CBE allowed the EGP to fall 16% against the USD to EGP 18.27 to the USD

CBE raised interest rates by 100 bps at a special monetary policy meeting

National Bank of Egypt and Bank Misr offer one-year certificates of deposit at 18% yield

The government is re-introducing the monthly customs exchange rate, setting it at EGP 16 for imports of basic commodities and materials used for manufacturing

Which companies will benefit from a weaker EGP versus the USD? Mainly exporters and the industrial sector have a direct benefit; ABUK, MFPC, EGCH, EKHO, ESRS, IRAX, EGAL, SKPC, AMOC, ORWE, ALCN, SWDY, RACC, ECAP, LCSW; Indirect benefit to real estate developers and banks through inflation (nominal impact on their size)

Which companies will benefit from interest rate rise? Banks whose treasury exposure out of total assets is the highest: FAIT, EGBE, SAUD, COMI; Banks whose funding base is of low cost: HDBK, COMI, CIEB, ADIB; COMI is a winner on both points above, and at current multiples, it is a top pick (P/E of 5.9x and P/B of 1.0x); Cash-rich companies: EMFD, MBSC, HRHO and ABUK

Ministry of Finance approved a package of social protection procedures, worth EGP130 billion

The capital gains tax on IPOs is being slashed by 50% for a two-year period

ADQ wealth fund will purchase up to 18% of COMI, unspecified stake in FWRY alongside three other companies

Sovereign Fund of Egypt has lined up investments for Egypt worth more than USD 2 bn

SKPC approved in its OGM the issuance of 1:5 bonus shares; SKPC trades at 2022 multiples of P/E 5.7x and EV/EBITDA 4.5x.   

HELI Board approved the sale of a receivables portfolio for EGP320.0 million (EGP0.24/share) to EXPA

Weekly direct flights between Baku and Sharm El Sheikh resumed on 18 March 2022

Weekly Commodities Update

Brent futures are trading at USD112.90/bbl and averaged USD95.34/bbl YTD

Egypt Urea Index increased by 3% WoW and prices are currently at USD1,130/ton (ABUK)

Polyethylene (HDPE) prices were up 9% WoW and prices are currently at USD1,510/ton (SKPC)

Diesel-HSFO spreads were up 26% WoW and are at USD528/ton (AMOC)

Polypropylene prices climbed to reach USD1,350/MT, higher WoW by 5.5%

Steel/Iron Ore spreads rose by 2% to USD621/ton compared to last week (ESRS)

Aluminum prices retreated this week by 3% to stand at USD3,381/ton (EGAL)

Retail cement prices in Egypt remained stable at the range of EGP1,450 -1,550 per ton

Steam Coal came down 9% WoW to record USD336/ton

Crude palm oil prices dropped to reach USD1,4230/MT, -9.8% WoW

SMP prices rose by 1.4% to reach USD4,545/MT