Breakfast Wrap: EFG Signs Dotted Line, Tunisia Stock Market Focus

Shareholders of EFG-Hermes, Egypt’s biggest investment bank, tied the knot on Sunday and finally approved a planned tie-up with Qatar’s QInvest after demands by the regulator for more information on the deal were met.

That pushes the once quite exciting Planet Investment Bank out of the picture, for now.  Planet IB, headed by a few high profile Egyptian businessmen and women, and investors including Naguib Sawiris until the deal fizzled, was at one point a rival bidder for EFG Hermes.

But Planet needed EFG Hermes to open its books to conduct due diligence before proposing a formal offer.  EFG did not comply, and Planet couldn’t go ahead with a hostile takeover because its investors wouldn’t allow it.

But Planet is one financial institution to keep an eye.  Executives at the company told me that with or without EFG Hermes, the plan is to get Planet growing to one of the biggest investment banks in the region.  That may come across as mere propaganda until readers consider the dwindling competition in the region.

International banks are scaling back from the region. The latest is Deutsche Bank, after Societe Generale and BNP Paribas said the same about Egypt recently.

Deutsche is cutting several senior jobs in its investment banking business in Dubai, including directors, as it cuts costs to adapt to a tougher investment banking environment globally, three banking sources said according to Reuters.

DATA

Cotton: Egypt’s new cotton season started on September 1st.  Egypt’s Alcotexa (Alexandria Cotton Exporters’ Association), the country’s main cotton exporter, sold 842 tons in the last week.  It has committed to sell 2,417 tons since the new season began.  Egypt committed to sell about 90,000 tons last season.

Trade deficit: Egypt’s trade deficit, the clearest government indicator of how much Egypt is selling and buying, widened by 47.9% as chronically high imports significantly outweighed exports.

The deficit reached 17.6 billion Egyptian pounds ($2.8 billion) in June 2012, almost double the 11.9 billion pounds deficit recorded in the previous year, according to Egypt’s official statistics agency.

Keep an eye on the Tunisian stock market

Apparently the economic impact of last week’s attacks on western missions in the Arab world by mobs angered by a trailer for the film The Innocence of Muslims will most acutely hurt Tunisia, according to an FT article by Borzou Daragahi and Heba Saleh.

The reasoning is that Tunisia lacks energy reserves and depends heavily on foreign revenue from tourism. Its promise as a haven for western businesses in Africa may have also been damaged.

In Egypt however, the FT reporters say,  last week’s attacks against the US Embassy in Cairo “can only darken prospects for the economy”.  While Egypt’s stock market has managed to shrug off impacts from the protests, the FT reporters say, but investors on Tunisia’s market are expecting huge losses when the market opens today.

While stock market performance is one viable indicator of a country’s economy, it is not necessarily a reflection of economic growth/recession.

Plus Egypt and other Middle East countries subject to protests also have problems with energy reserves and revenue from tourism.  The reasoning behind why Tunisia will be the most economically impacted seems somewhat arbitrary.

Iran is going down the renewable energy route after the country’s nuclear, oil and natural gas ambitions Iran’s nuclear, have been the subject of intensifying sanctions from the international community, writes Benoit Faucon in the Wall Street Journal.

“Fossil fuels will run out, but wind will always be available and no one can put sanctions on it,” says Ali Shirazi Tabar, a mechanical expert at Mapna Group one of Iran’s largest power contractors.



2 Comments


  • Posted September 17, 2012 at 9:50 am | Permalink

    Tunisia’s likely to be most affected by the recession in the EZ which absorbs over 70% of its exports – it strikes me the protests are a trigger for reassessment of the weaker growth. equity markets are not a great gauge here, particularly as local actors more than global ones are investing.

  • Posted September 17, 2012 at 9:55 am | Permalink

    Interesting – so Tunisia is most likely to be impacted by Eurozone recession out of the whole MENA region? And what stock market in MENA has the most international focus?



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