OUR ANALYST OF THE WEEK- Ahmed Soliman, head of the industrials sector at CI Capital (Linkedin).

My name is Ahmed Soliman and I’m the head of the industrials sector CI Capital, leading the team that covers industrial stocks across MENA including Egypt, Saudi Arabia, UAE, Kuwait, Qatar, and Morocco. I started my career in a small investment boutique called Axia Capital before moving to CI Capital as an equity analyst. The firm wanted to create a product that covered small and mid cap stocks, and I began work with that team covering some industrial stocks. I was then moved to the industrial team five years ago and gradually moved up the ranks.

The best part of my job is taking small pieces of information and creating a story with them. It’s like putting together a puzzle which will eventually be used to determine a valuation and forecast the future. I think that working with numbers is my edge — I’ve always been clever with mathematics. Meanwhile, the analysis is more intellectual and it depends on educated guessing to determine the direction you’ll take.

The worst part of my job is always being on call. We always have to be on the lookout for developments to quickly communicate to clients how the news impacts coverage and valuation. I guess this isn’t just confined to equity research… Anyone who is working in finance has had a vacation interrupted.

I wouldn’t say the pandemic didn’t change my job, but we are all trying to accommodate the new reality. It’s all about following the same trends and adopting technologies to create a new solid and effective work dynamic. In my job specifically, there has definitely been more interaction over the phone and over email, as well as holding investment conferences virtually. I do hope that with vaccination efforts, we can go back to travel and resume roadshows. Overall, it's difficult to substitute face-to-face communication with virtual meetings for a prolonged period.

The golden rule of investment I follow is to always diversify. Never put too much into one stock even if you think the upside potential is huge. The second thing I try to keep in mind is that timing is everything. It’s not enough to simply look at valuation. In emerging markets especially, potential and the timeframe at which it will show itself, can often be a gamechanger.

The most important thing I look at before recommending an investment is fundamentals. However, it’s a process really. We look at everything from operating and financial performance to competitive dynamics to determine what can go right and what can go wrong, and build on the findings to forecast for the future. We also focus on management structure, because management is everything. A lot of the time, it's up to their discretion to change the current dynamics into something that could create or destroy value. Finally, we integrate all these factors together and come up with a valuation, and based on that and the share price in the market, we make our recommendation.

For the industrials sector, it’s most important to look at global dynamics as they affect the local market. Everything from global commodity and energy prices have a direct impact on local firms and their stocks. We’re also always on the lookout for new technologies that could produce a major leap in the industry such as those that support or produce clean energy.

Our expectations as a house are very positive for 2021. There are a number of factors that we think will support an upwards trend in Egypt’s macrodynamics including stable inflation, a lower unemployment rate, and recovering consumer spending. The positive GDP growth is also a step in pushing the economic trajectory upwards.

For industrials, I’d say 2021 will pose a selective recovery where some industries will do well while others still face challenging dynamics. It’s not related to covid particularly, but building materials, especially steel and cement, might not reach pre-covid levels due to global and domestic challenges. Meanwhile, we think that petrochem will have a good recovery this year, boosted by higher commodity prices.

The last great thing I watched was a documentary series called Greatest Events of WWII in Colour. I find it very interesting to see how the modern world came to be, and WWII was one of the major events in human history. The series also captures human behavior throughout the events and how different circumstances build different people with different intentions.

The last great thing I read was The Age of Deleveraging. The book focuses on times when economic activity is down and suggests what you should do with your wealth. It offers strategies on how to manage your personal finances or your investments if you’re an institutional investor or fund manager, such as focusing on certain investment vehicles that can shield you from the negative dynamics, including high yielding bonds and high yielding stocks.

In my time off work, I like to read, listen to music, or watch movies. Before covid, my down time would also be spent at the gym or meeting up with friends, so I’m hoping to be able to go back to that soon.

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The EGX30 fell 0.4% at today’s close on turnover of EGP 1.13 bn (11.9% below the 90-day average). Local investors were net sellers. The index is down 8.8% YTD.

In the green: Cleopatra Hospital (+2.0%), Fawry (+2.0%) and Ezz Steel (+1.6%).

In the red: Pioneers Holding (-4.3%), Orascom Investment Holding (-3.1%) and Qalaa Holdings (-3.0%).