The Egyptian Exchange (EGX) could serve as a good tool to finance expansions in the automotive sector in a high interest rate environment, market and industry experts said on the sidelines of the fourth Egypt Automotive summit.
Mohsen Adel, vice chairperson of EGX, assured that the main role of the EGX is to finance the companies’ projects in order to expand.
Adel added that the stock market’s role is to give the chance to achieve economic development and reconstruction.
He pointed out that there are great stories of success for companies that are listed on NILEX.
Moreover, the EGX board is watching the promising sectors to attract companies to be listed on the market.
Meanwhile, he pointed out that small and medium-sized enterprises (SMEs) have a promising future in terms of developing, especially companies that work in the field of manufacturing car inputs and the supplier industry.
“NILEX has potential to attract these companies,” he added.
Moreover, he explained that the EGX and NILEX are considered to be great financing tools for the companies that have the desire to progress.
Adel asserted that companies are allowed to use the market as a financing tool, without being listed on the EGX, through the third market.
Furthermore, Adel assured that the EGX is in bad need of Initial Public Offers (IPOs) to redistribute market liquidity, because the liquidity is concentrated on certain equities.
“This supports raising the market quality leading to increase the relative weight of EGX on international indices,” he noted.
Moreover, he assured that the EGX board issued some decisions to encourage the IPOs.
“We target attracting companies from all sectors that are financially strong and have a potential to expand,” Mohsen Adel said.
For his part, Mostapha Adel, chairperson at Twin Capital, explained that the potential IPO of SIG is expected to be a perfect model on the EGX.
“Investment banks also target attracting smaller companies to be listed on EGX” he added, noting that Egypt has to support SMEs.
Moreover, he said that Egyptian investors used to rely on traditional shapes of financing, including banks or strategic investors.
To illustrate, Adel explained that there are many other financing tools like leasing and listing on the EGX.
In this respect, he revealed that investment banks believe that the EGX has a crucial role regarding supporting the Egyptian economy.
For his part, Saad Zaghloul, executive editor-in-chief of AlBorsa newspaper and chairperson and chief editor of Daily News Egypt newspaper, said that the volume of raising capitals of listed companies during the last four years amounted to EGP 37bn.
Meanwhile, he added that for the cars sector, there is only one listed company on the EGX and another listed company on the NILEX.
“Egypt has to target attracting companies that export to Africa, to be listed on NILEX, especially companies that work in the field of car inputs and spare parts,” he continued.
“NILEX is able to attract about 300-400 companies from the exporting councils,” he added.
Zaghloul pointed out that there are models for companies that can allow them to achieve growth through raising their capital through IPOs.
Finally, he called for an initiative to set identifying forums for the companies that work in the field of car inputs to know about the advantages of being listed on the EGX and NILEX.