Trading at the Egyptian Exchange is likely to improve in the coming six months to near one billion dollars daily on the back of big offerings and foreign purchases, a senior official at EFG Hermes has said.
Slowly but surely foreign transactions will return to levels reached before the January 25 Revolution, EFG Hermes Securities Brokerage Co-Head Mohamed Ebeid said on the sidelines of the 11th annual One-on-One Conference in Dubai.
The conference brings together over 450 investors with top Middle East and North Africa (MENA)-listed companies.
Indeed, the EGX has suffered over the past years but the market has been gradually improving since 2014, Ebeid acknowledged.
He touched upon foreign sales in 2011 and 2012, but foreign investors tended to purchase in 2013. The situation further improved in 2014 due to changes and stability.
The EGX had suffered from many giant companies exiting the market and this negatively affected liquidity, Ebeid told the conference.
Liquidity rates are apt to increase to levels before the January 25 Revolution with big offerings returning to the market, he assured.
The average trading ranged between 850 million pounds and 900 million before the revolution, Ebeid said, noting that it used to inch closer to two billion pounds at times.
Now the average trading reaches a daily 500-million that is likely to increase with the execution of two big offerings, Ebeid said.
He ruled out the possibility that many offerings would negatively affect market liquidity in the current stage. To the contrary, those offerings will help regain a big part of liquidity that had exited the market in the wake of the January 25 Revolution, Ebeid told the conference.
The Arabian Cement Company made the first offering at the EGX in 2010. Big offerings worth billion of pounds will be made in the current stage, he said, citing Orascom, Edita food industries and EMAAR Misr.
Arab and foreign businessmen are interested in investing at the Egyptian Exchange, which is reflected in their tendency to purchase Egyptian shares since the beginning of 2015, Ebeid said.
The EGX investors' map has undergone change after a long period of individuals' control, he noted.
Ebeid pointed to tangible activities of local and foreign funds and institutions.
Big foreign capitals are returning to the EGX and this will sure contribute to rendering the offerings successful, said an optimistic Ebeid.
Foreign businessmen are seeking to invest in promising fields, such as foodstuffs and the consumers sector, he said, adding that they do not find giant companies concerned with this sector on the EGX list.
Hopefully foreign investors will find what they are looking for in the new offerings and start pumping new investments into the market, Ebeid said.
EFG Hermes is currently managing a number of big EGX offerings, he told the conference, stressing that the company does not handle any offerings that are not sure to be covered or successful.
Ebeid expected the EGX index would better reflect the market after the new offerings are executed.
According to him, the recent decision by the Central Bank of Egypt to activate the direct investment fund for foreign investors since March 2013 has contributed to soothing fears of foreign businessmen.