Change necessary for the capital market
CAIRO: It is necessary to convey confidence in the present business environment to encourage further growth in the market, according to Beltone Director Aly El Tahry.
El Tahry was speaking at the annual Global Trade Matters Conference on Egypt Emirates Trade and Investment held in Cairo Sunday. He commented that the high confidence currently in the Egyptian market was an offshoot of its success and it was necessary to maintain it.
The Beltone director said that Egypt must continue to “build confidence, then maintain and enhance it, and quoted financier JP Morgan who said “finance is confidence.
In that respect, Deputy Chairman of the Capital Markets Authority (CMA) Alaa Amer said that “capital markets play a big role in investment funding.
Amer said that the three capital market indicators are the stock market size, its liquidity and regulatory development and stated that there is a process underway to restructure the CMA to regulate the stock market.
“Change is the name of the game in the capital market, said Amer.
El Tahry said: “The amount of capital ready to flow into Egypt and the region for that matter, is phenomenal.
Egypt’s market capitalization reached LE 534 billion in 2006, up 17 percent on the previous year, according to Amer. The total value of stocks traded in Egypt was LE 287 billion for the same year.
Amer added that the turnover ratio is 54 percent and liquidity increased by 52 percent over the past year.
According to El Tahry, what is equally impressive about the Cairo and Alexandria Stock Exchange besides its performance is its robustness against setbacks that could have adversely affected it in the past.
Now it takes it in its stride, he said.
Concerning privatization deals that involved Emirati businesses, Amer said they totaled LE 150 million in 2005, rising to LE 500 million last year. He said that they were in the process of another deal which also totaled LE 500 million.
According to Ashraf Salman, head of Investment Banking and Corporate Finance at the Arab African International Bank, the investor mix in the Cairo and Alexandria Stock Exchange was 80 percent retail and 20 percent institutions in 2005, but this ratio changed to 60-40 last year.
Additionally, Egypt was the best performing market in the world in 2005 at 145 percent return. Egypt was second in 2006, despite the knocks that occurred in regional markets.
Amer said there are plans to activate the bonds market, liquidating it, after the restructuring of the mutual funds legislation is complete.
On the broader subject of economic growth, El Tahry believed a key interaction to focus on now is land registration, making it more conducive for the mortgage market. He said that the mortgage market is key for sustaining economic growth, and will buffer against the dips of recession in the business cycle.
