OUR ANALYST OF THE WEEK- Shady Amr Al Afify, senior analyst at NI Capital (Linkedin).

My name is Shady Amr Al Afify and I joined NI Capital two months ago, working on the buy-side on their asset management team. I started my career as a research analyst at Prime Holding covering the industrials sector, but soon moved to their asset management team as well. Since university I knew I wanted to be in finance and I felt that it reflected the strategic side of me. I was adamant to make sure that I could enter the field so I got involved in many student activities at Helwan University that were related to finance. I finally got lucky when I landed a job that has taught me a lot.

In asset management, you cover all fields, which was a bit of a shock at first. I had already gotten used to construction and industrials during my research stint, so when I first started looking at consumers and banking stocks, it was very far away from my comfort zone. But with time you start to grasp the different processes and dynamics of each sector and see the overlap between them. To be honest, industrials are still my favorite sector though [laughs].

But that exposure to everything is the best part of my job. You really feel the impact of it when you’re sitting down with an expert in the field and can keep up a conversation. It’s also a great feeling to be able to make decisions and wait for their results. It’s exciting to see what happens next.

This isn’t a new answer, but the worst part of my job is the stress. You get so used to overthinking every decision that it starts to seep into your personal life. I also joined the field during a very hectic time as it was right after the EGP float and then the pandemic hit… so it’s been a bit tough to always have things thrown at you.

My theory of investment is to have a diversified portfolio. For me this means having a core portfolio and a trading portfolio. The core portfolio consists of value stocks with strong fundamentals that will pay off long-term. These act as a sort of hedge against any volatility risk. Meanwhile, the trading portfolio is more short-term and takes into account timely growth stories. The risk is higher, but the return is too, so it really depends on the client’s risk appetite.

Institutional investors have recently been leaning into short-term investing more than usual. No one has the tolerance to wait anymore, especially since the market has been very event-driven. An event or announcement causes a stock to go up or down for a brief amount of time and then it goes back to being flat. This dynamic is common when more retail investors get involved in the stock market, and institutions understand that trading short-term could be more lucrative at the moment.

The most important factors I look at before investing in a stock are the fundamentals, the liquidity, and if it will secure a good dividend yield.

It’s unclear whether the EGX30 will close in the green this year, especially with the recent spread of Omicron. If you had asked me a few days ago, I would have said that the EGX30 will likely stay flat towards the end of the year — rising 4-6% YTD isn’t green compared to other stock markets. But now with all the uncertainty around the new variant, I’m really not sure. Usually, foreign investors tend to flow back into the EGX during the last weeks of the year, and this would have been a catalyst for the index to rise. However, the lockdowns and the possible disruptions to international trade will surely dampen market sentiment.

All sectors in Egypt will be impacted by Omicron, but some will feel the burn more than others. Tourism is likely to take a big hit due to reinstated travel restrictions by countries worldwide. Meanwhile, demand for non-essential consumer goods and real estate properties usually also falls during times of uncertainty. I also expect any company that relies on international trade to be impacted heavily. The sectors that could come out on top are telecoms, healthcare, and fintech.

The variant could also lead to another commodities supercycle. There are now lockdowns and closures happening worldwide, but when everything reopens and infrastructure spending increases once again, commodity prices could go up. I had previously expected the commodities supercycle to end after 1H2022 as prices normalized.

Once again, it’s hard to determine whether 2022 could be the year of Egypt. Some argue that companies now have the experience and knowledge to mitigate the impacts of the circumstances we’re seeing. However, even before Omicron, there were uncertainties in the market such as the capital gains tax that were causing outflows from the exchange, and the outlook for emerging market currencies in general hasn’t been great.

The last great thing I watched was Squid Game. The idea behind the show appealed to me and I think it really shows that people under financial stress could do anything to get out of their situation. Other than that, I’m a huge Al Ahly fan and I’m always glued to the TV during their matches.

There really isn’t time to read anything other than CFA material [laughs]. I’m currently studying for level two of the CFA and my exam is in February.

In my downtime, I spend time with my friends. We play PlayStation or card games such as tarneeb and estimation. My friends are also in the financial field so our card games get very intense and full of analysis [laughs].

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MARKET NEWS-

MinaPharm’s bottomline increased 30% y-o-y during 3Q2021, recording EGP 103.2 mn, according to its latest financial statement (pdf). Revenues for the quarter were up 28% y-o-y to EGP 754.8 mn. On a nine-month basis, net income was up 72% y-o-y to EGP 358.9 mn on revenues of EGP 2.2 bn, up 34% y-o-y.

Sinai Cement narrowed its net losses to EGP 323.3 mn in 9M2021, from EGP 425 mn during the same quarter last year, according to its quarterly financials (pdf). The company’s losses continued despite sales rising 67% y-o-y to over EGP 984.8 mn. Egypt’s cement industry may finally be seeing signs of recovery after suffering from a drawn-out supply glut.

MARKET WATCH-

The EGX30 rose 1.6% at today’s close on turnover of EGP 1.81 bn (20.9% above the 90-day average). Local investors were net sellers. The index is up 5.1% YTD.

In the green: Fawry (+7.4%), Heliopolis Housing (+6.7%) and EFG Hermes (+5.2%).

In the red: Cleopatra Hospital (-2.2%), Egypt Kuwait Holding-EGP (-2.0%) and Telecom Egypt (-1.4%).