(AFP Photo)
The sale of foreign cash transfers has reached its peak on the Bourse, with some taking longer than six months, according to local brokerage companies. These delays are the result of the country’s low foreign currency reserves, which have made the process of distributing cash difficult.
Hussein Al-Sharabini, Managing Director of Pharos Holding for Financial Investments, recently requested during the ECMA annual conference held last week that Sharif Sami, Chairman of the Financial Supervisory Authority, work to distribute badly needed currency to foreign clients within 48 hours.
Submission of the request was made according to the Central Bank of Egypt’s 2005 decision regarding registered users of custodian banks. He said this would help inspire confidence and aid companies in working to attract additional investment; he stated that foreign investors within his company were frustrated as they have been waiting over six months to receive their foreign cash transfers.
He added that maximum cash retrieval rates for foreign investment firms had been set at $100,000 per day, which has lead to huge losses. This prolongs the period in which clients must wait in order to retrieve their funds, which in turn slows down investment.
Al-Sharabini added that withholding funds causes money to leave the local market and not return, saying that the Bourse will without a doubt suffer from huge losses in foreign investment as a result of this crisis. This is especially the case considering the fact that most foreign investment in the Bourse is short term and is based on speculation, with traders seeking to gain specific return rates on their investments, he said.
Egypt is also threatened, he said, by the prospect of Morgan Stanley withdrawing from the market; if foreign investors continue to encounter problems and cannot be provided any guarantees, such companies will continue to withdraw, he said, which will negatively affect the Bourse in the short term.
Youssef Kamel, foreign disc manager at Commercial International Brokerage stated that his company has suffered repeatedly from Egypt’s foreign cash transfer crisis, a fact which he said would no doubt cause companies to lose a large number of foreign clients.
He stated that his company was having trouble convincing foreign clients to take advantage of available purchasing opportunities of selected shares, saying that most did not seek to pump additional money into Egyptian stock, regardless of the benefits. Kamel said that no client would ever agree to have their funds withheld, especially for periods of up to four to six months, considering the existence of other, competing stock exchanges in the region.
Foreign investors are not opposed to pumping money into countries suffering from political and economic crises he said, but that they are opposed to doing so in markets where the prospect of withdrawing such funds is difficult.
Sharif Sami, Chairman of the Board of Directors of the Financial Supervisory Authority, and member of the Board of Directors of the central bank, stated that he was working to solve such crises and do so within the short term.
He added that a lack of adequate foreign currency reserves has prevented the government from addressing the crisis, saying that the use of such reserves has been prioritised to go towards the purchase of essential goods and the repayment of debt instalments.
Mohamed Maher, Chairman of the Board of Directors of Prime International Trading, stated that foreign investors within his company were frustrated over delays in foreign cash transfers from custodian banks, a fact which has made investment in Egypt on the whole more difficult.
He stated that many of these investors had already suffered losses as a result of Egypt’s political turmoil, saying that delays in foreign cash transfers have compounded the problem. Many investors who have been operating in the market for long periods of time have become frustrated with non-reciprocity experienced when seeking to retrieve their funds after completing the sale of shares. Many such investors have been waiting to receive funds totalling upwards of $50,000 to $100,000 daily.
Translated from Al Borsa
