EGYPT: Egyptian stock market chief Mohamed Omran says political stability key to development

Record ID: 238866

  • Title: EGYPT: Egyptian stock market chief Mohamed Omran says political stability key to development
  • Date: 3rd November 2013
  • Summary: CAIRO, EGYPT (RECENT - OCTOBER 23, 2013) (REUTERS) EXTERIOR OF EGYPTIAN STOCK EXCHANGE BUILDING SIGN OVER DOOR READING (Arabic): 'STOCK EXCHANGE' TRADING FLOOR VARIOUS OF DIGITAL STOCK EXCHANGE BOARD CAIRO, EGYPT (RECENT - OCTOBER 23, 2013) (REUTERS) EXTERIOR OF NEW STOCK MARKET BUILDING LOGO OF NEW STOCK MARKET BUILDING HEAD OF EGYPTIAN STOCK EXCHANGE, MOHAMED OMRAN, SE
  • Embargoed: 18th November 2013 12:00
  • Keywords:
  • Location: Egypt
  • Country: Egypt
  • Topics: Conflict,Economy,Politics
  • Reuters ID: LVA263QZKOX1QZ762RLEU8J692EK
  • Story Text: Egypt's stock exchange is trying to attract new companies to replace the loss of some of its biggest listings over the past three years, but progress has been hampered by political instability, its chairman said.
    The exchange is revising listing regulations, developing new mechanisms for exchange traded funds (ETF) and rights issues and working to spur trade on its fixed-income market, Mohamed Omran said in an interview.
    "Any steps taken are only cosmetic, ameliorative frills. The main criterion in this issue of trade is related to the economic situation as a whole," Omran said. He said significant changes would come from a change in political environment.
    The Egyptian economy has not yet recovered from the popular uprising that toppled Hosni Mubarak in 2011. Foreign investors and tourists fled the country, straining its foreign reserves and currency.
    Since then, the country has been in a state of political instability.
    "The biggest enemy to any investor is uncertainty, the environment in which there is no certainty. If this environment of uncertainty diminishes, you will see investments coming in," Omran said.
    The bourse was hurt when foreign-based companies bought majority stakes in three of its biggest firms - telecoms provider Mobinil, National Societe Generale Bank and Orascom Construction Industries (OCI) - leaving only residual shares on the market.
    The stock exchange is now looking to make up for the lost capital.
    "Yes, during this period and the coming one, we will be concentrating on big firms as well as the smaller firms. This is because you have three big companies that you need to replace: Mobinil, OCI, and Societe General. So you need to compensate for the exit of these firms. So we will have to make efforts to attract, or to compensate for part of the lost capital," Omran said.
    Among changes they are working on are to make it easier for companies to be listed through initial public offerings and to draw up rules for big investors who want to exit the market.
    By early next year, financial regulator Egyptian Financial Supervisory Authority hopes to complete a project that has been 10 years in the making: the introduction of rules for bond trading that would make it easier for investors to buy and sell securities on the bourse.
    Currently, activity in the existing interbank market for bonds is heavy, but under new rules banks would need to offer some of the bonds they buy to be traded on the bourse.
    Omran said the project could start early next year.
    "Within the first quarter, I would like for people to be able to sell and buy bonds through the stocks market's screen, just like they buy stocks."
    The flight of foreign investors and the economic slowdown since 2011 have also nearly halved the amount of trade on the exchange, which has 234 listed firms.
    The government says it is still on track to rewrite the constitution and hold parliamentary and presidential elections in early 2014, part of a political roadmap the army announced after it removed Islamist president Mohamed Mursi in July.
    Omran said if the roadmap went according to plan, he was optimistic the economy could return to pre-2011 levels.
    A $12 billion economic aid package pledged in July by Saudi Arabia, Kuwait and the United Arab Emirates has helped bolster confidence, but investors remain worried by the budget deficit that rose to nearly 14 percent of gross domestic product in the fiscal year that ended in June.
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