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Tuesday, 16 March 2021

Meet our analyst of the week: RenCap’s Ahmed Hafez

OUR ANALYST OF THE WEEK- Ahmed Hafez, the head of MENA research at Renaissance Capital (Linkedin).

My name is Ahmed Hafez and I head up MENA research for Renaissance Capital, covering mainly consumer names and diversified industrials. I started my career at HSBC’s global research division, where I was mainly focused on sectors including mining, metals, utilities, and some consumer names. In a big organization, you don’t always get to dip your toes in everything and mostly stay within your own scope. However, that changed when I went to HC Securities in 2011 as an analyst and got more exposure to many sectors, eventually becoming the co-head of research alongside Nemat Choucri.

In 2018, I moved to RenCap and was one of the first people at the Egypt office when they started operating locally. It was difficult in the beginning — from an office space perspective, I felt like I had joined a startup. It's very rewarding to now see everything up and running, but it was a long journey to get here.

The best part of my job is the learning that comes with client interaction. I always say that there is nothing better than a good discussion. Working in this field you often get to meet people with different backgrounds and perspectives that you wouldn’t have thought of otherwise. There’s also the need to always work harder to be more comprehensive and able to cover everything. That often means going back in history to draw parallels between events. I believe if you stop learning at a job, you’ll lose interest or even become complacent, so this field forces you to always be on your toes.

The worst part of my job is when there’s no interest in the product, country, or region you’re working on — you can feel alienated. There have been instances in the past few years where things haven’t been heading in the right direction for investors and it's quite demotivating. Being an analyst is a people’s job so without the people it just becomes a routine.

Less travel is more efficient, but I wouldn’t call it better. You can squeeze in more meetings during the day since there isn’t a commute time to factor in. It remains to be seen whether we’ll return to the same world post-covid, but I do think that travelling and road shows will still be part of the job.

RenCap remains very positive on Egypt in 2021, and while it might not be the year of Egypt, it will definitely be a better year. Last year was unfortunate because we saw some stories people have been looking for in Egypt play out such as capex recovery and faster private consumption, but covid-19 delayed these stories a bit. Nonetheless, there are other stories to get people excited for the year such as the bullish outlook on emerging markets in general.

I think 2022 could be the year of Egypt as key longer term themes start to materialize such as tourism becoming less depressed and monetary policy normalizing. We expect to start seeing more excitement in the tail end of this year.

My advice to retail investors or newcomers to the market is to buy what you understand. When you understand what you’re investing in so you can have clearer judgement when you make decisions. You should know the broad dynamics of an investment and have a good answer if someone asks you, ‘Why are you investing in this?’ It’s the same advice I would give someone buying an apartment or a car. It's very similar since at the end of the day you’re putting your wealth into all of them. I also advise investors to not get greedy when investing in the stock market.

A less obvious factor people should look at before investing is the governance of a company. It’s often harder to make a judgement on governance as opposed to earnings, growth, and similar factors. However, as we’ve seen in the past period, things can go wrong. So it’s important to be comfortable with the governance or else your investment could be vulnerable to things like inaccurate reported numbers or figures. So governance is really at the base of everything else.

When recommending calls or top picks, I try to get a good sense of what would make a stock reprice and what wouldn’t. There are some stocks that are [underpriced], but won’t necessarily rerate quickly while other stocks are more expensive but continue to outperform. This kind of thinking necessitates a more top-down approach to be able to judge the direction a stock is going and make a good call that materializes.

If I had to switch to another industry, I would like to go into operations. It’s a position I would like to explore in any field, whether it's a steel plant or an engineering firm.

I’m a numbers person. I’ve always been comfortable with numbers since I was younger. Meanwhile, words have had to come the hard way [laughs] and a lot of investment has been put into that while on the job.

The last great things I’ve watched were the last season of Narcos Mexico as well as The Mandalorian. My taste in TV shows varies with my mood — sometimes I want to watch something light and comedic while other times I’ll go for something more serious and deep. The last great thing I read was probably Lord of the Rings from my school’s library.

When I’m not working, I like to travel. It astounds me how you can find similarities in culture in the most unexpected countries. I was recently married and went to Hawaii for my honeymoon, so I think that is now my favorite destination. In the future, I think I’d like to devote more of my vacation time to exploring Egypt’s offerings such as Al Wahat and St. Catherine.


The EGX30 fell 0.3% at today’s close on turnover of EGP 805 mn (45.5% below the 90-day average). Local investors were net buyers. The index is up 3.2% YTD.

In the green: GB Auto (+2.5%), Abu Qir Fertilizers (+2.0%) and Orascom Development (+1.9%).

In the red: Ezz Steel (-4.1%), Orascom Financial (-3.8%) and Edita (-3.5%).

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.

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