Egypt sees surge in share offerings, testing market

Central Bank of Egypt's headquarter is seen in downtown Cairo, Egypt September 18, 2018. (Reuters)
Updated 18 September 2018
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Egypt sees surge in share offerings, testing market

  • Public share sales first in more than a decade
  • International volatility could deter investors

CAIRO: A surge of new shares offerings over the next few months will test whether Egypt can withstand emerging market contagion after currency crises that rattled Turkey and Argentina last month.
The government hopes offerings in five state-controlled firms already trading on the stock exchange will help trim its budget deficit.
Five private companies planning initial public offerings (IPOs) by the end of the year which could spur investment and private-sector growth, which has been moribund since Egypt’s 2011 uprising. A sixth private company plans a rights issue.
Economists say international participation would help appetite among local investors but international market volatility may be chasing them away.
“A realistic good scenario is that you stick to your timeline and you’re able to sell your entire pipeline of offerings at very compelling valuations,” said Wael Ziada, head of investment company Zilla Capital.
“A bad scenario is that if there is a deep, deep crisis in emerging markets, you may have to pull some of these offerings,” said Ziada, former head of research at EFG Hermes, Egypt’s biggest investment bank.
The Japanese brokerage Nomura this month listed Egypt as one of seven emerging market countries, including Turkey and Argentina, at risk of foreign exchange rate crises.
An economist at an Egyptian investment company said the government’s sudden push to sell shares after a hiatus of more than a decade was stretching the ability of banks managing the offerings and the appetites of investors.
“You have to do the research, test the market, do the marketing and do a road show,” said the economist, who declined to named. “The government should be staggering the offerings.”
Egypt is working on selling shares in at least 23 state-owned companies over the next few years. Analysts say much of the state sector has been suffering heavy losses and companies need major management overhauls and modernization.
The government on Monday it said it would offer five of these in the coming three months. It will start in October with a 4.5 percent stake in cigarette maker Eastern Company and a 20 percent stake in Alexandria Mineral Oils Company (AMOC).

TEN BILLION TARGET
The government is hoping the sales will help it reduce its budget deficit to 8.4 percent of GDP in the year to June 2019 from 9.8 percent last year.
Finance Minister Mohamed Maait said last week the government had budgeted 10 billion Egyptian pounds ($560 million) in revenue from share sales between now and June 30, when the current fiscal year ends.
“However, if we can get more we will be happy,” he said.
At the same time, private companies are hoping to benefit from an improved macroeconomic climate after IMF-backed reforms and an increase in tourism revenues and natural gas production.
Mohamed Elakhdar, Beltone Investment Banking’s managing director, estimated that the private offerings would reap more than 10 billion Egyptian pounds — a similar figure to expected revenue from state company sales, but over just three months.
Beltone is managing the IPOs of leasing company Sarwa Capital and textiles company Giza Spinning and Weaving and a rights issue for a third company
“Appetite, yes. There is, I believe,” said Hany Farahat, senior economist at Egyptian investment bank CI Capital.
“The key challenge is related to the process, how these transactions have to be structured and marketed to investors. This is what could make them a big success or failure.”
Another round of IPOs — both private and government — is expected in the first six months of 2019.
“We’re on a road show right now. The demand we’re seeing has been fairly healthy,” said Beltone’s Elakhdar told Reuters. “People are viewing Egypt differently than the rest of emerging markets.” ($1 = 17.8600 Egyptian pounds)


Samsung announces folding phone with 5G — at nearly $2,000

Updated 21 February 2019
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Samsung announces folding phone with 5G — at nearly $2,000

  • The device looks similar to a conventional smartphone, but then opens like a book to reveal a display the size of a small tablet
  • Samsung is also making improvements to its flagship Galaxy S devices and plans to offer a 4G version of its folding phone
SAN FRANCISCO/LONDON: Samsung Electronics Co. Ltd. on Wednesday unveiled a nearly $2,000 folding smartphone in a bid to top the technology of Apple Inc. and Chinese rivals and reignite consumer interest amid slumping sales.
The Galaxy Fold will go on sale on April 26 and take advantage of new and faster 5G mobile networks. The device looks similar to a conventional smartphone, but then opens like a book to reveal a display the size of a small tablet at 7.3 inches (18.5 cm).
The device “answers skeptics who said that everything that could be done has been done,” DJ Koh, chief executive of Samsung Electronics, said at an event in San Francisco. “We are here to prove them wrong.”
Samsung remains the world’s largest smartphone maker with nearly a fifth of global unit sales but underperformed a slumping market last year. Chinese rival Huawei Technologies Co. Ltd. — whose Mate series of phones also command premium prices — gained market share. Other Chinese makers like Xiaomi Corp. have also been increasing prices, leaving Samsung to defend its turf against upstart rivals in addition to its longtime foe Apple.
With the foldable phone, Samsung is going on the offense on two fronts in the smartphone race: It is offering an eye-catching new feature with the big, bending screen and the first 5G connection in a premium phone, a feature analysts do not expect Apple to match until 2020.
Samsung is also making improvements to its flagship Galaxy S devices and plans to offer a 4G version of its folding phone.
It also challenges the notion of what a phone can cost, debuting at nearly twice the price of current top-of-the-line models from Apple and Samsung itself.
Patrick Moorhead, founder of Moor Insights & Strategy, said the new folding device could help Samsung stay at the top and lure consumers to upgrade devices that have looked largely the same over the past five years.
“Samsung and Apple go back and forth” to lead the premium smartphone market, Moorhead said. “I think this is Samsung’s chance to take back the innovation crown.”
And even though the $1,980 starting price is steep, some dedicated Samsung fans said they would pay it. Navneet Kumar Singh, a Samsung enthusiast from India who traveled to San Francisco to watch the launch, is ready to place his order.
“The prices of the flagship models have been a little aggressive in India,” he said, “But in the end, if you invest the money you’re getting a different experience.”
Samsung also introduced several accessories to compete against Apple, including a pair of wireless headphones called Galaxy Buds. The headphones include wireless charging, a feature that Apple has promised to put into is competing AirPods but has not yet released.
Samsung also said that its new Galaxy phones will be able to wirelessly charge its headphones and new smartwatches by setting the accessories on the back of the phone.

10 times faster
Along with the folding phone, Samsung also added new cameras and a 5G version to its Galaxy series of phones.
Verizon Communications Inc. will be the first carrier to offer service for Samsung’s 5G phones. The networks are expected to be 10 times faster than current ones, improving viewing of live news and sports events.
With the 5G versions of its flagships, the Korean electronics maker looks to have beaten Chinese rivals in the 5G race, although the device will operate only on the small number of networks launching later this year. Apple is not expected to release a 5G smartphone until late 2020.
The new networks are not available in many places yet but will roll out this year and next. Consumers who want to hold on to their phones for several years before upgrading may be tempted to buy a 5G phone now so that it will be able to take advantage of those networks later, said Bob O’Donnell of TECHnalysis Research. That could sway some Apple buyers over to Samsung and other Android makers with 5G devices.
“People are going to be thinking about, am going to be able to use this a year from now? Two years from now? Three years?” he said.
Rival smartphone makers are expected to announce 5G models at next week’s Mobile World Congress, the industry’s top annual event, in Spain. Samsung said its 5G handset would be available in the early summer.
The Galaxy 10 series needs to appeal to consumers who are reluctant to upgrade for only incremental technological improvements in performance.
All of the Galaxy series of rigid phones except the 5G will be available from March 8, with the S10+ priced from $1,000, the S10 priced from $900 and the smaller S10e from $750.
The mainline S10 compares with $999 for Apple’s iPhone XS and $858 for Huawei’s premium Mate 20 Pro.