CAIRO: Despite its importance as a key means of financing both public and private businesses, platforms and statements of both presidential candidates did not address the developmental role of Egypt’s stock market during the coming period.
This disregard irritated Egyptian Exchange (EGX) investors who had complained of the same attitude towards the stock market during 2012 presidential elections campaigns.
Leftist candidate Hamdeen Sabbahi’s electoral platform entailed imposition of taxes on stock market profits amid several procedures to achieve social justice, while frontrunner Abdel Fatah al-Sisi who did not announce a formal electoral platform, said nothing about the stock market.
“Candidates not utilizing the stock market propagates the false idea that capital markets are only limited to wealthy people who do not need any kind of support. The Egyptian Exchange, its investors and employees have suffered a lot from such an impression,” Ihab Saeed, head of technical analysis at Osool ESB Securities, told The Cairo Post.
This comes while the military-backed interim government announced its intention to dip into the stock market to finance new major projects. In his speech during the IPO Egypt conference organized by the Egyptian Exchange (EGX) in Cairo, Prime Minister Mahlab urged companies to offer their shares on Egypt’s stock market.
Reiterating the importance of the stock market for the national economy, the analyst said EGX and investment levels have been suffering from hostility from intellectuals, who consider stock-trading a “gambling station,” especially after the ouster of Former President Hosni Mubarak in 2011, as his regime appointed a government of businessmen, and some ministers were proved to be involved in several crimes.
“There is a big difference between businessmen of the Mubarak era and EXG investors, especially small investors who represent 80 percent of total investments in EXG,” added Saeed.
Domestic investments in EGX amount to more than 70 percent of daily trading. The rest is divided between Arab and foreign traders, according to the analyst.
“The majority of local EGX traders are middle-class employees whose end of service payments amount to less than 50,000 EGP ($7200,) and widows who decided to invest their inheritance in the stock market in light of the low bank interest rates.”
“EGX managed to provide 2 billion EGP for the listed companies during the first quarter of this year and 5 billion EGP for four months … It will also play a significant role in financing the Suez Canal Development project,” said Mahlab.
Head of EGX Mohamed Omran urged state-owned companies and national projects to take advantage of the booming stock market by launching their projects for IPOs to get the required financing to implement such projects.
During the first four months of 2014, EGX investors offered a total of 5 billion EGP finance to the listed companies, said Omran, who considered this record a clear sign of growing confidence in Egypt’s economy.
“This is a high record which is likely to edge up while completing the road map,” added Omran.