Home > Insights > Moody’s, the global credit rating agency, gave Egypt a B3 rating after the International Monetary Fund (IMF) disbursed the final instalment of 1.25 BN USD from the first 4 BN.
Monday, 24 Jul 2017

Moody’s, the global credit rating agency, gave Egypt a B3 rating after the International Monetary Fund (IMF) disbursed the final instalment of 1.25 BN USD from the first 4 BN.


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Economic Outlook

Economic Outlook

  • Moody's, the global credit rating agency, gave Egypt a B3 rating after the International Monetary Fund (IMF) disbursed the final instalment of 1.25 BN USD from the first 4 BN USD tranche of 12 BN USD loan. After the IMF assessed the implementation of the reform program, they said that the review is "Credit positive". It is estimated that by 2020, Egypt budget deficit will shrink to 3% of GDP.
  • Egypt-Argentina trade deal will be in full force in 30 days; eliminating tariffs on 60% of Argentina exports while phasing out reduced tariffs over a 10-year span. The trade agreement also includes Mercosur members Argentina, Brazil, Uruguay and Paraguay. In addition, the deal will lift tariffs levied on Egyptian imports such as cars, auto parts, apples, pears and beef.
  • Egypt average yield on 6 months and 1-year treasury bill fell to 21.679% and 21.706% respectively in the last sale on July 13thForeign buying climbed by 7% to reach 7.4 BN EGP (414 MM USD); moreover, it accounted for 50.4% of the sale. Since the Central Bank of Egypt (CBE) floated the Egyptian pound and raised the interest rate by 700 basis point (bps); demand for domestic debt increased.
  • Saudi Finance Ministry qualifies 13 banks to participate in the primary market of the local currency Islamic bonds (Sukuk). It is predicted that the 1st issuance would be 10 BN SAR (2.67 BN USD) and it is estimated to cover 25% to 30% of 2017 budget deficit (200 BN SAR) caused by weak oil prices.
  • Diplomatic crisis in Qatar slightly affected the country's GDP growth this year to 2.3% from 3.5% in April 2017. As for next year, forecasting a decline in GDP from 3.7% to 3.1% as some foreign banks reduced transactions with Qatar.
  • Oman budget deficit has declined by 19.9% reaching 2.04 BN OMR (5.30 BN USD) from January to May 2017 in comparison to the same period last year. This can be attributed to the Sultanate prudent economic policies and recovering oil prices. The Omani government adopted a series of austerity measures including increasing corporate tax, price of natural gas to industries and fees of government services, in addition to the removal of subsidies on petroleum products. Hence, total government revenue surged by 19.2%, net oil revenues rose by 37.3% and natural gas revenues grew by 6.5%.
  • The Public Authority for Mining (PAM) in Oman issued 234 valid mining permits in 2016 with a total economic value of 116.6 MM OMR (302.86 MM USD). Greater priority is given to mining applications providing raw materials for industrial hubs and Special Economic Zones across Oman.
  • Chinese investors express interest in Jordan due to its safety and stability. The Chinese Ambassador underlined a range of "untapped opportunities" in his latest speech, including the kingdom free trade agreements. He added that China can export its expertise in processing waste to energy, as he understands the effect of the influx of refugees on Jordan scarce resources.
  • Tunisair signed a partnership agreement with "Classe Export" to be the official carrier for Africa 2017 meeting, taking place on 5th and 6th of October 2017. The national carrier will promote Tunisia networks in Africa and France as it will transport 1,000 African leaders and 300 French entrepreneurs from 30 different countries.
  • Syria and the Islamic Republic of Iran are enhancing their bilateral ties through activating the Syrian-Iranian High Joint Committee and the Syrian-Iranian Businessmen Council. Both countries expressed their interests in promoting economic cooperation, through the Iranian companies' participation in the Damascus International Fair due next month.
  • Lebanon parliament passed new tax hikes in order to finance the new salary scale for public sector workers. The value added tax (VAT) increased from 10% to 11%, taxes on corporate profits increased from 15% to 17% as well as a 7% tax increase on deposits. Moreover, additional taxes were imposed on imported alcoholic beverages and tobacco.
  • Safa Al Hashem, a member of Kuwait parliament, is calling for imposing a 10-year cap on expatriates; to reduce Kuwaiti unemployment. In terms of population, expatriates are 3 times Kuwaiti nationals. Al Hashem criticized the government for not training enough Kuwaitis to replace expatriates and address the demographic imbalance.
Political Events

Political Events

  • Saudis are outraged amid Israel closure of Al-Aqsa mosque, some described the act as a "deprivation of their rights as citizens". Moreover, the Saudi Council of Ministers voiced their deep concern over the unlawful action and called for the intervention of the international community.
  • Egypt, Sweden and France have called for an urgent meeting at the United Nations Security Council (UNSC) to address the outbreak of violence between Israelis and Palestinians in East Jerusalem. Last Friday and for 3 days, 10 Palestinians were killed and dozens injured while Israeli forces were installing metal detectors on the entrance of Al Aqsa mosque. The 3 countries are calling for de-escalation of violence between the 2 parties.
  • Saudi Arabia is pushing for Sudan sanctions to be lifted; referring to the latter's significant efforts exerted to fight terrorism. Both countries stressed their common objective of countering terrorism and supporting Yemen legitimacy through their Islamic alliance.
  • 28 sentenced to death at a Cairo court for the 2015 assassination of Hisham Barakat, a top prosecutor. Barakt was killed in Heliopolis in a bomb attack67 people were charged. The court sentenced 15 others to life in prison, and 8 others to 15 years in prison.
  • Turkish president Erdogan is calling for diluting the Qatar dispute as it is not in anyone's interest to prolong the crisis. Qatar denied aiding any terror groups. He further accused unspecific "enemies" of firing up "tension between brothers". Noting that Turkey and Qatar are trying to maintain good ties with Iran- Saudi's regional rival.
  • The 4 countries boycotting Qatar are withdrawing their 13 demands in return to the latter abiding by 6 core principles. These principles include fighting terrorism and discontinuing funding extremism. Qatar refused to abide by any demands that violate international law, nonetheless, they admitted supporting the Muslim Brotherhood but not acts of extremism.
  • The Syrian army is de-escalating conflict with rebels in the Eastern Ghouta area, one of the "de-escalation zones" proposed during the meeting between Russia, Iran and Turkey in May. Rebel group Faylaq al-Rahman welcomed the ceasefire, urging the government to respect it.
Stock Market

Stock Market

  • EGX30 banking sector has declined led by Commercial International Bank (CIB).
  • .TASI banking sector has declined led by Al Rajhi and Alinma Bank.
  • .KWSE banking sector has slightly increased led by Commercial Bank of Kuwait (CBK) and Ahli United Bank (AUB). In addition, real estate sector increased led by Real Estate Asset Management Co.
  • .QSI banking sector has increased led by Qatar National Bank (QNB) and telecommunication sector led by Ooredoo.

Note:  Weekly values are calculated on Thursday of each week.

Companies Transactions

Companies Transactions

  • Commercial International Bank Egypt (CIB) reported a net profit increase of 1.75 BN EGP in Q1-2017, relative to 1.29 BN EGP last year. Moreover, a capital hike was approved in the last general meeting which will raise the company capital from 11.6 BN EGP to 14.52 BN EGP and will be financed through a 25% bonus distribution.
  • EFG Hermes will start offering factoring services in Q4-2017 alongside expanding their leasing services to 5 BN EGP (279 BN USD), up from 2 BN EGP. In 2 years' time, the company is planning to increase its financial leasing portfolio to large companies and small and medium sized companies (SMEs) in the Egyptian market.
  • The assets of 13 UAE banks surged by 6.8% in H1-2017 to reach 1.41 TR AED compared to 1.31 TR AED in H1-2016. The surge was attributed to an increase in deposits by 963 BN AED and a 7% loan growth rate, hence the banking sector solvency reached 18.6%. The largest share of the assets of 456.2 BN AED was claimed by Emirates NBD, followed by Abu Dhabi Commercial Bank (ADCB), then Dubai Islamic Bank (DIB).
  • ADS Securities, an Abu Dhabi-based financial firm, hired Jason Hughes as global head of retail sales to its FX and CFD brokerage business. Mr. Hughes formerly occupied the position of managing director of CMC Markets at its Singapore branch.
  • Commercial Bank of Qatar (CBQ) reported a 58.4% drop in Q2-2017 net profits due to a rise in bad loans, in addition to weaker oil prices and souring overseas investments. Consequently, CBQ earned a net profit of 24.3 MM USD between April and June 2017; in comparison to 56.53 MM USD in the same period last year.
  • Kuwait Finance House (KFH), Kuwait biggest Islamic lender, is planning to merge with Bahrain Ahli United Bank (AUB), Bahrain's largest lender with a noticeable presence in Kuwait, Egypt, Iraq, Oman, Libya and the United Kingdom.
Sports and Culture

Sports and Culture

  • Egyptian league champions Ahly ended the season unbeaten after ousting their Zamalek rival 2-0 in the final game of the season.
  • Ballerinas of Assiut, a classical dance school in Upper Egypt celebrates its first-year anniversary, restoring hope. Given the conservative social environment in Upper Egypt, opening a dance school proved to be a difficult task. At the beginning only 4 girls enrolled in the class, now there are 120 girls.
  • Based on the latest rankings released by Forbes Middle East, Sheikha Lubna Al Qasimi,UAE Minister of State for Tolerance,is the most powerful Arab woman in government this yearSahar Nasr and Ghada Wali followed from Egypt for their positions of Minister of Investment and International Cooperation, and Minister of Social Solidarity, respectively.

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