Report: Egypt's stock market attracts foreign investors

The Central Bank of Egypt issued a recent report showing that foreign investors are starting to return. [Waleed Abu al-Khair/Al-Shorfa]

The Central Bank of Egypt issued a recent report showing that foreign investors are starting to return. [Waleed Abu al-Khair/Al-Shorfa]

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The volume of foreign investments that entered Egypt in the third quarter of the 2011-2012 fiscal year was valued at $3.13 billion, according to a recent report issued by the Central Bank of Egypt.

Since $2.49 billion in investments exited the country during the same quarter, there was a net increase of $640 million in foreign investments, the bank said.

The report, published by the official Middle East News Agency (MENA) on July 9th, showed that European Union countries, led by the United Kingdom, had the highest total of investments, followed by the United States and other Arab countries.

Stable market appeals to investors

"The upcoming period will witness foreign investors racing to enter Egyptian market, and the competition between foreign investors on one side and Arab investors on the other is going to be fierce," Dr. Shaher Abdullah, an economics professor at Ain Shams University, told Al-Shorfa.

Abdullah said investments from the Gulf will dominate the foreign investment arena.

"The Egyptian investment environment is by its very nature attractive to Gulf investors, especially Saudi, Kuwaiti and Qatari investors," he said.

He pointed to the substantial increase in the volume of Qatari investments -- from $3.4 million in the second quarter of the 2011-2012 fiscal year to $13.2 million in the third quarter -- as a sign of investors' eagerness to gain early ground.

"These projections are of course contingent on the stability of the political situation in Egypt," Abdullah said. "Signs of [stability] began to show with the resolution of the presidency crisis, which has transformed into normal political wrangling."

"President Mohamed Morsi's recurrent pledges to protect investment and [ease the investing process] gave the green light to investors who had been evaluating the situation in Egypt and its rate of risk," he said.

"Furthermore, President's Morsi's frequent appearances and expression of support for the security forces, including the army and the police, and his statement that the police are part and parcel of the security forces are evidence of his commitment to restore security, which is the biggest concern of foreign and domestic investors alike," he added.

Security issue was primary deterrent

Mahmoud Mansour, a member of the Egyptian Businessmen's Association, told Al-Shorfa, "Egyptian businessmen will be shouldering a great responsibility in the upcoming period, especially in view of the recent recession."

"The security issue was the primary deterrent and reason they refrained from entering into new projects," he said. "However, once a state of relative stability was achieved, their return began in earnest and a number of businessmen have in fact announced the formation of new economic conglomerates."

Mansour said he expects efforts will be made in the near future to draw Egyptian capital back to the country from abroad, remove obstacles facing Gulf investments and revive more than 1,500 shuttered Egyptian factories, which will in turn attract both foreign and domestic investment.

'Confidence in Egyptian markets'

Stock market analyst Mohammed Fawaz told Al-Shorfa that despite the Egyptian economy's gloomy outlook the first half of this year, investments in the stock market remained relatively stable and within their normal averages, in contrast to the economy in general.

Global financial institutions such as Morgan Stanley kept the Egyptian stock exchange as a part of its stock market index without any adjustments, Fawaz added.

"This reflects confidence in the Egyptian markets, which are considered emerging markets," he said.

Previously, an estimated 12% of the total volume of investments which had entered Egypt between 2006 to 201l left the country, he said.

"Getting that percentage back is very possible and in fact assured merely if the financial markets maintain their current stability," Fawaz told Al-Shorfa.

There were eight new stock market deals during the 2011-2012 fiscal year valued at 4.2 billion pounds ($692 million), he said.

Fawaz attributed the relative stability of stock market investments to the fact investors are concentrating on long-term investments with assured profits.

Also, investors are taking advantage of profitable opportunities by entering and exiting the markets purely for profit, disregarding political conditions except as they relate to profit margins and opportunities, he said.

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  • READER COMMENTS

    محسن

    2012-8-24

    I hope that the government can achieve what the previous governments could not achieve. We don't object about the new figures in the government because we did not see anything from them yet. We will judge them only after we see how they work although I think they will fail to run things in the country because most of them do not have the statesmanship to manage the country. Most of them need a lot of experience to be able to manage the affairs of a great country like Egypt. We do not need supporting figures from the president as the most important thing is achieving the suitable renaissance. The new government must seek to prove themselves to the Egyptian people and to show that they are able to work and achieve a lot of accomplishments. There are lots of demands that must be done quickly. The economy of the new government needs to have appropriate infrastructure for the future of the State. The government should contribute to its progress in order to keep up with the global economy. The government would also be working to improve the educational sector and to change the way that has been used since the previous generations. The education has not evolved for a very long period, thus, we must change the curriculum and make them suitable for the scientific development. We want to see the progress and the fulfillment of the promises of the government for the future of the Egyptians.

  • جبار

    2012-8-23

    The new Egyptian government has a great objective, which is achieving the renaissance for Egypt, the restoration of the leading position of the state as to the economy, and achievement of the demands of the people and dreams of the Egyptians who want to return to stability and the feeling of security. The Egyptian wants to live honorably in order to be able to provide his children with education and healthcare.

  • باهر عبد الرزاق

    2012-7-28

    There is no doubt that Egypt is currently at a very difficult juncture, and we hope that Egypt will make it to safety as the current circumstances are very difficult, and the political situation is very difficult as well, and the economic conditions are worse than before, and consequently the security situation has of course deteriorated a lot, and as for the social situation it is in absolute shambles, and everything is in total disarray due to the instability in the country and we, Egyptians, all hope that after Egypt makes it through this electoral process that took place and which was a success, and after the first president taking office in a transparent as well as a considerably democratic manner, which will be the first step toward safety for our beloved Egypt, and this is achieved by having a President governing Egypt with justice, by having Dr. Mohammed Morsi. We are very optimistic, and we hope to see our beloved Egypt become very advanced and developed, and it is on the way to prosperity, as he is such a great president that is governing the country. We hope that there will not be any conflicts or problems between the new Egyptian president and the Military Council that is governing the country, in contrast with the ousted president Hosni Mubarak, and of course, there could be problems between the two, because the Military Council always, or the armed forces establishment, which could become the president of the country and its general commander, and it is not necessary for him to be a civilian.

  • صلاح عمر

    2012-7-24

    This is the first time for us to choose those who represent us fairly and away from the corruption. The Freedom and Justice Party won the majority in these elections and this granted it a large space on the political arena. These elections were followed by the presidential elections that passed through many stages of the instability and inability to choose from the candidates. The first round ended with a second round between Dr. Muhammad Moursi and General Shafiq. Dr. Moursi, the candidate of the FJP and Muslim Brotherhood, won the office. This victory over the candidate of the former regime is the best evidence of the success of our great revolution and this is a great glimpse of hope that assures us that we will enjoy a bright future, when the freedom of expression and dignity of the Egyptians would prevail. Our disagreement with Muslim Brotherhood is political and it can be solved, but our disagreement with Ahmad Shafiq is penal because of the destruction that he caused in our home.

  • marvet

    2012-7-22

    I hope that the Egyptian market displays Egyptian products and works, for the Egyptian labor and to reduce the unemployment of the youth of Egypt ... It is shameful to use our market for other peoples' products!

  • تجار

    2012-7-22

    A new era has begun in Egypt after announcing the name of the new president after the success of the revolution of 25 January 2011. The news here is not that he is a president successor to the ousted president but the news is that he is the first president elected by the Egyptian people for the first time in history in seven thousand years. All of the Egyptian citizens should ally as one man to start the national reconciliation and to be optimistic about the good future of Egypt. Egypt and all of its scientists will come back from all the countries to share in its renaissance. All of Egypt’s sons will study and its education will develop. All of Egypt’s sons will work and will believe in the sanctity of work in Egypt. All of the ethics and values of our grandfathers will return. God will save Egypt despite this atmosphere that events rotate quickly. Yes, the change will take years to see the future of Egypt; however, change does not happen in one day, just be optimistic.

  • حيدر سامح

    2012-7-22

    We demand that the Egyptian President, who was freely elected after thirty years of painful conditions, serve the country. He should overlook his personal interests. He should also ignore the national and international considerations and be concerned only with the interests of the country. The new President is supposed to remove the oppression against the people who became used to injustice during the rule of the former regime. Based on his short period in office, I believe that Dr. Mohamed Morsi has managed to resolve the difficult equation. In fact, he converted the anxiety and fear of the citizens into tranquility, comfort and optimism. His decisions and actions made the citizens feel secure and confident. The Egyptians feel that their properties and their families are secure. In fact, I have suffered a lot because of insecurity due to the declining performance of the police and actions of the corrupt people. We no longer hear the repeated complaints about the lack of bread, transportation, gas cylinders, summer heat and the expensive electricity bills. In fact, the Egyptians are frequently talking about “President Morsi”. In a short period, this man managed to draw the attention of everyone. The Egyptians are talking about him in houses, buses and offices. There are various views and impressions which are mostly sincere about this man. Some views express the desire of the Egyptian people to create a new leader. Indeed, they had been longing for a leader for ages. Some other views, whether positive or negative over the performance of the new President, are loaded with political positions. They express the political affiliations of those people. Anyway, those who monitor and follow up the political scene in Egypt would come out with the following conclusions. Egypt is already changing and the inspirations of the revolution will continue. Indeed, everyone is looking forward to achieving the objectives of the revolutionaries. The actions, the speeches and the resolutions of the new president encouraged the revolutionaries to achieve their ever growing dreams.