Capital Markets
From The Report: Egypt 2017
View in Online Reader

The year 2016 was a difficult one for exchanges across the MENA region, due in large part to persistently low oil prices and political unrest. Egypt’s main index reflected the regional malaise for the first half of 2016, with a currency crisis and seemingly intractable fiscal deficit impacting investor confidence. By the second half of the year, however, the index was climbing once again as negotiations regarding an IMF lending programme were nearing a successful conclusion. While significant challenges remain, not least the direction of Egypt’s economy over the coming years, the Egyptian Exchange (EGX) and its regulator continue to develop one of the region’s most important exchanges. While the ability of the EGX to attract both new listings and investors is tied to the wider question of Egypt’s macroeconomic performance and the vicissitudes of global politics, the exchange is well positioned to grow should circumstances allow.

This chapter contains interviews with Sherif Samy, Chairman, Egyptian Financial Supervisory Authority; Hussein Choucri, Chairman and Managing Director, HC Securities & Investment; and Omar El Maghawry, CEO, FEP Capital.

Articles from this Chapter

Overview

Corner the market: New reforms are set to bolster one of the MENA region’s most active exchanges
OBG
plus

The year 2016 was a difficult one for exchanges across the MENA region, thanks in large part to stubbornly low oil prices and political unrest. Egypt’s main index reflected the regional malaise for the first half of 2016, with a currency crisis and seemingly intractable fiscal deficit doing little to boost investor confidence. By the second half of the year, however, the index was climbing once again as negotiations regarding an IMF lending programme were nearing a successful conclusion. Moreover,…

Analysis

Trade on: A new commodities exchange would be a regional first
OBG
plus

The prospect of a new commodities exchange in Egypt is one of the more significant developments to emerge in 2016. While the possibility of creating a new market has been floated for years, the current proposal, if developed as planned, will be a regional first. It would also correct the currently dysfunctional system that governs trade in some of the nation’s most important staples. News of the initiative first broke in late 2014, when the government announced it intended to turn Egypt into a…

Interview

Reform and revamp: Sherif Samy, Chairman, Egyptian Financial Supervisory Authority (EFSA), on good governance and attracting investors
OBG
plus

Interview: Sherif Samy What measures can encourage new listings on the main board and the Nilex? SHERIF SAMY: I strongly believe that we have all of the positive regulations in place to encourage new listings; the challenge now is solely the economic environment. There is not so much of a problem with the listing laws, disclosures or minimum capitalisation. Rather, the issue lies in how the international and domestic climate is impacting decision-makers. Being an emerging market, we rely heavily…

Interview

Strategies for growth: Hussein Choucri, Chairman and Managing Director, HC Securities & Investment, on driving growth with policy
OBG
plus

Interview: Hussein Choucri To what extent is there room to encourage greater investment from domestic institutions? HUSSEIN CHOUCRI: This issue has been discussed for years and market participants would like to see a greater investment and more capital being devoted to the equity market, which is now relatively small. While most pension funds are invested in domestic fixed-income markets, we have not yet seen a major policy change on this front. Another issue is the extent to which the Egyptian…

Analysis

For sale: Activity on the bourse is creating confidence in the economy
OBG
plus

The oil price decline that began in the second half of 2014 has dampened enthusiasm for initial public offerings (IPOs) across the MENA region. The mechanics of this trend are straightforward: oil sales account for the bulk of government revenues in the majority of the region’s hydrocarbon-rich economies, and, as allocation of these revenues is the principal engine of growth in many cases, market sentiment is closely allied to the direction of spot and future prices. This effect is further exacerbated…

Analysis

Reasons for optimism: Stock market
OBG
plus

Outline The Egyptian Exchange (EGX) is one of the oldest stock markets in the Middle East, dating back to 1883. The exchange covers the main market, an overthe-counter market and the Nilex, which is a relatively new market designated for small and medium-sized enterprises. As of December 2015 there were 221 companies listed on the main market, with a total market capitalisation of LE430bn (equivalent to $22.8bn as of December 2016); and 31 listed on the Nilex, with a total market capitalisation…

Analysis

Laying the foundations: Bonds
OBG
plus

Outline In 2015 and 2016 the government was adamant about supporting the value of the Egyptian pound in the face of ongoing currency depreciation pressure, through its successive increases of the Treasury rate. As of October 2016 Treasury bond offerings show the five-year bonds standing at 13.4% after tax, compared with 11.23% in October 2015. While Egypt has always been an inflationary economy, such rates have had a notable negative impact on the corporate bond market, which remains largely illiquid,…

Analysis

Invigorating the industry: Mutual funds
OBG
plus

Outline The first Egyptian mutual fund was launched in 1994. Since that time, the industry has evolved slowly. There are nearly 100 funds operating under the supervision of the Egyptian Financial Services Authority (EFSA) at present. There are specialised funds in a number of different asset classes, including 26 equity, 14 sharia-compliant, eight fixed income, 26 money market, 10 balanced and even a US dollar and euro-denominated money market fund. The EFSA has always been at the forefront of…

Interview

Grassroots growth: Omar El Maghawry, CEO, FEP Capital, on the process and value of supporting SMEs to list on the exchange
OBG
plus

Interview: Omar El Maghawry How does listing on the Nilex benefit small and medium-sized enterprises (SMEs)? OMAR EL MAGHAWRY: The Nilex gives SMEs a chance to raise capital within a regulatory environment that is designed to meet their needs; therefore, it has fewer listing and disclosure requirements and offers lower listing and trading fees compared to the Egyptian Exchange (EGX). Any company seeking to list on the Nilex must have a nominated advisor, who will stay with the company for the first…