EGX positioned for rebound in 2021 on strong fundamentals, positive growth outlook: Credit Suisse
The EGX is well-positioned for a comeback next year, thanks in large part to Egyptian equities currently being cheap because of the covid-19 market slump, Credit Suisse’s Head of Middle East Research Fahd Iqbal told Bloomberg. The EGX30 is currently the region’s worst-performer — down 22% year-to-date — and trails behind the MSCI Emerging Market Index, is up 8.5% for the year.
Egyptian stocks are now trading at their steepest discount to the MSCI EM Index in a decade. A covid-19 induced downturn in trading, as well as a decrease in the number of stocks listed on global benchmarks, and the lack of IPOs have all weighed on the EGX this year. The results of a central bank regulatory review of CIB’s business last month culminating in the resignation of its chairman also brought down the bank’s share price. CIB is the index’s largest constituent, which weighed on its overall performance.
A positive outlook for next year will help drive the rebound: “We’re positive across a lot of areas of Egypt,” said Iqbal, adding “the growth outlook for exporters and for domestically-focused companies alike is very constructive.”