Experts address financial crisis at Trends in Cairo conference

Kate Dannies
6 Min Read

CAIRO: Egypt’s top financial institutions have set up shop in the Cairo International Conference Center to dispense a range of information on finance and investment to attendees at the fourth annual Trends Stock Market Exhibition and Conference.

Running through Saturday, the event offers exhibits by Egypt’s top finance companies in addition to a series of lectures and panel discussions by experts in the field addressing the conference’s theme for this year: “Beyond the Crisis.

Discussing this year’s theme, conference chairman Mohammed Taymour pointed to the importance of exchanging information and opinions on the current situation in order to work towards effective solutions.

“Having experienced the worst year on record for the local market and perhaps globally, communicating with retail investors is more important than ever. A solid understanding promotes sound investment decisions based on appropriate risk- reward evaluations, he said.

In Thursday morning’s panel discussion, guest speakers debated the finer points of the financial crisis. While some experts professed more optimism than others, there seemed to be a general consensus that Egypt’s financial markets have passed through the worst of the crisis.

One of the speakers on the panel, Hussein El-Sherbiny, managing partner at Pharos Holding, expressed optimism about the stabilization of markets and a return of consumer confidence.

“Despite challenging conditions, retail trading remains the driving force behind the Egyptian market. In March 2009, retail trading has accounted for almost 60 percent of daily trading value and 92 percent of transactions; a rise of 8 and 2 percent, respectively compared to the same period of 2008. This reveals that investors have faith in market recovery and are coming to terms with the cyclical nature of equity markets, he said.

Daily News Egypt sat down with El-Sherbiny for an in-depth discussion on what is unique about Egypt’s position, the future of financial markets and the importance of consumer confidence.

Daily News Egypt: How are Egypt’s financial institutions faring now?

Hussein El-Sherbiny: Egypt’s banks are in a good position – an even better one than they were several years ago with low levels of non-performing loans and solid portfolios. It’s funny, because we used to look up to big investment banks in the United States as role models for what we’d like to achieve in Egypt, but the crisis has shown us otherwise. Capital markets in the country are strong as well; Egypt is a key member of the MENA region so its markets can’t be ignored by international investors, although I think valuations will be a key issue in markets’ effectiveness in the coming months.

And the stock market?

The stock market is also in a solid position, and the stocks have corrected to more appropriate values. The attitude of individual investors has been key to success in this area. Since 60-70 percent of daily turnover comes from individual investors, their attitudes have a huge impact on overall market trends.

I think people need to adjust their expectations and commit to medium term investments – by this I mean giving up the idea that quick money is to be made from the stock market and paying more attention to the numerous studies that show that returns are best over the medium term.

How has business been impacted at Pharos Holding?

On the brokerage side we are enjoying an increasing market share, but whether this will continue depends on turnover – if it declines, then we won’t be able to maintain our market share. In terms of investment banking, things have slowed down; a lot of products are on hold due to lower demand. And obviously now is not a good time for companies to go public due to slow investor appetites. Asset management, however, is growing on the portfolio side and we’re hoping to launch several new mutual funds in the near future.

Is the reaction of Egyptian financial institutions to the global crisis unique in any way?

No, in my opinion Egypt is not unique; it is part of a global financial system and therefore not immune from what is happening around the world. Egypt definitely faces different issues from the United States or Europe in that it wasn’t that affected by the toxic asset aspect of the crisis, but at the end of the day the US and Europe are our biggest trading partners and sources of tourism, so the effect is huge.

Just like other countries around the world Egypt faces declines in growth and rising unemployment but we don’t know what the extent of this will be. I think the future will bring more conservatism, regulation and attention to risk management as a result of this crisis.

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