Fortnightly, 14 November 2018

Fortnightly, 14 November 2018

November 14, 2018


14 November 2018
6 Kislev 5779
6 Rabi Al Awwal 1440




1.1  Israel & Boeing Sign Reciprocal Spending Agreement
1.2  Ben Gurion University and the State of Louisiana Announce Water Research Collaboration
1.3  Deputy Governor Dr. Baudot-Trajtenberg to Serve as Acting Bank of Israel Governor


2.1  Israel to Set Up Startup Incubators in India – Starting with Bengaluru in December
2.2  MTS Closes a $1.5 Million Investment
2.3  Shavit Capital Completes $100 Million Investment Round for Its Fifth Fund
2.4  Foresight Increases Stake in RailVision Following Successful Developments
2.5  Chinese Investors Participated in Three Out of the Four Largest Israeli Financing Rounds in 2018
2.6  The Hyundai Motor Company Invests in
2.7  Linse Capital, Together with Oppenheimer Asset Management, Invested $63 Million in Valens
2.8  Maverick Medical AI Raises $700,000
2.9  Mueller Water Products to Acquire Krausz Industries
2.10  Overwolf Raises $16 Million in Series B Funding Led by Intel Capital
2.11  Checkmarx Acquires Custodela to Bring Enhanced Automation to DevSecOps Programs
2.12  Turbonomic Expands In EMEA to Address Growing Demand for SMART Workloads
2.13  ForeScout Acquires SecurityMatters
2.14  Vitec Group Buys Amimon in $55 Million Cash Deal
2.15  Technion Launches t-hub, a New Center for Entrepreneurship and Innovation
2.16  RADA Announces $12 Million in New Orders
2.17  XM Cyber Closes $22 Million in Series A Funding
2.18  Cognigo Secures $8.5 Million Series A Round to Transform Data Protection & Privacy via AI


3.1  ICONS Coffee Shop Chain Eyes 40 Arabian Gulf Outlets by 2020/a>
3.2  BECO Capital Receives $15 Million from IFC
3.3  Cvent Continues Global Expansion with Opening of First Office in Dubai
3.4  Andersen Global Announces Expanded Presence in Saudi Arabia
3.5  Saudi Cinema Revenues Forecast to Hit $1.5 Billion by 2030
3.6  Saudi Car Sales Set to Rise 8% Courtesy of the New Women’s Market
3.7  Toys R Us Launches New Middle East E-Commerce Platform


4.1  Dubai Expands Plan for Phase 4 of Giant Solar Park
4.2  Softbank Said to Plan $1.2 Billion Solar Power Plant in Saudi Arabia
4.3  King Mohammed VI’s Renewable Energy Goals Reached Within Deadline


5.1  Lebanon’s Fiscal Deficit Up to $3.04 Billion by June 2018
5.2  Jordanian Parliament’s Committee Passes Draft Income Tax Law
5.3  Iraq’s 2019 Draft Budget Analysisr
5.4  Iraq Granted Exemption from US Sanctions on Iran’s Energy Exports
5.5  South Korea Wins $500 Million Deal for Electricity in Iraq

♦♦Arabian Gulf

5.6  Bahrain’s Growth Accelerates as Non-Oil Sector Expands
5.7  Dubai’s Nine-Month Trade Figure Exceeds $262 Billion
5.8  Saudi Budget Deficit Shrinks as Revenues Surge

♦♦North Africa

5.9  Egypt’s Foreign Reserves Rise to $44.5 Billion in October
5.10  Egypt’s Non-Oil Business Activity Slows Slightly in October
5.11  More Foreign Debt for Egypt?
5.12  Morocco Jumps 9 Places, Ranks 60th in World Bank ‘Doing Business’ Report
5.13  Morocco’s Trade Deficit Widens as FDI Drops by 2.7%


6.1  Turkey’s Inflation Hits 25% in October, Highest in 15 Years
6.2  Turkey’s Automotive Exports See Second-Highest Monthly Figure – $2.9 Billion in October
6.3  Greece Slips in World Bank’s Ranking on Ease of Doing Business



7.1  Forty Two Countries to Participate in Tel Aviv Eurovision Song Contest


7.2  UAE Private Sector to Get Long Weekend for Mawlid Al Nabi
7.3  QS Reveals the Best Universities in the Arab Region
7.4  UAE Now Requires Pre-Approval to Bring Personal Medicines Into the Country
7.5  Half of Moroccan University Students Drop out Before Graduation


8.1  iCAN Signs Bilateral Service Agreement With Global Technology Company
8.2  Zion Medical Announces Results of First Human Clinical Trial of HIV drug Gammora
8.3  Sweetch Partners With WellSpan Health to Help Fight Diabetes
8.4  FruitSpec Completes Successful Field Studies
8.5  Cellect Receives Multiple Patent Grants
8.6  Taranis Gets $20 Million Series B for its Crop-Monitoring Technology
8.7  PolyPid Raises $15 Million
8.8  ConTIPI Medical Raises $11 Millions
8.9  Alpha Tau Medical Launches New Clinical Trials in Italy with Leading Cancer Centers
8.10  MaxQ AI Receives FDA Clearance for Accipio Ix Intracranial Hemorrhage Platform
8.11  HemoScreen Hematology Analyzer for Point of Care Receives FDA 510(k) Clearance


9.1  Camilyo Scores a Triple Win at the SIINDA Industry Excellence Awards 2018
9.2  Gilat to Provide the Ground Network for China Satcom’s ChinaSat-18
9.3  KPN Chooses Allot Service Gateway to Deliver Superior Network Performance
9.4  Elbit Systems to Provide Maritime UAS to the European Union Maritime Safety Agency
9.5  Ladingo Takes Top Prize at Retail Disrupt Startup Competition
9.6  VoiceSense Launches Speech-based Predictive Analytics Solution for Human Resources
9.7  2bPrecise Honored as One of Israel’s Top Startups
9.8  IDRRA Named a “Cool Vendor” by Gartner for 2018
9.9  Moovit Partners with Microsoft to Provide Public Transit Data for Azure Maps
9.10  Innoviz’s Solid-State LiDAR Wins CES 2019 “Best of Innovation” Award
9.11  CloudAlly Introduces a Backup Solution for Dropbox Business
9.12  Foresight’s QuadSight Vision System Wins Prestigious 2019 CES Innovation Award


10.1  The Composite State of the Economy Index for September 2018 Increases by 0.3%
10.2  Israel’s Budget Deficit Climbs by 3.6%
10.3  Israel Improves Ease of Doing Business Ranking


11.1  JORDAN: Moody’s Affirms Jordan’s B1 Ratings, Maintains Stable Outlook
11.2  UAE: Fitch Affirms Abu Dhabi at ‘AA’; Outlook Stable
11.3  EGYPT: IMF Agreement on the Fourth Review for Egypt’s Extended Fund Facility
11.4  MOROCCO: Fitch Affirms Morocco at ‘BBB-‘; Outlook Stable
11.5  TURKEY: Turkey’s Crisis-Hit Construction Sector Threatens Big Fallout


1.1  Israel & Boeing Sign Reciprocal Spending Agreement

Boeing has agreed to spend billions of dollars in Israel over the coming decade if it wins major defense contracts, Israel’s Economy Ministry said on 30 October.  The “reciprocal procurement” agreement calls for Boeing to collaborate with Israeli industries for at least 35% of the value of any transaction it signs with the Israeli government.  This could ease concerns in Israel over new requirements in a U.S. aid package that divert funds away from local industries.

Boeing is competing in Israel for a number of key Defense Ministry contracts, including the purchase of additional F-15 aircraft, fueling planes and a squadron of transport helicopters.  With Israel expecting to make about $10 billion of military purchases from Boeing over the next decade, the agreement with the U.S. aerospace company means $3.5 billion in new business in Israel.

Under a defense aid deal signed in 2016 by Israeli Prime Minister Netanyahu and then U.S. President Obama, the United States agreed to provide Israel with $38 billion in military assistance over 10 years.  However, one component of the deal was to phase out a special arrangement that had allowed Israel to use 26.3% of the U.S. aid on its own defense industry instead of on American-made weapons.  All the aid will now have to be spent on U.S. equipment by 2026.  (Reuters 31.10)

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1.2  Ben Gurion University and the State of Louisiana Announce Water Research Collaboration

Louisiana Governor John Bel Edwards visited Beer Sheva’s Ben Gurion University in late October to participate in the signing of a research Memorandum of Understanding (MOU) between BGU’S Zuckerberg Institute for Water Research and the Water Institute of the Gulf in Baton Rouge.  The MOU calls for the two institutes to collaborate on research and development projects related to integrated water resource research and applied science, and to collaborate on decisions related to water management issues.  This will include exchanging research staff and students, as well as conducting joint research and academic meetings.

Governor Edwards added that he expects the five-year agreement to lay the groundwork for advanced bilateral projects focusing on issues including ecological and stream restoration, transboundary water resource research, water/groundwater modelling, policy and planning for sustainable management of water resources, agricultural efficiency, improved water quality, advancing water resource technology, and more.

The Zuckerberg Institute for Water Research (ZIWR) is located in Midreshet Ben Gurion as part of The J. Blaustein Institutes for Desert Research, Ben-Gurion University of the Negev.  Two departments operate within the Institute: The Department of Environmental Hydrology & Microbiology and The Department of Desalination & Water Treatment.  Studies of advanced degrees of MSc. and PhD in Hydrology and Water Quality are part of an international program and are conducted in English.  Students attend from all over the world.  ZIWR is also actively engaged in research projects within Israel and globally.  (BGU 31.10)

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1.3  Deputy Governor Dr. Baudot-Trajtenberg to Serve as Acting Bank of Israel Governor

In accordance with the Bank of Israel Law, 5770-2010, if the Governor has ceased to serve in the position, the Deputy Governor shall take the place of the Governor and shall be authorized to exercise the Governor’s powers until a new Governor is appointed.  As such, beginning on 14 November 2018, and until the new Governor shall take up the position, Deputy Governor Dr. Nadine Baudot-Trajtenberg will serve as Acting Governor and will be authorized to exercise the powers accorded to the Governor.  The date of the new Governor beginning his term in office shall be determined after his appointment is approved by the Government.  (BoI 13.11)

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2.1  Israel to Set Up Startup Incubators in India – Starting with Bengaluru in December

The Modi’in Entrepreneurs’ Startup Hub (MESH) will set up an India-Israeli Innovation Centre (IIIC) in Bengaluru, which will be its first startup incubation facility in India after the US, the UK and China.  IIIC in Bengaluru is expected to be launched mid of December this year, which will be followed by two more such incubation facilities in India.  The Bengaluru facility, which is MESH’s fourth such facility globally, will be set up in the central business district of Bengaluru and will be operated by MESH itself.  Startups that are part of IIIC will be given mentorship and guidance and opportunities to participate at all IIIC’s Global events and experience networking avenues with potential customers.

Beside giving Indian startups access to Israeli investors and frontier tech talent, the Bengaluru and other upcoming incubator facilities will bring on board both Israeli and Indian educational institutions for collaboration and co-research, under which Israel’s Technion, Ben-Gurion and Tel Aviv Universities will cooperate with India’s IITs and IIIT.

As well, Israel is aligning its India strategy around government initiatives like Startup India and Digital India. Israel has also identified six cities for starting these kind of incubation centers.  Additionally, for Bengaluru and other upcoming incubation facilities in India, Israel will team up with Indian government policy think tank, NITI Aayog, and Atal Innovation Mission, an innovation promotion platform involving academics, entrepreneurs, and researchers.  (IW2 Research 13.10)

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2.2  MTS Closes a $1.5 Million Investment

MTS – Mer Telemanagement Solutions announced the closing of the investment by an institutional investor, of $1.5 million in the newly-created class of convertible preferred shares of the Company, at a price per preferred share of $1.14.  The closing follows the approval of the Securities Purchase Agreement and the transactions contemplated thereby (the SPA) by the Company’s shareholders at the Company’s annual general meeting of shareholders held on 28 October 2018.  The price per share was determined based on a 15% discount to the volume weighted average price of the Company’s ordinary shares for the three trading days preceding the signing of the term sheet with the institutional investor in June 2018.

Ra’anana’s Mer Telemanagement Solutions (MTS) is focused on innovative products and services for enterprises in the area of telecom expense management (TEM) and Call Accounting.  MTS markets its solutions through wholly-owned subsidiaries in Israel, the U.S and Hong Kong, as well as through distribution channels.  (MTS 31.10)

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2.3  Shavit Capital Completes $100 Million Investment Round for Its Fifth Fund

Shavit Capital completed a $100 million funding round for its fifth fund.  Shavit Capital has over $400 million under management in five funds and specializes in pre-IPO investments in leading technology companies with a special focus on the life science sectors.  Shavit Capital is one of the most active investors in late-stage life sciences companies. Shavit Capital’s portfolio includes Foamix Pharmaceuticals, Kamada, Anchiano Tx (formerly BioCancell), Gamida Cell, Brainsway, Alpha TAU Medical and PolyPid.

Shavit Capital, which until now has focused on companies planning an IPO on Nasdaq, is expected to expand its activities to include companies nearing flotation in other markets, such as Europe, Canada, Australia and Hong Kong.  Shavit works closely with most of the leading international investment banks that specialize in raising capital for Israeli companies.  Shavit leads investment rounds ranging in size from $20 million to $60 million and its investments are also supported by leading financial institutions in Israel and around the world.  Shavit’s co-investors also support the fund’s portfolio companies when they go public.  Currently, Shavit is leading several investment rounds, including a round for a security company that plans to go public in Australia, and a $40 million investment round for Syqe Medical, which is developing an advanced inhaler for medical cannabis.

Jerusalem’s Shavit Capital was founded in 2007.  The fund’s investors include leading financial institutions from the United States, Asia and Israel, as well as owners and senior managers of leading investment banks and multibillion dollar hedge funds.  (Shavit Capital 31.02)

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2.4  Foresight Increases Stake in RailVision Following Successful Developments

Foresight Autonomous Holdings has increased its stake in RailVision by exercising warrants into 2,704 of RailVision’s ordinary shares for an aggregate of $0.6 million.  The exercise follows RailVision’s successful participation at the InnoTrans International Trade Fair for Transport Technology last September in Berlin, where RailVision demonstrated substantial technological and commercial progress.  Following the exercise, Foresight holds 36.33% of the issued and outstanding share capital of RailVision and 33.78% on a fully diluted basis.

At the InnoTrans fair, RailVision presented its add-on big data module concept, enabling customized real-time and offline analysis of rail infrastructure and the surrounding ecosystems.  The module concept is designed to carry out digital mapping of relevant areas, enabling infrastructure verification and behavioral and environmental trend analysis.  In addition, it generates comprehensive, easy-to-view reports, supporting condition monitoring and predictive maintenance of infrastructure.

Ra’anana’s RailVision is a leading provider of cutting-edge cognitive vision sensor technology and safety systems for the railway industry.  RailVision offers a solutions suite for mainline and shunting yard, equipped with deep learning technologies and designed to extend the locomotive driver’s visual range by up to two kilometers at all times of day and in all weather conditions.  RailVision aims to improve the safety of trains operating at all speeds.

Ness Ziona’s Foresight Autonomous Holdings, founded in 2015, is a technology company engaged in the design, development and commercialization of stereo/quad-camera vision systems and V2X cellular-based solutions for the automotive industry.  Foresight’s vision systems are based on 3D video analysis, advanced algorithms for image processing and sensor fusion.  (Foresight 05.11)

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2.5  Chinese Investors Participated in Three Out of the Four Largest Israeli Financing Rounds in 2018

A report by IVC Research Center indicates that Chinese investors are clearly favoring mature and profitable mainstream Israeli companies.  According to the report, four Israeli high-tech deals raised over $100m each, with Chinese investors participating in three of them.  They also participated in 35% of the largest Israeli deals in the first three quarters of 2018.  Chinese investors’ activity has grown steadily though slowly over the past two years from 15 investments per quarter to about 20 investments.  Analysis of their deal preferences has revealed a tendency for mainstream sectors such as software and life sciences companies.  The expansion of Chinese investors’ activity in Israeli high-tech companies capital raising is evident in Q1 – Q3/18 as Chinese investors participated in all 17 companies, which raised over $20m each.  In addition, IVC found that in the past five years, Chinese investors participated in 17 deals of over $50m each, with almost 60% of the deals in 2017–2018.  (IVC 06.11)

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2.6  The Hyundai Motor Company Invests in

Hyundai Motor Company announced its strategic investment in  Established in 1967, Hyundai Motor Company is committed to becoming a lifetime partner in automobiles and beyond with its range of world-class vehicles and mobility services offered available in more than 200 countries.  Hyundai explains that through this partnership, Hyundai aims to speed up the deployment of AI technologies across various business areas.  Hyundai expects to provide safer driving experiences for its customers by adopting DL computer vision technologies from prominent firms such as in its vehicles.  These technologies can be applied to autonomous driving systems to enhance road navigation and real-time decision making. is proud to partner with Hyundai and share Hyundai’s belief that AI empowers the industry to provide greater road safety, autonomy, to better understand customers’ needs and to help broaden their experiences.  With this addition of Hyundai Motor Company,’s investors now include MizMaa Ventures, Robert Bosch Venture Capital GmbH, Samsung Catalyst Fund, Hyundai Motor Company, Dynamic Loop Capital and Gandyr.

Ramat Gan’s allegro.aAI is a deep learning computer vision platform that provides a complete product lifecycle management solution for AI development & production, starting with computer vision.  The company’s platform simplifies the process of developing and managing deep learning powered solutions – such as for autonomous vehicles, robotics, security cameras, logistics and others.  (Allegro.AI 05.11)

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2.7  Linse Capital, Together with Oppenheimer Asset Management, Invested $63 Million in Valens

Valens announced that Linse Capital, joined by Oppenheimer Asset Management, invested a total amount of $63 million as part of this financing round.  The company, whose chipsets simplify in-vehicle connectivity, is looking to accelerate the development of its portfolio for the autonomous vehicle sector and address the ongoing requirements of its automotive partners.

Since its latest funding in 2017, Valens, with strategic partnerships with leading OEMs and tier-1s, has identified significant opportunities in the autonomous sector.  By raising additional capital, the company will be ramping up its activities in the sector, addressing in-vehicle high-performance computing, smart architectures and PCIe transmission, to realize the vision of the autonomous car.

Hod HaSharon’s Valens Automotive, a division of Valens, was established in 2015 with the singular goal of delivering the world’s most advanced audio/visual chipset technology to the automotive world.  Valens HDBaseT Automotive chip technology enables unparalleled in-vehicle connectivity, converging audio & video, Ethernet, USB, controls, PCIe, and power over a single cable.  Valens’ patented HDBaseT technology is used by the world’s largest audio/video component manufacturers, enabling the highest quality of connectivity without the limitations of legacy infrastructure.  (Valens 07.11)

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2.8  Maverick Medical AI Raises $700,000

Tel Aviv’s Maverick Medical AI has announced that it has raised $700,000 from The Time, the leading Israeli technology incubator in the field of Artificial Intelligence, together with the Israel Innovation Authority.  The funding will be utilized for the company’s development of its medical artificial intelligence-based solutions for identifying chronic disease in elderly populations based on text-based analysis of medical reports, and for implementing its solutions with U.S. healthcare providers and insurers.

Maverick AI is developing an advanced AI software system based on NLP (Natural Language Processing) and Machine Learning identifies clinical risk factors out of medical reports such as specialist and hospitalization reports.  These risk factors are chronic diseases that may not be fully documented in the elderly patient’s medical record due to the excess of information available to the attending physician, and may therefore be overlooked.  The Maverick AI system assists physicians, healthcare providers and insurers to identify these risk factors thereby ensuring better medical care to the patient and to reduce medical care costs by preventing complications.  The benefits offered by the system provide substantial value to the Medicare Advantage Plans and other value-based care programs.

The technology at the core of the company’s system is geared to specific elements in medical reports.  It allows the system to analyze medical reports written in unstructured text and to convert them into actionable diagnoses which are then presented to the physician.  The system is being developed based on large databases (millions of specialist reports) that are required in order to train neural networks.  (Maverick Medical AI 05.11)

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2.9  Mueller Water Products to Acquire Krausz Industries

Atlanta’s Mueller Water Products has signed a definitive agreement to acquire Tel Aviv’s Krausz Industries, a manufacturer of pipe couplings, grips and clamps, for $140 million in cash.  Krausz Industries provides a full suite of innovative and proprietary pipe couplings, grips and clamps under the HYMAX brand for the global water and wastewater industries.  The Company was founded in 1920, with manufacturing operations in Israel, distribution facilities in the U.S., and 300 employees world-wide.  Krausz had net sales of approximately $43 million in 2017 with approximately 75% of its sales generated in North America.  The transaction is subject to customary closing conditions and is expected to close in December 2018.

Once the transaction has closed, Krausz Industries will become part of Mueller Water Products’ Infrastructure segment.  Krausz’s product line of pipe couplings, grips and clamps are designed to address repair or pipe connection needs across a broad range of applications, pipe sizes and pipe materials.  Krausz has a history of growth, profitability, and execution through new product development.  The acquisition aligns with Mueller Water Products’ strategic focus on product and geographical expansion, and is complementary from product, distribution, customer and manufacturing perspectives.  This acquisition will also position Mueller in the growing pipe repair market.  (Mueller Water Products 05.11)

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2.10  Overwolf Raises $16 Million in Series B Funding Led by Intel Capital

Overwolf announced a $16 million round of funding led by Intel Capital, with additional investments from Liberty Technology Venture Capital as well as existing investors.  Overwolf is building an open platform of game apps and in-game services, with over 10 million monthly active players across mobile and desktop.  Overwolf’s mission is to generate value for every gamer in every game by empowering 3rd-party creators and developers.  Overwolf provides gamers hundreds of useful apps for popular PC and mobile games, from real-time coaching services, analytics solutions, video recording tools and much more.

Being an open platform obsessed with the developer experience, Overwolf intends to heavily invest into new and innovative tools that give developers a best-in-class app publishing experience.  Overwolf’s goal is to generate more value for developers of all sizes – from private independent contributors to venture-backed startups and large corporate developers.  This is Overwolf’s third investment round after a seed round in mid-2011 and a series-A round at the end of 2013.  The company is growing swiftly and recruiting for its Tel Aviv site.

This round of funding comes shortly after the announcement of a joint fund of over $7M by Intel and Overwolf, for the purpose investing in apps and mods for hardcore gamers.

Tel Aviv’s Overwolf‘s mission is to provide value for every gamer in every game by empowering third party developers.  Working with passionate creators, venture backed startups and large corporates, Overwolf helps developers unlock new game features that improve game experiences and support the game publishers.  Overwolf’s partners include Intel, OP.GG, NVIDIA, Cloud9, Team Liquid, Riot Games, Logitech and many others.  (Overwolf 07.11)

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2.11  Checkmarx Acquires Custodela to Bring Enhanced Automation to DevSecOps Programs

Checkmarx has acquired Custodela, an Ontario-based provider of software security program development and consulting services focused on DevSecOps.  The acquisition positions Checkmarx to uniquely empower CIOs and CISOs in accelerating the maturity of their DevSecOps programs with expert services for software security deployment and automation.

Only Checkmarx enables businesses to take a comprehensive, unified approach to managing software exposure at the speed of DevOps.  Unlike siloed, gate-based application security approaches, Checkmarx gives organizations a more holistic, platform-centric approach where security is driven from a business context perspective and implemented effectively and continuously through automation.  In turn, Checkmarx supports all stages of the software development lifecycle while bridging the gaps between senior management and business stakeholders, development, DevOps and operations.

Ramat Gan’s Checkmarx is the Software Exposure Platform for the enterprise.  Over 1,400 organizations around the globe rely on Checkmarx to measure and manage software risk at the speed of DevOps.  Checkmarx serves five of the world’s top 10 software vendors, four of the top American banks, and many government organizations and Fortune 500 enterprises, including SAP, Samsung, and  (Checkmarx 07.11)

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2.12  Turbonomic Expands In EMEA to Address Growing Demand for SMART Workloads

Boston’s Turbonomic, the leader in workload automation for hybrid cloud and three-time ranking Forbes Cloud 100 company, is expanding its international footprint in EMEA opening its first Center of Cloud Excellence (CoCE) in Tel Aviv, Israel.  Focused on research and development (R&D), the CoCE will ensure the highest level of cloud innovation, support and expertise to help customers advance and achieve their Microsoft Azure and Amazon Web Services (AWS) cloud strategy goals.  Additionally, in support of a doubling of the number of alliances in the region over the past year, a new representative office in Paris, France will support the Company’s growing European sales, alliances and channel and marketing organizations.

Turbonomic workload automation for hybrid cloud continuously assures that all workloads get precisely the resources needed to ensure performance and eliminate overspending while maintaining policy compliance.  Founded in 2009, Turbonomic is one of the fastest-growing technology companies, trusted by thousands of enterprise organizations to activate their hybrid cloud journey.  (Turbonomic 05.11)

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2.13  ForeScout Acquires SecurityMatters

ForeScout Technologies announced it has acquired SecurityMatters, a global leader in operational technology (OT) network protection, for approximately $113 million in cash, subject to customary adjustments.  The acquisition will bolster ForeScout’s global leadership position in agentless device visibility and control across the extended enterprise with expanded capabilities and advanced features to secure OT and industrial environments.

Founded in 2009, SecurityMatters provides organizations with device visibility, continuous network monitoring, and threat and anomaly detection specific to operational technology and industrial environments using passive collection techniques that don’t impact operations. Its solution protects networks from the widest range of threats utilizing patented technology and with a library of over 1600 ICS-specific threat indicators.

Tel Aviv’s ForeScout Technologies helps make the invisible visible.  The company focuses on providing Global 2000 enterprises and government agencies with agentless visibility and control of traditional and IoT devices the instant they connect to the network.  Our technology integrates with disparate security tools to help organizations accelerate incident response, break down silos, automate workflows and optimize existing investments.  (ForeScout 08.11)

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2.14  Vitec Group Buys Amimon in $55 Million Cash Deal

London-listed Vitec Group has acquired Israel-based chipmaker Amimon Inc in a $55 million cash deal, Vitec announced in a filing to the London Stock Exchange.  Including added expenses such as employee retention costs, the deal is valued at $59.9 million.

Herzliya’s Amimon, headquartered in San Jose, California, but the majority of its 60 employees are employed in its Israeli research and development center.  The company develops chipsets and modules for real-time wireless video transmission.  The company registered revenues of $18.6 million and an operating loss of $0.7 million for 2017, and revenues of $13.4 million for the first three quarters of 2018, according to Vitec.

Vitec, which has been a customer of Amimon since 2012, announced it will integrate the company into its creative solutions division.  The integration is expected to increase the division’s EBITDA by $4 million in 2019, $7.5 million in 2020 and $9 million in 2012, Vitech said.  (Vitec 11.11)

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2.15  Technion Launches t-hub, a New Center for Entrepreneurship and Innovation

Technion – Israel Institute of Technology won a NIS 10 million grant for the advancement of entrepreneurship and innovation as part of a “New Campus Vision” competition of the Council for Higher Education.  The grant will be used to establish t-hub – The Technion Entrepreneurship and Innovation Center, based on the strategic plan for entrepreneurship and innovation formulated by the university during the past two years.  Technion is the only academic institution to win the competition individually.

Since its establishment, the Technion has championed the integration of basic science and applied research, striving to advance scientific knowledge while cultivating the desire to exploit it for the benefit of humanity.  Technion has nurtured entrepreneurial thinking for many years and has pioneered the development of curricula for all students.  The first entrepreneurship course was founded 30 years ago on campus.

t-hub will serve as a focal point for all entrepreneurial activities of Technion faculties; will encourage entrepreneurial thinking through teaching, research, and practical experience; and enable each student, faculty member, and others to experience entrepreneurial activities through centralized activities as well as by encouraging local initiatives.  The Technion’s Entrepreneurship and Innovation Center has many partners among Israel’s leading industrial and hi-tech companies including Teva, Rafael and Alpha Omega.  (Technion 12.11)

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2.16  RADA Announces $12 Million in New Orders

RADA Electronic Industries announced the receipt of over $12 million in new orders, in recent weeks.  Out of these, over $5 million were orders for RADA’s software-defined radars for counter rocket artillery and mortar (C-RAM), counter UAV and short range air defense (SHORAD).  The majority of these orders were from new and strategic defense organizations, and these orders represent initial orders with potential for much greater follow-on orders in the future.  Portions of the orders were follow-ons from customers that have placed initial orders earlier this year.  Almost $7 million out of the $12 million, were follow-on orders for RADA’s legacy avionics, including avionics for UAVs, helicopters, digital video recorders, and ongoing maintenance orders for RADA’s wide installment base of core avionics for military platforms.

Netanya’s RADA Electronic Industries, a defense electronics company, specializes in the development, production, and sales of Tactical Land Radars for Force and Border Protection, and Avionics Systems (including Inertial Navigation Systems) for fighter aircraft and UAVs.  (RADA 12.11)

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2.17  XM Cyber Closes $22 Million in Series A Funding

XM Cyber has closed a $22 million Series A funding round with the participation of Macquarie Capital, Nasdaq Ventures, Our Innovation Fund, LP and UST Global, among others.  The company has now raised a total of $32 million, following a previous seed round of $10 million from Swarth Group.

XM Cyber will use the funding to accelerate its strong growth through expanded sales, marketing and engineering programs.  The company, a leader in the “Breach and Attack Simulation” category, has already received 16 industry awards this year on the strength of its HaXM platform, including being recognized as a “Technology Pioneer” by the World Economic Forum.  XM Cyber’s customers include leading financial institutions and critical infrastructure organizations across North America, Europe, Israel and Australia.

Herzliya’s XM Cyber provides the first fully automated APT simulation platform to continuously expose attack vectors, above and below the surface, from breach point to any organizational critical asset.  This continuous loop of automated red teaming is completed by ongoing and prioritized actionable remediation of security gaps.  In effect, HaXM by XM Cyber operates as an automated purple team that fluidly combines red team and blue team processes to ensure that organizations are always one step ahead of the attack.  (XM Cyber 13.11)

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2.18  Cognigo Secures $8.5 Million Series A Round to Transform Data Protection & Privacy via AI

Cognigo announced the completion of a $8.5 million Series A round.  The round was led by, with Prosegur and State of Mind Ventures.  The new funding will be used to support Cognigo’s global sales and marketing expansion and product development, as well as further fuel investment in its Cognitive Computing technology, which helps organizations achieve data protection and privacy regulatory compliance (such as GDPR, PIPEDA, CCPA and others).

Tel Aviv’s Cognigo is the world’s first AI-driven platform for data protection and compliance, offering a single point of control to manage and secure critical data, sensitive assets and PIIs.  Cognigo’s AI-driven solution provides a human-free data discovery, classification and protection platform, which supports structured and unstructured data – both for on premise and cloud data silos.  (Cognigo 13.11)

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3.1  ICONS Coffee Shop Chain Eyes 40 Arabian Gulf Outlets by 2020

ICONS Coffee Couture, a health conscious lifestyle coffee shop chain, is planning to open 40 stores across the Arabian Gulf region by 2020.  Through a partnership with ABL Company, the retailer is currently looking at an expansion across Kuwait with six branches.  The brand is also looking at a 10 company-owned store expansion in the UAE within the next six months, of which the newest Icons Branch just opened its doors at Manar Mall, Ras Al Khaimah.

ICONS said its vision is to be pivotal in creating healthier communities around its coffee shops through nutritious and balanced food offerings, and education and promotion of an active lifestyle.  The chain is now available in six countries including the UAE, Qatar, Saudi Arabia, Bahrain, Oman and Austria.  (AB 10.11)

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3.2  BECO Capital Receives $15 Million from IFC

IFC, a member of the World Bank Group, is investing a total of $15 million in a pair of investment funds managed by Dubai’s BECO Capital, part of an effort to support technology startups and drive innovation across MENA.  IFC invested $5M in BECO Capital’s inaugural $50M investment vehicle, launched in 2012. IFC has also invested $10M in BECO’s newest venture capital fund, which is expected to reach up to $100M.  BECO Capital has been an early backer of some of the region’s most successful technology companies including Careem, Property Finder, and Vezeeta. Such early support is considered crucial in a region where many entrepreneurs struggle to get the funding they need to turn their ideas into reality.

To-date, BECO’s inaugural fund has supported 16 technology companies, which have collectively created more than 6,000 direct jobs and raised $750M from other investors.  IFC’s investment in BECO’s first fund will help provide follow-on funding to high-potential portfolio companies.

BECO’s 2nd fund is expected to support 24 startups over 5 years.  IFC’s support for the 2nd fund has helped mobilize investments from other large investors such as RIMCO (a subsidiary of Rashed Al Rashed, a Saudi conglomerate) and Bahrain Development Bank’s Al Waha Fund of Funds.

IFC has invested in startup incubators in places like Egypt, Judea & Samaria and Gaza; while also investing larger venture capital funds, including the pan-MENA Wamda and the Egypt-focused Algebra Ventures.  (ArabNet 31.10)

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3.3  Cvent Continues Global Expansion with Opening of First Office in Dubai

Virginia’s Cvent, a market leader in meetings, events and hospitality technology, announced the opening of its first office in the Middle East.  Located in the heart of Dubai, the new location will serve as a regional hub enabling the company to service current clients more quickly and address the growing demand for its event and hospitality cloud platforms in the Middle East and Africa.  With more than 100 customers in the region, Cvent has established a strong client base including top brands and leading luxury hotels such as PwC, Qatar Foundation, Arabian Exhibition Management, Marriott Hotels, Shangri-La Hotel, and Atlantis-The Palm.  Opening this office in Dubai showcases the region’s thriving MICE industry and highlights Cvent’s ongoing expansion and growing customer base across the globe.

With the upcoming World Expo 2020, Dubai is poised for incredible growth in the tourism and hospitality sectors, offering more opportunities to attract group and corporate travel to the region.  In response to increased MICE interest and RFP volume going into the Middle East and Africa (MEA) region, Cvent for the first time launched a separate category for MEA in its annual list of the Top Meetings Destinations.  Additionally, Dubai properties took 17 of the top 25 spots in Cvent’s inaugural Top Meeting Hotels list in Middle East & Africa, further illustrating the region’s growing impact as a leading tourism and business travel destination.  (Cvent 05.11)

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3.4  Andersen Global Announces Expanded Presence in Saudi Arabia

Andersen Global furthers its expansion into the Middle East with news that the leading independent tax consulting firm in Saudi Arabia (KSA) has become a collaborating firm of Andersen Global.  Alrikaz Tax Consultants has signed a Collaboration Agreement with Andersen Global, expanding Andersen Global’s presence in the country with the largest economy in the region, and paving the way for continued growth.  Alrikaz has five offices and nearly 100 employees across major economic hubs of KSA, including Jeddah, Riyadh and Al Khobar.  Andersen Global’s expansion in the Middle East has been significant this year and includes added presence in UAE, Kuwait, Jordan and Lebanon.  Andersen Global is an international association of legally separate, independent member firms comprised of tax and legal professionals around the world.  (Andersen Global 08.11)

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3.5  Saudi Cinema Revenues Forecast to Hit $1.5 Billion by 2030

While the Arabian Gulf will see the development of more than 1,000 new cinema screens in the next three to five years, total cinema revenue in Saudi Arabia is expected to reach $1.5 billion by 2030.  PwC Middle East forecasts are based on a projected 2030 population of 39.5 million, and 6.6 screens per 100,000 people.  Based on global and regional benchmarks, PwC said it expects Saudi Arabia to accommodate between 300 and 370 cinema locations.  Based on pricing of $11–$14 for lower end formats, and $40 for luxury formats, Saudi Arabia could generate $950 million in box office revenues by 2030.  As other revenue streams typically account for 35% of overall revenues, this brings the total to $1.5 billion,

The Arabian Gulf region will see the development of more than 1,000 new cinema screens in the next three to five years, as developers and cinema operators announced massive investment plan at the forum that took place at the Grand Hyatt hotel in Dubai.  The region has 1,300 cinema screens in operation.  The announcement of 1,000 cinema screens will see more than 2,300 cinema screens in operations in the next five years, with the majority of the new screens to open in Saudi Arabia.  Majid Al Futtaim, which operates 355 cinema screens, is investing AED2 billion in adding 600 cinema screens in Saudi Arabia.  Novo Cinemas, which operates 124 screens in 10 locations with 19,000 seats, will also add more cinemas in the next few years.

Globally, the number of cinema screens has crossed 150,000, PwC Middle East said, adding that in the MENA region, box office revenue exceeded $500 million last year, up 3% from 2016.  (AB 03.11)

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3.6  Saudi Car Sales Set to Rise 8% Courtesy of the New Women’s Market

Saudi Arabia’s automotive sector is set for a rapid transformation in the coming years, with 20% of the female population, or three million drivers, expected to be added to the kingdom’s roads by 2020, according to a new report.  A whitepaper, published by global research company Aranca, said the lifting of the ban on women driving in Saudi Arabia, along with recovering oil prices and economic policies aimed at boosting consumer spending, will result in an 8% per annum increase of passenger vehicles sales until 2022.  The report added that in addition to new car sales, the positive impact of a new customer segment over the next 1-3 years will be felt in the kingdom’s automotive aftermarket, which was valued at $7.4 billion in 2017.

According to Aranca, vehicles in operation in Saudi Arabia stood at 7.3 million in 2017, with 438,000 new passenger cars and 110,000 new commercial vehicles sold for the year.  Tires accounted for the greatest slice of revenue in the Saudi’s spare parts market, with a 30% share in 2017 ($2.2 billion).  Aranca said 10 million vehicles will ply Saudi roads by 2022, including 6.5 million passenger vehicles and 3.5 million commercial vehicles.  It added that as a result, demand for spare parts and related auto services will grow six% annually, reaching a value of $9.8 billion in 2022.

Many of these opportunities will likely arise in Saudi’s western regions of Medina and Mecca, where more than one million women are expected to get behind the wheel by 2020.  The whitepaper further stated that key industry players are already taking initiatives to capitalize on opportunities created by women being allowed to drive, including the creation of women-only car showrooms, auto-insurance claims centers and driving schools dedicated to women.  (AB 03.11)

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3.7  Toys R Us Launches New Middle East E-Commerce Platform

Toys ‘R’ Us, the international children’s toy retailer, which closed down in the UK earlier this year, has launched a new e-commerce website to drive Middle East sales.  Implemented by California’s Astound Commerce, the website is one of seven e-commerce platforms to be rolled out by the retailer in other Middle East and North Africa markets over the next five months

Launched by franchisee Al-Futtaim in 1995 in Dubai, Toys ‘R’ Us MENA is now present in 19 locations in the MENA region.  To support its growth and deliver omnichannel capabilities to its customers, Al Futtaim Group has now sought to launch the new website.  The new e-commerce site also includes a special gift finder, allowing customers to search for presents based on the age of the child and allocated budget. Additionally, customers can pay online using Samsung Pay.  The first order was delivered just 12 hours after the site went live.  (AB 31.10)

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4.1  Dubai Expands Plan for Phase 4 of Giant Solar Park

On 3 November, the Dubai Electricity and Water Authority (DEWA) announced plans to expand the fourth phase of the Mohammed bin Rashid Al Maktoum Solar Park.  The state utility signed an amendment to the power purchase agreement with the consortium led by Saudi Arabia’s ACWA Power which includes adding 250MW of photovoltaic solar panels, at a cost of 2.4 cents per kilowatt hour.  With this addition, the total capacity of the fourth phase of the solar park will rise from 700MW to 950MW, a statement said, adding that the total investment for the project has increased to AED16 billion ($4.36 billion).

Noor Energy 1 was launched in a partnership between DEWA, ACWA Power and China’s Silk Road Fund to build the fourth phase of the Mohammed bin Rashid Al Maktoum Solar Park.  The project will use three technologies to produce clean energy – 600MW from a parabolic basin complex, 100MW from a solar tower and 250MW from photovoltaic panels.  The project will have the world’s tallest solar tower at 260 meters and the largest thermal energy storage capacity in the world of 15 hours, which allows for energy generation round the clock.  The 13MW photovoltaic first phase became operational in 2013.  The 200MW photovoltaic second phase of the solar park was launched in March 2017 while the 800MW photovoltaic third phase will be operational by 2020.  (AB 03.11)

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4.2  Softbank Said to Plan $1.2 Billion Solar Power Plant in Saudi Arabia

SoftBank Group Corp is planning to develop a $1.2 billion solar power plant in Saudi Arabia, according to people with knowledge of the matter.  The plant, to the north of Riyadh, would generate 1.8 gigawatts of power a year, the people said, asking not to be identified because the plans are private.  SoftBank has started preliminary talks with banks and developers to gauge interest in the facility.  Plans for the facility are at an early stage and SoftBank may decide to change the size of the plant or not proceed with it, the people said.  The plant would be a pilot project for Saudi Arabia’s wider plans to build more solar power facilities.

The country’s Public Investment Fund is the largest investor in SoftBank’s $100 billion Vision Fund as Masayoshi Son forged personal ties to Saudi Crown Prince Mohammed bin Salman.  The PIF continues to work with the SoftBank Vision Fund, and other parties, on a number of large-scale, multi-billion dollar projects relating to the solar industry, which will be announced in due course, including solar power generation.

Saudi Arabia and SoftBank signed a memorandum of understanding in March to develop 200 GW of solar power facilities, which would be larger than any other.  SoftBank and the PIF last month said they’re continuing to collaborate on solar energy plans after the Wall Street Journal said their $200 billion development was put on hold.  Saudi Arabia is seeking to overhaul its energy industry to stop burning oil and gas that are more profitable to export.  As part of this strategy, it plans to build at least 16 nuclear reactors over the next 25 years, and is also developing its first wind power plant and a 300 MW solar plant.  (AB 06.11)

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4.3  King Mohammed VI’s Renewable Energy Goals Reached Within Deadline

King Mohammed VI conducted a follow-up of the implementation of Morocco’s renewable energy strategy.  This year, the objectives that the King set in April were achieved within the deadlines.  These objectives included beginning the operation of Noor Ouarzazate, a 580MW solar energy complex.  The Noor Ouarzazate III tower was successfully synchronized to the power grid, making it one of the largest solar multi-technology complexes in the world.  Engineering and technology group Sener completed the first synchronization of the Noor III plant to the Moroccan grid in August.  The company will start the final testing of Morocco’s Noor III solar power plant in Ouarzazate to prepare for commercial operation by the end of 2018.

Noor Laayoune I and Noor Boujdour I solar power plants were also completed for “a combined capacity of 100 MW.”  These two power plants were built under an innovative financing plan that used the first green bond issue in the Kingdom.  The plants, which are part of a new development model, paved the way for further progress to benefit the local population and economic stakeholders in Western Sahara.

Construction of the 180 MW Midelt wind farm and the 100 MW Taza wind farm will start in 2019.  In 2019, a repowering project for the Koudia El-Baida wind farm, in the Tangier-Tetouan region, will be launched.  The farm is the first wind project in Morocco and has been operating since 2000 through Morocco’s National Office of Electricity (ONEE).  The repowering project will increase the farm’s capacity from 50 to 120MWs. The project will develop the wind energy resources in Morocco’s northern region.  (MWN 02.11)

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5.1  Lebanon’s Fiscal Deficit Up to $3.04 Billion by June 2018

According to the Ministry of Finance, Lebanon’s fiscal deficit expanded from $907.59M by June 2017 to $3.04B by June 2018.  In fact, fiscal revenues witnessed an annual decrease of 1.97% to reach $5.94B while the government spending rose by a yearly 28.84% to stand at $8.98B.  Lebanon’s overall primary balance which excludes Lebanon’s debt service posted a deficit of $155.41M, compared to a surplus of $1.63B by June 2017.

Tax revenues (constituting 76.91% of total revenues) declined by an annual 3.24% to $4.57B.  Revenues from the VAT (27.19% of total tax receipts) climbed by 9.71% year-on-year  y-o-y to $1.24B, and this can be largely attributed to the new VAT rate of 11%, increased from 10% starting January 2018.  Meanwhile, customs’ revenues (14.53% of tax receipts) dropped by 3.92% (y-o-y) to $663.74M. As for Non-tax revenues (22.88% of total revenues), they witnessed a drop of 16.93 % to stand at $860.26M by June 2018.  This can be linked to the yearly decrease of 26.02% in telecom revenues (constituting 37.04% of total non-tax revenues) to reach $318.61M by June 2018.

On the expenditures’ side, total government spending increased by a yearly 28.84% to hit $8.98B by June 2018.  In details, transfers to Electricity du Liban (EDL) alone rose by 32.76% to reach $738.44M which followed the 35.08% annual rise in average oil prices to $71.16/barrel over the period.  Moreover, total debt service increased by an annual 13.58% to reach $2.88B by June 2018.  In details, interest payments rose by a yearly 13.92% to stand at $2.78B by June 2018 while the foreign debt principal repayment recorded an uptick of an annual 3.52% to reach $97.77M by June 2018.  (MoF 13.11)

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5.2  Jordanian Parliament’s Committee Passes Draft Income Tax Law

Jordan’s Lower House of Parliament’s Committee on Economy and Investment approved a draft income tax law following weeks of debate and study of the bill.  According to the new bill the committee has endorsed, the threshold for individuals will be JOD10,000 in 2019, but will go down to JOD9,000 in 2020.  The tax threshold for households will be JOD20,000 in 2019 down to JOD18,000 in 2020.  Under the new draft, households will have an exemption of JOD3,000 a year covering medical and education expenses as of 2020, in addition to JOD2,000 tax relief for the disabled.  The committee introduced a JOD1 million exemption to farmers and revoked a proposed 20% tax on the industrial sector.  Further, the committee canceled another proposed social solidarity tax and replaced it with a national contribution tax targeting those whose income exceeds JOD200,000 a year.  The Lower House began debating the draft on 13 November in two morning and evening sessions.  (AMMONNEWS 11.11)

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5.3  Iraq’s 2019 Draft Budget Analysis

Iraq’s first draft budget for 2019 shows an overall increase in spending of 23% compared to 2018.  Oil revenues still dominate sources of revenue, projected at 89% of government finances.  The Iraqi government, with help from international creditors, has been aiming to increase non-oil sources of income. In 2019 however, non-oil income reduces by IQD 2.65 trillion ($2.24b), or a decline of 18%.

Spending on energy, security and defense as well as social services remains a priority ahead of other sectors.  Notably, the state’s planned spending on capital projects will grow by 32% and liberated provinces are included again in planned financial allocations after years of war, an important progression on 2018.  However, Iraq’s greatest challenge of reducing its operational expenditure is still unresolved as it expands by 21% in 2019 and dominates 75% of total expenditure.  This will of course leave the country extremely vulnerable to another fall in oil prices.  (IEI 30.10)

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5.4  Iraq Granted Exemption from US Sanctions on Iran’s Energy Exports

Iraq will continue to have access to the energy it needs from Iran to generate and supply electricity, the US State Department said.  Iraq is still importing natural gas and electricity from neighboring Iran and has set up a bank account to process payments in Iraqi dinars.  Iraq’s central bank officials said in August that the country’s economy is so closely linked to Iran that Baghdad would ask Washington for permission to ignore some US sanctions.  Iraq imports crucial supplies from its neighbor including gas for power stations.  (Tasnim 08.11)

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5.5  South Korea Wins $500 Million Deal for Electricity in Iraq

South Korea’s STX Marine Service has reportedly won a contract to restore and operate diesel-fueled electric power plants in Iraq.  According to Yonhap, the company said the $500 million deal will see it four 900 MW electricity generation units over five years.  It calls for 100 South Korean engineers to be dispatched by STX, along with the hiring of 500 local workers.  The company said work started on 1 July.  (Yonhap 01.11)

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►►Arabian Gulf

5.6  Bahrain’s Growth Accelerates as Non-Oil Sector Expands

Bahrain’s headline real growth rate increased sharply in Q2/18 to an annual rate of 2.4%, according to Bahrain Economic Development Board (EDB).  Its Bahrain Economic Quarterly Report showed a significant acceleration of growth from the previous quarter, underpinned by both the normalization of oil production and markedly faster non-oil growth.  The report also noted that the regional economic recovery is progressing somewhat more slowly than initially expected.  While GCC growth is expected to accelerate to 2.5% this year and 3% in 2019, this is below historical levels, it said.

The report added that business confidence has varied month to month while the growth of the non-oil sector has proved less pronounced that the expansion in the oil sector.  This has prompted a number of governments to initiate economic stimulus programs after a period of fiscal retrenchment.  The report also predicted that renewed regional spending power will drive growth in cross-border tourism as the Bahraini tourism industry continues to grow across a broad range of metrics.  Visitor numbers are up 5.8% year-on-year and the average number of nights spent in Bahrain per visitor jumped by 16%.

According to the quarterly report, Bahrain’s non-oil GDP expanded by an annual 2.8% in the second quarter, driven by the construction (up 6.7%) and manufacturing sectors (up 4.5%).  The total value of foreign direct investment is also continuing to increase with the total value of projects facilitated by the EDB in the first nine months of 2018 being 138% higher than a year earlier.  Of the companies attracted by the EDB in the first three quarters of 2018, 31 out of the 76 companies fall in the manufacturing sector, the report added.  (AB 31.10)

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5.7  Dubai’s Nine-Month Trade Figure Exceeds $262 Billion

Dubai’s external non-oil trade for the first nine months of 2018 reached AED965.3 billion ($262.8 billion).  Re-exports registered 13% growth to touch AED299.2 billion, while imports reached AED592.2 billion, and exports AED97.7 billion, according to official figures from Dubai Customs.  Dubai Customs said that the trade performance reflects “the success of government policies and initiatives and strategic sustainability development plans to support the growth of various economic sectors”.  China maintained its position as Dubai’s biggest trading partner in the first nine months of 2018 with AED102.9 billion worth of trade.  Trade with India registered 16% growth to reach AED86.2 billion, followed by the US in third place with AED59.6 billion.  Saudi Arabia remains Dubai’s largest Arab trade partner and its fourth largest global trade partner with AED38.6 billion.

Phones of all types topped the list of commodities in Dubai’s foreign trade in the first nine months of 2018 with AED111 billion worth of trade, followed by gold with AED110 billion and jewelry (AED78 billion).

The figures showed that trade through free zones grew 22% to reach AED394.3 billion in the first nine months of 2018.  Direct trade touched AED562.8 billion while customs warehouse trade weighed in at AED8.3 billion.  Dubai’s seaborne trade grew 4.1% to AED362 billion and airborne trade grew 2.3% to AED449.4 billion.  However, trade conducted through land transportation declined 13.6% to AED153.8 billion.  (AB 06.11)

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5.8  Saudi Budget Deficit Shrinks as Revenues Surge

Saudi Arabia’s finance ministry announced that the budget deficit dropped sharply in the first nine months of 2018 on the back of a surge in oil and other revenues.  Saudi Arabia, which has introduced economic reforms aimed at reducing its dependence on oil, has benefited from a sharp rebound in energy prices on world markets.  The budget shortfall in the first three quarters of 2018 was $13.1 billion, a 60% drop from the same period last year.  Oil revenues rose 47% year-on-year to $120.6 billion while non-oil income jumped 48% to $56.3 billion.

The kingdom, the world’s top crude oil exporter, has posted a budget deficit every year since oil prices crashed in 2014.  In the past four fiscal years, it posted a total shortfall of around $260 billion and has projected a deficit of $52 billion for 2018.  The Finance Ministry said that expenditure in the first nine months of 2018 rose by 25% to $190 billion.

The rise in non-oil income is significant after Riyadh has increased the prices of fuels and power and imposed a 5% value-added tax (VAT) in addition to fees on around 11 million expatriates in the country.  Saudi Arabia has also increased its oil production by over 500,000 barrels per day to more than 10.5 bpd since June and the price of oil has surged to over $80 a barrel.  (AB 31.10)

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►►North Africa

5.9  Egypt’s Foreign Reserves Rise to $44.5 Billion in October

Egypt’s foreign currency reserves spiked by $42 million to reach $44.501 billion in October against $44.459 billion in September, the Central Bank of Egypt (CBE) announced.  Reserves have been climbing since Egypt agreed a $12 billion three-year loan program with the International Monetary Fund in late 2016, part of efforts to attract foreign investors and revive the economy.  (CBE 05.11)

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5.10  Egypt’s Non-Oil Business Activity Slows Slightly in October

Egypt’s non-oil private-sector activity weakened slightly in October to reach its lowest level of 2018.  The Emirates NBD Egypt Purchasing Managers’ Index (PMI) for the non-oil private sector weakened to 48.6 in October from 48.7 in September, below the 50 mark that separates growth from contraction.  September’s return to contraction followed expansionary readings in July and August.

The PMI has had an average reading of 47.9 since the International Monetary Fund reform program began.  The non-oil private-sector sector saw a decline in output for the second consecutive month, which companies attributed to lower demand for goods and services due to challenging market conditions.  Companies also saw a decrease in export orders in October, though at a slower pace than seen in September, which they linked to challenging economic conditions in international markets.  Egypt’s fiscal year runs from July to June.

Egypt has been implementing a series of tough economic reforms as part of the three-year $12 billion deal with the IMF.  Measures included devaluing the Egyptian pound, slashing energy subsidies and imposing new taxes in an attempt to draw back investors who fled during the 2011 uprising.  (Reuters 05.11)

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5.11  More Foreign Debt for Egypt?

Egypt’s foreign debt reached $92.6 billion by the end of June, recording an increase of $13.6 billion, or 17.2%, on the end of June 2017, according to the monthly report published by the Central Bank of Egypt (CBE).  A marginal part of the increase was caused by a rise in the exchange rates of foreign currencies used in borrowing against the US dollar, accounting for $0.4 billion.  The bigger chunk of the increase, $13.2 billion, is the result of an increase in debt-servicing costs over the past year, including paid instalments of $11.1 billion and interest payments of $2.1 billion.

An analysis of the development of Egypt’s foreign debt-to-GDP ratio over consecutive years, and that of debt-servicing to imported commodities and services, points to a considerable rise in the foreign debt-to-GDP ratio, recording 37% and up from 15.1 in 2014.  The foreign debt-servicing to total imports ratio almost quadrupled from 7.4% in 2014 to 28% in 2018.

The government has set a ceiling for foreign borrowing at $16.733 billion for the current fiscal year, which ends in June 2019. $10.51 billion of this is to pay back foreign debt instalments.  The sum does not include a $3.3 billion Kuwaiti deposit that is due in 2018-19, based on a government document.  Total foreign debt is expected to reach $98.863 billion during fiscal year 2018-19.

The rapid increase in total foreign debt since 2014 points to the government’s choice of foreign borrowing to meet the rising costs of its foreign debt, against a backdrop of economic reforms to lower the budget deficit.  CBE data shows Egypt’s foreign debt-to-GDP ratio exceeded the expectations of the International Monetary Fund, set at 34.5% for this year and based on the third revision of the loan deal signed with Egypt in November 2016 and released in July.  (Al-Ahram 01.11)

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5.12  Morocco Jumps 9 Places, Ranks 60th in World Bank ‘Doing Business’ Report

Morocco ranked 60th in the World Bank’s Doing Business 2019 report out of 190 countries, jumping 9 places.  Improving its 2018 global ranking of 69th by nine places, Morocco owes its score of 71.02 out of 100 to several new entrepreneurship-friendly policies.  Due to these reforms, Morocco ranked the 2nd best country for doing business in the MENA region behind the United Arab Emirates, which came 11th worldwide and just ahead of Bahrain, which ranked 62nd.  Morocco came 3rd in Africa behind Mauritius, which ranked 20th globally and Rwanda at 29th. Morocco came ahead of South Africa, which ranked 82nd globally.

According to the report, Morocco has made it easier to start a business by reducing registration fees, easier to register property by streamlining procedures and easier to resolve insolvency.  The report also noted that Morocco made exporting and importing easier by implementing a paperless customs clearance system and improving infrastructure at the port of Tangier.  (MWN 01.11)

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5.13  Morocco’s Trade Deficit Widens as FDI Drops by 2.7%

Morocco’s foreign direct investment (FDI) flows were down by 2.7% compared to the same period of the previous year, the Foreign Exchange Office (FEO) reported.  The increase in the deficit is caused by a larger increase in imports, up MAD 31.39 billion, than in exports, up MAD 21.81 billion.  Morocco’s debt-service coverage ratio was 77.7% in the period, compared with 78.4% in the previous year.  Morocco’s increase in imports was mainly driven by the purchases of energy products, up 19.6%; raw materials, up 19.1%; capital goods, up 10%; food products, up 8.5%; and finished consumer products, up 6.8%.

Exports also increased by 7.9% to MAD 298.2 billion in the first nine months of 2018.  The rise can be attributed to increased exports in all sectors, but particularly that of phosphates and derivatives, up 16.8%; automobiles, up 14.7%; aeronautics, up 14%; and agriculture and food, up 6.3%.

FDI inflows amounted to MAD 19 billion in the 12-month period up to September 2018, down 2.7% compared to the same 12-month period of the previous year. The drop is the result of a higher increase in spending, up 43.6%, than in revenues, up 8%.  Spending on FDI in the 12-month period amounted to MAD 8.5 billion; 37.1% of the spending was on debt repayments.

Overall revenues from Moroccans residing abroad (MREs) were slightly down by 0.2% at MAD 49.7 billion in the first nine months of 2018.  MREs returning home had spent a net balance of MAD 40.3 billion in the same period, compared to MAD 41.8 billion a year earlier.  (MWN 06.11)

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6.1  Turkey’s Inflation Hits 25% in October, Highest in 15 Years

Turkish annual inflation surged to 25% in October, the Turkish Statistical Institute (TUIK) announced on 5 November, hitting its highest rate in 15 years.  Month-on-month, Turkish consumer prices jumped 2.67%, while core inflation surged by 24.34% in annual terms.  October inflation was driven by a 12.74% month-on-month surge in clothing and shoe prices and a 4.15% rise in housing prices.  On a yearly basis, the biggest price hike was in furnishing and household equipment in October with 37.92%.

Last month, Turkey’s central bank left its benchmark interest rate unchanged, after a mammoth hike in September and as tensions with the United States eased, helping the Turkish Lira gain some ground.  The currency has recently recovered some losses from a sell-off driven by concerns over central bank ability adequately respond to rising inflation and deteriorating ties with Washington.  The rising inflation in October means the central bank’s real interest rates – the level once price rises are taken into account – has been pushed further into negative territory, another issue investors have expressed concern about.  (TUIK 05.11)

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6.2  Turkey’s Automotive Exports See Second-Highest Monthly Figure – $2.9 Billion in October

One of the driving forces of the Turkish economy, automotive industry exports hit $2.9 billion in October, marking a year-on-year rise of 11%.  This figure was the second-highest export figure after the record of $3.1 billion in March on a monthly basis, according to the Automotive Industry Exporters’ Association.  Meanwhile, the share of the automotive industry in total exports stood at 19%.  As far as product groups go, exports by the automotive subindustry grew by 3% to $939 million, private car exports by 10% to $1.19 billion, motor vehicles for goods transport by 5% to $471 million and bus-minibus-midibus by 26% to $178 million.

On the country basis, exports to Germany, the largest market, decreased by 2%, while exports to the U.S. rose by 24%, to Poland by 15%, to Morocco by 40%, to Algeria by 122% and to Slovenia by 48%.  Also, exports to Romania, Spain and Iran, which are among the major markets, dropped by 12%, 10% and 75%, respectively.  Exports to the European Union, the largest market on the basis of the groups of countries, went up by 13%, reaching $2.27 billion in October.  European Union countries had a 78% share in exports.  While exports to African countries, which are among alternative markets, soared by 60%, exports to Middle Eastern countries plummeted by 41%.

The automotive industry exported $433 million worth of goods to Germany, up by 4%, which is the largest market on a national basis, followed by Italy, the second-largest market, with $278 million with a 3% rise.  On the other hand, exports to France tumbled by 7% to $269 million.  (DS 05.11)

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6.3  Greece Slips in World Bank’s Ranking on Ease of Doing Business

Greece dropped five places in this year’s World Bank’s annual “Doing Business Index,” ranking 72nd, down from 67th place last year. Greece’s score of 68.08 represents a decline of 0.12 points compared to last year’s index.  The annual World Bank report reports that obstacles to doing business increased in Greece in the past year.  While many other countries moved ahead in fighting bureaucracy, Greece has added more layers of red tape to dealings between entrepreneurs and the state.

Although Greece has made progress in its building permit system, it has increased the burden on citizens and businesses by requiring more documents for the registration of real estate.  At the same time, the Greek state has not fully implemented previously-announced reforms, such as the simplification of export procedures or the reduction of documentation needed for establishing a corporation.

Once again, Greece ranks as one of the least attractive countries in the European Union for conducting business, with the second worst score among the 28 member states of the bloc.  Only Malta fared worse than Greece, ranking in 84th place with 65.43 points.  Greece has fared worse than some Balkan and Mediterranean countries. For instance, the Former Yugoslav Republic of Macedonia (FYROM) ranked in 10th place, Portugal in 34th place, Serbia in 48th place and Romania in 52nd place.

Greece declined in the index measuring the ease of starting a new business, dropping from 37th to 44th. In the index ranking the ease of registering real estate, Greece plunged to 153rd place from 145th last year after introducing a new mandatory certificate to the existing required paperwork for registering and transferring property.  In regards to the ease of opening a new account with the electric utility, Greece dropped from 76th to 79th place.  Greece also dropped in the index measuring business access to bank loans, from 90th to 99th place.  Greece also slipped in the index measuring protection of minority shareholders, from 43rd to 51st place, while Greece’s position in the index measuring the ease of conducting cross-border transactions fell from 29th to 31st.  The only index where Greece recorded significant progress in the past year was the ease of obtaining a building permit.  Greece ranked 39th in the recently-released rankings, compared to 58th last year.  (Various 01.11)

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7.1  Forty Two Countries to Participate in Tel Aviv Eurovision Song Contest

In 2019, 42 countries will be travelling to Israel for the Eurovision Song Contest in Tel Aviv, the European Broadcasting Union (EBU) has announced.  Some 36 countries will perform in the semifinals on 14 and 16 May, hoping to qualify for the final on 18 May.  Host country Israel and the ‘Big Five’ countries – France, Germany, Italy, Spain and the UK – automatically qualify for the final at the Expo Tel Aviv (International Convention Centre).  The three shows will be co-produced by the EBU and the Israel Broadcasting Corporation – KAN.  Last year Israel’s Netta Barzilai won the contest in Lisbon, bringing it to Israel for 2019.  (Globes 07.11)

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7.2  UAE Private Sector to Get Long Weekend for Mawlid Al Nabi

UAE Ministry of Human Resources and Emiratisation announced that Sunday, 18 November, will be a holiday for private sector workers.  This will mean a three-day weekend with work resuming on Monday, 19 November.  Earlier, it was announced that ministry and federal authority staff in the UAE will be given a holiday on that Sunday.  The occasion has been expected to fall on Tuesday, 20 November.  It is one of a series of important dates in the country.  (AB 06.11)

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7.3  QS Reveals the Best Universities in the Arab Region

The Arab Region has a new top university, according to the latest edition of an independent ranking of the region’s institutions.  The 2019 QS World University Rankings: Arab Region sees Saudi Arabia’s King Fahd University of Petroleum and Minerals take the regional top spot.  It replaces Lebanon’s American University of Beirut, which now places second.  QS uses ten indicators to compile the ranking (

Saudi Arabia dominates with 23 ranked universities, and three of the region’s top 10 institutions, with King Abdul Aziz University (3rd), which exchanged places with King Saud University (4th).  Egypt’s top university is the American University in Cairo, which falls from 6th to 8th.  The UAE is home to two top-10 universities: United Arab Emirates University remains 5th, while American University of Sharjah rises from 8th to 7th.

Oman and Jordan can lay claim to one of the region’s top 10 institutions:  University of Jordan maintains its rank of 9th, while Omar’s Sultan Qaboos University is unchanged in 10th.  Though Saudi Arabia is the dominant higher education system, Egypt’s universities have made consistent progress, with seven in the top 50, five of which improve their rank this year.  The UAE is also home to a number of upwardly-mobile universities, with Khalifa University (joint-15th) and the University of Sharjah rising into the regional top 20.  (QS 30.10)

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7.4  UAE Now Requires Pre-Approval to Bring Personal Medicines Into the Country

Middle East Medical Portal reported that as of October 2018, anyone entering the UAE now needs pre-approval to bring personal medicines with them.  The new legislation is especially strict on narcotic drugs, controlled, and semi-controlled drugs.  A visitor can bring enough personal use medicines to last three months for non-controlled medicines and one month for controlled and semi-controlled ones.  To get pre-approval, one is required to show a prescription and report issued by a doctor, as well as a passport.  The process may take up to ten days.

The Pharmacy Federal Law No 4 of 1983 and Narcotic Law 14, of 1995, regulate the import of medicines (Narcotics I Psychotropic I General I and any controlled medicines) in to the UAE.  While the majority of medicines used worldwide are available in community pharmacies and hospitals in the UAE, travelers carrying personal medicines are advised to seek permission from Registration and Drug Control Department, MOH, prior to travelling in to the UAE.  Officially, any personal medicines carried by travelers will be subjected to inspection by the Ministry of Health Inspectors and the Customs Department at the port of entry in to the UAE.

Of particular concern to UAE authorities is the entry of narcotic drugs with visitors who are entering or transiting through the UAE.  A traveler should have in their possession a valid medical prescription, if the original of the prescription is retained in the pharmacy that dispensed the preparation.  The documents should be in the traveler’s possession during the stay in the UAE and should be available on request for presentation to the authorities.

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7.5  Half of Moroccan University Students Drop out Before Graduation

While the unemployment rate for Moroccan graduates with higher education degrees is double the unemployment rate for the general population, nearly half of university students will not go on to get a degree.  Moroccan universities currently have 860,000 students, 42% of whom are female students and 244,000 of whom are freshmen.

Morocco still has a comparatively low rate of students in higher education.  Only 37% of the Moroccan population aged 18 to 22 choose to enroll in universities, according to the Ministry of Education.  The ministry pointed out that 16.5% of university students drop out in their first year and 8.1% drop out in the third. Some dropouts, 7.8%, choose to leave for smaller training institutions.  Over the past five years, student enrollment has increased by 42%.  However, the number of professors has only increased 17% and available seats in classrooms only 28%.

Morocco will need to employ 2,488 university professors to join new educational institutions to prevent overcrowding because of the 18% increase in baccalaureate graduates.  The higher education and scientific research sector, with a budget of MAD 11.3 billion according to the 2019 Finance Bill, is experiencing a decline in student costs over the past years, from MAD 14,000 per student in 2013 to MAD 11,000 in 2017.  The government allocated MAD 70 billion in 2018 specifically to improve material resources and educational quality for university students.  (MWN 07.11)

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8.1  iCAN Signs Bilateral Service Agreement With Global Technology Company

iCAN: Israel-Cannabis signed a bilateral service agreement and strategic alliance with Theracann International Benchmark Corporation to assist in promoting the Company’s many incubated technologies and cannabis services globally.  Theracann a technology, operations and analytics company with operations in North American, Oceania and South America provides regulatory services and advanced technology to the cannabis industry.  The agreement will allow iCAN to deliver Theracann’s technology to emerging markets in Europe, Africa and Asia while allowing Theracann clients and projects access to iCAN’s deep technology pipeline and expertise.

iCAN is a technology incubator and service provider based in Israel, known globally for their CannaTech conferences dedicated to accelerating cannabis innovation.  iCAN was formed to build a global cannabis eco-system, connecting stakeholders from all aspects of the industry.  CannaTech is powered by iCAN.  CannaTech is the premier international cannabis summit held annually in Tel Aviv, and internationally in London, Panama, and for the first time in Sydney, Australia in October 2018 and Hong Kong in November 2018.  (iCAN 01.11)

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8.2  Zion Medical Announces Results of First Human Clinical Trial of HIV drug Gammora

Zion Medical announced the results of the first clinical trial of HIV-drug Gammora, eliminating up to 99% of the HIV virus within four weeks of treatment.  The Investigational Medicinal Product (IMP) Gammora is a synthetic peptide compound derived from the HIV enzyme integrase, which is responsible for inserting the virus’s genetic material into the DNA of the infected cell.  Gammora stimulates the integration of multiple HIV DNA fragments into the host cell’s genomic DNA, to an extent that triggers the self-destruction of the infected cell, called apoptosis.  The peptide, produced by San Diego, California -based PolyPeptide Labs, has the potential to cure HIV infected patients, by destroying all cells carrying the HIV virus-genome.  As opposed to the commercially available retroviral treatments, the so-called “cocktail,” which merely suppress the spreading of the virus, but do not cure the infection.

Between July and August 2018, Zion Medical conducted a Phase 1/2a human clinical trial of Gammora, reaffirming results of prior preclinical tests that had showed the safety and effectiveness of the drug in killing HIV-infected cells.  Through the 10 weeks, patients in both studies demonstrated that Gammora is a safe and well-tolerable drug, exhibiting no side effects.  Patients showed a significant increase of the CD4 cell count – up to 97 % from the baseline. CD4 cells, also referred to a T cells or T helper cells, play an important role in the body’s immune system and are an indicator of its overall health.

Abraham Loyter, professor at the Hebrew University of Jerusalem, first started research on this novelty drug about 10 years ago, having been granted patents for the peptide in 2015 and 2017 (U.S. Patent No. 9163067, 9738878).  Zion Medical in-licensed the compound and has been continuing research and development through pre-clinical and clinical stages, building an entire team of researchers around the development of Gammora.  On 31 August 2018, Zion Medical filed another patent application with the U.S. Patent and Trademark Office for an updated version of the peptide and final drug composition.

Israel-based Zion Medical was established in 2014 with the mission to develop groundbreaking medical solutions for HIV/AIDS and cancer.  It is known for its patented synthetic peptide Gammora, which is derived from the HIV enzyme integrase, and has been proven to be effective in killing HIV-infected cells, and which has also shown promising results with some types of cancers cells.  (Zion Medical 31.10)

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8.3  Sweetch Partners With WellSpan Health to Help Fight Diabetes

Sweetch is partnering with integrated health care system WellSpan Health of York, Pennsylvania.  The partnership’s first phase will provide Sweetch’s mobile health app to WellSpan Health’s 15,000 employees, including 200 primary care and specialty physicians and advanced practice clinicians in central Pennsylvania and northern Maryland.

Using its proprietary machine learning algorithm, Sweetch accurately quantifies personal diabetes risk which is critical for enabling early and effective prevention.  On the personalized prevention front, Sweetch’s mobile health app with its connected bluetooth digital scale monitors and analyzes the user’s personal, environmental and behavioral digital bio-markers.  This results in contextual, real-time specific and detailed recommendations that guide the user towards achieving disease prevention goals.  This could include advising the user to take a five-minute walk to a nearby coffee shop in the middle of the day based on his calendar availability, to achieve their 20-minute activity goal.  By applying predictive analytics, Sweetch continuously optimizes the user’s goals and messages, in order to predict which of these messages will trigger action with an emphasis on long-term engagement.

Jerusalem’s Sweetch Health is the creator of Sweetch, an AI-driven mobile platform for large scale prediction, prevention and outcome improvement of chronic diseases including diabetes, hypertension, ischemic heart disease, hyperlipidemia and obesity.  (Sweetch Health 31.10)

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8.4  FruitSpec Completes Successful Field Studies

Misgav’s FruitSpec, a portfolio company of The Trendlines Group completed successful field studies with its solution for fruit yields estimates/projections.  The trials, which used FruitSpec’s hyperspectral machine vision technology, resulted in estimates that were more than 90% accurate.  FruitSpec’s hyperspectral machine vision technology consists of specially designed sensor pods mounted on any vehicle that scans the trees in the orchard.  Applied computer vision and a hyperspectral algorithm automatically count and estimate fruit number and size, focused at the green fruit stage.  Accurate yield estimates offer fruit packing houses and growers a service that enables them to make sound decisions which impact revenues and financial stability, without adding to the workload.

Recently, FruitSpec completed two international field studies, predicting yields six months before picking. FruitSpec’s early estimations demonstrated a more than 90% accuracy rate compared with the orchard’s actual yield.  In September 2018, FruitSpec was granted a United States patent for its method and system for crop yield estimation.  The patent granted re-affirms the company’s technology.  (FruitSpec 31.10)

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8.5  Cellect Receives Multiple Patent Grants

Cellect Biotechnology received a formal Notice of Allowance from the Japanese and Australian Offices for Patents & Trademarks (Japanese Application No. 2014-560516; Australian Application No. 20132s29008) covering a key composition of matter and method of use of Cellect’s ApoGraft technology in devices for stem cell selection.  The current patent significantly enhances Cellect’s protection of its core technology and its commercial applications by covering the various devices using the ApoGraft for a positive selection of stem cells.

The device can enable cell selection in a simplified and affordable setting using an off-the-shelf product – a solution that currently does not exist and potentially covering a wide range of unmet medical needs.  Furthermore, it brings a first in kind method for obtaining of raw material (specific cell types) for many of the cell therapeutics and therefore is anticipated to take a pivotal role in the fast growing cell therapy market.  The devices covered by the patent are essentially containers (a bag, column, tube, bottle, vial or flask) comprised of a biocompatible material and a biologically active cell surface apoptosis-inducing ligand immobilized to a surface that is adapted for cell selection by elimination of apoptosis-sensitive cells.  Specifically, the patent protects the company’s planned devices and any devices planned by other companies adapted for selection of cells that are resistant to receptor-mediated apoptosis and a method for using the device.

Kfar Saba’s Cellect Biotechnology has developed a breakthrough technology for the selection of stem cells from any given tissue that aims to improve a variety of stem cell-based therapies.  The Company’s technology is expected to provide research, hospitals and pharma companies with the tools to rapidly isolate stem cells in quantity and quality allowing stem cell-based treatments and procedures in a wide variety of applications in regenerative medicine.  The Company’s current clinical trial is aimed at bone marrow transplantations in cancer treatment.  (Cellect Biotechnology 05.11)

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8.6  Taranis Gets $20 Million Series B for its Crop-Monitoring Technology

Taranis has raised a $20 million Series B led by Viola Ventures.  Existing investors Nutrien (one of the world’s largest fertilizer producers), Wilbur-Ellis venture capital arm Cavallo Ventures and Sumitomo Corporation Europe also participated.  Tel Aviv-based Taranis says its aerial imaging technology, carried on high-speed drones or manned aircraft, is currently used by farms in Argentina, Brazil, Russia, Ukraine and the United States.  It plans to expand into more countries with this round of funding, including Australia.

Founded in 2015 to increase food production, Taranis’ software targets commodity crops like corn, cotton, wheat, soybean, sugarcane and potatoes.  It identifies potential crop issues, including insect damage, nutrient deficiencies and diseases, and provides farmers with magnified, high-resolution images that are detailed enough to (for example) let them see what bugs are eating their plants.

Traditional crop monitoring is labor-intensive and not always accurate, even with the use of sensors to track soil quality, fertilizer levels, insects and other issues.  Other venture capital-backed startups using computer vision and AI-based technology to make the process more efficient (a growing field referred to as “precision farming”) include Prospera, which is also based in Tel Aviv, Arable and Ceres Imaging.  (Taranis 06.11)

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8.7  PolyPid Raises $15 Million

PolyPid has completed a financing round of $15 million at a company value of $180 million.  Polypid is a portfolio company of Xenia Venture Capital, which made the announcement of the capital raising.  Xenia did not itself invest in the financing round.

Petah Tikva’s PolyPid is a clinical stage drug development company focused on manufacturing and commercializing noval, locally administered therapies using PLEX (Polymer-Lipid Encapsulation matriX) technology.  The company’s product pipeline candidates are designed to address unmet medical needs by pairing PLEX technology with approved pharmaceuticals which are delivered locally at predetermined release rates and duration over periods ranging from days to several months.  PLEX technology has the potential to improve patient outcomes and lower the overall cost of treatment by enabling customizable, controlled local delivery of drugs, thereby addressing many of the shortcomings of systemic administration and existing localized delivery systems.

Xenia specializes in investing in medical device and biotech companies and earlier this week, another portfolio company Medi-tate, which has developed a medical device to treat prostate cancer, has raised $20 million from Japanese company Olympus.  (Xenia 08.11)

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8.8  ConTIPI Medical Raises $11 Million

Caesarea’s ConTIPI Medical, which has developed non-surgical and disposable vaginal solutions for women with various Pelvic Floor Disorders (PFD’s), has completed a $3 million financing round, bringing the total amount raised for its new product to $11 million.  The latest round was from both new and previous investors: company founder, medical director, and CEO Dr. Elan Ziv, medical investor Zeev Bronfeld, Boris Krasny, Capital Point and New Pharm.  The company said that the round was bringing it closer to competing the product’s development.

ConTIPI Medical is a continuation of Contipi, which was active in various areas and was sold to Kimberly Clark for $90 million.  Contipi developed a disposable quasi-tampon for preventing urinary incontinence.  After the company was sold, the new ConTIPI Medical was founded by more or less the same staff and investors in order to continue development of the product line begun by the original company.

Organ prolapse is a more serious problem than urinary incontinence; treating requires diagnosis by a doctor.  As with the product for preventing urinary incontinence, however, ConTIPI Medical hopes to develop a product that women can use to treat themselves.  The existing treatment for organ prolapse is surgical insertion of a net to support the organs.  The net itself, however, is attached to tissue that is not strong and is liable to be damaged by this.  A pessary, a rubber ring in the vagina on which the organs rest, can also be used. The problem is that inserting and removing it without a physician is difficult, and it is therefore replaced every three months.

ConTIPI’s solution to this problem superficially looks similar to its solution for urinary incontinence: a tampon-like product inserted into the vagina, where it expands into a supporting ring.  As soon as a prescription is obtained, the patient can use the product by herself.  The product has already been approved for marketing in Europe and is in clinical trials for obtaining approval from the US FDA.  ConTIPI has other products that it has not yet revealed, and will develop them after this product is sold or commercialized through a marketing company.  (ConTIPI Medical 07.11)

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8.9  Alpha Tau Medical Launches New Clinical Trials in Italy with Leading Cancer Centers

Alpha Tau Medical has announced the initiation of two new clinical trials evaluating the efficacy of the Alpha DaRT (Diffusing Alpha-emitters Radiation Therapy) with two leading medical centers in Rome, Italy.  Following the approval from the Institutional Review Board (IRB), La Sapienza is initiating Alpha Tau’s clinical trial protocol for SCC of the Skin, and IFO is conducting their first study of Alpha DaRT for the treatment of CMN.

Alpha DaRT enables the first alpha-radiation-based cancer treatment for all types of solid tumors.  The team hopes that the study’s outcome will further reinforce the promising early results from the ongoing SCC study at the Rabin Medical Center, Israel and the IRST, Italy.  Results showed all patients’ tumor sizes reduced and more than 70% of patients’ tumors completely disappeared within a few weeks after treatment.  The company is collaborating with key cancer physicians worldwide to investigate the Alpha DaRT as a treatment for additional indications.

Founded in 2016, Tel Aviv’s Alpha Tau Medical is a medical device company that focuses on research, development and commercialization of the Alpha DaRT for the treatment of solid cancer.  Initially developed in 2003 from Tel Aviv University, Alpha DaRT delivers high-precision alpha radiation, which is released when radioactive substances decay inside the tumor.  The short-range alpha particles effectively kill the cancer cells while sparing the surrounding healthy tissue.  (Alpha Tau Medical 07.11)

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8.10  MaxQ AI Receives FDA Clearance for Accipio Ix Intracranial Hemorrhage Platform

MaxQ AI announced that its revolutionary Accipio Ix intracranial hemorrhage (ICH) detection software has received 510(k) clearance from the U.S. FDA.  The clearance paves the way for healthcare providers and physicians in acute care settings to have access to this artificial intelligence (AI) software designed to aid in prioritizing the clinical assessment of adult non-contrast head computed tomography (CT) cases that exhibit indications of intracranial hemorrhage (ICH), commonly known as a brain bleed.

Earlier this year, MaxQ announced CE Mark approval and commercial availability in the European Union.  Now, Accipio Ix, is cleared for commercial sale within the United States. Accipio Ix leverages artificial intelligence technology to automatically analyze non-contrast head CT images without workflow impact to the reader, altering the original series or storing Protected Health Information (PHI).  The AI-powered Accipio Ix, part of MaxQ’s unique Accipio INSIGHT platform, is designed to be highly sensitive to the presence of ICH, identifying and prioritizing patients with ICH for the treating physician.  It provides a capability for rapid escalation and prioritization of the patient and can be natively integrated into CT and PACS systems using the imaging industry-standard DICOM, installed both on-premise and cloud-capable.

Tel Aviv’s MaxQ AI is at the forefront of transforming healthcare by empowering physicians to provide ‘smarter care’ with artificial intelligence (AI) clinical insights.  Their team of deep learning and machine vision experts have developed clinical diagnostic intelligent software solutions that enable timely and more accurate diagnosis.  (MaxQ AI 07.11)

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8.11  HemoScreen Hematology Analyzer for Point of Care Receives FDA 510(k) Clearance

PixCell Medical announced that The HemoScreen Hematology Analyzer received FDA 510(k) clearance, enabling commercialization in the USA.  The HemoScreen is a miniature portable hematology analyzer that uses disposable cartridges; each cartridge includes all necessary reagents and is designed to accept a drop of blood taken from the finger.  The operation of the device is exceptionally simple and requires minimal training or expertise.  Once the cartridge is inserted into the reader, the blood sample is automatically processed and analyzed within the cartridge and thus the concept is termed by the company “Lab On a Cartridge”.

In contrast to existing solutions, the HemoScreen requires no maintenance or calibration which is extremely important in such settings.  The HemoScreen should empower physicians to make validated, data-driven decisions: referring patients to the ER, prescribing antibiotics and other medication, ordering additional specific tests while reducing redundant tests and by that greatly improve patient care and workflow efficiency.

Yokneam’s PixCell Medical develops innovative POC diagnostic devices.  The HemoScreen is designed to simplify blood testing, making it extremely accessible anywhere and to anyone.  Future tests are expected to enable early detection of the most critical health threatening diseases including cancer, infection and heart failure.  PixCell’s technology is based on patented method called Viscoelastic Focusing and on a proprietary microfluidic based disposable.  (PixCell Medical 07.110

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9.1  Camilyo Scores a Triple Win at the SIINDA Industry Excellence Awards 2018

Camilyo was recently honored with three Industry Excellence Awards by SIINDA, the Search and Information Industry Association.  The Awards were granted at the SIINDA Local Search Summit held in Dubrovnik, Croatia last month.  The prestigious Industry Excellence Awards are granted to SIINDA member companies in recognition of advancements in mixed media, local search innovation and technology.  The independent judging panel consisted of industry experts and media professors from across Europe.  Camilyo won the following Awards:

-Platinum Industry Excellence Award – Mobile Products for the Camilyo Mobile Action Center

-Platinum Industry Excellence Award – Sales and Marketing Automation for the Email and SMS marketing campaigns

-Silver Industry Excellence Award – Mobile Products for the DASH SMB mobile app for digital agencies

Tel Aviv’s Camilyo is a rapidly growing software company with offices in the US, Europe and Israel.  Since 2010, Camilyo has partnered with leading vendors worldwide to equip SMBs with white-labeled, fully-integrated presence, marketing, sales and business management tools that enable them to successfully compete online.  In 2017, Camilyo was named one of the 50 fastest growing technology companies in Israel by Deloitte.  (Camilyo 01.11)

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9.2  Gilat to Provide the Ground Network for China Satcom’s ChinaSat-18

Gilat Satellite Networks’ ground network will be provided for China Satcom’s ChinaSat-18 (CS-18).  The nationwide Ka-band coverage, now to be provided by CS-18 and ChinaSat-16 (CS-16), will be uniquely supported by Gilat’s single platform supporting multiple applications all over China.  China Satcom’s CS-18 Ka-band will be launched in mid-2019, thus completing the company’s Ka HTS coverage over all of China, which is critical for broadband applications requiring continuous service.

Gilat’s multi-application platform, SkyEdge II-c, has been deployed in China over CS-16 to provide IFC, rural broadband, cellular backhaul and maritime applications.  With the launch of CS-18, Gilat will deliver Ka-band high throughput and highly efficient connectivity across the rest of China.

Petah Tikva’s Gilat Satellite Networks is a leading global provider of satellite-based broadband communications.  With 30 years of experience, we design and manufacture cutting-edge ground segment equipment, and provide comprehensive solutions and end-to-end services, powered by our innovative technology.  Delivering high value competitive solutions, our portfolio comprises of a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid State Amplifiers (SSPA) and Block Upconverters (BUC).  (Gilat 01.11)

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9.3  KPN Chooses Allot Service Gateway to Deliver Superior Network Performance

Allot Communications announced that KPN, a Tier 1 Dutch internet and communications technology (ICT) provider has selected the Allot Service Gateway (SG) for its data center.  KPN chose Allot’s solution to meet the mounting service expectations of their growing business user base and its resulting increased network traffic.  The Allot Service Gateway, a proven carrier-class solution, prevents costly downtime by managing the KPN’s high-rate bandwidth across multiple IP addresses, while simultaneously identifying bandwidth anomalies and enforcing Service Level Assurance (SLA) requirements for application performance.

KPN serves millions of fixed, mobile and Internet subscribers throughout the Netherlands, Germany, Belgium, France, and Spain with business network services and data transport throughout Europe.  With this large and growing customer base depends on the ICT provider for uptime and accessibility, KPN selected Allot to meet a variety of service expectations, such as reducing time-to-market for new services and preventing any costly impact of malicious traffic.

Hod HaSharon’s Allot Communications is a provider of leading innovative network intelligence and security solutions for service providers worldwide, enhancing value to their customers.  Their solutions are deployed globally for network and application analytics, traffic control and shaping, network-based security services, and more.  Allot’s multi-service platforms are deployed by over 500 mobile, fixed and cloud service providers and over 1000 enterprises.  (Allot 01.11)

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9.4  Elbit Systems to Provide Maritime UAS to the European Union Maritime Safety Agency

Elbit Systems was awarded a framework contract to provide maritime Unmanned Aircraft System (UAS) patrol services to be provided by the European Maritime Safety Agency (EMSA) to countries in the European Union.  The contract that will be executed in cooperation with CEiiA is for a two-year base period and two single year option periods.  If fully ordered, the total contract value is €59 million (approximately $68 million).

Under the contract and in cooperation with CEiiA, a leading engineering company in Portugal, Elbit Systems will lease and operate its Hermes 900 Maritime Patrol and its Ground Control Station.  A persistent long-range unmanned maritime surveillance system tailored for littoral and blue water operations, the Hermes 900 Maritime Patrol will feature maritime radar, an Electro Optic payload, Satellite Communication and an Automatic Identification System (AIS) receiver.  Thus configured, the Hermes 900 Maritime Patrol will enable persistent monitoring of vast swathes of sea and long coastlines and effective identification of suspicious activities and potential hazards.

Haifa’s Elbit Systems is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world.  The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios and cyber-based systems.  The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems.  (Elbit Systems 01.11)

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9.5  Ladingo Takes Top Prize at Retail Disrupt Startup Competition

Master of the global fulfillment of international purchases of large-sized items, Ladingo was awarded first place at the 2018 Retail Disrupt startup competition.  Ladingo pitched its global shipping optimization platform to the competition’s panel of seasoned retail technology leaders and decision makers, including top executives from, winning their attention and their respect.

Ladingo is the first company to offer a technological solution that enables the simple, straightforward and automated purchase of large items to end customers via online-shops to be shipped internationally.  The innovative platform introduces the possibility of the low-cost, international shipping of large items purchased through B2C e-commerce channels.  With Ladingo, buying large items, such as furniture, bikes or home appliances, from international online shops is as easy as ordering a t-shirt online.

Taking first place at the Retail Disrupt startup competition, Ladingo was awarded access to several key networking opportunities in the coming year.  The prize includes a booth at ShopTalk 2019, participation in the Merage Institute Leadership Program, and a booth and speaking session at Retail Disrupt’s 2019 conference.

Hod HaSharon’s Ladingo enables online-retailers to sell large items to international shoppers via ocean freight by utilizing its container-sharing optimization algorithms.  With Ladingo, buying a sofa from overseas is as easy as buying an iPhone case and shipping costs are lower than ever.  (Ladingo 31.10)

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9.6  VoiceSense Launches Speech-based Predictive Analytics Solution for Human Resources

VoiceSense has launched a new speech-based predictive analytics solution for human resources.  The new VoiceSense solution for human resources dramatically streamlines recruitment processes by automatically and objectively filtering large volumes of applicants and providing a short list of the most relevant candidates for a position.  This solution uses applicant voices only and eliminates the need to manually evaluate hours of video and audio interviews to find appropriate candidates, which is a time-consuming process that is easily influenced by subjective factors that lead to inaccurate outcomes.

The technology behind the VoiceSense solution works by analyzing the prosodic parameters of a person’s speech, which are the non-content features of speech, such as intonation, pace and emphasis.  VoiceSense’s technology assesses over 200 prosodic speech parameters and builds an AI-driven personality profile of an individual’s working characteristic, such as temperament, ambition, cooperation, communication, dependability, creativity and others.

With VoiceSense’s solution, human resource teams can upload individual or large volumes of candidate video and audio interview files through an API to the VoiceSense Cloud.  The VoiceSense solution then runs its signal processing to analyze the prosodic parameters of each applicant’s speech and applies behavioral models in order to output a specific job match score for each candidate, which are automatically sent back to the human resource database.  The job match score can also include the complete working profile report of each candidate’s tendencies.  Human resources teams can then create a short list of the best candidates per position for further evaluation and consideration.

Herzliya’s VoiceSense specializes in speech-based predictive analytics with a groundbreaking approach to forecast individuals’ behavioral tendencies.  The technology uses AI techniques to link data generated from non-content aspects of speech, such as intonation, pace and emphasis, to behavioral and personal characteristic, resulting in predictions of individual behavior.  (VoiceSense 31.10)

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9.7  2bPrecise Honored as One of Israel’s Top Startups

2bPrecise was named one of nine finalists in Israel’s “most promising startup” competition. Sponsored by Calcalist, Israel’s leading financial daily news publication, the contest drew more than 50 nominations.  Along with eight other finalists, 2bPrecise presented its precision medicine business model and technology platform to a panel of 10 judges at Calcalist’s eighth annual digital and mobile conference, INSPIRE Digital@Mobile.

2bPrecise was established in 2015 with the objective of bridging the final mile between the science of genomics and making that data useful at the point of care.  Leadership assembled a team with deep experience with complex ontologies and clinical integration to create a cloud-based platform that delivers previously inaccessible genomic data within the patient context.

Beer Sheva’s 2bPrecise precision medicine platform harnesses the power of genomics to help healthcare providers identify patients at risk for disease, and more effectively determine optimal preventive, diagnostic and therapeutic care.  Vendor-agnostic and cloud-based, 2bPrecise consumes data from any lab or knowledge source and delivers it into the clinical workflow of any EHR, in an actionable format and in a vocabulary meaningful to clinicians.  Its robust data model future-proofs the solution and enables clients to customize their strategic precision medicine strategy, starting where it makes most sense for them and scaling across the entire enterprise.  (2bPrecise 02.11)

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9.8  IDRRA Named a “Cool Vendor” by Gartner for 2018

IDRRA has been selected by Gartner as a Cool Vendor in a report titled “Cool vendors in security and risk management, securely scaling digital businesses” by Gartner analysts.  IDRRA is a scalable, AI-powered assessment platform that automates manual cybersecurity consulting practices.  It enables enterprises to streamline their cybersecurity, data protection, and privacy compliance across their organization and their supply-chain while eliminating labor intensive costs.

In the report, Gartner identified several challenges in the IT security and risk management field, including that, “traditional approaches of IT and security risk management — focusing on point-in-time assessments, qualitative risk assessments and based on operational insights — are insufficient to provide assurance to CISOs, particularly those facing big data issues.”  Specifically, within the area of vendor risk management (VRM), Gartner identified that, “third-party security due diligence is in a state of chaos, caused mostly by lengthy, subjective questionnaires. IT compliance professionals spend over 25% of their time assessing external controls, and they want a better approach.”

Gartner selected IDRRA as a cool vendor because, “IDRRA has brought a modern solution to the security risk assessment market by incorporating consulting intellectual property into an algorithm and layering this algorithm into a chatbot.  An automated security or vendor risk assessment is done based on the creative use of chat bots, NLP and security consulting intellectual property designed into the native algorithm.”

Tel Aviv’s IDRRA is an AI powered platform for automating security, data protection and privacy related risk analysis for organizations.  The IDRRA platform enables enterprise to rapidly adopt risk management programs for VRM and internal compliance and achieve better oversight of risk.  IDRRA supports leading regulatory frameworks, security best practices, and enables customization to automate their self compliance for numerous industries, including: financial services, technology, industrial and healthcare.  (IDRRA 05.11)

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9.9  Moovit Partners with Microsoft to Provide Public Transit Data for Azure Maps

Moovit announced that it is integrating its people-driven transportation platform into Microsoft’s Azure Maps.  Tel Aviv-based Moovit has built a mapping tool for public transportation.  The company uses crowdsourced data from millions of users to map routes for buses and metros around the world. It also leverages that data via a service it provides to urban planners called Smart Transit Suite.  The partnership with Microsoft will allow developers who use Azure Maps to hook into Moovit’s transit data.

For Moovit, a partnership with a tech giant like Microsoft offers one more avenue to increase its visibility and gain new users, who can contribute more data.  Over time, Moovit will migrate its products and services to Microsoft Azure, and it will potentially incorporate services such as Microsoft Cortana to deliver real-time transit information for a user’s commute.  The company says it now has 300 million registered users in 2,600 cities and 85 countries, and it has attracted 450,000 editors who help monitor and improve the data being contributed to the platform.

Moovit, founded in February 2012, released its first version of the basic transportation app in January 2013.  Since then, the company has raised $133 million in venture capital, which includes a $50 million round led by Intel Capital earlier this year.  (Moovit 06.11)

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9.10  Innoviz’s Solid-State LiDAR Wins CES 2019 “Best of Innovation” Award

Innoviz Technologies announced that its InnovizOne automotive-grade solid-state LiDAR and Computer Vision software have been awarded the elite 2019 CES® “Best of Innovation” honor, given to only the highest-rated product or technology in each category, underscoring the company’s key technology contributions to the mass commercialization of autonomous vehicles.

The first and only LiDAR capable of delivering a commercially viable, automotive-grade, solid-state sensor, InnovizOne represents an unprecedented combination of safety, reliability, compact size and affordability together in one of the most high-performance 3D sensing solutions in the industry.  Hailed as the most outstanding product in the “Vehicle Intelligence and Self-Driving Technology” category by the Consumer Technology Association (CTA), Innoviz will be showcased at the upcoming CES 2019 in Las Vegas.  The annual CES Innovation Awards program – judged by an expert team of industrial designers, independent engineers and members of the trade press in the autonomous vehicles sector – celebrates outstanding product design and engineering in new technology products.

Innoviz’s LiDAR solution offers unique solid-state, MEMS-based design, providing the superior depth perception necessary for Levels 3 – 5 of autonomous driving.  Combined, InnovizOne and Innoviz’s Computer Vision software deliver a complete software stack for autonomous vehicles, turning the LiDAR’s superior data and 3D point cloud into meaningful driving decisions through industry-leading object detection, classification, tracking, lane marking, simultaneous localization and mapping (SLAM) software and more – all while meeting or exceeding the stringent requirements of OEMs and technology companies.

Kfar Saba’s Innoviz is a leading provider of cutting-edge LiDAR remote sensing solutions and Computer Vision software designed to enable the mass commercialization of autonomous vehicles.  The company’s LiDAR products deliver superior performance at the cost and size required for mass market adoption.  Available now, InnovizPro offers unrivaled angular resolution at the highest frame rate of any LiDAR solution currently on the market.  (Innoviz Media 08.11)

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9.11  CloudAlly Introduces a Backup Solution for Dropbox Business

CloudAlly announced the addition of Dropbox Backup to its growing list of secure automated online backup services.  Available immediately, the new service ensures the ability to quickly recover critical data stored within Dropbox in the event of data loss.  In many enterprise companies Dropbox Business is used as the primary storage location for critical business documents, but it lacks the backup and recovery features needed to recover data that has been accidentally or maliciously destroyed.”

Company CIOs and IT managers who rely primarily on the Dropbox Trash folder simply risk data loss occurrences, since this folder is automatically purged after 120 days.  Once purged, the data is gone forever, without the ability to restore.  CloudAlly’s automated daily backups of Dropbox folders & files enables businesses to quickly recover data from any point in time.  The service is compatible with the Dropbox Business and Enterprise plans, and allows Admins to backup all or selected Dropbox users within the organization.

Founded in 2011, Ra’anana’s CloudAlly‘s ISO 27001 certified and GDPR / HIPAA compliant cloud-to-cloud backup and recovery solution performs automated daily backups of leading SaaS applications to Amazon S3 secure storage and makes it available for restore or export from any point in time.  (CloudAlly 08.11)

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9.12  Foresight’s QuadSight Vision System Wins Prestigious 2019 CES Innovation Award

Foresight Autonomous Holdings announced that its QuadSight vision system has been named a 2019 CES Innovation Award honoree in the Vehicle Intelligence and Self-Driving Technology category.  Foresight’s quad-camera vision system was selected from a highly competitive pool of participating innovative CES products.

Focused on the stringent demands of autonomous vehicle vision needs, QuadSight is designed to achieve near-100% obstacle detection with near-zero false alerts under all weather and lighting conditions, including complete darkness, snow, rain, fog, sandstorms and blinding glare.  Leveraging decades of field-proven security technology and highly advanced image-processing algorithms, Foresight’s quad-camera technology combines two pairs of long-wave infrared (LWIR) and visible-light stereoscopic cameras to achieve an unprecedented performance standard for autonomous vehicle vision.

Ness Ziona’s Foresight Autonomous Holdings is a technology company engaged in the design, development and commercialization of stereo/quad-camera vision systems for the automotive industry based on 3D video analysis, advanced algorithms for image processing and sensor fusion.  The company, through its wholly owned subsidiary Foresight Automotive, develops advanced systems for accident prevention, which are designed to provide real-time information about the vehicle’s surroundings while in motion.  (Foresight 09.11)

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10.1  The Composite State of the Economy Index for September 2018 Increases by 0.3%

The Bank of Israel’s Composite State of the Economy Index for September 2018 increased by 0.3%.  The growth rate of the Index is similar to the pace that has characterized it in recent years.  The Index was positively impacted by the increase in imports of manufacturing inputs and in the job vacancy rate for September, and by the sharp rise in industrial production and the rise in services revenue in August.  In contrast, the declines in goods exports and consumer goods imports moderated the Index’s rate of growth this month.  (BoI 31.10)

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10.2  Israel’s Budget Deficit Climbs by 3.6%

Israel’s government budget deficit over the past 12 months (November 2017 – October 2018) climbed to 3.6% of GDP, the Ministry of Finance announced on 5 November.  A NIS 38.5 billion deficit, 2.9% of GDP, was planned for 2018, but the actual deficit is NIS 9 billion higher.  The past 12 months include December 2017, when tax revenues were exceptionally low.  State tax revenues totaled NIS 28.1 billion in October.

Ministry of Finance sources attributed the rise in the deficit to a technical reason, but the decline in tax revenues continues.  The sources said that the rise in the deficit resulted from a NIS 4 billion one-time provision for the property tax fund in December 2017, added that the deficit would fall next month.  Nevertheless, the Ministry of Finance declined to state what the budget deficit would be at the end of the current year two months from now.  The budget deficit target for 2018 is 2.9% of GDP.

The government budget deficit in October was NIS 800 million.  The Ministry of Finance explained that an estimated NIS 6.1 billion in tax payments was put off from September to October because of the Jewish holidays in September.  Excluding this postponement, the October deficit was NIS 6.9 billion. Tax revenues totaled NIS 256 billion in January-October 2018, 2.9% less in nominal terms than in the corresponding period last year.

Government spending totaled NIS 33 billion in October: NIS 26.6 billion in spending by government ministries, NIS 2.8 billion in interest payments on the government debt, and NIS 3.6 billion in repayment of principal and interest to the National Insurance Institute.  Government spending totaled NIS 306.4 billion in January-October 2018. 81.1% of the original budget and 7.2% more than in the corresponding period last year. Defense spending rose 3.5%.  It should be noted, however, that starting in 2018, revenue from the Israel Land Authority designated for projects in the Ministry of Defense listed in economic vacating agreements is included in the budget deficit calculation.  (Globes 06.11)

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10.3  Israel Improves Ease of Doing Business Ranking

On 31 October, the World Bank announced its Ease of Doing Business ranking; Israel rose five places to rank 49th in the world.  This year’s advance follows consecutive declines in recent years.  The World Bank Ease of Doing Business Index is considered the most important index in the world for measuring the bureaucratic burden on businesses, and a country’s ranking carries great symbolic importance.  The index was launched in 2006, when Israel was ranked 26th. Since then, Israel has slipped in the rankings, reaching 54th place last year.

Israel scored very poorly in some of the sub-rankings of which the final ranking is composed.  Last year, Israel was ranked 130th (and almost last) for registering property, 99th for paying taxes and 92nd for enforcing contracts.  In the current rankings, Israel has risen 41 places for registering property (to 89th), thanks to the introduction of on-line Land Registry (Tabu) entries.

Israel improved 24 places, from 65th to 41st, for dealing with construction permits.  On the other hand, it is still ranked low for enforcing contracts and paying taxes (90th in both categories).  In categories in which Israel scored well in the past, it has declined, falling seven places (from 16th to 23rd) for protecting minority investors, and eight places (from 37th to 45th) for starting a business.  Israel fell to 60th place from 55th for getting credit, and three places to 29th for resolving insolvency.  The ranking, it should be pointed out, is relative, and Israel is in competition with other countries that are also working to improve their rankings on the index.  (Globes31.10)

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11.1  JORDAN:  Moody’s Affirms Jordan’s B1 Ratings, Maintains Stable Outlook

On 8 November 2018, Moody’s Investors Service affirmed the Government of Jordan’s long-term issuer and senior unsecured ratings at B1 and maintained the stable outlook.

The decision to affirm Jordan’s B1 ratings reflects credit challenges posed by an increasingly adverse global financing and trade environment, in the context of very large current account deficits and declining foreign exchange reserves, and rising domestic social pressures.  It also takes into account credit supports such as the government’s proven commitment to fiscal consolidation, strong and broad-based international commitment to support Jordan’s economic, financial and social stability, and reforms of Jordan’s energy sector and changes in energy sources that will reduce the sovereign’s vulnerability to higher oil prices.

The stable outlook balances Moody’s view that the planned fiscal reforms will set the government’s elevated debt-to-GDP ratio on a gradually declining path in the next several years against the risk that weak growth and high unemployment cause delays or partial reversals in the government’s fiscal consolidation strategy.  The stable outlook also balances better prospects for growth in merchandise exports and tourism receipts, due to the improving security situation in Iraq and Syria, against the balance-of-payments and external liquidity pressures posed by higher oil prices and rising global interest rates.

Moody’s has also affirmed the B1 backed senior unsecured foreign currency rating and maintained the stable outlook on the Development and Investment Projects Fund of the Jordan Army.  In Moody’s view, this is ultimately the obligation of the Government of Jordan which, acting through the Ministry of Finance, unconditionally and irrevocably ensures the due payment of this debt.

Jordan’s country ceilings are unchanged.  The foreign currency bond ceiling remains at Ba1/NP, the foreign currency deposit ceiling at B2, and the long-term local currency bond and deposit ceilings at Ba1.

Ratings Rationale

Rationale for Affirming the B1 Ratings:  Increasingly Adverse Global Financing and Trade Backdrop, Rising Domestic Social Pressures Heighten Jordan’s Persisting Vulnerabilities

Higher energy prices compared to 2017 and the ongoing tightening of global financial conditions compound pressures associated with Jordan’s long-standing credit challenges such as persistently very large current account deficits and a high government debt burden.  Moody’s expects that these challenges will continue to constrain Jordan’s creditworthiness in the next several years.

With a nearly 35% increase in global oil prices relative to 2017, Moody’s expects that Jordan’s fuel imports will rise by around 2.5% of GDP from this year, exerting negative pressure on an already large current account deficit, expected to average around 11% of GDP in 2018 and 2019.  In the first half of 2018, less than a third of Jordan’s current account deficit was financed by foreign direct investment, highlighting the country’s reliance on external debt financing.  In the absence of sovereign external borrowing in 2018, foreign exchange reserves have declined by around 13% during the first nine months of this year.  Although at $11.7 billion (excluding gold and SDRs) in September 2018, reserves cover nearly 6 months of imports of goods and services, Moody’s expects that they will continue to fall in the next couple of years, increasing Jordan’s external vulnerability.  Moody’s projects Jordan’s External Vulnerability Indicator, the ratio of external debt repayments due over the next year to foreign exchange reserves, to rise to 127% in 2019 from 95% in 2017.

Meanwhile, rising global borrowing costs will increase the cost of external and domestic debt for Jordan.  Although the government’s debt affordability, measured by the ratio of interest payments to government revenue, is currently better than for most similarly-rated sovereigns with comparable debt loads, Jordan’s elevated debt burden and relatively short average maturity of debt, at around 5 years, heighten the sovereign’s fiscal strength sensitivity to a higher cost of debt and contribute to pressure on government liquidity.

Aside from an increasingly febrile global environment, Jordan’s credit profile will be increasingly constrained by growing social pressures due to high unemployment, which reached 18.7% in the second half of 2018, and relatively weak growth of only around 2%.  Rising social and political pressures became most evident in May this year when the government’s proposed new income tax law triggered widespread street protests.  The protests led to a government reshuffle and a withdrawal of the proposed law from parliament.  Although the new government has since submitted a revised income tax law with a similar positive fiscal impact, this episode suggests that rising social and political opposition to austerity measures will complicate fiscal consolidation efforts in the coming years.

Proven Commitment to Fiscal Reforms, Strong International Support and Improving Regional Security Buttress Jordan’s Credit Profile

Jordan’s creditworthiness is supported by the government’s proven commitment to fiscal reforms, significant and continued financial support from a range of bilateral donors and lenders, and by reforms to its energy sector and changes in energy sources which have already muted the impact of higher oil prices on the budget and will, over time, reduce the country’s external position’s vulnerability to oil price increases.

Despite some setbacks during 2018 in implementing fiscal measures planned under the current IMF Extended Fund Facility arrangement, the Jordanian authorities remain committed to gradual fiscal consolidation.  For instance, the new income tax law is planned to be included in the 2019 budget.  Moody’s expects that the law will be implemented broadly as currently proposed or that the government will put in place other compensatory fiscal measures in order to maintain a small primary fiscal surplus during 2019.  Such compensatory measures were implemented in the past when planned fiscal reforms had been delayed or revenue collection outcomes underperformed budget projections.

Jordan’s credit profile is also underpinned by enduring, strong and broad-based international commitment to support the Kingdom’s economic, financial and social stability, including through budgetary grants, loan guarantees, concessional financing and both technical and military assistance.  Aside from the United States (Aaa stable), which in February 2018 committed to increase its annual assistance to Jordan by close to a third, Jordan receives bilateral grants and other financial and economic support from the European Union (Aaa stable) as well as the Gulf Cooperation Council (GCC) states.  Following the street protests in May 2018, Saudi Arabia (A1 stable), Kuwait (Aa2 stable) and the UAE (Aa2 stable) announced a new $2.5 billion support package, designed to shore up Jordan’s economy through investments and to bolster central bank foreign exchange reserves.  Separately, Qatar (Aa3 stable) announced a $500 million aid package that includes investments and project finance in addition to the commitment to employ ten thousand Jordanians in Qatar.

Moreover, while Jordan’s balance of payments remains vulnerable to a sustained rise in oil prices, its fiscal vulnerability to oil price fluctuations has been significantly reduced by structural reforms implemented during the past several years.  These reforms include the elimination of general fuel subsidies in 2012, diversification of the energy sources from more expensive heavy oil to LNG during 2015, and the introduction of an automatic electricity tariff adjustment mechanism in 2016, which is intended to avoid large operating losses for the National Electricity and Power Company.  Moody’s estimates that these reforms will ensure that the oil price increases seen since the middle of 2017 will not weigh on the government’s budget.

Furthermore, Moody’s expects that in the next two years the negative balance-of-payments impact of higher oil prices will be at least partly mitigated by the planned replacement of LNG imports with cheaper piped natural gas from Israel (A1 positive) and Egypt (B3 positive), with the first deliveries expected to start in 2019 and 2020, respectively, and by a greater reliance on renewables, which the authorities expect to supply up to 20% of Jordan’s electricity demand by 2020 compared to 10% in 2017.

Rationale for the Stable Outlook

The stable outlook balances Moody’s view that the planned fiscal reforms will set the government’s elevated debt-to-GDP ratio on a gradually declining path in the next several years against the risk that weak growth and high unemployment cause delays or partial reversals in the government’s fiscal consolidation strategy.

Moody’s projects government debt to decline to 93% of GDP in 2020 from 94.3% in 2017 and then further to 91% by 2022.  Should GDP growth be durably slower than Moody’s currently expects, with limited scope for the government to implement significant new revenue-raising measures or expenditure cuts, government debt would likely remain at least around the current levels for longer, heightening Jordan’s sensitivity to a marked increase in interest rates.

The stable outlook also balances better prospects for merchandise exports and tourism receipts, due to the improving security situation in Iraq and Syria, against the balance-of-payments and external liquidity pressures posed by higher oil prices and rising global interest rates.

Conflicts in Syria and Iraq have significantly reduced Jordan’s exports during the past five years.  Direct exports to Iraq and Syria accounted for about a fifth of Jordan’s exports in 2013 (equivalent to 4% of GDP), but declined to less than 9% of total exports (1.4% of GDP) in 2017 due to the deterioration of security situation and a closure of all border crossings since 2015.  Furthermore, the war in Syria affected trade with third counties by interrupting the key trade routes to Lebanon, Turkey and Europe.  The reopening of the border crossings with Iraq (in August 2017) and Syria (in October 2018) should, over time, lift Jordan’s exports, boost growth and help to contain further increases in unemployment.

Despite the steps taken to ensure access to energy sources that are either cheaper or less correlated with global oil prices, in the near term, the balance-of-payments gains from improved security in Iraq and Syria could be offset by materially higher oil prices than Moody’s currently assumes.  In turn, wider current account deficits would heighten pressure on the country’s foreign exchange reserves which could weaken global investors’ confidence, raise the cost of government debt and heighten pressure on government liquidity.

What Could Change the Rating Up

A sustained downward trend in the government’s debt burden, with a reduced sensitivity to potential increases in interest rates, would likely lead Moody’s to upgrade the rating.  Over time, the rating would likely be upgraded if Jordan’s external position strengthened markedly, through increased regional trade and/or a durably lower energy import bill.

What Could Change the Rating Down

While Moody’s expects some further erosion of Jordan’s external buffers, a significantly faster decline in foreign exchange reserves than currently anticipated would likely lead to a downgrade, in particular if such a weakening in the country’s external position pointed to a likely loss of investors’ confidence that raised pressure on government liquidity.  A reversal of the improvement in the security situation in Iraq and Syria or other negative geopolitical developments in the region could be factors leading to a weaker external position for Jordan.

A further material increase in domestic social pressures, due to elevated unemployment and weak growth, would likely lead to a rating downgrade should they point to renewed, lasting, increase in government debt.  (Moody’s 08.11)

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11.2  UAE:  Fitch Affirms Abu Dhabi at ‘AA’; Outlook Stable

On 5 November 2018, Fitch Ratings affirmed Abu Dhabi’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘AA’ with a Stable Outlook.

Key Rating Drivers

Abu Dhabi’s key credit strengths are its strong fiscal and external metrics and high GDP per capita, balanced by high dependence on hydrocarbons and a relatively underdeveloped economic policy framework.  Sovereign net foreign assets are estimated to be the third-largest among Fitch-rated sovereigns, at over 190% of GDP in 2018, and government debt is the second-lowest, at around 7% of GDP.  Oil and gas contribute around 80% of fiscal revenue, making it highly volatile.  UAE governance scores remain below the ‘AA’ median, although they are the best in the Gulf Cooperation Council (GCC).

Higher oil prices are leading to a rapid rebound of revenue and continued increases in government spending.  We expect a fiscal surplus of 2.7% of GDP in 2018, from a deficit of 3.5% of GDP in 2017.  Higher oil prices will drive a 30% increase in revenue, while spending will rise by about 8%, after nearly identical increases in revenue and spending in 2017.  Our fiscal numbers include the estimated investment income of Abu Dhabi Investment Authority (ADIA) in government revenue but treat any transfers from ADIA as financing items.

We expect the budget will slip back into a deficit of 3.3% of GDP by 2020, as Brent oil prices fall back to our long-term baseline assumption of an average of $57.5/bbl and moderate spending growth continues, partly reflecting the three-year AED50 billion (5% of GDP) stimulus package announced by the Crown Prince in June.  The full composition of the AED50 billion is unclear, but AED10 billion will be in the form of loan guarantees for SMEs, and AED20 billion will be spent in 2019.

The increased expenditure, which constitutes a loosening of underlying fiscal policy, follows significant structural fiscal reforms and spending cuts undertaken in 2015 and 2016 and the resulting slowdown of growth.  Government spending was cut by a cumulative 25% between 2014 and 2016.  Utility prices were raised for non-nationals, and various new fees and levies were introduced, including taxes on hotel stays, a tax on expat rental contracts introduced in 2017 and increased this year, and a proposed road tax.  The UAE reformed petrol subsidies in 2015, putting in place a robust benchmark-linked pricing system that has continued to operate.  The UAE government introduced 5% VAT in 2018, after introducing excise tax in October 2017.

We estimate that Abu Dhabi’s fiscal financing requirement (or cumulative deficit excluding estimated ADIA income) will total $32 billion for 2018-2020.  We estimate that ADIA interest and dividend income may be enough to offset this, and we do not assume any further bond issuance after the $10 billion in October 2017.  Local-currency issuance at the Abu Dhabi level remains a remote prospect.  Strong financial market returns may have allowed ADIA to mostly preserve the value of its assets in recent years, even as they have been used to finance the deficit.  We estimate ADIA foreign assets at $523 billion (nearly 200% of GDP) in 2018.

We expect real GDP growth of 2.0% in 2018, from a decline of 0.5% in 2017 led by oil production cuts.  We forecast only a moderate pick-up of Abu Dhabi’s non-oil growth to 2.5% in 2018 and 3.5% in 2019-2020, from 1.8% in 2017.  The renewed expansion of the budget will support economic activity and confidence, but government spending growth did not prevent the economic slowdown in 2017.  Short-term economic indicators have remained muted, and residential real estate prices have been falling.  On the oil side, we only assume an production increase of 100k bbl/day in 2H2018, and the planned expansion of oil production capacity to 3.5m bbl/day represents an upside risk to headline growth and government finances.

Long-term growth potential is supported by continued public sector investments in the stock of capital, although a return to looser fiscal policy might delay the economy’s transition away from a growth model that is reliant on government projects and immigration.  The government is also undertaking structural reforms, which over time could help build momentum in the non-oil economy.  The UAE has continued to pull ahead of its GCC peers on indicators of Doing Business, climbing to 11th place in the World Bank’s 2019 ranking.

Contingent liabilities are high compared with peers but manageable in the context of Abu Dhabi’s fiscal resources.  We estimate state-owned and government-related-entity debt including banks and the Abu Dhabi National Oil Company at around 38% of GDP.  The IMF estimates Dubai public sector debt at around 60% of Abu Dhabi GDP.  UAE banking system assets are around 280% of Abu Dhabi GDP (Fitch’s average Viability Rating for UAE banks is ‘bbb’).  However, we note that while Abu Dhabi is committed to the financial stability and health of the UAE, it was demonstrated in 2009-10 that support for Dubai and the UAE banking system is selective and narrowly delineated.

In our view, geopolitical risks are elevated relative to ‘AA’ peers.  Tensions between Iran and Saudi Arabia and the US pose a risk to the region, in particular Dubai as a trade and financial hub.  The UAE, led by Abu Dhabi, remains embroiled in the Yemen civil war and is taking part in the ongoing boycott of Qatar.

Rating Sensitivities

The main factor that could lead to positive rating action is:

-Improvement in structural factors such as a reduction in oil dependence, and a strengthening in governance, the business environment and the economic policy framework.

The main factors that could lead to negative rating action are:

-Erosion of fiscal and external positions, for example due to a sustained period of low oil prices, or a materialization of contingent liabilities.

– Spill-over from a regional shock that impacts economic, social or political stability.  (Fitch 05.11)

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11.3  EGYPT:  IMF Agreement on the Fourth Review for Egypt’s Extended Fund Facility

An International Monetary Fund (IMF) team visited Egypt on 18 – 31 October 2018 to conduct the fourth review of Egypt’s economic reform program supported by a three-year Extended Fund Facility.  At the end of the visit the IMF issued the following statement:

“The IMF staff team and the Egyptian authorities have reached a staff-level agreement on the fourth review of Egypt’s economic reform program, which is supported by the IMF’s SDR 8.597 billion (about $12 billion) Extended Fund Facility arrangement.  The staff-level agreement is subject to approval by the IMF’s Executive Board.  Completion of this review would make available SDR 1,432.76 million (about $2 billion), bringing total disbursements under the program to about $10 billion.

“The Egyptian economy has continued to perform well, despite less favorable global conditions, supported by the authorities’ strong implementation of the reform program. GDP growth accelerated from 4.2% in 2016/17 to 5.3% in 2017/18 while unemployment declined to below 10%.  Meanwhile, the current account deficit narrowed to 2.4% of GDP in 2017/18 from 5.6% the year before, primarily driven by strong remittances and a recovery in tourism.  Gross general government debt declined from 103% of GDP in 2016/17 to about 93% of GDP in 2017/18, supported by fiscal consolidation and higher growth.

“The Central Bank of Egypt’s (CBE) prudent monetary policy helped bring down annual inflation from 33% in July 2017 to 11.4% in May 2018.  However, inflation increased again to about 16% in September 2018, reflecting the pass-through from energy price increases in June and a stronger than expected increase in volatile food prices in September.  In the medium term, the CBE aims to reduce inflation to single digits.  Meanwhile, in the current external environment of tighter financing conditions for emerging markets, the CBE’s commitment to a flexible exchange rate policy will help enhance competitiveness, protect Egypt’s foreign reserves, and cushion against external shocks.  Egypt’s banking system remains liquid, profitable, and well capitalized.

“Egypt’s fiscal policy in 2018/19 and beyond will continue to aim at keeping general government debt on a clearly declining path and achieving a primary surplus of 2% of GDP.  The government also remains committed to continuing energy subsidy reforms and raising revenues which will help create fiscal savings to invest in a well targeted social safety net, human development including health and education, and infrastructure.  To improve fiscal transparency and public access to information, the authorities have continued to expand the data disseminated on the budget process and execution throughout the year.

“We welcome the authorities’ comprehensive efforts to improve the living standards of the most vulnerable.  These efforts include: Takafol and Karama, which has expanded to cover around 10 million individuals; Forsa, which has created job opportunities for graduates of the Takafol program; and Mastoura, which provides microfinancing to women for sustainable income generation.  These programs are being complemented with the Sakan Karim program to provide clean drinking water and sanitation to rural areas.  Moreover, a social package consisting of an additional increase in the salaries of public servants, an increase in pensions, and a progressive increase in tax credits has been implemented.

“The government continues to make efforts to implement reforms that aim to help the private sector invest and create the jobs needed to achieve more inclusive and sustainable growth for Egypt’s young and growing population.  These reforms include: improving access to industrial land; promoting competition; improving transparency and accountability of state owned enterprises; and fighting corruption.  (IMF 31.10)

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11.4  MOROCCO:  Fitch Affirms Morocco at ‘BBB-‘; Outlook Stable

On 13 November, Fitch Ratings affirmed Morocco’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB-‘ with a Stable Outlook.

Key Rating Drivers

Morocco’s ‘BBB-‘ rating is supported by a track-record of macroeconomic stability, comfortable external buffers and a low share of foreign-currency debt in public debt.  This is balanced against weak development and governance indicators, high government debt and budget and current account deficits (CAD) that are wider than rating peers.

The government will miss its target of narrowing the central government (CG) budget deficit to 3.0% in 2018 from 3.6% of GDP in 2017.  Fitch projects it will widen to 3.8% of GDP, against a revised government estimate of 3.5%.  The upsurge in hydrocarbon prices will lead to a 0.4% of GDP overshoot in spending on subsidies as Morocco continues to support the prices of butane gas as well as those of wheat and sugar.  Moreover, disbursements of Gulf Cooperation Council (GCC) grants will fall short of projections and the receipts of the corporate income tax will undershoot budget forecasts.  Fitch forecasts the general government (GG) deficit, which also includes social security, local governments and extra-budgetary units, to widen to 2.5% of GDP in 2018 from a government estimate of 2.2% in 2017.

The government has prioritized social policies in the 2019 budget. It envisages an overhaul of social programs as well as measures to support consumer purchasing power, spur employment and reduce regional disparities.  Despite strong investments in infrastructure and manufacturing capacities in recent years, Morocco’s non-agricultural activity has failed to accelerate and job intensity of growth remains low, resulting in only small improvements in employment and social indicators.  This has contributed to social discontent, which is illustrated by recurrent protests in peripheral regions since 2016 and a boycott movement targeting some consumer products earlier in 2018.

Fitch projects a broadly stable CG deficit of 3.7% of GDP in 2019 (GG: 2.5%) reflecting a halt in consolidation efforts.  The government is seeking to accommodate social priorities while containing pressures on the budget deficit by closing tax loopholes and raising some direct and indirect tax rates.  It expects to limit the CG deficit to 3.3% of GDP by raising MAD5 billion from planned privatizations but Fitch treats privatization receipts as a below-the-line financing item rather than budget revenues.  The CG deficit will narrow slightly to 3.5% of GDP in 2020 (GG: 2.4%) under Fitch’s forecasts, mostly on lower on-budget capital spending/GDP.  A further rise in oil prices would exert pressures on the budget.

The government’s stated goal of reducing CG debt to 60% of GDP in 2021 is unlikely to be achieved.  Fitch projects CG debt will rise to 67.6% of GDP in 2020 from 65.1% in 2017.  CG debt has been on an upward trajectory since it reached its low point of 45.4% of GDP in 2008, reflecting moderate growth and slow and intermittent progress on fiscal consolidation.  GG debt will rise from 51.1% of GDP in 2017 to 53.3% in 2020.  Refinancing risks are low as debt is mostly dirham-denominated, while 76.7% of external public debt is owed to official creditors.

The debt of state-owned enterprises’ (SOEs) is high, at 26% of GDP at end-2017, of which 16.9% of GDP is owed to external creditors.  Government guarantees on SOE debt amounted to 14.3% of GDP at end-2017.  The government is currently working on a draft law to streamline the governance and oversight of SOEs and strengthen their balance sheets.

GDP growth will average 3.2% in 2018-2020, in line with the current ‘BBB’ category median of 3.3%.  Following a bumper harvest in 2017, crop production has further increased during the current season due to supportive weather conditions and improved productivity, but unfavorable base effects mean that GDP growth will slow from 4.1% in 2017 to 3.3% in 2018 and 2.9% in 2019 as agricultural value-added contracts assuming a normalization of harvests.

Activity in the non-agricultural sector is underpinned by continued foreign-financed investments in the automotive and aeronautic industries, steady growth in mining production and strong tourism.  However, the medium-term outlook for non-agricultural activity remains constrained by structural impediments, including weak education outcomes, skill mismatches and low participation rates.  The government is intensifying efforts to reduce the long payment delays in the economy, which are a key constraint for private sector activity.

The CAD will average 4.2% of GDP in 2018-2020, up from 3.6% in 2017 and well above the current ‘BBB’ median of 1.6%.  These forecasts reflect a larger trade deficit and lower disbursement of GCC grants.  Rising imports are driven by the upsurge in oil prices given the high dependence on energy imports, strong domestic demand and assembling industries inputs.  They will be only partly offset by strong export performance lifted by sales of phosphates and transport equipment.

Foreign direct investments will average 1.7% of GDP in 2018-2020.  Wider CADs against the background of a pegged exchange rate will result in a fall in FX reserves to 4.9 months of current account payments in 2020 from 5.9 months in 2017, assuming a Eurobond issuance by the sovereign in 2019.  Net external debt will also rise to 15.6% of GDP in 2020 from 14.6% in 2017, above the current ‘BBB’ median of 5.8%, based on Fitch’s projections.  Morocco’s two-year precautionary liquidity line (PLL) with the IMF expired in July and the government has applied for a successor arrangement with the Fund.  A new precautionary arrangement would offer a safety net against risks of external stress.

Bank profitability is steady, supported by wide interest margins, and the deposit-based funding structure is stable.  However, the sector’s capitalization is below the ‘BBB’ median and provides only thin buffers given asset risks.  Loan concentration is high, despite tighter regulatory rules and non-performing loans were 7.5% of total loans in 2017 versus a ‘BBB’ category median of 4.2%.  The transition to the IFRS9 accounting standards that started in January is putting pressure on capitalization ratios but the central bank has allowed a five-year transition period for compliance.

Structural features are a major constraint on the ratings, as governance and development indicators are well below ‘BBB’ and ‘BB’ medians.  Continued tensions between some of the members of the ruling six-party coalition persist, but will not impact policy-making in the short to medium term, in Fitch’s view. Negotiations over the long-simmering conflict in the Western Sahara region have reached a standstill since 2012 but renewed UN efforts could lead to the resumption of talks in the coming months.  Although Fitch does not expect a prompt resolution to the conflict, a reactivation of the peace process would contribute to reducing regional geopolitical tensions.

Rating Sensitivities

The main factors that may, individually or collectively, lead to positive rating action are as follows:

-Fiscal consolidation leading to a trend reduction in government debt/GDP;

-Sustained improvement in the current account balance consistent with declining net external debt-to-GDP;

-Over the medium term, stronger growth potential and an improvement in development indicators.

The main factors that may, individually or collectively, lead to negative rating action are as follows:

-An increase in government debt/GDP driven by the fiscal stance or a materialization of contingent liabilities;

-Security developments or social instability affecting macroeconomic performance or external balances or leading to significant fiscal slippages;

-Weakening of medium-term growth prospects leading to a widening of the gap between Morocco’s development indicators and the ‘BBB’ category medians.

Key Assumptions

We expect global economic trends and commodity prices to develop as outlined in Fitch’s latest Global Economic Outlook.  We assume that oil prices will decline from $70/barrel in 2018 to $65 in 2019 and further to $57.5 in 2020.  (Fitch 13.11)

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11.5  TURKEY:  Turkey’s Crisis-Hit Construction Sector Threatens Big Fallout

Mustafa Sonmez noted on 1 November in Al-Monitor that Turkey’s construction sector, the backbone of Ankara’s growth policies for the past decade and half, stands out among the earliest victims of the country’s economic crisis, rapidly contracting and threatening to drag others down with it.

The sector, including realty, accounted for 15.7% of Turkey’s $851.5 billion in gross domestic product (GDP) last year, almost on par with the manufacturing sector, which accounted for 18.5% of GDP.  After impressive expansion, sales are now shrinking rapidly for homes and offices, leaving builders with swelling stocks.  Housing demand, in particular, has fallen sharply, hit by the slump of the Turkish lira and the ensuing increase in interest rates.  Building companies are struggling to decrease stocks and repay bank loans.  Despite government incentives, including tax cuts and cheaper loan campaigns, the sector remains in turmoil and the circle appears to be tightening.

In the first nine months of the year, home sales decreased 2.7% compared to the same period last year.  Mortgaged home sales, meanwhile, were down 29.4%, largely the result of the increase in interest rates.  The rate on home loans hit 25.2% in September, up from 12.9% in September 2017, before climbing further to 29% in October.

The overstock problem has also strained the government’s Housing Development Administration (TOKI) and its affiliated Emlak Konut, the country’s biggest real estate investment trust.  Founded in 1984 to develop land with infrastructure and provide loan support to mass housing builders, TOKI turned to high-profit housing after the Justice and Development Party (AKP) came to power in 2002.  Since 2008, it has also focused on the construction of public buildings, including hospitals and schools.  As of June, TOKI had 142,000 homes for sale.  Since 2003, it has sold about 696,000 of the nearly 838,000 homes it built, but it is now struggling to attract buyers, and the number of its new projects has visibly decreased.

Sales figures in branded projects developed by Emlak Konut also indicate a slowdown.  Nearly half of Emlak Konut homes, offices and shops remained for sale during the first half of 2018, according to a company activity report released on the Public Disclosure Platform.

Shrinking demand has also led to tangible drops in home prices.  As a result, the annual increase in housing prices has fallen well behind the increases in overall consumer and producer prices.  As of August, the 12-month increase in housing prices stood at only 3.8% in Istanbul, 8.6% in Ankara and 15.7% in Izmir, according to central bank data.  Producer inflation was 32% for the same period, a striking sign of how the increase in housing prices was not even half of the inflation rate.

Hardship in selling or renting finished homes and offices has forced an abrupt halt in new investments.  Another major factor is the spike in construction material prices amid the rapid increase in foreign exchange prices and interest rates over the past several months.  The construction cost index by the Turkish Statistical Institute indicates that the prices of construction materials soared 44% over the last 12 months, with overall producer inflation reaching 46% in the same period.  In 2016 and 2017, the increase in construction material prices stood at 13% and 27%, respectively.  The soaring costs have not only discouraged new investments but have also dealt a heavy blow to ongoing projects.

A sharp downturn is seen for infrastructure as well.  Public construction investments have rapidly slowed, and the so-called megaprojects, launched as public-private partnerships (PPP), have also fallen into crisis. PPP projects, including airports, highways, bridges and hospital campuses, many of them in and around Istanbul, have been hit by foreign currency losses due to the meltdown of the Turkish lira, which has aggravated the debt burden stemming from the foreign loans acquired.  The increasing costs are hard to cope with for those projects as well.

Dozens of construction companies have already thrown in the towel, lining up for bankruptcy protection in commercial courts.  The hardest blows, however, are being felt by the sector’s workers, from blue-collar laborers to architects and engineers.  Employment figures in the sector are falling.  Moreover, the increase in labor costs trails well behind consumer inflation, indicating a meltdown in the real income of construction workers.  As of July, the 12-month increase in labor costs stood at 17%, compared to a nearly 20% increase in consumer prices for the same period.

When the AKP come to power in early elections in November 2002, it was handed a rehabilitated economy on a silver platter, while the three outgoing coalition partners were ousted from parliament, paying the penalty for the International Monetary Fund-backed austerity measures that put the economy back on track after a severe crisis in 2001.  Drawing on this precious inheritance, the AKP government was able to attract an extraordinary inflow of foreign funds, including in the aftermath of the 2008 global crisis, until 2014.  Thanks to those foreign funds, obtained mostly through borrowing, it achieved high rates of economic growth, which relied largely on the domestic market and was heavily driven by construction.  The government paid no mind that construction was not generating much-needed foreign exchange, enjoying the political returns of the building frenzy.

Turks were impressed by the grandiose airports, bridges and buildings springing up before their eyes, rewarding the AKP at the ballot boxes.  In further electoral gains for the party, the construction boom meant jobs for the most unqualified and neediest breadwinners, while part of the foreign funds flowing into the country became housing loans to make large numbers of Turks homeowners.

Another reason to opt for construction-centered growth was to create the AKP’s own bourgeois, with the building spree proceeding along with nepotistic construction permits and public land allocations by local administrations and the central government.  As such, the construction sector provided the funds to build a party state through the control of crony business people of varying caliber.

This wheel, which relied on foreign funds to continue spinning, began to slow as money became more expensive after 2014 before hitting a downturn and then crisis.  Due to its links with many industrial subsectors and service sectors, among them financing, real estate marketing and advertising, the crisis-hit construction sector has begun to drag the entire economy down.

A fresh takeoff can be achieved only with the revival of domestic demand, which, in turn, requires reducing inflation to single digits, getting loan interests to reasonable rates, restoring foreign investor confidence in Turkey and the flow of external funds and dispelling the general fog of economic uncertainty.  In short, it all depends on seeing a light at the end of the tunnel, which is likely to take several seasons.  Before anything else, however, the AKP government needs a clear roadmap to begin climbing out of the hole.  Some may claim the worst is now behind, but the truth is, Turkey has not hit bottom in the current crisis.

Mustafa Sonmez is a Turkish economist and writer. He has worked as an economic commentator and editor for more than 30 years and authored some 30 books on the Turkish economy, media and the Kurdish question.  (Al-Monitor 01.11)

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