State of emergency lifted to help Egypt attract new foreign investment: investment bankers


Investment bankers hailed recent developments in Egypt as the Egyptian president lifted the state of emergency.

Abu Bakr Imam, head of the research department at investment bank Sigma Capital, said President Abdel Fattah Al-Sisi’s decision to lift the state of emergency in the country sends promising and reassuring messages to investors. Therefore, it would encourage and attract foreign investment as Egypt turns out to be more stable politically, economically and socially. In recent years, the Egyptian state has put in place a major infrastructure to encourage local and foreign investment to establish multiple industries and projects.

He indicated that the mental image of Egypt in the minds of investors will change massively in the period to come after this move, as investors are still looking for security.

Mubasher’s research has shown that Egypt’s credit rating, which is currently decided by various international rating agencies such as Standard & Poor’s, Fitch and Moody’s, is decided based on the balance or intersection between a group of advantages or strengths on the one hand and a group of disadvantages or weaknesses on the other. One of the weaknesses considered in all of Egypt’s credit ratings is the risk of what is called political instability. So, while the president announces the lifting of the state of emergency and the relevant decisions, rating agencies can worry less about political instability. This means reduced risks of investing in Egyptian government debt securities and increased potential to attract more indirect foreign investment into the Egyptian capital market, including stocks and fixed income instruments (Treasury bills and obligations).

In addition, more foreign direct investment will be attracted to Egypt, which may improve its financial situation.

Al-Ahly Pharos research also welcomed President Al-Sisi’s decision, adding that the fruits of the decision should be reaped in the future.

As a result, stock indices reacted strongly to the new decision. All Egyptian Exchange (EGX) indices and trading volume rebounded significantly in the morning of Tuesday, amid heavy buying by investors, especially in major stocks.

The market capitalization of stocks of companies listed on EGX made a profit of EGP 10 billion in morning trading, reaching EGP 752 billion, against a backdrop of strong market activity.

The main stock index EGX30 jumped 2.8%, to record 11,431.24 points, and the small and medium-sized equity index EGX70 jumped 0.9%, to record 2,377.24 points, while the The larger EGX100 index rose 0.98%, registering 3356.80 points.

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