of Morsi, discounting both a changing risk perception and, as well as foreseeing the CBE to cut rates     

*      Nevertheless, this should be viewed as positive news by the market given the liquidity boost that could follow as a result of increased borrowing at cheaper costs and, indirectly stimulating industrial/business activity  

Ahmed Ezz released on EGP100m bail

North Cairo Criminal Court on Thursday ordered the release of steel tycoon Ahmed Ezz on an EGP100m bail. The court also decided to stop the retrial of another pending case against Ezz on charges of money laundering until a verdict is reached in the steel license and Dekheila cases, as these are directly related to the money laundering case. His lawyer, Farid al-Deeb, had requested the release of his client based on the fact that the detention order has not been implemented since October 2011, pointing out that Ezz was detained for other cases. Verdicts against Ezz ranged from three to ten years in prison, in addition to financial penalties ranging from tens of millions to billions of pounds. The Court of Cassation had overturned a previous ruling by the Criminal Court sentencing Ezz to seven years in prison, with a fine of EGP19bn for money laundering, profiteering and seizing public funds. The Court of Cassation ordered his retrial before another constituency.

Our take:

*      We continue to be of the opinion that the ruling does not have any direct implication on operations of either ESRS and/or EZDK

*      However, we note the reasons behind the weak sentiments over the stock (since Mr. Ezz's arrest), as being on the back of speculation that Mr. Ezz might be forced to sell his stake to make good of a possible huge fine. The concern was that if and when the stake sale happens, whether this would attract a discount to market valuations or in any way even nationalization (of his 66% stake). We believe that given this latest ruling of a bail being granted, speculations over scarp- sale of Mr. Ezz stake should to an extent be put to rest. In our view, any stake sale (if it does occur) should attract at least a minimal amount of premium over the current market price   

*      Nevertheless, a lot needs to be confirmed on the exact amounts of fine (if any) that would get levied ultimately on Mr. Ezz and whether this would entail him to sell his stake (in case the final verdicts fall against him)

*      Ahmed Ezz's 66% stake in ESRS, as of today stands at an estimated EGP4bn

ECONOMIC & POLITICAL NEWS

Egypt returns USD2bn to Qatar after talks to securitise it fail, Kuwait to transfer USD1bn in a week

Egypt has returned to Qatar USD2bn that the Gulf state had deposited with the central bank, after negotiations to convert the funds into three-year bonds broke down, central bank Governor Hisham Ramez said by telephone on Thursday. Qatar had sent Egypt USD3bn in May, of which it converted USD1bn into three-year bonds. In related developments, Kuwait is said to transfer a total of USD1bn to Egypt's Central Bank next week, according to Hisham Ramez. (Source: Ahram Online)

Yields on 12-month T-bills fall over 1pps ahead of CBE rate cut

Yields on Egyptian 12-month T-bills dropped more than 1pps ahead of the rate cut at a central bank policy meeting on Thursday. The yield on the 12-month bills fell below the yield of six-month bills as appetite increased for longer term debt on the belief that yields would fall. The average yield on 182-day T-bills dropped to 10.599% from 11.300% at last week's auction, while the yield on 364-day T-bills tumbled to 10.538% from 11.539%. The bank sold EGP2.5bn (USD360m) of the 182-day T-bills and EGP4bn of the 357-day bills, the amounts it had sought. (Source: Reuters)

UAE mulls EGP20bn financing for investments in Egypt

Ashraf El-Araby, the Minister of Planning, said that the United Arab Emirates is studying a list of projects to execute within an urgent plan to support the Egyptian economy. The funds to be injected by the UAE will be an addition to the USD3bn worth of aid from the UAE, he said. He added that, during a recent visit by a UAE official delegation, Egypt had presented the financing plan for projects worth more than EGP20bn. (Source: Mubasher)

CBE sells USD38.9m in FX auction; pound strengthens

CBE sold USD38.9m at a foreign currency auction on Thursday with a cut-off price of EGP6.8828/USD versus EGP6.8831 at its last sale on Wednesday. It had offered USD40m. (Source: Mubasher)

Verdict on Muslim Brotherhood dissolution case set for 23 September

A Cairo court has scheduled 23 September for a verdict in a lawsuit demanding the dissolution of the 85-year-old Muslim Brotherhood group and the confiscation of its leaders' funds. (Source: Ahram Online)

Friday pro-Morsi demos in Egypt lead to minor clashes

Protests were held in a number of Egyptian cities on Friday by supporters of ousted president Mohamed Morsi, although the turnout at rallies was low. Clashes erupted in various cities between pro-Morsi protesters and security forces or groups of locals who opposed the protests. There were clashes in the Mohandiseen district of Greater Cairo between locals and protesters on Friday afternoon. (Source: Ahram Online, Daily News Egypt)

51 arrested in raid on Islamist-dominated district near Cairo

Egyptian security forces fired tear gas and exchanged gunfire with armed groups in Giza's Kerdasa district (15km from Cairo) early on Thursday, state TV reported. A security source stated that 51 people had been arrested during the raid and police were combing the area for around 100 other suspects. Three of those arrested allegedly played a prominent role in an assault on Kerdasa police station which killed 11 officers. (Source: Ahram Online)

Egypt sees 0.5% drop in tourists in first 8 months of 2013

Egypt received around 7.25m tourists in the first eight months of 2013, 0.5% less than the numbers during the same period last year, a recent report released by the Egyptian tourism ministry states. According to the report, the most substantial decrease came from Middle Eastern tourists to Egypt, whose numbers fell to 1.15m visitors, some 7.8% less than the same period in 2012. (Source: Ahram Online)

German tour operators resume Egypt trips

Some major tour operators in Germany will shortly resume flying tourists to Egypt, although others said they would wait for government advice on safety to change. Many travel firms' halted trips to the country after violence broke out in July and August. Thomas Cook Germany and DER Touristik said this week the situation was calm in the popular Red Sea resorts and that trips would restart from 30 September. (Source: Reuters)

Egypt reduces curfew hours

Egypt's curfew will be reduced to between 12AM – 5AM, except for Fridays when curfew hours would continue to be 7PM – 5AM, the cabinet announced on Thursday. (Source: Ahram Online)

Court postpones case review against El Baradei

Nasr City misdemeanor court decided on Thursday to postpone the review of a case filed against former vice president for international relations, Mohamed ElBaradei, to 19 October. (Source: Ahram Online)

Ahmed Emam, Minister of Electricity: 6,000MW of power capacity to be added to the national electric grid, El-Ain El-Sokhna power station to be opened next March. (Source: Al-Ahram Newspaper)

 

USD100m from the World Bank for the development of railway workshops. (Source: El Borsa Newspaper)

 

The opening of three factories at Kom Abu Radi in Beni Suef with investments worth EGP1bn. (Source: El Borsa Newspaper)

 

CORPORATE NEWS

Arab Contractors wins USD168m housing projects in Algeria

Eng. Mohsen Salah, Chairman of Arab Contractors Co. said that his company signed contracts for establishing 4,500 residential units in Algeria at a total value of around USD168m. The company is currently undertaking several mega projects in various African and GCC countries, he said. (Source: Mubasher)

Raya to launch new arm to operate restaurants by 1Q14

Raya Holding for Technology & Telecommunications plans to launch a new subsidiary to run restaurants with capital of EGP35m during the first quarter of next year, financial supervisor Ahmed Farouk told Al Mal gazette. (Source: Mubasher)

ESGI soars 10%, sees biggest volume in 4 months

The stock of Egyptian Starch & Glucose has surged by 9.89% during Thursday's session to reach EGP8.33; its highest price since June 3, 2013. (Source: Mubasher)

Orascom Telecom Media and Technology (OTMT) denies Mena cable extension approval

OTMT denied a final solution with the Egyptian Company for Communications and the Ministry of Transport to extend the remaining area of the cable Maritime Mina. The company said in a statement to the EGX, that it still continues its research and study of all options available to run the cable. (Source: Mubasher)

TMG affirms talks with three banks for EGP1.8bn loan

Property developer Talaat Moustafa Group (TMGH) has affirmed news that it is holding talks with a consortium of three banks to secure a long-term syndicated loan worth EGP1.8bn, which will go for completing the group's project in Al Rehab City. (Source: EGX)

Palm Hills to hold EGM to discuss capital top-up

Palm Hills Development Co. (PHDC) announced that it will hold and an extraordinary general meeting (EGM) today at 9:00 AM for Shareholders to look into endorsing the board's report on reasons for a capital hike based on the feasibility study presented by the independent financial advisor. (Source: Mubasher)

 

 

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NAEEM Research

40 Lebanon St., Mohandessin, Giza – Egypt

e-mail:  research@naeemholding.com

Tel:         +(20) 2-3300 5100

Website: www.naeemholding.com

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Disclaimer

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