Riyadh – Mubasher: Saudi Arabia witnessed the launch of a discussion panel earlier this week to highlight investment opportunities in the Egyptian capital market, where a high-ranking delegation of the Egyptian capital market and stock exchange participated.
The event was organised by Global Trading Network (GTN)-Middle East and held under the sponsorship of the Saudi-Egyptian Business Council on 14 February.
Chairman of Mubasher Financial Group, Mohamed Al Ballaa
Chairman of Mubasher Financial Group, Mohamed Al Ballaa, talked about how the securities markets affect investment opportunities in Egypt, given it is the main method to invest in stocks and bonds.
Al Ballaa added that financial markets in general play a key role in activating economic growth through the development of savings, providing liquidity, and endorsing capital formation.
“The market has its impact on attracting local and indirect foreign investments, besides supporting economic activity as well as stimulating capital recycling and business. Therefore, it boosts economic growth,” according to Al Ballaa.
Al Ballaa highlighted the strong bond between the financial market and economic performance; the more the state’s financial system develops and becomes more connected to a prosperous financial market, the more economic activity develops. He added that the financial market could lead to higher economic growth rates, in addition to an increase in savings and investment.
“Financial markets are important to developing investments, including the optimum direction of financial resources to the most efficient sectors in the economy. This is besides the endogenous growth theories in the 1980s and 1990s such as savings mobilization, information analysis, risk sharing, and providing liquidity,” Al Ballaa noted.
The Chairman also said that the relation between capital markets and the economic theory evolves from the participation of financial markets and their support to Adam Smith, the pioneer of political economy who created the classical economics. Smith focused on economic freedom and the liberalisation of capital markets, as well as the idea of segmentation and the division of work.
He concluded, looking back to Egypt and its capital market, we would find that Alexandria Futures Market was officially launched in 1883, followed by the foundation of Cairo stock market in 1903.
FRA’s Mohamed Farid
The Financial Regulatory Authority (FRA) offers facilities to attract foreign investments into the local market, Chairperson Mohamed Farid stated.
He noted that Egypt has four regulatory authorities; the Central Bank of Egypt (CBE), the FRA, the Administrative Control Authority (ACA), and the Accountability State Authority (ASA).
Farid indicated that the high rate of population aligns with an increase in required job opportunities, adding that 800,000 vacancies should be provided on an annual basis. This process needs funding, which transactions begin in the financial-banking sector besides the non-banking segment, which includes stocks and bonds.
Economic growth must serve operation transactions, the official said, noting that issuing sustainable Islamic bonds will be in the near future. Farid referred to the EGP 20 billion bonds which were offered by the New Urban Communities Authority (NUCA) and guaranteed by future cash flows, adding that this instrument helps NUCA to grow and continue providing the citizens with their needs.
Farid pinpointed the authority’s role in regulating the Egyptian Exchange (EGX) in addition to offering key reforms. He also talked about the total volume of non-banking financing as well as the turnover value and volume of the Egyptian financial market.
CBE’s Rami Aboul Naga
Deputy Governor of the Central Bank of Egypt (CBE), Rami Aboul Naga, stated that the Egyptian government has worked on preserving the purchasing power, as it targeted prices stability in the medium term.
The return of inflows into the official market was the reason behind restoring the ability to have reserves, according to Aboul Naga, who noted that Egypt’s cash reserves hit $34 billion.
Aboul Naga indicated that the International Monetary Fund (IMF) will provide Egypt with $3 billion in funding, adding that the higher prices of the majority of goods formed a huge burden on all states. The inflation rate in emerging economies leaped by nearly 22%, while it rose by approximately 7% in developed countries.
EGX’s Chairman, Rami El-Dokany
The EGX intends to launch an index compliant with the Islamic Sharia, Chairman of the EGX, Rami El-Dokany, unveiled. He also talked about setting up the Commodities Exchange (EGYCOMEX) in cooperation with the Ministry of Supply and Internal Trade.
El-Dokany added that the government’s decision to offer 32 companies for direct sale or public subscription in the EGX will contribute to improving the market performance, given that the firms are in various sectors such as banks, petrochemicals, fertilisers, and insurance.
The EGX’s indices registered the highest growth rate of 22.20% in 2022, while the average of dividends announced by the firms listed on the EGX is considered the highest among the regional markets, according to El-Dokany.
