David Welch: Egypt Heads to Important Investment Stage Source: Arabic News, January 18, 2005
US ambassador in Cairo David Welch said Monday, January 17, that Egypt would witness an important stage of investments, for which it owns qualified infrastructure.
Addressing a popular gathering in Suez Governorate yesterday, Welch affirmed that he would promote for northwestern Suez area as a remarkable target for investments.
He expressed Washington's readiness to include Egyptian industrial zones as part of the Qualified Industrial Zones (QIZ) agreement.
Stressing he would invite US investors to come to Egypt and in particular to Suez, Welch underlined that Egypt enjoyed security and stability.
Albright In Egypt to Push Reforms Source: Khaleej Times, January 27, 2005
Former US Secretary of State Madeline Albright met pro-democracy advocates in Egypt on January 26 as part of an American-led international drive for political reform in the Middle East.
Albright’s visit comes amid efforts by the Bush administration to deepen political reform in the Middle East. Arab leaders, including Egyptian President Hosni Mubarak, have been reluctant to embrace the US reform vision promoted by President George W. Bush and instead have suggested change should start from within the region, not be imposed from outside. Activists Albright met consider that view an excuse for the slow pace of reform.
“We are here from the Council on Foreign Relations and we have a taskforce that is looking at how the US should respond to (calls for) reform in the Arab world”.
Albright met with Members of the American Chamber of Commerce in Egypt in their monthly meeting and luncheon on Wednesday January 26.
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Egypt Blue Chips Lead Rally Source: Trade Arabia January 26, 2005
Egypt's benchmark index hit a new all-time high on January 26 as foreign money continued to pour into blue chips, but profit-taking on small caps weighed on the market late in the session, brokers said.
The Hermes index closed 2.48 per cent higher at 29,076.23 points, making for a 9.5 per cent gain in the three days since the long Eid holiday and a massive 21.7 per cent rise since the beginning of the year.
The broader CIBC index was last quoted 0.17 per cent down at 118.32 points, reflecting the decline in small caps.
'People don't want to miss out. They know there is a good story in Egypt so funds are coming in that have never really looked at Egypt before,' said Bassim Arida of CIBC Brokerage (link here).
'It seems that everyone is really bullish on the Egyptian market,' added Chahir Hessni of Delta Securities.
'We're getting close to the time when (2004) results are published and everyone is expecting good news. Then there's the way the government is moving to attract investment,' he added.
Telecom shares, a mainstay of Egyptian blue chips, led the advances, while banks and cements were more mixed.
Orascom Telecom (OT) (link here) last traded 6.53 percent up at a record close of 329.00 pounds ($56.24). Sister company MobiNil (AmCham Member) (link here) was 3.58 per cent up at 157.00 and Vodafone Egypt (AmCham Member) (link here)rose 2.79 per cent higher at 64.15.
Egyptian American Bank (AmCham Member) (link here)was the largest percentage gainer of the day, adding 7.97 per cent to 54.89 pounds.
In the cement sector, Torah Portland climbed 2.85 percent to 82.00 pounds, helped by a financial media report that the company had good 2004 results.
The sell-off in small caps hit the flour-milling sector hard. Four milling companies were among the top 10 percentage losers, with declines of between 4.85 and 5 per cent.
Government of Egypt and Microsoft Sign Cooperation Agreement Source: Arabic News, January 26 & 31, 2005.
Egypt's Prime Minister Ahmed Nazif met at his office in the Smart Village (link here), on Sunday with Microsoft (AmCham Member) (link here) Chairman Bill Gates to discuss a host of cooperation projects between the Egyptian government and the chief Software Company. Following the meeting Gates toured the village to stand on companies activities inside it.
Gates arrived on Saturday January 29 on his second visit to Egypt in less than a year. The American Chamber of Commerce in Egypt (link here) organized a reception party for Gates on the same day. More than 1.200 Egyptian officials and businessmen attended the party. Egypt's Prime Minister Ahmed Nazif received Gates at the reception.
On the same day, Gates also launched a new website built by the Ministry of Investment (link here) to render its services and information in Arabic and English for Egyptian and foreign investors.
On Sunday January 30, Nazif attended the signing ceremony of a cooperation agreement between the Egyptian government and Microsoft.
By virtue of the agreement, the company will contribute to projects of modernization and technological development, being implemented by the Egyptian government, covering several projects, mainly pre-university education, electronic education, smart schools and "computer for every home' projects.
Signing for the Egyptian side were Minister of Telecommunication and Information Technology Tarek Kamel, Minister of Education Ahmed Gamal Eddin Moussa and Minister of State for Administrative Development Ahmed Darwish Chairman of Microsoft Bill Gates signed for his company. The agreement is aimed at setting up joint ventures in the domains of information technology.
At a joint press conference with Gates after the signing ceremony, Nazif underlined the importance of Gates visit to Egypt as a sign of his keenness on increasing his investments in Egypt.
Nazif noted that cooperation with Microsoft will help enhance education in Egypt by introducing modern technology into the educational process such as electronic education and videoconference.
Egypt Upbeat on Reform Source: Trade Arabia, January 28, 2005
Egyptian Prime Minister Ahmed Nazif gave world business leaders an upbeat account of his country's economic reforms in a bid to attract foreign investment.
Nazif told the World Economic Forum (link here) in the Swiss resort of Davos that his six-month-old government had embarked on "profound structural changes at an accelerated pace".
The country has cut corporate and personal taxes and tariffs to make Egypt more attractive to international business, aiming for at least 6 percent annual growth over the next five years.
Nazif said Egypt's currency had stabilized in a free float and even gained ground in recent weeks, while year-on-year growth had reached 4.2 per cent in the last quarter of 2004.
Tourism revenues increased 30 percent last year and the number of tourists rose to 8 million from 6 million in 2003.
New 20-Year Bond Oversubscribed Source: BMI Market Alert, January 18, 2005
The Egyptian government launched EGP1bn (US$170mn) worth of 20-year bonds on January 18, in a bid to boost the development of the long stagnant mortgage market and thereby give further impetus to the already burgeoning economy.
Bids of 11% and 11.5%, with prices of EGP1,032 and EGP992 respectively, have been accepted for each EGP1,000 bond, and the new paper will carry an 11.4% coupon. According to Ahmed Assaad, an adviser to Finance Minister Youssef Boutros Ghali, the aim of the issue was to provide banks with sufficient liquidity to enable them to lend to property buyers - currently an underdeveloped market in Egypt. The news is encouraging, then, for two reasons. For one thing, the freeing up of billions of dollars tied up in property should provide a boost to the economy. Secondly, though, and perhaps more importantly, the scale of demand for the instruments - the bonds were oversubscribed by a factor of two - shows that investors' perception of Egypt's creditworthiness is improving, given the many reforms already enacted by the new government since July.
Indeed, positive sentiment towards Egypt continues to be evident in both the Hermes stock exchange and the strength of the pound. The latter has continued to firm this morning, moving from EGP5.8600/US$ to EGP5.8400/US$, and thereby defying both the upwards movement in the dollar and the high demand for forex usually seen at this time of year, as Egyptians prepare to make the annual pilgrimage to Mecca.
We see some further upside for the unit, given the plentiful supplies of US dollars associated with tourism inflows, in the context of a medium term weak period for the latter unit. Meanwhile, Egyptian Investment Minister announced this week that hopes raised by the new government's pro-reform policies had led to a 233.3% rise in foreign direct investment, from US$450mn to US$1,500mn, between 2003 and 2004. Against this backdrop, and in line with our continued bullish stance, the Hermes continues to climb. The bourse was trading at a new all-time high of 26,247.05 at mid-morning on Tuesday, compared with an open of 26,218.15.
Egyptian Pound Strengthens Against U.S. Dollar Source: Noozz, January 30, 2005
The Egyptian pound strengthened against the U.S. dollar on Sunday January 30, extending a five-week rally which has added more than 6 percent to its value.
The Central Bank of Egypt (CBE) (link here) quoted a weighted average of 5.8324 pounds to the dollar on the interbank market at 11 a.m. (0900 GMT), compared with 5.8368 at the close of business on Thursday.
On the interbank market , rates ranged between 5.8250 and 5.8375 at 11.30 a.m.
"It's the same wave of dollar selling," one banker said. Bankers said Citibank had predicted that the pound would strengthen to 5.25 to the dollar within six months.
After many years of gradual decline, the pound has risen on the back of a large current account surplus, coupled with confidence that the government is serious about reform.
The turning-point was the launching of the interbank foreign exchange market on Dec. 23, which gave people confidence to buy pounds, knowing they could switch back to dollars if necessary. Before that the pound was trading at about 6.23 to the dollar.
IMF Obligations Accepted Source: Business Monitor International, 27 Jan 2005
The Egyptian government has accepted the obligations of a key IMF (link here) document, in a move that should inspire further confidence in its economic outlook.
The conditions in question - those set down in Article VIII, sections 2, 3 and 4 of the Fund's Articles of Agreement - stipulate that Egypt cannot impose restrictions on the making of payments or transfers for current international transactions. Moreover, the terms bar the government from engaging in any discriminatory currency arrangements or multiple currency practices without the approval of the IMF. The government's agreement to abide by the obligations is good news, and will serve as a signal that Egypt is committed to pursuing economic policies that will render such transaction restrictions unnecessary. It also implies that the country will contribute to a multilateral payments system free of restrictions.
The news added to already buoyant investor sentiment on the Hermes stock index, which was on the rise again this morning, trading up to 29,197.85 from an open of 29,113.26. Cement stocks were leading the way, with gains for all listed companies in the sector on Wednesday, on the back of renewed foreign interest in the light of strong 2004 profits. Although we did see some profit-taking yesterday, most notably in the big caps such as Mobinil (AmCham Member)(link here), we remain bullish on the bourse. Indeed, investor confidence in Egypt was also reflected in the performance of the pound today. Despite struggling against a dollar bounce in the last few days, the unit has held on to its gains, and now looks to be pushing back upwards: it rose from last night's close of EGP5.8200/US$ to EGP5.8100/US$ this morning.
Alex Bank Signs Debut Syndicated Loan Source: Middle East Economic Digest, January 21, 2005
Bank of Alexandria (AmCham Member)(link here) has made a successful debut in the syndicated loan market after the signing on 17 January of a $150 million bullet facility with 18 local and international banks.
The deal was upsized from $100 million due to oversubscription. Mandated lead arrangers and book runners were Bank of Tokyo-Mitsubishi(link here), Barclays Capital(link here) and Citigroup (AmCham Member)(link here), with Citigroup acting as facility agent and documentation bank. Nine banks joined at arranger level and six at lead manager level. The margin is fixed at 65 basis points.
Prime Minister Ahmed Nazif has approved the sale of Bank of Alexandria during 2005, making it likely that it will be the first local state bank to be privatized. Cairo has been considering for years the sale of one of the country’s "big four" state-owned commercial banks, the others being Banque Misr (AmCham Member)(link here), National Bank of Egypt (AmCham Member)(link here)and Banque du Caire (AmCham Member)(link here), as part of its drive to consolidate the sector. It is yet to be decided whether the sale will be made through an initial public offering (IPO) or a tie-up with a strategic investor.
Coordination Council on Monetary Policy Set Up Source: ARABIC News, January 25, 2005
Egypt's President Hosni Mubarak issued a republican decree on setting up a coordination council under Prime Minister Ahmed Nazif.
The new council will be in charge of drawing up the country's monetary policy that provides a safe banking system and helps stability of the Egyptian pound exchange rate against the foreign currencies.
Best Affirms Egypt's Misr Insurance 'A-' Rating Source: Insurance Journal, January 31, 2005
A.M. Best Co. (link here) has affirmed the financial strength rating of "A"- (Excellent) of Egypt's Misr Insurance Company with a stable outlook.
Best said it "believes Misr's level of risk-adjusted capitalization will deteriorate slightly at June year-end 2004 as a result of a 25 percent increase in net premiums written in 2004; however, this is likely to be partially offset by retained earnings of approximately EGP 100 million (USD 16 million).
"Prospectively, at June year-end 2005, Misr could come under pressure if net written premiums continue to grow at this rate." However, the rating agency said that in its opinion the Egyptian market is "not of a sufficient size to continue to support such rapid growth. Misr is likely to benefit from an improved Egyptian economy in 2004 and 2005 after the devaluation of the Egyptian Pound in 2003, and as tourism recovers after recent disturbances in the region. This is likely to lead to an increase in both gross premiums written and investment returns of less than 10 percent at June year-end 2004."
Best also noted: "Misr has a large branch network that comprises in excess of 200 offices, which is expected to help it to consolidate its position as leader in the non-life market and second-largest participant in the life market despite ongoing liberalization, which has opened the market to new entrants.
Partially offsetting factors are Misr's dependence on the Egyptian market for business and its requirement to distribute 70 percent of profits to the Egyptian government and company employees, which precludes a more robust increase in capitalization."
Orascom Takes ET Job Source: Middle East Economic Digest, January 21, 2005
State-owned cigarette manufacturer Eastern Tobacco Company (ET) has awarded the local Orascom Construction Industries (OCI) (AmCham Member)(link here)a contract worth LE152 million ($24 million) contract to build a new cigarette factory at Sixth of October City.
The project is part of ET’s LE900 million ($144 million) plan to centralize its activities in a new industrial complex in the city and to increase its production capacity. OCI estimates the project will require about 170,000 cubic meters of concrete, which will be supplied by its subsidiary, Ready Mix Egypt (RME). Construction work is scheduled for completion by mid-2006.
The contract is the second to be awarded to OCI under ET’s relocation program. In January 2004, OCI was awarded a LE246 million ($40 million) contract to build new warehouse facilities for the storage of tobacco and tobacco products. ET is the sole manufacturer of cigarettes in the country and the largest cigarette manufacturer in the Middle East.
Domestic cigarette brands comprise more than 95 per cent of ET’s production, with the Cleopatra brand dominating the market. The company was established in 1920 and nationalized in 1956.
Avitar Gains Foothold in Middle East Source: PR Newswire Association LLC, January 25, 2005
Avitar (link here), the company that developed the world's first on-site oral test for drugs-of-abuse, today announced that the Government of Egypt has approved its ORALScreen(R) oral fluid-based drug testing products for sale.
"Acceptance by the Government of Egypt, a country with a population of over 75 million, demonstrates the tremendous worldwide market potential for saliva-based drug testing products," notes Pete Phildius, Avitar's CEO. "We're confident that our position as the quality and performance leader in oral-based testing solutions continues to differentiate Avitar from our competitors and play a very important role in our future growth."
The Government of Egypt, including the Ministry of Health, and the Ministry of Foreign Trade and Industry have approved the sale of Avitar products, including OralScreen disposable tests for illicit drugs, and Avitar's OSR handheld electronic reader.
Avitar's business partner in Egypt, EICEP, a distribution firm with international reach, has signed an agreement with a reseller in the Middle East with over thirty (30) sales locations across Egypt and thirteen (13) additional offices throughout multiple Arab Countries.
Egypt Makes Debut on Global LNG Stage Source: Energy Intelligence Group, Inc. January 28, 2005
Egypt has made its debut on the global LNG stage. Its first LNG cargo was delivered into Huelva, Spain, Western Europe's fastest-growing sizeable gas market, early on January 27, a week after being loaded. The load date had slipped a few times since December, but marks a milestone in Egypt's transformation from North Africa's largest gas consumer into a global player that by 2007 could be exporting some 12.2 million tons/yr (16.8 Bcm/yr) to Europe and the US from two LNG ventures.
Union Fenosa Gas (UFG) (link here), the 50-50 joint venture of Spanish energy group Union Fenosa and Italy's Eni, took delivery of the cargo, delivered on the Cadiz Knutsen, one of two LNG carriers on long-term charter to UFG.
Egypt's Damietta LNG export plant cost $1.2 billion and is owned and operated
by Segas, itself owned 80% by UFG, and 10% each by state Egyptian General
Petroleum Corp. and private Egyptian firm Egas. Its single liquefaction train
will be able to export 5 million tons/yr, half contracted to UFG, the rest split
Egyptian LNG, the country's second LNG project, will start two trains each of
3.6 million tons/yr by 2006; the first is sold out to Gaz de France, the second
to BG. Last week, BG contracted to supply 2.4 million tons/yr of its offtake to
Italy's Enel from 2008.
$300 Million in Insurance for Apache's Natural Gas Development in Egypt Source: PR Newswire US January 19, 2005
The Overseas Private Investment Corporation (OPIC) (link here) today made a commitment to provide $300 million in political risk insurance to Apache Corporation (AmCham Member) (link here) that is helping Egypt shift the emphasis of its energy production from oil to more environmentally friendly natural gas. OPIC's board of directors approved the project in April 2004.
Apache, the largest U.S. investor in Egypt, will use the OPIC insurance to develop various onshore and offshore oil and gas concessions in Egypt. Apache's natural gas discoveries in the Western Desert have already played a significant role in helping Egypt to convert much of its thermal power generation capacity from oil to natural gas, and in providing the resources necessary to meet growing local energy needs as well as expanding Egypt's hydrocarbon exports.
Egypt's production of crude oil from maturing oil fields is declining, while large discoveries of gas have emerged in the Western Desert and Nile Delta.
"The oil and gas sector is an increasingly important part of the Egyptian economy, accounting for 8 percent of the country's gross domestic product. Apache's continued investment in the sector will be critical to Egypt's ability to meet both domestic and export demand," OPIC President and Chief Executive Officer Dr. Peter Watson said at a signing ceremony at OPIC headquarters. "OPIC is pleased to support both Apache Corporation and our Egyptian partners in this important investment."
"Since 2000, Apache has doubled its production in Egypt and has considerable running room for additional investment," said G. Steven Farris, Apache's president, chief executive officer and chief operating officer. "With the Egyptian General Petroleum Corporation (EGPC) (link here) as our partner and now with OPIC's substantial support, we look forward to further developing Egypt's considerable hydrocarbon potential."
Dr. Watson noted that Apache produces 14 percent of Egypt's total oil and gas output and, according to company estimates, generates nearly $4 million a day in net revenue for the Egyptian economy.
OPIC was established as an agency of the U.S. government in 1971. It helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports U.S. foreign policy. Because OPIC charges market-based fees for its products, it operates on a self- sustaining basis at no net cost to taxpayers.
OPIC's political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency's 33-year history, OPIC has supported $164 billion worth of investments that have helped developing countries to generate more than 732,000 host-country jobs and $13 billion in host-government revenues. OPIC projects have also generated $69 billion in U.S. exports and created more than 264,000 American jobs.
Apache Corporation is a large oil and gas independent with core operations in the United States, Canada, the United Kingdom North Sea, Egypt and Australia.
The Finance and Administration Department of the
Ministry of communications and Information Technology
issued a request on January 18, 2005 for local & international
offers for the supply, erection, commissioning & guarantee
of 15,000 computers & ancillary equipment & introduce
ultra high speed Internet access at 3,000 preparatory
schools in all governorates. The job further provides
for availing special educational services at those
schools such as applications pertaining to the electronic
content & the training on other applications related
to ICDL - International Computer Driving License.
Tender documents are available at the Ministry offices
at the Smart Village in Sixth of October City & a
pre bid meeting will be held on 2/21/2005. Bid bonds
are L.E. 250,000, L.E. 250,000, L.E. 250,000 & L.E.
250,000 & L.E. 100,000 & L.E. 10,000. The deadline
for submission of offers is March 6, 2005.
The Purchases & Stores Dept. of the Productive
Efficiency & Vocational Training Authority issued
five tenders on January 31, 2005. The tenders are
for the supply of (a) electronic instruments & requisites,
(b) automatic control instruments, (c) furniture for
computer laboratories, (d) computers & printers, also
(e) supply & commissioning of instruments & equipment,
also (software) applications & networking equipment
for the integrated networking project. The specification
fees are LE500 & 500 & 250 & 350 & 1,000 and the bid
bonds are LE37,000 & 26,000 & 5,000 & 6,000 & 60,000
respectively. The deadline for submission of offers
is March 10, 2005.
The Purchases Department of the Principal Bank
for Development and Agricultural Credit (PBDAC) issued
a request on January 16, 2005. The request is for
international offers from companies of member countries
of the African Development Bank & Fund through their
agents to supply one Backbone Core Router, information
security equipment & Oracle database licenses [UNIX].
Job goes under funding from the African Development
Fund. The specification fee is $500 and the bid bond
$8,000 and the performance bond is 5%. The deadline
for submission of offers is March 17, 2005.
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