THE WEEKLY NET FOREIGN DIRECT INVESTMENTS REBOUNDS IN THIS ISSUE... Thursday A WORLD OF REAL POSSIBILITIES

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1 THE WEEKLY Thursday Issue # 39 NET FOREIGN DIRECT INVESTMENTS REBOUNDS Egypt s net foreign direct investments rose significantly by 54.7 % (Y/Y) in Fiscal Year (FY) 2014/2015 to register $ 6.4 billion, the highest level since the 2011 revolution. The massive increase follows fiscal and legislative reforms adopted by Egypt since the beginning of FY 2014/15. European Union investments topped the investment inflows in FY 2014/2015 with $ 6.9 billion investments, where the United Kingdom s investments represented the highest share of 77.8% with $ 5.4 billion investments, followed by Belgium ($ million). Inflows from Arab countries increased by 51.6 % (Y/Y)in FY 2014/2015 to $ 2.7 billion,where the United Arab Emirates investments represented the highest share of total Arab countries inflows (52%) recording $1.4 billion, followed by Saudi Arabia $ million. Egypt is targeting $ 10 billion in foreign direct investment for the current financial year. The government hopes to cut unemployment from 11.2 %to 10.6 % this financial year Ashraf Salman Minister Of Investment Egypt Independent 13 th October 2015 IN THIS ISSUE... Banking Sector Updates Budget Deficit Reduction Measures Egypt s Economy Grew By 4.1 % In Fy2014/2015 Two New Exploration Licenses In The Egyptian Offshore Egypt will receive a $ 3 billion loan from the World Bank Net International Reserves Registered $16.3 Billion A WORLD OF REAL POSSIBILITIES 1

2 BANKING SECTOR UPDATES The Central Bank of Egypt (CBE) released the latest updates about the performance of the banking sector thorough its monthly bulletin that shows the following: ITEM( EGP MILLION) JUL-15 JUN-15 JUL-14 M/M % Y/Y % Securities & investments in TBs Loan & discount balances for customers 1,015,348 1,016, , % 22.3% 726, , , % 23.5% Assets 2,268,366 2,198,979 1,853, % 22.4% Provisions 66,358 66,049 63, % 4.9% Total deposits 1,773,768 1,734,178 1,453, % 22% Prime Minister Sherif Ismail announced on Saturday that the government has been tasked with reducing the budget deficit by 1.5 % annually. The government plans to reduce the energy subsidization to EGP 61 billion during the current fiscal year and to get rid of 70 % of subsidies over the next five years, but will continue to ensure that the neediest people get assistance Sherif Ismail Prime Minister Al Watan News 10 th October 2015 Investment Minister Ashraf Salman announced that Egypt s economy grew by 4.1 % in FY2014/2015 and is projected to grow by 5% to 5.2 % in FY 2015/2016. The Italian oil and gas company (Eni) has been awarded two new exploration licenses in the Egyptian offshore of the Mediterranean Sea, North El Hammad and North Ras El Esh. The company was awarded a 37.5 % participating interest and operatorship in North El Hammad in partnership with BP (37.5 %) and Total (25 %) and 50% participating interest in North Ras El Esh along with BP (50%) which will act as an operator. These two new concession agreements follow the recent award of the deep water Karawan and North Leil blocks, strengthening Eni s presence in Egypt, a country of historic and strategic importance for the company, and further relaunching its exploration activities after the recent and important successes of Nidoco NW and Zohr Eni s Press Release 12 th October 2015 Finance Minister Hani Qadri announced that Egypt will receive a $ 3 billion loan from the World Bank in installments over the next three years to support the state s budget. Egypt signed a deal with France to buy two Mistral warships that each can carry 16 helicopters, four landing craft and 13 tanks. The deal, estimated at about 950 million, was signed in the presence of the Egyptian President Abdel Fattah AL-Sisi and French Prime Minister Manuel Valls. France believes the world needs a strong and stable Egypt... we all have a common enemy, ISIS Manuel Valls French Prime Minister Yahoo News 10 th October 2015 Egypt s net international reserves continued to decline for three consecutive months to register $16.3 billion at the end of September down from $18.1 billion a month earlier which is considered credit negative according to the global credit rating agency Moody s Investors. The drop reflects continued dependence of Egypt s Balance of Payments on external donor support, which is credit negative for the country s external liquidity position Moody s Investors The Cairo Post 12 th October

3 Egypt s Central Bank Governor Hisham Ramez was chosen by the IMF and the World Bank as the best Central Bank Governor Of The Year For Middle East And North Africa during their annual meetings held in Peru from 8-11 October. The choice of Ramez was based on the measures he took to put Egypt on the right economic path. After some initial controls, which in the circumstances were reasonable, he [Ramez] has allowed the currency to ease, to create a more open market and weaken the black market in dollars George Abed Director For The Middle East And Africa At The Institute Of International Finance Emerging Markets 9 th October 2015 The Egyptian armed forces started the second phase of the army s operation Martyr s Right in North Sinai, including the commencement of various development projects and the implementation of reconstructions in North Sinai in the cities of Sheikh Zuweid, Arish, and Rafah, among others. On the 22 nd of September the armed forces announced the end of the first stage that included the killing of over 500 militants and destroying various terrorist refuges and weaponry storage facilities in North Sinai. An Egyptian court ruled to release Gamal and Alaa Mubarak, sons of former Egyptian President Hosni Mubarak, from prison after completing their three-year sentences on embezzlement charges related to a case known as the presidential palaces case. 3

4 EGYPT AT GLANCE EXCHANGE RATES USD EURO Sterling Pound W/W* M/M Y/Y YTD % 1.28% 10.33% 13.37% % 2.71% -1.45% -5.51% % 1.12% 6.76% 5.91% * Compared to 8tt of October 2015 EGP per USD EGP per Euro EGP per Pound Sterling STOCK MARKET W/W* M/M Y/Y EGX 30 7, % 6% % * Compared to 8tt of October 2015 YTD -13% EGX EGX 30 EGX 70 (Rel.) EGX 100 (Rel.) TB S AUCTION INTEREST RATES Auction Date 11 Oct Oct Oct Oct 2015 Maturity Average Yield % 91 Days Days Days Days Current* Previous** Overnight Deposit Rate 8.75% 9.25% Overnight Lending Rate 9.75% 10.25% Corridor Rate * Since January 2015 ** 9.25% Since July % -50 bp -50 bp -25 bp FX-AUCTION RATES Auction Date 8 th Oct US $

5 Zewail City, Cairo T : E : research@alexbank.com Head of Research Emil Eskander emil.eskander@alexbank.com Research Manager Hemat El Masry hemat.elmasry@alexbank.com Senior Associate: Sahar Ezz El Arab sahar.ezzelarab@alexbank.com Copyright Notice. The Weekly is a publication of ALEXBANK. No part of this publication may be reproduced or duplicated without the prior consent of ALEXBANK.This publication constitutes a summary of published news, quotes and economic indicators. This material does not constitute analytical economic research nor should be treated as such. All charts and graphs are from publicly available sources or proprietary data. Any views expressed in this publication do not necessarily reflect the opinion of ALEXBANK. The news, views and quotes within this publication are gathered from sources deemed to be reliable but which have not been independently verified. ALEXBANK does not make any guarantee to the accuracy or reliability of such information. AlexBank shall not be liable for any losses or damages incurred or suffered as a result of using its publications in part or in their entirety. 5