The EFG Hermes Virtual Investment Conference has continued its activities on Wednesday with the attendance of 480 investors from 72 investment companies and institutions from around the world. The conference is scheduled to last until 30 June.
EFG Hermes Managing Director Karim Awad said the group has no current plan to debut its non-banking financial institution (NBFI) platform, EFG Hermes Finance, on the stock market. He noted, however, that the plan could be presented to the Board of Directors and stakeholders at a later time.
He added that EFG Hermes Finance is able to withstand the consequences of the ongoing novel coronavirus (COVID-19) pandemic. The partnership with Tokyo Marina Insurance is also ensuring the group’s activity growth and enhancing opportunities for its non-banking activity.
Speaking on the sidelines of the conference, EFG Hermes CEO Mohamed Ebeid said that it is currently difficult to talk about proposals and future plans. This is especially as the market conditions are controlling the offerings operations during the current period. He added that the fourth quarter (Q4) of 2020 could be a somewhat appropriate time for government proposals.
Ebeid pointed out that stock levels and prices are low, and that the market needs relatively large companies in terms of evaluation.
He revealed the group’s intention to hold a series of virtual teleconferences, over the coming period, will allow a large number of companies and investors to participate.
Ahmed Shams El-Din, Head of Research at EFG Hermes, said that it is difficult to expect the crisis to end well economically. He suggested that with the beginning of Egypt’s gradual reopening to co-exist with the coronavirus, the improvement will be seen from the start of 20201.
Shams El-Din also noted that the recovery is likely to be quick, taking place over a period of up to 18 months.
He noted that it is possible for a bubble to emerge after a large amount of liquidity is pumped into emerging markets, particularly into their stock exchanges.
He pointed out that the major impact will be on emerging market exchanges, and that the infrastructure and logistics sectors are the most promising sectors in the market.
Shams El-Din added that the coronavirus outbreak will negatively affect EFG Hermes’ profits for the current year, with the company’s profits expected to decrease by 25% from previous 2020 expectations.
He pointed out that distance education companies that invested in the pre-pandemic period are the most prominent beneficiaries of the ongoing health crisis. The health sector is another, more obvious, beneficiary, as it has witnessed a great demand in terms of investment and ideas that serve the sector.
Shams El-Din expects oil prices will range between $50-$55 per barrel during Q1 of 2021. He pointed out that there is a current crisis in the disparity between increasing the supply and the declining demand, which can be corrected with production decreases by oil countries according to recent agreements.
He pointed out that during its annual conference, EFG Hermes noted that the most prominent investor concerns were high cost items and the impact on domestic demand after labour migration from the GCC.
Shams El-Din pointed out that the expected deficit in the general budget for the current year may reach 8.5%, especially after fiscal stimulations due to the coronavirus’ economic implications.