Hedging against the decline of the Egyptian pound has propelled the Egyptian stock market to an unprecedented level

Newsletter

29 Oct 2023

Hedging against the decline of the Egyptian pound has propelled the Egyptian stock market to an unprecedented level. The main index of the Egyptian stock exchange achieved record levels during the current week, driven by local investments seeking to hedge against the continuous decline of the Egyptian pound against the US dollar in the parallel market, amid speculation of an imminent official exchange rate liberalization. The EGX30 main index breached the 23,000-point level for the first time in its history, rising by 8% during the current week, reaching 23,381 points as of 10:40 AM Cairo time, and up approximately 60% since the beginning of the current year. (Asharq Business)

The Israel- Hamas war is driving up the price of greenbacks on the parallel market of Egypt, said Fitch’s regional country risk head Ramounda Moubarak.
Moubarak stated that “negative sentiment because of the war has weighed on the parallel market,” saying she thinks the EGP is at about 46. The parallel market is illiquid and opaque, and so more than a little prone to swings and exaggerations. It is worth remembering that the IMF earlier this month downgraded its outlooks for the Egyptian economy and the wider MENA region.
The Fund downgraded its FY 2023-24 growth outlook for Egypt to 3.6% from 4.1% previously.
This was the second time it had downgraded its outlook this year, having cut it from 5.0% in July due to the FX crunch and lower investor confidence. The IMF lowered its 2023 MENA growth outlook by 0.5 percentage points to 2.0%. (Ahram Online)
S&P Global downgrades credit ratings of 3 Egyptian banks to B negative.
S&P Global Ratings has lowered its long-term ratings of three Egyptian banks, namely the National Bank of Egypt (NBE), Banque Misr, and Commercial International Bank (CIB), to B- from B, with a stable outlook, the agency stated. Meanwhile, the rating agency has affirmed its short-term issuer credit ratings on the three banks at B. (Arab Finance)
The downgrade resulted from delays in the execution of monetary and structural reforms which aggravated imbalances in the currency market and impacted the net foreign asset position of systemic banks.
The agency considered the government’s high debt servicing costs as a potential challenge to debt sustainability. S&P Global downgraded previously Egypt’s long-term foreign and local currency sovereign credit ratings to B- from B, with a stable outlook. (Arab Finance)
The Egyptian Central Bank eases restrictions on using credit cards abroad.
The Egyptian Central Bank has relaxed the restrictions it previously imposed on the use of credit cards abroad and abolished the requirement for customers to provide travel proof before their departure. In a statement issued today, Thursday, the Central Bank explained that customers now need to provide proof within 90 days of returning to Egypt that the card was used during their trip abroad. The proof may be in the form of entry and exit stamps on passports or by sending evidence of continued residence abroad if the trip exceeds 90 days. (Asharq Business)
Wall Street stocks suffer from Arab boycott campaign.
The recent Arab boycott initiative targeting businesses supporting the Israeli occupation has adversely affected the stock prices of major Wall Street firms. Daily News Egypt conducted an analysis of how this campaign, originating on October 10 and propagated by social media users, influenced the shares of companies with franchises in Arab nations or those contributing significantly to Israel. Several of these companies have attempted to distance themselves from their parent corporations and assert their independence. (Asharq Business)
PepsiCo, the company behind well-known brands like Pepsi, Chipsy, and Dunkin’ Donuts, was particularly hard-hit by this boycott campaign.
On October 12, the shares of PepsiCo reached their lowest point since November 2021, with a value of $157.9 per share, significantly down from $164.3 per share on October 10, the campaign's inception. Subsequently, the shares experienced a modest recovery, closing at $160 per share by the end of the most recent Tuesday. (Daily News)
The European Bank for Reconstruction and Development has approved a 50 million USD financing for Banque du Caire.
The European Bank for Reconstruction and Development (EBRD) has approved a 40 million USD financing for Banque du Caire with the aim of re-lending it to small and medium-sized enterprises, in addition to 10 million USD for financing micro, small, and medium-sized enterprises led by women. The bank intends to invest 40 million USD in the third fund of SBA, the Private Equity Fund, as per the bank's website. The targeted size of the fund is 350 million USD, focusing on equity and equity-related investments in medium-sized companies in Egypt, Morocco, and Tunisia. (Al Borsa News)
Al Qalaa is considering listing a number of its subsidiary companies on the Egyptian stock exchange.
Al Qalaa for Financial Investments has announced its long-term plan to list several of its subsidiary companies on the Egyptian stock exchange. The company stated in its press release that the timing for the listing of any of these companies depends on the appropriate market conditions and requires obtaining the necessary approvals from regulatory and market oversight authorities. It also mentioned that The Citadel is actively seeking suitable investment opportunities to expand its operations and enter new ventures, especially in the fields of new and renewable energy. (Arab Finance)
Oraimo launches first locally made smartwatch, earphones in Egypt.
Oraimo, the leading TWS and power bank brand in Africa, has established its inaugural manufacturing facility in Egypt, situated within the Silicon Valley for Electronic Industries (SVEi) located in the Suez Canal Economic Zone (SCZONE) in Ain Sokhna. This factory, formally unveiled in September, stands as Egypt's pioneering facility dedicated to the production of mobile accessories. (Daily News)
"The European Union has added the Egyptian-Greek electrical interconnection to the list of common benefits."
The European Union has proposed adding the plan for connecting the electricity grids between Greece and Egypt to a list called "Projects of Common Interest," a move that could help secure permits and financing. The Greek company Elica, a part of the Copelouzos Group, is working on the project known as the "GREGY Interconnector," which will be laid beneath the sea. Copelouzos stated that the list will be sent to the European Parliament and the European Council for approval. (Asharq Business)
Bahraini company GFH is in negotiations to acquire an educational group in Egypt.
GFH Group, the Bahraini financial company, is in negotiations to acquire an educational group in Egypt Marbati mentioned on the sidelines of the 7th edition of the "Future Investment Initiative" in Riyadh that his company is interested in sectors like healthcare, logistics, and education in Egypt. The company is involved in acquisition operations in the education sector through its subsidiary platform "Britus," focusing on the three fundamental educational stages. The number of schools they have acquired so far is 9 schools. (Asharq Business)