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Monthly Brief – April 2015 Macroeconomics Foreign exchange rate Number of tourists to Egypt increased 5.5% in January The number of tourists visiting Egypt increased by 5.5 % from 2014 to 2015, recording 677,500 tourists in January 2015 compared with 642,200 tourists in the same period in 2014. External debt decreases by 10.3% in December: CBE The Central Bank of Egypt announced that the external debt declined to reach $ 41.3 bn by the end of December 2014 marking a 10.3% decrease compared to figures of June 2014 where the debt amount was $ 46.1 bn. USD/EGP EUR/EGP YEN/EGP GBP/EGP CHF/EGP SRL/EGP 7.60/7.62 8.15/8.18 6.38/6.40 11.33/11.36 7.89/7.92 2.02/2.03 Beltone stock – 1 year fluctuations Beltone Financial profits plunge 79.4% in 2014 Beltone Financial Holding consolidated net profits declined by around 79.4% to EGP 15.3 million ($2 million) in 2014, down from EGP 74.3 million ($9.7 million) in 2013. The company suffered EGP 1.1 million in unconsolidated net losses for 2014, against EGP 96.4 million in profits for the previous year. EFG Hermes reports highest net profit since 2010 The Arab world’s leading investment bank, EFG Hermes, has reported EGP 538m in net profit on EGP 2.6bn in total revenues. The latest figures represent the company’s highest net profit since 2010. EFG Hermes to launch “ EFG Hermes Leasing” EFG Hermes group announced that it will launch its leasing arm “EFG Hermes Leasing” beginning of May 2015 with capital of EGP 100 million. 3% of GDP in 2016/2017 budget to go to healthcare, 6% to education Minister of finance, Hany Dimian announced that the targeted spending on healthcare in the fiscal year (FY) 2016/2017 budget is around 3% of the Gross Domestic Profit (GDP), while the government aims to spend 6% of the GDP on education. Moody’s raises Egypt’s credit rating to B3 Moody’s Corporation estimated a decrease in Egypt’s budget deficit to 10% of GDP this year, and a decrease in public debt to less than 90% of GDP. As a result, the corporation raised Egypt’s credit rating to B3 and a “stable” outlook after assessing the country’s economy. Kuwaiti Fund loans Egypt $1.5bn The Kuwait Fund for Arab Economic Development (KFAED) is set to lend Egypt a total of $1.5bn over a five year period ($ 300 million annually) to be invested in different sectors. EFG Hermes Stock – 1 year fluctuations Foreign reserves record $ 15.29 bn end of March International foreign reserves registered $15.29bn at the end of March, compared to $15.45bn the preceding month. This marks the first foreign reserve decline in 2015 after increases in January and February. Also CBE Governor Hisham Ramez confirmed that USD 6 bn in GCC deposits are expected to arrive within this month. Foreign Reserves ( In USD Bn) 15.5 15.45 15.4 4 public petroleum companies to be listed on EGX Four new public companies will be listed on the Egyptian stock market during 2015 and 2016. 15.3 15.25 Egypt sees 3% more tourists in first quarter of 2015 Egypt welcomed three percent more tourists in the first quarter of 2015 than in the same period of the previous year, while reservations for the summer season were up 15 percent compared to the previous year. Egypt’s tourism sector has seen a relative recovery in the past year, after being hit hard by protests and regime change in 2011 and again in 2013. 15.35 15.2 FEB The World Bank Group is increasing investments in Egypt to USD 4.5 bn over the next four years The World Bank Group is increasing investments in Egypt to USD 4.5 bn over the next four years, at a rate of USD 1.2 bn annually, according to World Bank VP for the Middle East and Africa Hafez Ghanem. The WBG will continue to pump funds into creating employment opportunities, improving education, and supporting vital sectors including agriculture. $400m World Bank loan to be repaid over 35 years A loan worth $400m for the Egyptian government has been finalized on the sidelines of the spring meeting of the World Bank and International Monetary Fund (IMF). The loan, provided by World Bank, will be used to support the Egyptian government’s social safety nets project entitled “Solidarity and Dignity”. The loan is to be repaid over a period of 35 years, with a fiveyear grace period and a six month US dollar LIBOR interest rate, plus a variable margin. MARCH IMF raises Egypt’s growth outlook to 4% in 2015 Growth forecasts for Egypt’s real gross domestic product (GDP) were raised to 4% in 2015 and 4.4% in 2016, the International Monetary Fund (IMF). In 2013, the IMF’s projections for real GDP growth was 2.2%. Expectations for prices inched up in 2015 and 2016, in comparison to last year’s 10.1% inflation. In 2015, projections for consumer price were 10.3%, and increased to 10.5% in 2016.Unemployment rates are believed to reach 13.1% in 2015, in comparison to 13.4% in 2014. Unemployment is expected to reach even lower rates in 2016, declining to 12.5%. IMF Projections 14% 12% 10% 8% 6% 4% 2% 0% 2015 2016 Automotive Automotive market to finalize specifications for cars The Egyptian automotive market will soon enforce standard specifications on imported cars, in parallel with what was implemented last year on locally produced cars. The ten standard specifications are on a number of car parts, including tyres and headlamps, among other parts. Car Sales increased 17% in January & February Car Sales have increased by 17% in Jaunary & February 2015 where 46,700 cars were sold compared with the same period in 2014 where only 39,900 cars were sold. Hyundai & Chevrolet still have the largest market share. 12,000 10,000 8,000 6,000 4,000 2,000 0 Beltone Private Equity decides to divest the agency for Peugeot in Egypt Beltone Private Equity has announced that El Arabia for investments & Development is mulling to sell its owned subsidiary Cairo for Development and Car Manufacturing, the exclusive agent for Peugeot brand in Egypt, to a strategic investor. Real Estate Car Sales Jan & Feb 2015 Jan & Feb 2014 Spending on Egypt’s construction sector could exceed USD 7.3 bn by the end of 2015 According to market analysis released by Collaboration, Management and Control solutions (CMCS), spending on the construction sector in Egypt could exceed USD 7.3 bn by the end of 2015 due to the development of new construction projects. Secon signs 3 contracts to design new real estate projects The Saudi-Egyptian Construction Company (Secon) signed three contracts to design new real estate projects on an area of 100 acres, entailing investments valued at EGP 2.5bn. The projects will be built in the areas of New Cairo, New Damietta and New Assiut. Palm Hills to manage financing joint project with MNHD near new capital Palm Hills Developments and Madinet Nasr for Housing & Development (MNHD) have agreed to develop two pieces of land totaling 103,250 acres (433,643sqm). It is expected that the project will achieve revenues ranging from EGP 4.6 bn and EGP 5.5 bn. It includes residential buildings with floors ranging from ground to 3 floors and ground to five floors, with total area of 484,100sqm. The development works would be done over four phases to be done through nine to ten years. Palm Hills expects 75% y-o-y increase in Q1 sales Palm Hills Developments expects a 75% y-o-y growth in 1Q 2015 sales to reach EGP 1.3 bn. Strong sales figures are reported from projects in west and east Cairo as well as the North Coast as the value of reservations more than doubled compared to last year to EGP 1.1 bn. Palm Hills will announce the 1Q 2015 results formally by the end of the month. Palm Hills Stock – 1 year fluctuations EGP 425 M of new budget goes to slums: Housing Minister The New Urban Communities Authority (NUCA) has suggested supporting the plan to develop slums in Egypt using EGP 425 million in collaboration with the Ministry of Urban Development and Slums. Heliopolis company stock- 1 year fluctuations Heliopolis Company targets EGP 200m profits for FY 2015/2016 The Heliopolis Company, known as Masr Al-Gadeeda for Housing and Development, announced it is targeting EGP 200 M distributable profits for the fiscal year (FY) 2015/2016. The budget awaits the approval of the company’s general assembly. The company’s profits for the six months between June and December 2014 totaled EGP 89.3m, increasing by 36% on the same period in 2013. MGM Financial & Banking Consultants Investment Banking Division B2111 Smart Village – Cairo Alex Desert Road – Egypt Tel: +20 23 53 70662 Fax: +20 23 5370663 www.mgm.com.eg