|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||12.95 - 13.18|
|52 Week Range||10.81 - 14.46|
|Beta (3Y Monthly)||0.45|
|PE Ratio (TTM)||19.96|
|Earnings Date||Feb 25, 2020 - Mar 2, 2020|
|Forward Dividend & Yield||0.65 (5.02%)|
|1y Target Est||12.98|
(Bloomberg Opinion) -- As Egypt marks the third anniversary of its bailout by the International Monetary Fund, the results are decidedly mixed. While the state has managed to significantly reform its subsidy program, lower its budget deficit, strengthen its reserves, and devalue the pound, ordinary Egyptians have paid a significant cost. Austerity measures introduced to improve efficiencies in the market, coupled with the pound’s devaluation, have devastated their purchasing power and driven many into poverty.There is little gain to show for all this pain. Exports are down, the purchasing managers index has been negative nearly every month since the bailout began—indicating economic contraction outside of the oil and gas sector—and non-oil foreign direct investment is small and shrinking.While many contributing variables help explain these disappointing figures, the armed forces’ economic activity through an expanding network of military enterprises is central to Egypt’s long-term structural underperformance and its failure to properly benefit from the difficult and important reforms it has undertaken in the past few years.The military has played an outsized role in Egypt’s economy since the administration of President Gamal Abdel Nasser. The military competes with the private sector in producing an array of consumer goods, from bottled water to home appliances. Since the 2013 coup the military has grown even more aggressive in expanding its economic empire.One example is the armed forces’ decision in 2018 to build a billion-dollar cement factory despite the oversaturation in production capacity in Egypt. As a result, private cement manufacturers, already dealing with oversupply and rising input costs, have come under even greater pressure. The German-owned Tourah cement plant halted production entirely this summer due to oversupply in the market.As military enterprises grow, investors, both foreign and domestic, contend with the daunting prospect of competing with an institution that enjoys an array of comparative advantages—from lower taxes to looser regulatory controls, subsidized labor, and privileged access to credit. Naguib Sawiris, one of Egypt’s most prominent business leaders, complained in a recent interview that these advantages have deterred investment in the private sector.Aside from undercutting competition in the market, tax exemptions for military companies hurt the state’s fiscal position. As they take market share from taxable private entities, they cut into Egypt’s tax base. The country’s tax to GDP ratio is already stubbornly low at around 14%. To reduce the deficit and end the dependence on debt-driven stimulus, the government needs that figure to rise, but expanding untaxed military-led economic activity hampers that effort.President Abdel-Fattah El-Sisi has granted military companies a series of no-bid contracts to upgrade Egypt’s long-neglected infrastructure. While this policy may bolster Sisi’s support among his officers, it adds to Egypt’s already substantial infrastructure bill. Given the country’s economic challenges and significant upcoming infrastructure needs, this approach is wasteful, and possibly unaffordable.The military’s control over the government and its spending priorities also encourages rent-seeking behavior, emphasizing projects that benefit military companies. A military-owned company oversaw the Suez Canal expansion and another now manages the creation of the new administrative capital.To make matters worse, the authoritarian nature of the state denies investors access to information essential to making investment decisions. Much of the media is owned by the state or its institutions. Government data is dubious. The Central Bank’s claim to have floated the pound was challenged when a report found that the central bank had been using large state banks to stabilize the currency and impose a surreptitious peg to the dollar.Sisi floated the idea of listing military companies on the Egyptian Stock Exchange, framing this as an opportunity for the public and private sector to invest in, and benefit from, military enterprises. To comply with public-trading regulations, military companies would need to dramatically improve their transparency. But some of their private-sector competitors worry that the state could grant these companies yet another legal exemption, allowing public listing at a lower standard of disclosure. This would not only give them another advantage over the private sector, it would also damage the integrity of the EGX in the process.Egypt’s rulers have long prioritized control over growth, and patronage over progress. This has spawned a class of interested parties—the military preeminent among them—that sees no benefit in the reforms needed to lift the country out of poverty, such as reducing red tape and making regulations more consistent, coherent and efficiently applied; streamlining customs procedures; expanding judicial independence; and subjecting military enterprises to the same tax and regulatory burdens applied to the private sector.Such reforms would necessitate ceding power to the public. Preventing that from happening helps preserve the military’s competitive advantage over the private sector.Without these reforms, any appearance of improvement is just that: an appearance. The IMF program may have stabilized Egypt’s fiscal position, but it has not set the country on a path to sustainable growth or recovery. This why the market is reluctant to buy into Egypt’s current trajectory, as is indicated by the negative PMI figures and the stubbornly low levels of FDI, most of which are in the oil and gas sector. Between the cost of patronage, lost investments, and market instability, the military’s intervention in Egypt’s economy is a luxury the country can no longer afford.To contact the author of this story: Timothy Kaldas at KaldasTimothy@gmail.comTo contact the editor responsible for this story: Bobby Ghosh at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Timothy Kaldas is an independent risk adviser and nonresident fellow at the Tahrir Institute for Middle East Policy. For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- President Donald Trump’s decision to move American troops out of Syria to make way for a Turkish attack on pro-U.S. Kurdish forces cements America’s growing reputation in the Middle East for being unreliable, unpredictable and, increasingly, even weak.Unreliability was the first thing noticed — by America’s biggest critics, such as Iran; its main competitors, including Russia; and even its allies, including Israel and Saudi Arabia. The impression began to form during President Barack Obama’s first term, when Washington, after a period of dithering, abandoned Egypt’s President Hosni Mubarak, allowing his ouster after huge street protests. Was this America’s way of showing solidarity with friends?Such questions grew into serious doubts when Obama, with five other international powers, signed a nuclear agreement with Iran. Israel expressed alarm, and more quietly so did Gulf Arab countries. All feared it might even be the start of a broader U.S.-Iranian rapprochement that would replace their longstanding U.S. partnerships.It didn’t help when Obama called Gulf Arab countries “free riders,” and suggested they “share” the Middle East with Iran. To Saudis, especially, who had sided with the U.S. for decades, that felt like a betrayal.After the 2016 U.S. election, America’s Middle Eastern partners hoped President Donald Trump would improve matters. Instead, he kept up the unreliability, and added a heavy measure of unpredictability.Trump famously finds it advantageous to keep friends and foes alike off balance. Such unpredictability may be useful in the real estate business. It may also work in international relations for small, disruptive states like Iran and North Korea that rely on chaos and destabilization to further their agendas. But for a global power looking to preserve stability in a volatile region like the Persian Gulf, unpredictability is self-defeating.Even the Israelis, who benefited from Trump’s unpredictability when he recognized their annexations of Jerusalem and the Golan Heights, have been unnerved by his sudden reversals on North Korea and other global challenges. As they watch him abandon the Syrian Kurds to Turkey, some are wondering if they might be next.Saudi Arabia and other Gulf Arab countries have concluded that Trump sees them mainly as arms purchasers. So they have little difficulty imagining him making friends with Iranian leaders, and reaching for photo-ops and small diplomatic victories largely at their expense.Added to all this is the growing perception in the Middle East that the U.S. is losing, or has lost, the will to fight. While no one doubts America’s military and economic power, it has also, in the aftermath of disastrous campaigns in Iraq and Afghanistan, demonstrated serious conflict fatigue. That became evident when President Obama declined to enforce his own “red line” against the use of chemical weapons in Syria. And it appeared twice more recently when Trump essentially ignored Iran’s downing of an American drone and audacious attacks on Saudi oil facilities.But no action, or non-action, has been as stark as this week’s abandonment of the Kurds, who have been the key allies in the American battle against Islamic State terrorists. Now it appears to friend and foe alike that the U.S. has fundamentally lost its nerve in the Middle East. It will fight only in self-defense, and only as a last resort.All this calls to mind the 1956 Suez fiasco, which resulted in a collapse of British and French authority in the Middle East that presaged a broader loss of global clout for those declining European powers. At the time, they were being superseded by the rise of American and Soviet dominance.The U.S., in contrast, has undermined its own authority with no help from any other country or competitor. This only reinforces its image as a global power that, especially in the Middle East, is growing ever more unreliable, unpredictable and weak.To contact the author of this story: Hussein Ibish at email@example.comTo contact the editor responsible for this story: Mary Duenwald at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Hussein Ibish is a senior resident scholar at the Arab Gulf States Institute in Washington. For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
When Suez SA (ENXTPA:SEV) released its most recent earnings update (30 June 2019), I compared it against two factor...
Shares in French waste and water group Suez dropped more than 6% on Wednesday after its new chief executive unveiled a four-year plan to boost earnings but lacked clarity on dividends and planned asset sales. The plan unveiled on Wednesday by Bertrand Camus, who was appointed in May, follows an appeal in July by activist investor Amber Capital for a review of the utility's strategy to create more value for its shareholders. Camus' 2020-2023 strategy focused on boosting earnings per share, cutting costs and selling assets, but he declined to say which assets the firm may sell and gave no date for a long-awaited dividend increase.