Capital Markets
From The Report: Egypt 2014
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After a downturn in the wake of the 2011 revolution, the Egyptian Exchange (EGX) has staged an impressive recovery. Having dealt effectively with the fallout from the broader economic uncertainty, the management of the EGX has now turned its attention to deepening the market and widening its investor base. The EGX is relatively diverse compared to its regional peers, with the largest sector in 2013 being construction and materials (21.37%), followed by telecoms (15.7%), banking (14.3%) and financial services (7.29%), among several other significant sectors. Since 2010 investors have also had the option to direct their capital to a range of small- and mid-cap firms that are listed on a separate board, the Nile Stock Exchange (NILEX). The sub-market has a lower capital requirement of $7.1m and more flexible financial history and disclosure rules. While ratings agencies take a more favourable view of the nation’s economic prospects, significant structural reforms are still necessary to stabilise Egypt’s economy in the longer term.
This chapter contains interviews with Mohamed Omran, CEO, Egyptian Exchange (EGX) and Hussein Choucri, Chairman and Managing Director, HC Securities & Investment.
Articles from this Chapter
The country’s financial markets are poised to recover lost ground
Encouraging firms to list will be central to the market’s new strategyOBGplus
Economic uncertainties typically work against new listing activity, as the diminishment of Egypt’s initial public offering (IPO) stream over recent years clearly demonstrates. The global economic crisis had already had a negative effect on markets throughout the region, prompting global investors to retrench and domestic investors to sit on capital – and Egypt was no exception. Between 2008 and the close of 2010 only four IPOs were staged in the country, the last of which was the offering of…
A new index for SMEs should generate more interest and help to unlock potentialOBGplus
The performance of the Nile Stock Exchange (NILEX) over 2013 and into 2014 suggests that it has broken through the inertia that plagues many new secondary boards in stock exchanges. Established in 2010 as a sub-market for mid- and small-cap firms wishing to access liquidity through the exchange, the NILEX had to contend in its first year of business with low trading values and volumes – not only as a result of the traditional lack of interest by investors in smaller-cap boards but also the 2011…
OBG talks to Mohamed Omran, CEO, Egyptian Exchange (EGX)OBGplus
Interview:Mohamed Omran To what extent does the political environment in Egypt impact stock performance? MOHAMED OMRAN: Investor sentiment does affect our market performance to a great extent. It is worth mentioning that in the past few years our market has been dominated by institutional investors, which capture around half of the total value traded on the exchange. The political climate therefore also influences our market performance, especially during times of crisis or uncertainty where…
Hussein Choucri, Chairman and Managing Director, HC Securities & Investment, on fiscal reform and growth in EgyptOBGplus
On July 10, 2014, President Abdel Fattah El Sisi signed the decree that approved Egypt's budget for the fiscal year 2014/15, reflecting his intention to reduce the national deficit from 14% to 10% of GDP. The president’s decision is a step in the right direction towards regaining stability. The government has set a total spending budget of LE790bn ($112.2bn), compared to LE737bn ($104.7bn) during the previous year. The new budget is markedly different because the Egyptian government is beginning…
A steady hand: New reforms are set to put the market on track for sustainable and long-term growthOBGplus
Given the fallout from the revolution of 2011, the management of the Egyptian Exchange (EGX) focused heavily on short-term challenges and adjusting market operations in order to safeguard the exchange. T+0 settlement was suspended, which brought intraday trading to an end, the pre-trading mechanism used to quote stocks’ guide prices was halted and price fluctuation caps were introduced, acting as dampers to volatility by temporarily shutting down the exchange when they were exceeded. However,…
Financial servicesOBGplus
The Company THE COMPANY: Egyptian Financial Group was established in 1984 as a consulting boutique that merged with Hermes Financial in 1996 to form EFG Hermes Holding. In 2007, the company acquired a stake in Bank Audi, a Lebanese commercial bank, mainly to smooth income fluctuations through an integrated banking model. The firm sold its stake in 2010 as it could not achieve a majority and acquired 65% of Lebanese commercial bank Credit Libanais – a stake which now stands at 63.7%. EFG Hermes currently has a direct presence in Egypt, the UAE, Saudi Arabia, Oman, Kuwait and Jordan, and an indirect presence in Morocco, Lebanon, Qatar, Palestine,…
Financial servicesOBGplus
The Company THE COMPANY: Egyptian Financial Group was established in 1984 as a consulting boutique that merged with Hermes Financial in 1996 to form EFG Hermes Holding. In 2007, the company acquired a stake in Bank Audi, a Lebanese commercial bank, mainly to smooth income fluctuations through an integrated banking model. The firm sold its stake in 2010 as it could not achieve a majority and acquired 65% of Lebanese commercial bank Credit Libanais – a stake which now stands at 63.7%. EFG Hermes currently has a direct presence in Egypt, the UAE, Saudi Arabia, Oman, Kuwait and Jordan, and an indirect presence in Morocco, Lebanon, Qatar, Palestine,…
Crédit Agricole Egypt: BankingOBGplus
The Company Crédit Agricole Egypt is 60.5% owned by the Crédit Agricole Group, which has operations in 70 countries in Europe, the Americas, Asia and Africa. In September 2006, Egyptian American Bank merged its operations with Calyon Bank Egypt to become Crédit Agricole Egypt. As of December 2013, the bank had a 1.9% deposit market share in Egypt, down from 2.2% at the end of 2010. Since the January 2011 uprising, the bank’s asset base has shown a muted 4% CAGR, reflecting the group’s efforts to minimise exposure to risky assets as the risk rating for Egypt’s sovereign debt deteriorated. Over the past two years, the group has shifted…
Consumer goodsOBGplus
The Company Oriental Weavers (OW) is one of the largest producers of machine-made woven and printed/tufted rugs in the world. In 2013 it produced 116m sq metres of carpets across 10 manufacturing facilities in Egypt, China and the US. With a combined 240 showrooms and wholesale outlets across Egypt, it enjoys a dominant position domestically with an 85% market share. OW is also an export-oriented company, selling its products in 130 countries worldwide, with 60% of revenue from exports. The company benefits from the current textile industry export support programme, with rebates coming in at LE151m ($21.4m) in 2013, accounting for 43% of the…
Egypt Kuwait Holding: InvestmentOBGplus
The Company Egypt Kuwait Holding (EKH) is one of the largest and fastest-growing direct investment companies in the Middle East, with total assets exceeding $2.1bn as of December 2013. The company is a handson, long-term investor seeking majority stakes and management control and has a strong record of successfully developing and operating greenfield projects. It consolidates itself into three major lines of business: • Fertilisers & petrochemicals: two operational investments and a start-up scheduled to begin in late 2014. Investments include the manufacturing of a wide range of products including urea, ammonium nitrate, melamine, formaldehyde,…
Telecom Egypt: TelecommunicationsOBGplus
The Company Telecom Egypt (TE) is Egypt’s sole fixed-line operator and wholesale telecommunications services provider, with indirect access to the mobile market via its 45% stake in Vodafone Egypt (VFE), the country’s largest mobile operator with a 41.7% market share. TE-Data, its fully owned internet service provider (ISP), has 63.4% of the ADSL market. TE has two main business lines: retail and wholesale. The retail segment includes home services with traditional voice and ADSL services and enterprise solutions with ADSL and enterprise-integrated application solutions, and contributes 42.7% of revenue, 62.8% of which is home services. The…
Telecom Egypt: TelecommunicationsOBGplus
The Company Telecom Egypt (TE) is Egypt’s sole fixed-line operator and wholesale telecommunications services provider, with indirect access to the mobile market via its 45% stake in Vodafone Egypt (VFE), the country’s largest mobile operator with a 41.7% market share. TE-Data, its fully owned internet service provider (ISP), has 63.4% of the ADSL market. TE has two main business lines: retail and wholesale. The retail segment includes home services with traditional voice and ADSL services and enterprise solutions with ADSL and enterprise-integrated application solutions, and contributes 42.7% of revenue, 62.8% of which is home services. The…
Real estateOBGplus
The Company Sixth of October Development and Investment Company (SODIC) follows an integrated, low-risk, self-financed business model, focused mainly on the upper-middle-income class. Despite a smaller land bank than its competitors (Talaat Moustafa Group and Palm Hills Developments), SODIC manages to position itself among the biggest real estate developers in Egypt, generating sizeable, new contracted sales and capitalising on its strong experience in real estate development. SODIC aspires to venture into three areas: tapping the middle-income market; secondary housing in coastal areas such as those along the North Coast and the Red Sea; and…
