Credit Suisse Sees Positive Outlook for Egypt Shares: Inside EM

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Egypt, the worst performing major equities market in the Middle East and North Africa this year, is poised for a recovery led by a positive outlook for local companies, according to Credit Suisse.

A decline in trading volume following a pandemic-led slump and a decrease in the number of stocks included in global benchmarks were “significant headwinds” to the Egyptian market recently, said Fahd Iqbal, the head of Middle East research at Credit Suisse in Dubai. The EGX 30, little changed on Sunday, has retreated 22% this year, compared to a 8.5% increase for the MSCI Emerging Markets Index.

Egyptian shares are trading near the biggest discount to EM since at least 2010

The underperformance put stocks in Cairo at a significant discount versus those in other developing countries, with the Egyptian benchmark trading near the cheapest level against the MSCI Emerging Markets Index since at least 2010. The index was pressured further last month as the biggest listed lender, Commercial International Bank Egypt, slumped after the central bank raised concerns over governance and its chairman quit.

“We’re positive across a lot of areas of Egypt,” Iqbal said in an interview with Bloomberg TV on Sunday. While low liquidity remains a concern, fundamentals are “very robust” and “the growth outlook for exporters and for domestically-focused companies alike is very constructive.” He also said the Egyptian pound is not expected to drop by more than 5% over the next year.

HIGHLIGHTS:
  • MSCI Emerging Markets Index rose 1.8% last week, the third consecutive increase. It’s up almost 10% this month
  • EM REVIEW: Vaccine Optimism Powers Risk Assets to Weekly Gain

MIDDLE EASTERN MARKETS:

  • Gauges in Saudi Arabia, Dubai, Bahrain, Kuwait and Qatar advance as much as 0.5% as of 12:37 p.m. in the United Arab Emirates, while those in Oman, Abu Dhabi and Israel fall as much as 0.6%
  • In Riyadh, Saudi Telecom Co. rises 1.1%, boosting the Tadawul All Share Index by the most, after Western Union acquired a 15% stake in one of its units that is focused on digital payments and financial technology services
  • Bank Hapoalim fell 0.5% in Tel Aviv, heads for the first drop in six sessions

    • Lender signed a cooperation pact with Dubai’s DIFC and a memorandum of understanding with Abu Dhabi’s financial district for fintech development
  • MORE: Sale of shares in Israel Aerospace Industries Ltd. received the official go-ahead from a ministerial committee on privatization, the company said on Nov. 20

— With assistance by Manus Cranny