Brokerage and securities trading companies seek to penetrate the Arab Gulf countries, following the momentum witnessed by those markets in terms of the increase in trading and the steady increase in the number of offerings, in contrast to the decline in the number of offerings in the Egyptian Exchange.
The Gulf Cooperation Council markets accounted for 21% of global subscriptions in 2022, compared to only 2% in 2021, and last year witnessed a strong start in the Abu Dhabi Securities Exchange, so that the market value increased significantly in the market with the best performance in the region after its index rose 68%. Last year, the UAE markets witnessed a series of IPOs that were the strongest in the history of financial markets in the region.
These include Abu Dhabi Ports, Dubai Electricity and Water Authority (DEWA), Borouge, GFH Financial Group, Invictus Investment, TECOM Group, Union Coop, the Saudi Agricultural and Livestock Investment Company (SALIC), Barajeel Engineering Consultants, Bayanat, and Taaleem.
Since the beginning of this year, the UAE markets have witnessed record demand and great demand by investors, sovereign funds, and local, regional and global investment portfolios. and “Al-Ansari” for financial services, about $280bn, while the four offerings collected revenues of more than $3.95bn.
Egyptian companies are seeking to take advantage of this momentum, especially with its absence in the Egyptian market, which has not witnessed initial offerings other than a direct listing of “Lotus for Investment and Agricultural Development” since the beginning of this year, and the search for new markets has become an imperative necessity to increase profit margins.
The largest entities and financial brokerage companies are already present in the Arabian Gulf, led by EFG Hermes, CI Capital, Naeem Holding, and a number of major financial brokerage companies.
Mohamed Maher, head of the Egyptian Capital Market Association (ECMA), said that the Egyptian market is anticipating government offerings, especially with the presence of large companies in the program, led by logistics and energy companies, in addition to banking sector companies, which is an opportunity for brokerage firms to benefit under these circumstances.
Maher expected that the capital market would witness momentum in offerings that would attract new clients, but he pointed out that the most important factor in these offerings is “pricing”, especially since it is the element capable of attracting liquidity.
Yasser Al-Masry, Managing Director of the Arab African International Securities, believes that the Egyptian market will witness a momentum of government offerings and may witness strong growth rates during the coming period, especially with the entry of new investors. The index is likely to reach the level of 22,000 points during the current year.
He added that brokerage firms should focus on increasing their profitability margins from the Egyptian market, and not focus on seizing an arrangement in “ranking” but rather on the quality of service provided while raising commissions, explaining that competition between brokerage firms over commissions reduced the quality of services provided in the Egyptian market.
He pointed out that companies should target specific segments of investors, and focus on strategic investors at the present time, in conjunction with the privatization programs in Egypt.
Tamer Gamal, managing director of Sigma Capital, said that the company is in talks with a strategic partner to expand in the Saudi market as soon as possible to take advantage of the steady growth momentum there.
He explained that the expansion will come in cooperation with the Saudi shareholders of Sigma Capital.
Gamal stated that the state of Saudi Arabia is taking bold expansionary decisions, and has achieved great successes in attracting investors to the Saudi market, as it has many companies with financial solvency and incentives for investment, and it succeeds in attracting companies to be listed in addition to offering government companies.
He pointed out that the Egyptian market needs more incentives, especially for medium-sized companies, as was the case before for companies that are listed on the stock exchange and are exempted from taxes.
Sigma occupied the 17th place in the brokerage companies, in terms of trading values in the main market, seizing 2% of the market share of the total trading.
Mohamed Farouk Masoud, managing director of Global Invest, said that the Kuwaiti company aims to expand in Egypt by establishing an investment bank with huge investments, to be the company’s arm in direct investment in various economic sectors.
The Kuwait and Middle East Financial Investment Company (KMEFIC) acquired a 75% stake in Global Invest for Securities Brokerage, and the total implementation of Global Invest amounted to about 1.8 billion pounds since the beginning of the year, with a market share of 0.3%, through the implementation of 66,400 transactions, on 958.7 million securities.
Ahmed Abu Hussein, managing director of Cairo Capital, said that the company’s approach to the Saudi market and the Gulf markets is an idea proposed by the company’s shareholders, but they did not take any steps.
He pointed out that the Saudi market and the Gulf markets need a good study to enter them, and to measure the ability to compete, especially with many companies heading to the Saudi market during the recent period.
Cairo Capital ranks thirteenth in the ranking of brokerage firms in terms of trading values in the main market.
Amer Abdel Qader, managing director of Pioneers Securities Brokerage, said that the idea of expansion is on the table and that it is possible to move towards expansion in the Gulf markets, especially with the presence of a Saudi partner already.
He explained that the Egyptian market enjoys promising opportunities for several axes, including that it is the largest market with the number of individuals present in the region.
Abdel Qader added that the presence of Saudi investments and the tendency of sovereign funds to companies should light the green color for the awareness of investors regarding the values of fair shares traded at levels below their value, and some at negligible levels, which moved some shares to the upside.
He pointed out that we are still an emerging market that has begun to recover from the blunders of successive crises, and in the stage of rapid growth that is emerging and the incentives of the Egyptian market are incomparable with Saudi Arabia, despite the facilities provided by them.
Pioneers Securities Brokerage ranked 8th in terms of trading values in the main market, accounting for 3.6% of the market share.
Ali Ezzat, the board member of The Roots Stock Brokerage House, told Daily News Egypt that the company’s plan includes establishing a new team to manage the operations of the institutions within the framework of the company’s main shareholder’s direction to attract clients from Arab countries.
The ownership structure of The Roots Stock Brokerage House comprises the Kuwaiti Al-Safat Investment Company (60%), along with investor Mahmoud Shaaban with a 40% stake.
Al-Ahly Pharos occupied the first place with a 13.4% market share, while the Commercial International Brokerage Company came with an acquisition rate of 8.9%, and EFG-Hermes International Securities Brokerage acquired 8.3% of the market share, and Mubasher Trading occupied 4.8%, Argaam acquired 4.8%, and EFG Hermes accounted for 4%.