Record-breaking year for Egypt's stock market as capitalization surpasses LE1.7T in 2023

CAIRO - 31 December 2023: The Egyptian Exchange (EGX) witnessed record-breaking gains during 2023 as the market capitalization exceeded LE 1.7 trillion.

 

Investors sought to hedge against accelerating inflation, the expected devaluation of the currency, and the stocks reaching tempting levels compared to their true values.

 

At the end of the year, the market capitalization rose to LE 1.7196 trillion, compared to LE 961.2 billion at the end of 2022, gaining LE 758.47 billion, with a 79 percent increase.

 

The benchmark EGX30 closed at 24,894.26 points at the end of 2023, compared to 14,598.53 points at the end of the previous year, an increase of 10,295 points, rising by 70.5 percent.

 

Meanwhile, the small and mid-cap index EGX 70 rose during the year to 5,473.42 points, compared to 2,801.93 points, an increase of 95.34 percent.

 

The broader index EGX 100 also rose to 7,880.35 points, compared to 4,145.5 points at the end of the previous year, an increase of 90.1 percent.

 

Egypt is currently experiencing an economic crisis due to the shortage of foreign currency, leading to an increase in the gap between the official exchange rate of the pound and the exchange rate in the parallel market, which exceeded LE 50 per dollar compared to the official rate of LE 30.9 per dollar.

 

The stock market witnessed historical momentum and increases during the current year due to investor concerns about accelerating inflation and expectations of currency devaluation. 

 

Forecasts by international institutions indicate the exchange rate reaching LE 45 in the first quarter of the current year.

 

Analysts at HSBC projected that the Egyptian pound will undergo another devaluation in the first quarter of 2024, anticipating rates to reach LE 40-45 against the US dollar, according to a report by the bank earlier in December.

 

The bank’s forecast shares a similar outlook with recent reports from EFG Hermes and Fitch Solutions' research unit BMI.

 

At the end of November, BMI revealed that it expected the pound to depreciate to 40-45 against the USD in February 2024.

 

EFG Hermes believes that the EGP will fall to LE 40 against the USD as an “eventual area of stability for the EGP when the FX market clears”. 

 

Mohamed Abu Basha, lead MENA economist at EFG Hermes, shared in a note to clients in early November that he sees evidence that foreign currency was accumulating in the economy and that the pound’s adjustments could be coming to an end.

 

The Egyptian government announed a plan to attract $191 billion annually within three years to enhance liquidity in the local market and address the challenges posed by foreign exchange shortage.