Egypt .. Starts First Steps to List Two Army Companies on Stock Exchange .. and Experts Comment

Cairo, Egypt (CNN)– The Egyptian government has agreed to qualify the first two companies affiliated with the military to be listed on the stock exchange, namely Watania for the sale and distribution of petroleum products, and the National Company for Production Projects Safi, as part of a previously disclosed government plan to offer assets to the private sector worth 10 billion dollars annually. .

Experts see this announcement as a message to the government’s seriousness to accelerate the pace of government listings on the stock exchange, stressing the need to remove the obstacles currently facing the capital market, the most important of which is capital gains tax is. before the start of the presentations.

And Dr. Mostafa Madbouly, Prime Minister of Egypt, instructed the Ministry of Finance early last month to update the proposals program, including companies affiliated with the military in the program, as well as preparing the timetable for the agreed government proposals , in addition to studying laws and fees that will encourage investment in the stock market. , according to an official statement.

Rania Yaqoub, a member of the board of directors of the stock exchange, and the chairman of the board of directors of a stock brokerage company, said that the qualification of two army-affiliated companies to float on the stock exchange is a clear message of the government to renew its commitments to withdraw from a number of assets for the benefit of the private sector and give the latter a greater opportunity to participate in the national economy, adding that there are clear tendencies of the Egyptian state to the private sector’s participation in the economy and pays more attention to the role of the capital market.

However, Yaqoub sees the need to remove obstacles in the Egyptian capital market before offering the two army companies “so as not to affect the investors’ appetite to subscribe to the offer, the most important of which is firstly the introduction of capital gains tax on the stock exchange traders, which negatively affected the investors, and at the same time achieved no return for the return.” The balance in view of the losses suffered by traders, which require their cancellation, and secondly, the cancellation of the operations of manipulators in the stock exchange, which negatively affected the confidence of investors,” calls for the need to ‘ achieve a mechanism that maintains the safety and stability of the market and at the same time does not affect those affected by the cancellation of operations.

In exclusive statements to CNN in Arabic, Rania Yacoub emphasized the need for incentives to offer private sector companies to the stock exchange, and proposed a tax cut for companies to encourage registration in the capital market, thus increasing the depth of the stock exchange and new traders, in addition to diversifying the sectors offered to investors.

The member of the Board of Directors of the Stock Exchange sees the difficulty of attracting government offers with foreign investments at the moment, and therefore he will rely on local liquidity seeking investments in higher savings yields, and reiterates that the persistence of the aforementioned obstacles will determine success or failure of the expected government offerings.

On the impact of the army’s ownership on the companies listed on the stock exchange, Rania Yacoub said that the armed forces invest in a number of strategic and highly profitable sectors, which makes them attractive to those who want to invest in Egypt, which is reflected in the desire of large Arab companies to buy shares in them, especially since the economy Al-Masry is diversified and includes several sectors, whether real estate, healthcare, food or financial services, and is not dependent on a specific sector , and it is a competitive advantage that makes it the focus of attention for many investors.

Mohamed Kamal, a member of the Board of Directors of the Securities Division of the General Federation of Chambers of Commerce, emphasized the importance of accelerating the pace of the government’s supply program in the stock market, to achieve depth in the capital market , to increase trade. volume and attract new investors, adding that the government’s announcement to qualify two companies affiliated with the military is the beginning of the launch of the offering program, especially since Two national and net companies are characterized by high profitability.

The government previously announced the establishment of the Sovereign Fund of Egypt for a subsidiary fund to manage the offering process for some state-owned companies on the Egyptian Stock Exchange, or to a strategic investor. Before the fund, aimed at strategic investors, which helps to gauge the extent of institutional interest before moving to the IPO stage.

In exclusive statements to CNN in Arabic, Kamal pointed to the role of the government’s supply program to cope with inflation by offering companies characterized by high profitability at a competitive share price for listing in the money market, leading to the withdrawal of part of the liquidity of the markets, which is one of the mechanisms to control inflation, which points to The last quarter of this year is considered a suitable time for offering companies, following the improvement in the performance of the capital market.

Muhammad Kamal pointed out that the two companies, Watania and Safi, which are affiliated to the military, are distinguished both in the activities in which the two companies operate, namely the distribution of petroleum products and food, and their positive financial performance. expected to have broad future plans, and could therefore contribute to attracting more investors.

Mohamed Reda, a member of the Board of Directors of the Egyptian Securities Association – ECMA, said that the objectives of announcing the qualification of two national and net companies on the stock exchange are first of all to emphasize the government’s seriousness in the implementation of its orientation in the private sector to give the opportunity to participate more in the national economy, and secondly to provide community participation to investment companies and benefit from the large returns they achieve, and thirdly, the rules of governance and transparency apply to stock exchange companies, allowing for social control over their performance.

The Egyptian government aims to improve the participation of the private sector in the economy, and to increase its contribution from 30% to 65% of total investments during the next three years.

In exclusive statements to CNN in Arabic, Reda believes that the appropriate timing for the offering of the two military companies is related to the performance of the capital market, which is currently seeing a decrease in liquidity, and prefers that the offering take place in the last quarter of this year or the beginning of next year, after the decline in the global inflation wave, which negatively affected the global economy following the tendency of the world’s central banks to increase interest rates, which negatively affects the performance of financial markets.

Muhammad Reda said that there is a triangle for the success of proposals in general, which is firstly the pricing of the stock, and the pricing must be fair for everyone, secondly, the choice of the appropriate timing, and prefer to leave to remain from the timing of religious holidays, and the period from the first of May to September, which coincides with the holidays. Summer, third, promoting the offer abroad to attract foreign investment to invest in the Egyptian market, noting that the two companies’ subordination to the military gives them confidence in their financial performance and future plan.

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