CAIRO: Direct investment funds are needed the most in Egypt during this period, as they have a great impact in supporting economic growth, attracting new savings and providing resources, head of the Egyptian Exchange (EGX) Mohamed Omran said Monday.
Omran reiterated the importance of infrastructure investment funds for increasing growth rates in his speech at the 1st first annual conference for Mutual Funds held in Cairo Monday, organized by Money Cycle, a company that specializes in promoting unconventional financial products and services.
“The total assets of investment funds in Egypt are valued at $1 billion,” said Omran, who called for increasing such funds in the near future. The current situation in Egypt requires establishing various mutual funds, not only exchange traded funds (ETFs), so as to provide the necessary finance for small and medium enterprises (SMEs) which represent 70-75 percent of Egypt’s GDP.
“The Egyptian economy has many promising opportunities for recovery and growth in the coming period, especially after the presidential and parliamentary elections are conducted,” according to Omran.
He added that current economic growth rates are very weak and the economy needs 7 to 8 percent growth rate to overcome the soaring unemployment.
Omran further noted that legislation recently adopted by the Egyptian Financial Supervisory Authority will play an important role in facilitating the establishment of mutual funds to attract more savings.
As for the stock market, Omran explained that he aims to increase funds trading to 60 percent compared to the current 25 percent, while retail is currently 75 percent and should be 40 percent.
More than 500 officials from leading commercial and investment banks in Egypt, in addition to managers of mutual funds, members of capital market societies and investors in the Egyptian market, participated in the event.
Minister of Investment Mounir Fakhry Abdel Nour was scheduled to open the conference entitled “The Role of Mutual Funds in Supporting Egypt’s Economy,” but he apologized for missing the event as he had a meeting with Prime Minister Ibrahim Mahab.
Creating the legislative environment, searching for new promotion mechanisms and encouraging businesses to be listed in the stock market were the key potentials on which speakers agreed for promoting the role of mutual funds.
They also affirmed that cooperation between all competent bodies in developing the role of these funds is a key factor for supporting economic growth indicators and stimulating the domestic savings for shifting financing investment.
The Egyptian Financial Supervisory Authority (EFSA) was keen to amend the mutual funds bylaw in order to promote the real estate funds through flexible regulations and establishment procedures, said EFSA chairperson Sherif Sami.
EFSA aims to complete and approve the first Egyptian measures for real estate assessment, along with preparing regulations for categorizing those responsible for the assessment within two months, Sami added.
The majority of funds are not listed in EGX, and having them listed will increase the total turnover and activate the stock market, chairperson and Managing Director of Misr for Central Clearing, Depository and Registry (MCDR) Mohamed Abdel Salam said.
Abdel Salam urged all the competent bodies, including government and investors to support the establishment of mutual funds for its great impact on economic growth in Egypt.
During the conference, speakers assessed the role of mutual funds in achieving socioeconomic development, and proposed the establishment of restructuring sovereign funds to manage state’s assets in accordance with the newly imposed regulations.
“Mutual Funds” also highlighted the role of tourism as a fund in supporting the sector amid current circumstances, and speakers reviewed potential investment opportunities and different financing mechanisms were discussed in the 3rd session.
A number of Egypt’s government and business leaders, decision makers, executives and experts gathered for the first annual Mutual Funds event, including the Egyptian Capital Market Association (ECMA), the Egyptian Investment Management Association (EIMA), the Egyptian National Competitiveness Council (ENCC) and the Financial Service Institute (FSI), an affiliate of the Egyptian Financial Supervisory Authority (EFSA).