OUR ANALYST OF THE WEEK- Soha Saniour, associate director at Arqaam Capital (LinkedIn).

My name is Soha Saniour and I started my career in equity research after graduating from AUC in 2015. I was very lucky to land my first job at Pharos where I met Hany Genena. He’s not in the field anymore but I will always owe him a lot for how much he inspired me. I then moved to Beltone where I stayed for three years and became their associate vice president, before finally moving to Arqaam Capital for the past two years. I was hired as a senior associate, but promoted this year to associate director.

I now cover industrials in the GCC and to a lesser extent in Egypt. That includes fertilizers, utilities, and fuel retailers.

The best part of my job is the exposure you get with every stock you cover, especially in a diversified sector such as industrials. It’s important to understand the core of every business and the details of production to the extent that you need to put on a chemical engineer hat when looking at fertilizer stocks… I never imagined I would be back to writing down chemical equations after high school but here I am [laughs].

There has been an increased focus on ESG from investors in the past couple of years. They are very keen on companies who issue an annual sustainability report while shying away from stocks that have a negative impact on the environment. As Arqaam, we’ve started publishing periodic ESG reports focused on the whole region that look at ESG scores and how they’ve evolved throughout the years.

There is a lot of room for improvement in Egypt on the ESG front. The focus isn’t quite as big on the environment front and corporate governance is way behind. I think firms need to improve their management quality, communication, and the positioning of their strategy to encourage foreign investors to inject capital into them.

The worst part of my job is being unable to disconnect and the unpredictability of the workflow. The schedule never plays out the way you think it will as a lot of things happen throughout the day while sometimes one announcement can change your whole week. It’s also been difficult for me to accept that not all of my calls are going to play out correctly. I take failure very heavily. However, I try and tell myself that if we could always predict the movements of the stock market then we would all be bn’aires and stop working [laughs].

I found work from home and the lack of travel to be quite isolating. However, on the work front, we’ve been able to adapt and the business practice has flowed as usual (albeit virtually). We’ve held two successful virtual conferences and conducted several virtual roadshows. Meanwhile, client calls have significantly increased as research teams now seem more accessible so it's nice to be engaged on that front. However, I miss the face-to-face factor when interacting with people, especially in negotiations where body language and reactions help you determine your strategy for persuasion. The chit chat before and after meetings is also where a lot gets done and we’re missing out on that.

I think roadshows will come back but not with the same frequency — and probably not this year.

My theory of investment is to advocate for fundamentals. If a firm has a top-down story and cheap valuation, the stock will confidently re-rate. I’m not a hit-and-run strategy kind of person; I prefer the long-term approach to see how things play out. However, you have to know where the story is going and its limits and whether the stocks you’re investing in are well-positioned according to forecasts. Commodity-based stocks made a lot of returns these years because the industry itself was going through a change and a lot of investors caught it from the beginning. Good timing is always a plus.

2021 will definitely be the year of industrials. Fertilizers are at levels that haven’t been seen since 2012, with companies reporting record earnings. Meanwhile, utilities are very resilient and have stayed steady throughout all the twists and turns. Industrials came out even stronger post-pandemic because of the commodity boom and I think that even if we have a correction next year, the fundamentals are solid enough that it will be at a healthy level as well.

If I had to cover another industry I would choose between education or healthcare. They’re promising industries with obvious growth stories and they’re very hot now. There’s also the added bonus of them being less volatile than my current coverage.

The last great thing I watched is How To Get Away With Murder. I love seeing small town family TV shows. After a demanding day, it’s great to watch something light.

I’m a very musical person. I have played piano at the Opera since I was a kid and only stopped after I started working. My favorite piano pieces (that I can still play on the go without looking at piano notes) are The Meadow by Alexandre Desplatt, and Venetian Boat Song by Felix Mendelssohn.

I spend my time off work with my four-year-old daughter Lara. She’s at a difficult toddler phase and I’ve been reading How to Talk So Kids Will Listen & Listen So Kids Will Talk to try and understand her better. It’s a really good book and I recommend it to my fellow parents.

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MARKET WATCH-

The EGX30 fell 0.9% at today’s close on turnover of EGP 1.80 bn (29.8% above the 90-day average). Foreign investors were net sellers. The index is down 1.1% YTD.

In the green: Ezz Steel (+3.8%), Pioneers Holding (+2.9%) and GB Auto (+2.1%).

In the red: Orascom Development Egypt (-9.3%), Egyptian for Tourism Resorts (-4.2%) and Cleopatra Hospital (-3.2%).