At a time when researchers and traders in the Egyptian financial markets are warning about the impact of the absence of real stimuli on the performance of the markets, a recent report revealed that the Egyptian markets during the first quarter of this is a big shock topic. year. The report issued by the Financial Supervisory Authority indicated a decline in activity in the Egyptian Stock Exchange and in securitization issues, while all other capital market activities saw a slight increase in the first three months of this year.
Official data suggest that some $ 20 billion has left Egypt since the beginning of the year and before the economic crisis, prompting the Central Bank of Egypt to hold an extraordinary meeting last March, in which it devalued the Egyptian pound against the dollar announced. The Central Bank of Egypt had earlier said that the adjustment of foreign exchange market conditions was reflected in a 30 per cent increase in foreign exchange flows during the month of March.
According to the Supervisory Authority’s report, the number of newly issued “foundation shares” decreased year on year by 34%, while the value of the capital increase shares decreased by 6%. On the positive side, the market capitalization of the “EGX30” stock index increased by 19.9 percent year-on-year during the first quarter, reaching £ 431.6 billion ($ 23.104 billion). The total value of trading on the Egyptian Stock Exchange (including equities and bonds) increased by 85.1 percent year-on-year to 447.2 billion pounds ($ 23.94 billion).
Egyptian investors ‘transactions accounted for about 72.7 percent of trading activity in the first quarter of this year, while foreign investors’ transactions accounted for about 17.9 percent of trading. In terms of Arab investors’ transactions, it accounted for about 9.4 percent of trading activity in the first quarter.
Administrative and organizational problems
The economic researcher, Hani Tawfiq, believes that “no projects are financed with new loans unless the ways and resources to repay these loans are determined with precision and professionalism.” He stressed the need to discuss all the obstacles facing the Egyptian Stock Exchange, to reach ministerial decisions and laws to resolve them.
He pointed out that “a new investor can not enter a market in which he faces dozens of problems with the administrative and regulatory authorities.” He explained that “the fair value of any stock depends on expectations of performance, profits and future cash flows under certain assumptions. In view of the uncertainty over all input and output prices, locally and internationally, the confidence factor decreases in all assumptions and expectations about stock performance. “
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Tawfik explained that “when measuring the relationship between any economic variables, a distinction must be made between the independent variable (influential) and the dependent variable (affected), and in the Egyptian case it is clear that the stock market by the economy and not the other way around.As for the correct decision to leave the state from many of its companies It is preferable that the retirement either in the form of the sale of the usufruct right to qualified investors who have a development plan for 50 years., or by increasing the capital of each company and not selling the current state-owned shares, in order to retain its historical ownership, even if a new shareholder participates in the capital increase. And he has the right to administer. “This investor must of course have a good reputation and previous experience and have a clear development work plan, ”he added.
The economic researcher said that “the sale of shares is only the transfer of ownership from the hands of the state to others, and there is no addition to the gross national product, while the sale of the usufruct right or the increase of capital means that new money is pumped into the official economy, and means increasing the share of the Egyptian, Arab and foreign private sector in These companies, in the case of increasing the capital without losing the original ownership, also means providing the necessary funds for the development of companies by expanding their businesses, and thus the operating rates, which means a real addition to the gross national product.
Securitization bond issues go down
Also, the report from the Financial Supervisory Authority revealed that the issuance of securitization bonds decreased by 6 percent on an annual basis during the first quarter. This includes the issuance of 2.4 billion Egyptian pounds ($ 0.128 billion) of “Corples” securitization bonds, spread over 4 parts over a 13-month period, 170 million pounds ($ 9.1 million) in short-term securitization bonds. from “Premium Card”. ”And the sale of GB Auto issued bonds worth £ 4.3 billion ($ 0.23 billion) and the first tranche of £ 300 million ($ 16.05 million) from Madinet Nasr’s three-year housing and development securitization program , worth £ 3 billion in sales ($ 0.16 billion). an EGP 794 million ($ 42.5 million) issue of Misr Italia Real Estate as part of an EGP 2.5 billion ($ 0.133 billion) securitization program, and EGP 1.2 billion ($ 0.069 billion) in UE Finance securitization bonds. And the first issue of securitization bonds by “Al-Ahly Financial Leasing and Factoring” company, with a value of 747.5 million pounds.
In terms of financial leasing, factorization and insurance sector activities, they all had a good quarter, as financial leasing companies completed 11.7 percent more transactions during the quarter, with a 32.4 percent increase in the value of contracts. The value of discounted securities rose 90.8 percent year-on-year to 6.62 billion pounds ($ 0.354 billion). At the same time, the insurance sector’s activity increased in the first quarter of 2022, as the total value of collected premiums increased by 9.8 per cent year-on-year to £ 13.21 billion ($ 0.707 billion), while the total value of compensation payments increased by 23.6 percent on an annualized basis Annual to reach 7.51 billion pounds ($ 0.402 billion).
The number of property financing providers increased by 75.8 percent year-on-year, with an increase of 91.3 percent in residential property financing providers, to a 69.0 percent year-on-year decrease in property financing service providers for non-residential to compensate. purposes. The total value of funding granted in the first quarter of 2022 rose 103.5 percent year-on-year to £ 3.47 billion ($ 0.185 billion). While some 36 new companies reportedly obtained microfinance licenses during the first quarter of the year. The volume of consumer financing during the first quarter amounted to about 6.8 billion pounds (0.364 billion dollars). However, the Financial Supervisory Authority indicates that this number will increase in the future, as the government works to support local production and dependence on locally produced goods. Electronics and home appliances accounted for the majority of about 45.8 percent of consumer financing activity, followed by cars and other car purchases with 32.3 percent.