FILE – Chairman of the Egyptian Exchange (EGX) Mohamed Farid
CAIRO – 26 April 2018: Foreign Investors at the Egyptian Exchange (EGX) have bought at LE 25 billion since November 2016, compared to LE 1.6 billion before the flotation of the Egyptian Currency, with an increase of LE 23.4 billion, according to Chairman of EGX Mohamed Farid.
Farid added in a press release that foreign investors were net buyers during the first quarter of 2018 at LE 8.7 billion, compared to LE 3.1 billion in the fourth quarter of 2017.
The average of daily trading jumped 200 percent to record LE 1.6 billion after the flotation compared to LE 530 million before floating the exchange rate, according to the statement.
Farid added that Egypt is now ready to receive investments because of economic reforms such as the restructuring of subsidies and the flotation of the exchange rate.
Egypt had embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT), and cutting energy subsidies, all with the aim of trimming the budget deficit.
Egypt floated its currency in November 2016; losing 50 percent of its value, as part of the economic reform program, before clinching a $12-billion loan from the International Monetary Fund (IMF).
The IMF’s executive board approved in November 2016 a three-year Extended Fund Facility (EFT) loan to Egypt worth $12 billion to support its economic reform program.
He emphasized the importance of economic diversification in Egypt, clarifying that many sectors contribute to the development and stability of the economy.
Chairman of EGX explained that Egypt witnessed a growth of 5 percent during the first two quarters of fiscal year 2018/2019, which is reflected in the IMF’s expectations to the gross domestic product (GDP) that are upgraded to 5.2% by the end of June 2018, instead of 4.2 percent, due to the results of the positive economic reforms.
The IMF expected that Egypt will record a GDP of 5.2 percent in the current fiscal year and to reach 5.5 percent next year, with an increase of 0.7 percent and 0.2 percent, respectively.
The IMF further anticipated the GDP to record 6 percent in 2023.
Regarding governmental IPOs program, he said that this program will contribute in increasing the awareness about the role of the stock exchange as a finance arm of investment to reach sustainable development.
In 2016, Egypt launched the government’s IPO program to offer shares over three to five years in several state-owned companies in fields such as petroleum, services, chemicals and real estate. The program will serve as a main tool to attract local and foreign capital flows to Egypt in order to help boost state finances.