surge in foreign fund inflows sets stage for egyptian boom
Last Updated : GMT 09:03:51
Almaghrib Today, almaghrib today
Almaghrib Today, almaghrib today
Last Updated : GMT 09:03:51
Almaghrib Today, almaghrib today

Surge in foreign fund inflows sets stage for Egyptian boom

Almaghrib Today, almaghrib today

Almaghrib Today, almaghrib today Surge in foreign fund inflows sets stage for Egyptian boom

Surge in foreign fund inflows sets stage for Egyptian boom
Cairo - Al Maghrib Today

 Encouraged by Egypt’s economic reforms, a major gas find, streamlined business rules and a devalued currency, investors are increasingly optimistic about prospects for the North African country after years of political turmoil.
Foreign holdings of Treasury bills hit a record high in December, foreign inflows into the stock market last year were the highest since 2010 and direct investment by foreign firms and private equity funds is on the rise again.
Key for many longer-term foreign investors are the natural gasfields that have come on stream in the last few months, including the offshore Zohr field, whose estimated 30 trillion cubic feet makes it the largest in the Mediterranean.
Iyad Malas, a Dubai-based partner of private equity firm Gateway Partners, said Zohr “will be a game changer for Egypt” and the company’s fund, which invests in Asia, the Middle East and Africa, is looking at several opportunities in Egypt.
The gas discoveries should eventually make Egypt a gas exporter and boost its plans to become a regional energy hub.
Besides the gas, private equity firms say reforms launched since the end of 2016 that secured a $12 billion loan program from the International Monetary Fund (IMF) have shifted sentiment enough to spur investment, despite the risks.
One of Egyptian President Abdel Fattah El-Sisi’s biggest challenges is to end an Islamist insurgency which has started to shift its attacks from the remote Sinai peninsula to larger cities.
Investors, however, say they are more concerned the government might deviate from reforms agreed with the IMF, such as cutting energy subsidies further, to keep voters on side ahead of presidential elections this year.
Investors also want inflation to fall and for the government to press ahead with reforms to tackle the red tape that has left Egypt ranked 128 out of 190 countries in the World Bank’s ease of doing business index.
’Economic outperformer’
Since November 2016, Egypt has devalued its currency, removed limits on foreign currency transfers, lifted hard currency restrictions for importers, cut subsidies for domestic fuel and raised value-added tax.
“We’re very positive on Egypt,” said Karim El Solh, co-founder and chief executive of Abu Dhabi’s Gulf Capital, which has invested some $200 million in Egypt.
“In the region, it is set to be the economic outperformer in 2018, especially after these very strong and needed structural reforms,” he said.
Investment by overseas investors in short-term, liquid instruments such as Treasury bills has been heavy since Egypt devalued its currency and raised interest rates.
Throughout 2017, investors snapped up bills with maturities of three to 12 months yielding as much as 22 percent. By early December, foreign holdings of Treasury bills had hit a record 338 billion Egyptian pounds ($19 billion), up from 532 million pounds in mid-2016, central bank data showed.
In US dollar terms, foreign holdings of Treasury bills are now nearly three times the previous high in 2010 — with about half the investment coming in the last few months of 2017.
Charles Robertson, global chief economist at Renaissance Capital, estimates the Egyptian pound is 16 percent undervalued compared to its long-term average and with inflation coming down from its 2017 peak of 33 percent, Egypt remains one of the most attractive emerging markets.
The stock market, which has a capitalization of $45 billion, has also benefited from net inflows of foreign funds, which came to 7.5 billion pounds in 2017, the highest since a record 8.4 billion pounds in 2010, according to exchange data.
Since the pound floated on Nov. 3, 2016 — slumping from 8.8 to the dollar to 17.7 now — the Egyptian blue-chip index has climbed more than 70 percent.
Robertson expects the rally to continue for the next two years now the shock of the 2016 currency devaluation has passed, economic growth is picking up and high inflation is receding.
Direct investment
More importantly for Egypt’s longer-term stability, investment by foreign companies and acquisitions by foreign private equity firms are rising — the kind of commitment that is less likely to be affected by short-term market fluctuations.
Economists say the fact Egypt has a population above 90 million, the third highest in Africa behind Nigeria and Ethiopia, coupled with a young and growing labor force make it an attractive destination.
Net inflows of foreign direct investment into Egypt came to $7.9 billion in the year to the end of June, according to government data, helped by the energy sector. While below the government’s $10 billion target, it was the fourth annual increase in a row and the highest since $8.1 billion in 2008-09.
Inflows peaked at $13.2 billion in 2007-08 before plummeting to $2.2 billion in 2011 during the Arab Spring uprising that ousted long-serving President Hosni Mubarak, disrupted the economy and ushered in years of political instability.
Partly because of the improving outlook for gas supplies and a growing solar power industry, foreign private equity firms are expecting a surge in investment in the energy sector.
Hashem Fouad, chief investment officer at Dubai-based Enara Capital, said his firm was working with Chinese interests on opportunities in Egypt.
“We achieved financial closes worth $200 million in the renewable energy sector in 2017 and expect more deals this year,” he said.
Others are focusing on sectors likely to benefit as the economy expands, and exporters helped by the weaker currency. Solh at Gulf Capital said his firm was looking at companies in health care, education, water and food.
“We are backing companies that are very export-oriented, earning hard currencies in dollars or euros so we are partially hedged to the currency,” he said.
Gateway Partners is also focusing on export-orientated sectors and consumer industries.
“We believe sectors related to consumer — retail, real estate, health care and education — and export manufacturing industries like textiles, agri-processing, and many other manufactured products are attractive,” said Malas.
The impact of the devaluation on exports and imports, coupled with the surge in foreign fund inflows, has also helped Egypt start to address the chronic trade deficit and balance of payments problems that have plagued the country for a decade.
The central bank’s foreign reserves surged to $37 billion in December from just over $24 billion a year earlier, while gross domestic product growth accelerated to 5.2 percent in the July-September quarter from 3.4 percent a year ago.

Source: arabnews

almaghribtoday
almaghribtoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

surge in foreign fund inflows sets stage for egyptian boom surge in foreign fund inflows sets stage for egyptian boom

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

surge in foreign fund inflows sets stage for egyptian boom surge in foreign fund inflows sets stage for egyptian boom

 



Almaghrib Today, almaghrib today Skincare PR Performance Full Year 2017

GMT 09:22 2018 Monday ,22 January

Skincare PR Performance Full Year 2017
Almaghrib Today, almaghrib today New hunt for flight MH370 gets under way

GMT 11:03 2018 Wednesday ,24 January

New hunt for flight MH370 gets under way
Almaghrib Today, almaghrib today Modern colorful bedroom renovation

GMT 10:57 2017 Thursday ,21 December

Modern colorful bedroom renovation
Almaghrib Today, almaghrib today Puigdemont candidate for Catalan president

GMT 13:56 2018 Tuesday ,23 January

Puigdemont candidate for Catalan president
Almaghrib Today, almaghrib today Turkey detains dozens more

GMT 10:47 2018 Wednesday ,24 January

Turkey detains dozens more
Almaghrib Today, almaghrib today The Rake announces editorial updates

GMT 10:46 2018 Tuesday ,16 January

The Rake announces editorial updates
Almaghrib Today, almaghrib today Europe brings on charm and blue skies

GMT 11:51 2018 Tuesday ,23 January

Europe brings on charm and blue skies
Almaghrib Today, almaghrib today For the Variety of Interior Design Styles

GMT 10:46 2017 Tuesday ,19 December

For the Variety of Interior Design Styles
Almaghrib Today, almaghrib today US Christian tourists see deep meaning

GMT 13:44 2018 Monday ,22 January

US Christian tourists see deep meaning
Almaghrib Today, almaghrib today Amazon to open first cashierless shop

GMT 10:03 2018 Tuesday ,23 January

Amazon to open first cashierless shop

GMT 16:26 2018 Friday ,31 August

First Paris attacks feature film shown at Venice

GMT 10:43 2018 Tuesday ,23 January

Volkswagen clinches record sales

GMT 09:47 2018 Tuesday ,23 January

To 'eternal style' of late Alaia

GMT 09:35 2017 Monday ,13 November

begin Algeria production in 2018

GMT 19:45 2014 Saturday ,25 October

BATTCo showroom opened in Sitra

GMT 12:54 2012 Friday ,17 August

Ramy Ayash to film ‘Yah Tofaha’

GMT 20:53 2017 Sunday ,24 September

UK negotiator dismisses reports of $54bn Brexit bill

GMT 06:10 2012 Friday ,20 July

'Reunion' tops DVD sales, rental charts

GMT 08:03 2015 Saturday ,28 February

Ghalia Benali concert fusing Arabic tunes

GMT 10:11 2014 Monday ,17 February

Al-Sharqiya Channel launched

GMT 13:56 2017 Saturday ,16 September

France slams Silicon Valley for skirting tax in Europe

GMT 11:42 2017 Wednesday ,26 April

Dalal Abdel Aziz participates in a new drama show

GMT 14:20 2012 Wednesday ,11 July

Azzedine Alaia to open Paris store

GMT 09:23 2017 Saturday ,02 December

UN appeeals for record $22.5 bn in global aid for 2018

GMT 16:41 2017 Thursday ,30 November

Slavery scandal overshadows EU-Africa summit

GMT 13:20 2011 Wednesday ,07 December

Dr. Saleh Al-Ujairi meets KUNA chief

GMT 07:02 2015 Monday ,14 September

Record 5809 migrants enter Hungary in new surge

GMT 07:15 2014 Wednesday ,26 November

Kuwait has leading contributions to blind people
Almaghrib Today, almaghrib today
 
 Almaghrib Today Facebook,almaghrib today facebook  Almaghrib Today Twitter,almaghrib today twitter Almaghrib Today Rss,almaghrib today rss  Almaghrib Today Youtube,almaghrib today youtube  Almaghrib Today Youtube,almaghrib today youtube
.almaghribtoday .almaghribtoday .almaghribtoday .almaghribtoday
almaghribtoday almaghribtoday almaghribtoday
almaghribtoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
almaghribtoday, Almaghribtoday, Almaghribtoday