CAIRO: Egypt’s stock market will see a big leap in 2015 after its “auspicious start,” as two companies with 250 million EGP in estimated total capital were recently listed, predicted the Egyptian Exchange’s (EGX) chairman Dr. Mohamed Omran.
In an interview with Youm7 and The Cairo Post, Omran said another “rosy sign” reflecting investors’ confidence in the Egyptian market is the anticipated listing of Emaar-Misr, a subsidiary of Dubai-based Emaar Properties.
Reviewing the EGX’s performance last year, Omran said 2014 was “unique,” and since June, 30, 2014 until the end of 2014, the benchmark index EGX30 jumped 90 percent, marking investors’ optimistic outlook for Egypt’s economy.
EGX performance in 2014
“In 2014, the EGX witnessed the biggest turnover since 2010, amounting to 191 billion EGP which is twice the turnover in 2013,” said Omran.
The EGX indexes have been the highest worldwide for the past 84 months, he said, and the benchmark index EGX30 jumped 90 percent since June, 30, 2014 until the end of 2014,” said Omran.
Prices, however, are not the key judgment, but rather financing companies to boost the economic growth, added Omran. “Thus, the capital hikes and high volumes are just a means to reach our goal of luring investors to the market.”
The market played its “real” role in mobilizing people’s savings, he said, making the best use of resources and providing needed finance for business of all-sizes. The figures show the EGX played a role in financing companies, with a third of listed companies – roughly 71 – increasing capital in 2014, and total capital hikes reaching 10 billion EGP.
Further, the EGX listed 13 new companies, with capital totaling 1.9 billion EGP, 10 times 2013’s achievement, according to Omran.
“These figures reflect investors’ optimistic outlook for Egypt’s economic future and growth in the coming period,” said Omran.
For Omran, the stock market is a “sensor” of economic outlook, which explains investors’ interest in taking advance steps like capital increases or listing requests in a certain market where they expect a big turnout and growth.
“Foreign investors focus on two key elements while eyeing investment in a certain market; the possibility to exit whenever they are want, and getting the needed finance for expansion either from the stock market to form banks,” said Omran.
EGX chairman’s outlook for 2015, Emaar to be listed at Feb-end
The year 2015 is off to an auspicious start for “many reasons,” said Omran. Notably, two companies with capital valued at 250 million EGP were recently listed in the EGX.
Also, Emaar-Misr, a subsidiary of Dubai-based Emaar Properties with 878 million EGP in capital distributed in 87 million shares, has submitted a request to float its shares in the Egyptian market. “The company is expected to submit all the listing documents in 10 days and may be listed by the end of February or the beginning of March,” said Omran.
Listing a company as large as Emaar-Misr in the EGX is a “very rosy sign” reflecting investors’ confidence in the Egyptian market, he added, predicting that two to three other large companies could also be listed in 2015.
Economic growth outlook
“In addition to these positive indications, a jump in the growth rate is expected in the coming few years,” said Omran, forecasting a growth rate ranging between 3.8 to 4 percent at the end of the current FY, compared to a 2.1 percent growth over the past four year.
According to Central Bank data, Egypt’s gross domestic product (GDP) inched up 6.8 percent in the 1st quarter of FY 2014-2015. This is the highest annual growth rate since the fourth quarter in 2007/08.
However, Egypt needs to achieve growth rate of 6-7 percent in a sustainable manner, in order to slash a growing unemployment rate which amounts to 13-14 percent, said Omran.
Reiterating his rosy outlook, Omran said Egypt is the largest market in the region with more than 90 million consumers, and “its economy is diversified and does not depend on a single sector like oil in the Gulf States or tourism in other countries.”
He urged the government to take certain procedures and establish social safety networks to insure a fair wealth distribution and investment map nationwide.
“Positive” reports from IMF, international agencies
“Since the 2011 Revolution and until 2013, there was no political or economic vision for the country’s future. In this period, it was very easy to lose investors’ confidence, and in turn, it is very hard to reinstate confidence,” said Omran.
Recent reports and assessments on Egypt’s economy by The International Monetary Fund (IMF), the World Bank (WB) as well as other credit rating agencies like Moody’s, Standard and Poors (S&P) and Fitch Ratings, were “positive” from Omran’s point of view.
These reports had a different tone compared with previous assessments, giving a push for building investors’ confidence, and also a sign of a change in the international outlook for the economic situations, said the EGX chairman.
Egypt’s upcoming economic summit
Egypt “is changing and has several promising investment opportunities” and this message will be delivered clearly at the economic summit in March, said Omran, adding that the conference presents an opportunity for Egypt to move in the right direction.
The lack of investment in the last four years means Egypt is “thirsty” for new investment, said the EGX chairman.
Asked if investors need an economic summit to be convinced to inject investments in a certain country, Omran said, “We need to show investors that Egypt has the ability to organize such large conferences in order to show the world our potential for luring new investments and assure the capability to protect their investments.”
“Holding such conferences has a spillover effect on investors as some investors wait until certain institutions or businessmen enter a special market and imitate them,” he said.
Additional reporting by Mahmoud Askar