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11 December 2019

Two expected IPOs bring hope to Egypt’s subdued stock market

The government had said it plans to raise EGP 100 billion from the sales in three years in sectors including banking, oil and finance, but have moved at a slower pace than expected.

Bloomberg/Shawn Baldwin

Egypt’s ailing stock market could find a much-needed jolt of liquidity from two state-owned enterprises set to go public early next year, reported Bloomberg.

Hasnain Malik, Head of Equity Strategy at Tellimer, said, “The long-awaited initial public offering of one of the biggest banks in the country, Banque du Caire, in particular could draw funds from outside the region.”

“In 2019, Egypt has continued to be a consensus favourite among foreign investors, but this has been reflected in the performance of its biggest stock, CIB, not the rest, which are much less liquid,” said Malik.

Nearly three years ago, Egypt unveiled a programme to sell stakes in state-owned enterprises as part of broader efforts to revive the economy by devaluing the currency and rising interest rates to curb a dollar crunch that had battered business activity.

The listing plan largely stalled after officials sold an additional stake in state tobacco monopoly Eastern Company in March 2019, yet may restart soon.

Mohamed Eletreby, the Chairman of Banque Misr, said that officials expect to start the roadshow for a 30 per cent-40 per cent stake offering in Banque du Caire in January 2020.

In addition, payments firm e-Finance is wrapping up preparations for an IPO in Q1 2020 said Ibrahim Sarhan, the Managing Director of e-Finance.

Egypt’s EGX 30 equities gauge has lagged behind peers in emerging markets this year, rising 3.5 per cent while the MSCI Emerging Markets Index is up 8.6 per cent.

Banque du Caire and United Bank were intended to be sold this year, but both were put on pause amid a market downturn.

The decline in interest for stock trading in Cairo partly reflects the government’s measures to cool inflation that soared to over 30 per cent in the wake of the 2016 currency float. Cuts in fuel and electricity subsidies have pressured business activity, which was already struggling amid weak consumer demand.

The impetus now, with the central bank easing rates, is on boosting private sector growth, which could lead to an increased appetite for listed companies but even that effort carries some risks.


RELATED STORIES: EGX 30 equities Banque du Caire IPO





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