Capital Markets
From The Report: Egypt 2018
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Despite the economic challenges facing the country, 2017 was a positive year for the Egyptian Exchange (EGX), with the main index expanding by approximately 17%. The EGX remains an important component of the economy and thanks to an ongoing process of market development is likely to continue to act as a useful platform for both corporates and small and medium-sized enterprises wishing to raise capital. The ability of the EGX to attract new listings and investors is linked to the wider question of Egypt’s macroeconomic performance. A potential commodities exchange would represent a key structural advance, although a number of important questions regarding its implementation remain to be answered.

This chapter contains interviews with Mohamed Farid Saleh, Chairman, Egyptian Stock Exchange; and Hussein Choucri, Chairman and Managing Director, HC Securities & Investment. The chapter also contains share analyses & data provided by HC Securities & Investment.

Articles from this Chapter

Overview

Forward momentum: The exchange is becoming increasingly attractive as the authorities broaden their horizons
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Despite the economic challenges facing the country, 2017 has been positive for the Egyptian Exchange (EGX), with the main index expanding by approximately 17% over the course of the year. This growth came on the back of a strong 2016, in which the EGX was one of the best-performing markets in the world in local currency terms. After the years of volatility which have accompanied Egypt’s difficult political and economic transition, the exchange entered 2018 in what investors hope is a return…

Interview

Breaking barriers: Mohamed Farid Saleh, Chairman, Egyptian Stock Exchange (EGX), on how opening the market accelerates development
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Interview:Mohamed Farid Saleh How have currency flotation and other economic reforms impacted the EGX? MOHAMED FARID SALEH: The currency flotation and other reforms that were implemented in November 2016 represent a paradigm shift in economic policymaking and a turning point for the development of capital markets in Egypt. The moves have gradually restored confidence among the investment community, as the Egyptian currency reflects supply and demand forces. On the real economy it has served…

Analysis

Inclusive growth: A new public offerings programme looks set to benefit the public while attracting foreign investment
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The late 1980s and early 1990s marked a time of economic change as Egypt began moving towards more market-oriented policies and streamlining its public sector through large-scale privatisation and restructuring, with at one point more than 300 state assets slated for divestment. However, a perceived mishandling of the process meant that by the mid2000s public resistance to the process was growing. By 2010 the programme had come to an end, with the 2011 revolution making the continuation of…

Analysis

A taxing issue: Officials look to generate revenue by levying market activity
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The introduction of capital gains tax on equities has been one of the more challenging areas of Egypt’s wide-ranging tax reforms. Introduced in July 2014 and implemented in March of the following year, the 10% levy was subsequently postponed for two years as a result of objections from traders and brokers – a decision which lead to criticism from the IMF. In March 2017 the Egyptian government approved a further three-year extension of the freeze, effectively moving the issue into the…

Interview

Engaging investors: Hussein Choucri, Chairman and Managing Director, HC Securities & Investment, on encouraging inflows from abroad
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Interview:Hussein Choucri What impact is the new investment law likely to have on foreign investment in the country? HUSSEIN CHOUCRI: The law is well prepared and a lot of effort was spent to make it as comprehensive as possible. However, at the end of the day, whether a tool is successful in attracting investors or not depends on how well it is implemented. In the past Egypt has been known for its complicated bureaucracy, which is not conducive for new investment. I am hopeful that we will…

Analysis

New ground: Mutual funds
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Outline The first Egyptian mutual fund was launched in 1994, and since that time the industry has evolved slowly. There are nearly 100 funds operating under the direction of the Financial Regulatory Authority (FRA). There are specialised funds in a number of asset classes, including 28 equity, 10 sharia-compliant, seven fixed income, 27 money market, 11 balanced, three capital preservation, and one dollar- and one euro-denominated money market fund. The FRA has always been on the forefront…

Analysis

Trade on: Stock market
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Outline The Egyptian Exchange (EGX) is one of the oldest stock markets in the Middle East, dating back to 1883. It covers the main market, an over-the-counter market, and the Nile Stock Exchange (Nilex), a relatively new market board for small and medium-sized enterprises. As of January 31, 2018 there were 222 companies listed on the main market with a total market capitalisation of LE855.7bn ($56.4bn) and 32 listed on the Nilex with a total market capitalisation of LE1.18bn ($77.7m). The…

Analysis

A good start: Bonds
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Outline In November 2016 the executive board of the IMF approved a three-year, $12bn loan under an Extended Fund Facility (EFF) aimed at boosting the economy. According to a September 2017 IMF staff report on the aims of the development programme, the loan instalments are contingent on the government acting to tighten Egypt’s fiscal position, improve the business environment and liberalise the economy. Crucial goals of the EFF include the liberalisation of the exchange rate; elimination…