Chairman of the Egyptian Stock Exchange Mohamed Omran described the main stock index as generally good, having made remarkable progress in recent times. Omran anticipates continued growth compared to the last three years.
He said that the recent rise of the stock exchange indicators reflects restored confidence from local and foreign business and financial communities. However, economic indicators are still marred by persistent unemployment, debt, the budget deficit, and inflation – 7% growth is needed to overcome these challenges.
During the first session of the Euromoney conference on Wednesday, Omran said that Egypt is one of the largest capital markets in the MENA region.
Regarding the treasury bonds that were made public by the Egyptian government, Omran said that an understanding has been made between the Central Bank of Egypt and the capital market. He added that a way must be found for the treasury bonds to be offered on the stock market.
According to Omran, treasury bonds are worth up to EGP 3tn in the form of debt.
He stated that housing bonds were offered in 1995, but various legal issues arose and modifications were required.
Omran asked that capital markets in Asia and Europe be explored, adding that he will meet with representatives from one such market at the end of next month to facilitate a partnership with the Egyptian Exchange.
Omran believes that, over the past year, the capital market has fared better than ever before, noting that the situation has largely changed as a result of renewed political stability.
According to Omran, the Egyptian capital market will not be able to deal with derivatives as other markets do, saying: “We are waiting to take advantage of this field and gain training and knowledge from the major markets.”
Omran believes that the presence of small and medium enterprises is important to the Egyptian Exchange, saying: “Small and medium enterprises have their market, and the capital market develops these enterprises.”
NILEX, developed for small companies, has 26 companies listed, but the 2008 financial crisis and the three years following the revolution have negatively influenced NILEX listings for this type of company.
Total capital increases for these companies reached EGP 58m on the Egyptian Exchange.
Omran said: “These companies’ capital is worth EGP 900m, but 50% of the trading process is focused on their shares. When the situation stabilises, the NILEX index will rise.”
Omran mentioned that last week a company with EGP 26m in capital entered the NILEX, and he expressed hope that other companies would do the same.
“Six more companies hope to register with NILEX at present. Listing procedures for NILEX are faster and easier,” he added.
He believes that the coming phase will represent a better outlook for capital market indicators, saying; “We have a positive feeling. We have started on our path and are continuing to move toward implementing more courageous economic policies.”
Omran believes that the stock market in Egypt is open to foreign investors but, despite the market’s diversity, foreign investment has been limited.
Omran said that he will hold extensive consultations with all global stock markets with the aim of developing and organising the work of the Egyptian Exchange. He also hopes to add new tools that create more savings able to finance economic growth, which will help reduce unemployment levels.
Additionally, Omran said: “The option of creating partnerships with global markets is available and we often discuss it.”
“We lack the technology and knowledge necessary to revitalise the derivates markets, but we are looking to the rest of the world to cooperate with us and allow us to benefit from their experiences,” he added.
Omran stated that neighbouring Arab markets suffer from a shortage in the number of companies listed on the stock market, unlike Egypt, which enjoys a diverse corporate sector. Those markets will not be able to attract capital from Egypt, a fact that was demonstrated following January 2011 when, despite a sharp decline in Egypt’s stock market, Arab markets were still unable to draw capital away from Egypt.