What does the capital market expect from the new ECB governor?

The capital market is awaiting a decision on several files from the new interim governor of the Central Bank of Egypt, Hassan Abdalla.

Mohamed Maher – head of the Egyptian Securities Association – said that the capital market expects a clear policy from the banking sector regarding the financing of brokerage firms to finance marginal purchases, pointing out that there is a clear policy from the share of some banks operating in the banking system.

He added that the other file which is also awaiting a decision is an increase in investments by institutions affiliated with the banking system in the stock market, stressing that he looks forward to more investments being pumped into the banks of the Egyptian Exchange (EGX).

The EGX indices closed collectively higher at the end of last Thursday’s session, with the main index up 0.36% as the session closed to around $1.28 billion.

Mohamed Fathallah – managing director of BLOM Egypt Securities – said that exchange rate stability is one of the most important issues for the new governor, as the capital market can attract foreign capital and give more stability to the market. scholarship.

He pointed out that currency revaluation through a managed float should also be considered so that Egypt can obtain a loan from the International Monetary Fund (IMF) to fill the financing gap and revive the stock market.

Additionally, Rania Yacoub – Chairman of the Board of Three Way Securities Brokerage – said the CBE’s decision to fix interest last Thursday is a positive move for the capital market, especially as any increase in interests will affect the investment climate.

Yacoub added that the return of the production movement has become a strong necessity for the field of investment in general, as well as the opening of channels with importers regarding the need to open documentary credits on raw materials for the manufacturing as a start to ensure the activity of the sector, which in turn is reflected in the capital market.

She pointed out that the capital market needs economic activity as a whole for the Egyptian state, especially since the EGX is “the mirror of the economy”. There is also an urgent need for activity in all sectors of the economy for the stock market to act as a financing tool.

Yacoub then underlined that the market was waiting for a decision to increase investments from banks, since investments can be pumped to create demand for cheap Egyptian assets, noting President Abdel Fattah Al-Sisi’s initiative to inject 20 billion EGP into EGX during the COVID-19 pandemic.

She added that creating success stories in the capital market by offering shares of major public banking institutions in the capital market is an important goal that could help strengthen EGX.

In addition, she stressed that the decisions of the CBE Governor are independent and based on state economic data, adding that they are not responsible for the causes, but for the management of the results, and that it is good management that helps the state overcome a crisis.

Yacoub also stressed the need to create flexible policies in the EGP exchange rate to provide liquidity in dollars, especially since the EGP must reflect its true value in order to attract foreign investment.

For his part, Mohamed Hassan — managing director of BLOM Egypt Asset Management — said the new portfolio needs to factor in and take into account capital market conditions in decisions related to monetary policies.

He added that the Governor must review the capital market and take steps to ensure its continued movement by urging banks to place their subsidiaries in the capital market, noting that government banks own thousands of businesses that are suitable for the offer in small and medium-sized enterprises. market that only require some administrative restructuring before being offered on the EGX.

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