ANALYST OF THE WEEK- Alaa Tolba, consumer sector head at CI Capital (Linkedin).

My name is Alaa Tolba and I’ve been with CI Capital since 2015. I’m currently the MENA consumer sector head and we mostly focus on Egypt, Saudi Arabia, and Kuwait. I’ve always been interested in the field and during university I did a couple of internships at investment banks. I started my career at Naeem Holding and then left the field a bit and moved to Banque du Caire. Even though I wasn’t working in research at the time, I finished my CFA back in 2014 as I felt it was a way to get the position I wanted. I’ve been working in sell-side research since then and I’m very passionate about it. There’s so much more to the job than research and analysis: you have to be creative and market your ideas, especially these days where engaging with clients is an integral part of your role.

The best part of my job is the ability to get your name out there. The more you offer a forward looking view, be creative, look outside of the box, and provide good calls, the more likely you are to develop a franchise name. You become the go-to when someone wants information about a certain sector. This gives you a high sense of ownership in your work that motivates you to always learn more. The job also helps to expand your network because you are in contact with high-level management and investors. Covering more than one country pushes you to think bigger and gives you a sense of the bigger picture and how it links together.

The most challenging part of the job is how unpredictable it is. There’s always room for a new development to upend your workflow and shift your priorities.

We managed to hold virtual roadshows and conferences during the pandemic and it served us well. We were able to do more things in a shorter time frame as we weren’t limited by travel time. So yes, there are benefits to keeping it virtual, but it doesn’t fully replace real life interactions. I believe in-person roadshows will still be less frequent moving forward.

My theory of investment is to pick stocks with promising fundamentals, stories and interesting industry dynamics. After that, you need to diversify your portfolio and be flexible — don’t get too attached to a stock. I combine both top-down and bottom-up approaches when I analyze a company. Sometimes the macro outlook for a country is good, but a firm isn’t positioned to take advantage of it and vice versa, so by doing both analyses you can decide on which one is more fitting or if there is a catalyst that could make one more likely.

When I recommend a stock, I tailor my suggestion based on the investor. I get a sense of their investment horizon, whether they’re looking to commit medium term or short term and how big their appetite for risk is. Usually they offer this insight or with time, analysts can pick it up as we talk. As Alaa, I often like to go for quality names as they are usually backed by strong management teams that are agile and have a good strategy to expand.

I’m not sure whether the EGX30 will close in the green this year. The pipeline of IPOs could be a good catalyst and motivate more investors to participate in the exchange, while on the macro front, the outlook seems pretty solid. However, it could go either way still.

There are too many uncertainties to say whether 2022 will be the year of Egypt. It all comes down to how the pandemic plays out in the coming months — and it’s certainly thrown us for a loop before. If we hit our vaccine targets, the impact will be positive. Our position so far seems promising and it paves the way for a further recovery. In the consumer sector, we’re also expecting things to look up as wage increases accelerated faster than inflation, causing consumer spending to rise.

If I had to switch and cover another industry, I would choose healthcare. I like that, similar to consumers, you can easily relate to it and see its performance on the ground. It’s also highly diversified and a growing sector, especially since it's now backed by a number of regulatory changes.

The last great thing I watched was the last season of Money Heist. But usually work is hectic enough so when I go home I like to watch anything that is light [laughs].

Yoga has become a part of my daily routine. I’ve been quite consistent about it in the past few months. Other than that, it’s usually seeing friends and family. Before covid I used to travel whenever I could. It was my way to disconnect and recharge.

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MARKET NEWS-

Trading on Pioneers Holding shares on the EGX have been put on pause for three days as the company completes its demerger, according to an EGX statement. Pioneers had announced last month that it would be registering two new subsidiaries — Pioneers Properties and Gadwa Industrial Development — with the Financial Regulatory Authority (FRA), which has been in the works since 2019.

MARKET ROUNDUP-

The EGX30 rose less than 0.1% at today’s close on turnover of EGP 813 mn (47.9% below the 90-day average). Foreign investors were net sellers. The index is down 3.8% YTD.

In the green: Raya Holding (+7.5%), Fawry (+3.9%) and Ezz Steel (+3.6%).

In the red: Cleopatra Hospital (-3.4%), Egyptian Resorts Company (-2.5%) and CIRA (-2.3%).