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الرئيسيةاستثمارات ماليةChairman of the Egyptian Stock Exchange: The exchange rate crisis is a...

Chairman of the Egyptian Stock Exchange: The exchange rate crisis is a major challenge

Rami El Dokani, Chairman of the Board of Directors of the Egyptian Stock Exchange, acknowledges that his country’s stock market is facing a real crisis that hinders its permanent attempts to attract new investors and investment funds. He believes that the instability of the exchange rate of the Egyptian pound against foreign currencies, especially the US dollar since March 2022, is the reason behind this.

Al-Dukani, who was appointed president to the Egyptian Stock Exchange At a very important time in August of last year, he draws attention to the results of the crisis that he called, and he says in an interview with “Independent Arabia” that it led to the exit of foreign investors and behind it foreign investment funds with the instability of exchange rates, which prevents them from returning again in the current time,” pointing out that “with the continuation of exchange rates in Egypt, foreign investment funds will return as well as foreign investors.” He explained that the Egyptian Stock Exchange achieved a rise of about 21 percent in six months, ahead of its counterparts from emerging markets in the Arab countries.

Al-Dakani continued, “The attempts made by the stock exchange’s board of directors, whether by promotion or discussions with major investment companies to pump their investments and the double entry in the Egyptian market, always collide with the absence of major foreign investment funds, which are also dependent on the stability of the exchange rate, and this is difficult to achieve at the present time.”

The stock exchange is not responsible for government offerings

and about Government offerings programme Al-Dukani said that “the stock exchange’s board of directors is not responsible for the delay in the launch of the government offering program,” explaining that “the government is the owner of the money and the decision-maker,” and criticized holding the stock exchange’s management responsible for the delay in the government offering program.

Al-Dukani stressed the need for government companies to offer a discount rate in the share price in line with the share offered to maximize the return from the remaining percentage that was not offered for trading, adding that “ignoring the value of the remaining shares will not bring anything new and will not push us a step forward.”

He explained that “the government offering program previously announced by the government is the prerogative of the Government Offering File Management Committee, which will determine the timetable for listing and offering these companies, including registered government companies that may increase their capital or offer additional shares during the coming period,” pointing out She pointed out that “the Egyptian government’s announcement of contracting with international financial institutions last week to develop a strategy for offering state companies on the stock exchange represents a huge step, which increases the reassurance of Arab and foreign investors about the state’s seriousness in implementing the program.”

He pointed out that the Egyptian stock market is capable of accommodating all volumes of offerings at any time the concerned governmental committee decides to announce the offerings schedule.

Private racehorse

He continued, “I personally tend more to involve the largest number of companies from the private sector, as the private sector brings financial sustainability to the economy, as it is the most successful administratively and technically, and its companies last for long periods, and its entry into the stock exchange means that it is convinced of the Egyptian market, in addition to that the stock exchange is always looking for active stocks.” Not stagnant shares,” explaining that “some government companies or others may offer a percentage of their capital, but it is not traded, and this is considered stagnant shares.” He added, “But this does not mean that offering government companies is not successful, as there are government models that succeeded when they were put on the money market.” He stressed that “the activity and trading of stocks is the most important feature that distinguishes the private sector, and we focus more on sectors that work positively in light of the current difficult economic conditions.”

Al-Dokani explained, “We seek to attract companies that provide Hard currency Right now, export companies are like this, along with technology and renewable energy companies, to provide a new form of investor.”

He said, “The stock exchange is communicating intensively with a number of private sector companies to work to attract them to the listing and to clarify the importance of being in the stock market and the advantages that this provides, the most important of which is the ease of access to various funding sources locally and internationally.”

Absence of tax incentives

When asked about the golden age of the Egyptian Stock Exchange in the period from 2007 to 2009, El Dokani said, “The period of boom in the stock market in the middle of the first decade of the current century coincided with the state’s expansion of financial and tax incentives in that era, which had positive effects on local investors.” And Arabs and foreigners,” pointing out that “the current period lacks the tax incentives that investors aspire to, and this is not our role.” Egyptian money. And he added, “But it is not all about the existence of tax incentives or not, but it is part of the aspirations of investors, and the Egyptian economy must be viewed as a single block, and tax incentives, for example, cannot be offered in the money market separately from stimulating the economy in general, and we are working with the concerned authorities to create an investment atmosphere.” To attract investors by studying several incentives.

It is noteworthy that the market capital of the Egyptian Stock Exchange exceeded one trillion pounds (32 billion dollars) during the current year, and trading values ​​rose to 3 billion pounds (97 million dollars) per day.

Regarding the new tools and mechanisms to activate the Egyptian market, El-Dokani said, “We are studying a package of new procedures and tools to activate the market during the second half of this year,” explaining that “among these tools is the start of trading in government treasury bills during the months of August and September.” He pointed out that government agencies’ investments in stocks in the market increased to 23.5 billion pounds (about 745 million US dollars) now from 4 billion pounds (130 million dollars) a year ago, and cash dividends during the first half ranged between 23 and 24 billion pounds. ($777 million), and seven companies out of eight were registered in the period from November 2022 to this June, with a issued capital of 1.2 billion pounds ($39 million), and the number of new investors on the Egyptian Stock Exchange reached 224,000 investors. during the first half of this year.

Launching an Islamic Sharia-compliant index

Regarding the rest of the new tools, Al-Dukani explained that “the stock exchange’s board of directors is considering launching an index compatible with Islamic law during the second half of the current year 2023, in line with the requirements of investors wishing to invest in shares of companies that comply with the law,” adding, “We will also start trials of the trading system on the Stock Exchange. Futures contracts during the third quarter of this year, following the establishment of the Company for Settlement of Transactions on Futures and Derivatives, with a capital of EGP 100 million ($3.2 million), with the aim of conducting clearing and settlement operations for contracts that are being dealt with on futures exchanges.

It is noteworthy that derivatives are financial instruments that derive their value from the performance of a real or financial asset or from the performance of a market index and fall under the name of real assets and international commodities such as gold, oil and wheat.

Gold investment fund

Regarding the launch of an investment fund in gold, Al-Dukani said, “The beginning was with the announcement of gold prices on the stock exchange screen, despite the fact that it is not traded. Through data provided by a company specialized in trading precious metals, which is the ‘Gold Net Trading’ company, which is affiliated with the ‘Evolve’ Holding Group, and we confirm here that these prices are indicative.”

He continued, “We are also working on developing a special trading program that allows receiving requests to buy and retrieve gold fund documents from its member brokerage firms, which contributes to creating an active secondary market for trading these documents, in coordination with the Financial Supervisory Authority, pointing out that” some companies are considering launching funds. to invest in precious metals, especially gold,” stressing the importance of launching a fund to invest in gold to regulate the market and increase its transparency.

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The head of the Egyptian Stock Exchange also indicated that “his administration is working to increase the awareness of investors within the listed companies, as the Egyptian Stock Exchange has become a platform for meeting investors in the country, and investment funds and some companies are meeting with the aim of marketing these companies.”

It is noteworthy that the percentage of non-Egyptian investors trading on listed shares during the first half of this year amounted to 15 percent, compared to 39 percent in the same period in 2022, and capital increased during the first half of 2023 amounting to 8.3 billion pounds ($270 million). ), compared to 6.1 billion pounds ($197 million) in 2022.

The stock market is the mirror of the Egyptian economy

And about reflection Economic crisis On the stock exchange, Al-Dukani said, “The stock exchange is a stock market, and it is part of the national economy, and it is often considered a mirror of what is happening in the important sectors of the economy. Stock Exchange in the past years,” expressing his optimism and confidence in the ability of the Egyptian economy to recover and overcome the challenges of the current stage, as the process of structural reform of the Egyptian economy is progressing at a good pace and with the testimony of international institutions, and this will reflect positively on the Egyptian Stock Exchange in the coming periods.

Regarding the legislative amendments that are being worked on to develop the capital market, Al-Dukani said, “We are currently coordinating with the Financial Supervisory Authority to make a number of amendments to the rules for listing and delisting securities to facilitate the listed companies and simplify some procedures, as well as finalizing the regulatory framework for the carbon market, in addition to carrying out with a number of promotional tours in the Arab Gulf region,” pointing out that the month of October of last year witnessed the first promotional round for investment in the Egyptian Stock Exchange, similar to what Arab and non-Arab stock exchanges do, and the beginning was in the United Arab Emirates, specifically the cities of Dubai and Abu Dhabi. Abu Dhabi, then another tour followed that included a visit to Saudi Arabia, during which we met a number of individual and institutional investors in the city of Riyadh, and representatives of the business and financial community in the two countries showed strong interest in the investment opportunities available in several sectors in the Egyptian stock market, and there is a continuous dialogue with all institutions To help them overcome obstacles and maximize their investments.

Supporting startups

Regarding the support provided by the stock exchange to startups, El Dokani said, “The stock exchange management has launched the first center to support innovative financial technology solutions (Corbette) in partnership with the FCA. The center will serve as a platform to discover, support and qualify promising ideas supported by technology to improve the non-banking financial business environment.” He explained that “the center will provide an integrated set of services and technical, administrative and financial support for companies that are in the process of being established, and this includes setting work strategies, growth and expansion, and then following up on the application, as well as training cadres and raising their efficiency with assistance in financial structuring and procuring the financing necessary for expansion, and this center will be established within the headquarters of The stock exchange in the smart village while working to provide all the data and resources necessary for its work.

challenges

Regarding the challenges facing the Egyptian market, El Dokani affirmed that “the most prominent challenges are the difficult phase facing the national economy and of course affecting the Egyptian Stock Exchange, in addition to the delay in launching the carbon market,” explaining, “This delay is due to the lack of ‘best practices’, as the market Trading carbon emission reduction certificates is still in its infancy globally, and therefore we seek to be ahead of it.” restricted to raising the level of investor relations officials as well as increasing the ability of these companies to deal with various developments, including sustainability reports and various disclosures related to them,” noting that “this trend had a positive impact, as the year 2022 witnessed the entry of more than 175 thousand new investors as the largest registered number Within one year in the history of the stock exchange, the period from January 1 to May 31, 2023 witnessed the entry of about 203 thousand new investors, of whom 19 thousand reactivated their stagnant accounts.

And about capacity The Egyptian Stock Exchange On the competition of its Arab and Gulf counterparts, Al-Dukani said, “Comparing the Egyptian Stock Exchange with its Arab and Gulf counterparts in terms of the size of the market capital is an incorrect and non-objective comparison.” However, “what is more important than the size of the market capital is the extent of the activity of the stock exchanges, which means the turnover rate of market capital, and thus The measure is that the Egyptian Stock Exchange is the highest in the Arab region in the rate of capital turnover, and this means its activity despite its small size.” He explained that the small size of the market capital of the Egyptian Stock Exchange is due to the “floating” exchange rate changes more than once.

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