OUR ANALYST OF THE WEEK- Ahmed Hesham, associate director of equity & quantitative strategy at Beltone Financial (Linkedin).

My name is Ahmed Hesham and I’m the associate director of equity & quantitative strategy at Beltone. I studied economics at Sadat Academy for Management Sciences and then received my masters from Kyung Hee University in South Korea. In the time in between, I was working as an economist at the Financial Regulatory Authority. When I came back from South Korea, I worked as an economist at ElSewedy Electric and then at Mubasher. I then made the leap and joined the quantitative research team at EFG Hermes where I stayed for almost nine years. From there, I moved to CI Capital as part of their quantitative and equity research team and finally took on my position at Beltone in 2018.

My job revolves around purely quantitative-driven research. We collect data from stock exchanges all over MENA, including stock prices, investment participation, and investment ownership. We then analyze these data points to try and spot trends and answer basic questions such as how a market, stock, or sector will react in certain circumstances. We also use the data to publish quantitative research products that tackle the market from a different perspective, issue index-related research that looks at the MSCI, FTSE, and local indices for each market, and answer questions from our clients using our database.

Using quantitative research is still somewhat new in Egypt. It’s common in global banks and is gaining traction in Egypt. EFG was one of the first that began to heavily invest in this kind of department and when I moved to CI Capital, I began to establish a similar one. When I joined Beltone, the department had already been launched, but it was still at a smaller scale. We took it to the next level with a lot of support from management, who understood the importance of data in investment decisions.

The best part of my job is that it’s ever-evolving and ever-changing. I like to analyze and connect the dots and my job allows me to find a correlation between sectors in MENA stock markets in terms of performance, momentum, and liquidity. I also like to come up with new products and hearing the appreciation from clients.

The worst part of my job is the cliche answer: The pressure [laughs]. There are also a lot of surprises that can throw you off. However, I’ve spent 20 years in the field and I’ve learned that you need to be quick, calm, and efficient. It’s also a matter of having been put in the situation so many times, that you now know how to react.

My theory of investment is based on my work. I’m a big fan of momentum investing, which looks at volumes, index inclusion, and end conclusions. If done correctly, you can get massive returns.

The most important factor I look at before I decide on a recommendation is the data, of course [laughs]. I check that there aren’t any outliers or anything that seems off. Our database at Beltone is fully automated and uses algorithms and methodologies that help us make recommendations. These algorithms help us look at the market from a fourth dimension to determine where the momentum is at any given period. We also look at investor participation, liquidity, and volumes all over MENA to link the numbers to events and compare markets to each other.

I think 2022 will be a good year for Egypt, pending one main factor: The state privatization program. These are crucial for the local market to increase liquidity and volumes. If it proceeds as planned, I think it could be the trigger for Egypt’s next bull cycle. However, a lot of momentum in the region will still go to GCC countries, mainly UAE and Saudi Arabia, as they issue a lot of listings and benefit from the high oil prices.

Since the beginning of the year, foreign and institutional investors were net sellers and the EGX30 saw a lower than usual turnover. I attribute this to the supply of shares being limited. Investors have already invested in all the buzzworthy companies in the market and are awaiting new stories, hence the need for more IPOs.

I recently binge-watched The Fear Index. It follows a hedge fund type who gets roped into this massive scheme — it’s really good. But my favorite show of all time is Bns. Even though it portrays the greedy part of the financial field, it’s still really amazing to watch something you can relate to in your own life.

The last great thing I re-read was When Markets Collide by Mohamed El Erian. He’s my number one author and I read anything he releases.

When I’m not on the clock, I like to disconnect from work, whether it’s through working out or going out with friends. I try to find a balance between work-life and home-life. I also love to travel, but covid has made the options very limited.

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EARNINGS WATCH- Heliopolis Housing and Development Company (HHD) reported a net income of EGP 91.26 in 4Q2021, reversing from net losses of EGP 43.35 mn in 4Q2020, according the company’s financial statement (pdf). The company’s revenues saw a 248% y-o-y increase to record EGP 152.93 mn.

MARKET ROUNDUP-

The EGX30 rose 1.4% at today’s close on turnover of EGP 744 mn (28.6% below the 90-day average). Foreign investors were net buyers. The index is down 3.2% YTD.

In the green: Qalaa Holdings (+7.9%), Sidi Kerir Petrochem (+2.8%) and Ezz Steel (+2.7%).

In the red: Madinet Nasr Housing (-4.1%), Cleopatra Hospital (-1.5%) and Mopco (-0.9%).