Back to the complete issue
Tuesday, 2 October 2018

Fund managers “have turned negative” on Egyptian equities amid EM Zombie Apocalypse

Fund managers “have turned negative” on Egyptian equities amid the Emerging Markets Zombie Apocalypse, a monthly poll of leading fund managers shows, according to Reuters. Of the 13 managers polled, 15% said they expect to curb their exposure to Mideast equities within the next three months, while around 8% said they plan on raising them.

One-third of managers see themselves cutting allocations to Egypt: Egypt “is not protected by a currency peg, with 31 percent expecting to cut allocations to Egypt and 8 percent to raise them — the most negative balance since February 2017.” Egypt will likely see capital outflows as investors’ demand for EGP-denominated bonds is waning, says Global Investment House’s head of regional asset management Bader Ghanim al-Ghanim. Saudi Arabia, Kuwait, and the UAE are somewhat spared from the negative sentiment thanks to their currency pegs to Saudi and Kuwait’s anticipated inclusion in global equity indexes, and to the UAE’s comparative affordability.

The upside for Egypt: We’re “probably still the best place in the Middle East and North Africa to find bottom-up stories that can deliver 20 to 25 percent earnings growth for a sustainable period,” Al Mal Capital’s Vrajesh Bhandari says. Investors’ bearish sentiment on Egypt’s equities is driven more by the “macro clouds” than by domestic or corporate fundamentals, he suggests.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.