The Egyptian capital market has witnessed a significant boom during the past three months, prompted by the state’s plan to empower the private sector, as the government announced the launch of its IPOs programme.
The IPOs programme represents the executive side of the State Ownership Policy Document that was launched after the economic conference last October, as a step to complement the state’s efforts towards strengthening the role of the private sector in the economy, creating an attractive and supportive climate for investment, and thus raising economic growth rates.
Chahir Hosni, CEO and Managing Director of Brokerage, CI Capital, said that the money market is waiting for more positive steps regarding the government IPOs programme, as the gradual improvement has become tangible in most of the conditions surrounding the market.
He added in an interview with Daily News Egypt that the appetite of private sector for investment is linked to the strength of the upcoming offerings, in addition to the improvement in the performance of the capital market, explaining that the Egyptian Exchange as an asset class was not in the first place in the past and has now become at the forefront of priorities, which is reflected in the performance of stocks. in the last period.
Hosni stressed that the current time is appropriate to implement the offering programme in light of the improvement in the performance of the stock market, the stability of the exchange rate, and the pound’s arrival at a fair value.
He stated that the valuation of the companies must be in line with the market prices to ensure the required demand, and thus the success of the offerings, the increase in the number of investors, and the growth of the depth of the market significantly.
Hosni pointed out that the most promising sectors in the market during the coming period are the banking sector in light of the continued policy of monetary tightening, along with the non-banking financial sector. As for the consumer sector, it was likely to be affected by high inflation rates and low demand, but to a small extent.
He hinted that fears of slowdown and recession would not affect the Egyptian stock market significantly due to the sharp drop in stock prices in recent years.
Hosni said that any promotional campaign to attract clients to the market is positive and will greatly support the stimulation of the demand side, but at the same time, he believes that it is necessary to start on the supply side and offer large and diversified companies with the improvement of the economic climate, which supports the appetite of investors to enter the market.
He added that the company is currently working to adapt to the developments of investor categories in the local market by working with both sides of the market, institutions and individuals, instead of dealing with institutions more.
Hosni stressed that CI Capital is currently working on regional expansion in parallel with diversifying the services provided to clients, starting with electronic trading and developing the electronic application.
According to the monthly bulletin of the Arab Monetary Fund, the market value of Arab stock exchanges declined by 2.86%, to reach about $4.057trn in December 2022, due to the decline in liquidity rates and the decline in foreign investment activity.
The Arab Monetary Fund indicated that the index declined due to the performance of a number of Arab stock exchanges, in line with the declines recorded in the majority of global financial markets, and a number of emerging stock exchanges, in addition to the impact of a number of stock exchanges due to the reduction in expectations of growth rates by a number of international institutions during the past month.
The monthly bulletin of the Arab financial markets issued by the Fund showed that the Egyptian Exchange led the ascending movement recorded at the level of the Arab stock exchanges, with its index rising by 10.10%, and topped the recorded increases at the level of the market value by 10.48%.
In a related context, Hosni added that the state has already taken serious steps to create economic conditions, especially with regard to customs release of goods.
The company is currently focusing on expansion opportunities to capture larger market shares during the coming period, in conjunction with achieving and developing profitability.
He pointed out that the company’s research sector covers a large number of companies listed on the Gulf Stock Exchange and the Middle East, with the expansion of companies listed in the Egyptian market.
Hosni added that the GCC markets benefited from the rise in fuel prices after the repercussions of the Russian-Ukrainian war, and the markets were able to enhance their investment potential by increasing local investments and launching major projects, which put the Gulf markets at the forefront of the most attractive markets around the world since the Coronavirus pandemic.
He added that the company aims to launch new products during the coming period, with the process of continuous development on the electronic application to increase the rates of electronic trading.
Hosni further added that the company is currently running a number of operations in the OTC market, expecting to complete some deals during the coming period.
In a related context, he stressed that the return of foreigners to invest in the Egyptian stock market once again is related to the availability of hard currency, especially since it is the first step that represents stability in the exchange market.
He expected that the second half of 2022 would witness the beginning of a decline in interest rates again, which would increase the appetite for investment in the Egyptian Exchange.
He pointed out that the Egyptian market witnessed exceptional performance since November 2022 with the continuation of the upward trend of the Egyptian Exchange, which drew the attention of foreign investors to the market and enhanced the participation of local investors as well, whether institutions or individuals.
Hosni added that the reform measures adopted by the Egyptian government, which in turn enhance the stability of the economic indicators growth, increasing foreign exchange reserves, enhancing sustainability and supporting the private sector will have a prominent role in returning the Egyptian market to the map of investment institutions around the world.
He pointed out that the Egyptian market enjoys very attractive prices for investment, despite the recent improvement in stock prices, suggesting that with the start of a breakthrough in macroeconomic indicators, it will affect attracting more investments, in addition to the resumption of the government offering programme, which will push for more investment.
Hosni stressed that Egypt’s access to the IMF loan gives great confidence in the economy, which stimulates merger and acquisition deals in the Egyptian market, increases dollar liquidity, and reduces investors’ fears of the high cost of insurance for sovereign debt.
Regarding investors’ appetite, he said that the investment conference launched by CI Capital last week indicates an increase in investors’ interest in investing in the Egyptian market.
And he also said that investors have already sensed the improvement of some macroeconomic indicators, which gives more reassurance in the Egyptian economy, explaining that the companies assured investors in individual interviews that last month witnessed a breakthrough in the provision of dollar liquidity and the beginning of improvement in economic performance.
CI Capital Holding launched the seventh edition of the annual MENA Investor Conference, an investment forum in the Middle East and North Africa region that is being organized in Egypt with the participation of senior state officials and a number of decision makers representing various investment institutions and the most important companies listed in the Middle East markets. North Africa.
The conference was attended by 300 investors representing 97 institutions through direct meetings with the leaders of 75 companies representing 12 diverse sectors from Egypt and the Gulf countries, according to Hosni.
The conference aims to stimulate global liquidity flows to the Middle East and North Africa markets since its first edition, as the conference activities provide an opportunity for direct communication between the executive managements of the leading companies listed in the markets of the Middle East and North Africa region and representatives of global investment institutions that manage assets with a total value exceeding $2.5trn.