Outlier — Egyptian equities to outperform Middle East and North Africa region in 2015

Egyptian EGX 30 Price Return Index, which gained more than 17 per cent last year, has accumulated 4 per cent gains so far this year.

By Siddesh Suresh Mayenkar, Staff Reporter

Dubai: Egyptian equity markets may rally further by at least 10 per cent this year, outperforming the regional players followed by Saudi Arabia, an official at EFG Hermes told Gulf News.

The positive performance would be triggered by momentum around the Sharm Al Shaikh Conference in mid-March, which is expected to host officials from 2,000 companies from 20 different countries, along with robust GDP (Gross Domestic Product) growth amid rate cuts by the central bank.

“In the last quarter, we have seen continuous outperformance by Egypt compared to other GCC countries as a result of a decline in oil price, which is positive for Egypt and negative for Gulf,” Wael Ziada, head of research, EFG Hermes told Gulf News.

“We expect that trend to continue in 2015 assuming oil prices stabilise where they are,” said Ziada, who expects crude to stabilise at current levels due to supply distribution in Libya and Iraq, and an turnaround in Europe.

The Egyptian EGX 30 Price Return Index, which gained more than 17 per cent last year, has accumulated 4 per cent gains so far this year. This compares with h more than 1 per cent gains on the Dubai Financial Market General Index.

He expects consumer sector along with health care and retail sector would outperform in the market.

Correction in sight

Egyptian stocks may ride on the back of positive sentiment in the economy, though a correction ahead of the March conference cannot be ruled out, analysts said.

“Egypt is a different story than GCC markets as the markets expect more FDI after the March economic conference scheduled there and this would be positive for the economy and also ahead of parliamentary elections. We expect higher GDP this year,” said Amr Hussein Elalfy, managing director — global head of research at Mubasher Financial Services.

“In terms of stock markets, it was the best performing markets in the GCC and MENA markets last year, but that has been stagnating in the past 4-5 months, and we expect a decent correction as we go into the conference,” said Elalfy.

Fathi Ben Grira, chief executive officer at Menacorp wants UAE investors to invest and benefit from returns provided by that country and wants a product that would not leave the local investors prone to currency risk.

In November, Nasdaq Dubai and Egyptian securities clearing house have signed an agreement that would facilitate dual listing of companies.

On currency risk, Nasdaq Dubai’s chief executive officer Hamed Ahmad Ali said on November 6.

“We can also have listing in Egyptian pounds, if that is required. For us the currency is flexible and it is not a challenge. We could have the same the same currency as the primary jurisdiction or US dollars,” Ali added.

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