Trader profile: Summit has made its mark on Egyptian finance

Ahmed Abu Taleb

Position: Vice president of Pharos Securities Brokerage in Cairo

Years trading: 7

Based: Cairo

What asset class and geography are you focused on?

I cover the equity market in Egypt. I trade for investors in the Middle East and North Africa region, as well as in Europe and South Africa. We cover asset management, private banking and international brokers.

What is the outlook for the month ahead?

It’s definitely going to be very exciting, as the economic summit in Sharm El Sheikh has been received positively. There have been significant announcements of foreign direct investments into the real estate, energy and telecommunications sectors. A big portion of the FDI comes from the GCC, along with American and European companies. This will increase the confidence of local and international investors in Egypt’s economy. This can also pave the way for a possible IMF loan that was on the priority list in 2012, but because of political and economic reasons was suspended. Now it is very possible that will be renewed again. Having the IMF credentials will be positive for Egypt’s credit rating, especially ahead of the country’s planned debt issuance of US$1.5 billion in the summer. It is an important month that will determine the outlook for the rest of the year.

What are the main risks, either upside or downside, to the outlook?

The main risk to the outlook would have been the failure of the economic summit to generate sufficient FDI. But that fear has been laid to rest. The other issue that could weigh heavily on the markets is the deterioration of the security levels in the country which could lead to more uncertainty or terrorist attacks. Energy shortages, if they continue this summer, will definitely impact the economy. Also, a dollar shortage may affect FDI inflow into the country. In addition, the bureaucracy and lack of decision-making could keep investors away.

What is the best investment at the moment?

In Egypt, you don’t have many options. It’s either real estate or stock market. You don’t really have a bond market or a commodity market. I believe that those are the two best sectors to invest in until the economy develops more and creates additional sustainable sectors. The entrepreneurial society is growing and the recent circumstances have encouraged many to start up their own companies, and there are several very successful start-ups in new non-traditional sectors such as sports and entertainment. There is a strong trend of health awareness that has attracted many Egyptians to start their own fitness training companies, and so far they are doing great. I would invest as well in those non-traditional start-ups.

What was the best investment you were ever involved in?

The stock of the Egyptian investment bank EFG Hermes was a very good investment. Since July 2013, the stock value has increased from 10 Egyptian pounds to 18 pounds. In fact, most Egyptian stocks have almost doubled during this period.

What was the worst?

January 2011 was the worst trading month. After the Arab Spring most equities crashed by around 50 per cent. The market was also closed for some period, and then when it opened it fell by another 50 per cent. It was difficult to exit the market for at least three months.

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