The Market Was Just Tired Of Bad News
Since the revolution, the Egyptian Stock Exchange EGX30 has taken a series of consecutive beatings and downgrades from rating agencies that had demolished investor confidence. This is why many are switching to forex trading instead, using the best arbitrage ea as their invaluable aid. But in a world of behavioral finance – market sentiment went from red to green as stability-starved Egyptians welcomed an undisputed presidential election with open arms, and what looked like open wallets. Doesn’t matter if you were standing in Tahrir Square or at the Manassa – the stock market indiscriminately took the results of Egypt’s presidential election as sign of hard-earned stability, and ultimately as an invitation to dive at what it perceived to be the bottom of a cycle of negativity.
Short-term optimism as our newly elected (has a nice ring to it) president Mohamed Morsi promised an inclusive government has translated into gains of 7.5% on the Egyptian Stock Exchange, the largest single daily jump the EGX has ever seen.
Just to make things a bit more tangible; look at a snapshot of my stock market tracker. In the “Low Ask” column where there are zeroes, that basically means that there was no price at which shareholders were willing to sell their shares or “ask” for a price, while hundreds of thousands of “Bids” or willing buyers were piling up in volumes. That is a positive sign if I’ve ever seen one. Where volumes have been in the range of EGP 200 million per day in the past period today saw total volumes soar to EGP 520 million.
We should be proud of our Egyptian stock exchange and the companies that constitute it. We have the second largest stock market in Africa, with listed companies that do world class deals and have world class management teams. Listed on our stock exchange are the largest Private Equity firm in the MENA and Africa, the most established Investment Bank in the same region, and the most successful contractor in terms of revenue and diversified portfolio in the region. Did you know, that just last week, in a deal unprecedented in size and purpose, an EGX listed firm, Citadel Capital SAE, planned and successfully achieved the financial close of a US 3.7 billion dollar refinery deal, Egyptian Refining Company, with investors and debt providers from Korea, Japan, the Middle East, Europe, and the USA have committed to Egypt at one of the most tumultuous times in its recent history? This deal took six years to close; it not only reduces Egypt’s dependence on imported light oil products, but reduces the release of toxic waste into the atmosphere, and is a beacon of investor confidence and in our ability to get deals done.
We have a long way to go, but today we’re proud. Here’s hoping that this is a positive indication of what’s to come. The MBs have long been perceivedas capitalists – where a serendipitous accidental candidate, whose short term focus has not been economic, wins an election in Egypt’s first ever democratic election, anything can happen. Let’s hope that this time everyone keeps their word, and let the gains keep coming. Today local buyers were enticed, hopefully tomorrow positive sentiment will bring back foreign institutions. It’s important that we don’t jump the gun; this is not a blind invitation to dump your funds into the market. It’s a positive sign that will only begin a trend if promises are fulfilled and the region’s political uncertainty gradually declines.
