Pre-Trading Thoughts

Al Ahly Pharos

United States inflation slowed to its lowest level in a year in December, to 6.5% from 7.1% in November, largely on the back of falling gas prices, raising hopes that this will prompt the US central bank to again slow the pace of rate hikes in its coming meeting to 25 bps on February 1.

Signs that inflation may have peaked in the US and that monetary tightening could ease are prompting investors to pile into emerging-market sovereign debt in 2023 following a tough year. EM sovereign debt has seen more than USD40 bn in inflows so far this year.

Foreign investors are starting to return to the local debt market, with Thursday’s treasury auction more than 3x oversubscribed. CBE was looking to sell EGP20 bn worth of six-month bills and ultimately sold EGP51.9 bn worth of bills at a weighted average yield of 21.0%.

Goods worth a combined USD645 mn were released from ports last Wednesday and Thursday, which would put the total value of goods cleared since 1 December at some USD9.1 bn.

Egypt’s trade deficit widened in October 2022 to USD3.58 bn, up 21% from October 2021. Exports fell almost 10% y-o-y in October to USD3.77 bn, due to declining oil and fertilizer prices. Imports rose slightly to USD7.35 bn, up 3.0% y-o-y.

Preliminary figures for 1H 2022/2023 show a 14.2% rise in state revenues. Cash subsidies grew 14% y-o-y to EGP10.7 bn. Ration-card subsidies increased 17.5% y-o-y. The primary surplus grew more than eightfold y-o-y to register EGP25.5 bn (2.3% of GDP).

The Sovereign Fund of Egypt added five companies to its pre-IPO fund. Safi, Wataniya, Banque du Caire, Misr Life Insurance, and Egyptian Linear Alkyl Benzene (Elab) are on the list. The fund will offer a 20-30% stake in these companies to strategic investors. The fund will sell shares worth USD2.5-3 bn during the initial phase.

Egypt launched a tourism marketing campaign starting today to attract a wider and different tourist base.

TALM 1Q22/23 net profit reached EGP108 mn, up by 50% YoY.

PACH’s major shareholders raised objections on the current offer prices of EGP30/share. The shareholders clarified that PACH’s valuation now exceeds EGP30/share in light of the new FX rate.

The German company Wintershall Dea discovered a new gas field in its concession area in Damanhour governorate.

Egypt exported around 8 million tons (Mt) of liquefied natural gas during 2022, worth around USD8-8.5 billion. Egypt’s LNG exports grew by almost 1 Mt from 2021 levels and more than 6 Mt compared to 2020.

Oil prices were boosted by improved demand outlook in China. Brent crude for March delivery rose 1.5% to settle at USD85.28/bbl.

MCQE stated that the fire that broke out in the company’s mazut tank on January 10, 2023, lasted for just 30 minutes, and the plant is operating normally now.

Several contracting companies have submitted requests to the Ministry of Transport to set up a mechanism that includes calculating the price differences for contracted works that are being completed on a monthly basis instead of every three months, in light of the recent movements in the EGP exchange rate.

The Economic Authority of the Suez Canal is seeking completion of the development works of Al-Arish sea port and reopening it by the beginning of 2024, with investments of EGP3 billion.