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Tuesday, 15 February 2022

SFE boss wants to see more ins. + pension fund investments in the EGX

More EGX investments by ins. + pension funds, please -SFE’s Ayman Soliman: Pushing ins. funds’ investments in EGX-listed stocks to 10% could “revive” the bourse, Hapi Journal quotes Sovereign Fund of Egypt (SFE) CEO Ayman Soliman as saying, adding that pension funds could also increase their bourse investments.

More local activity would support the bourse + its IPO program: Soliman reportedly said now is the right time to make the move, which would bring added liquidity to the EGX from local investors, helping to guard it against external shocks. Local participation in the bourse helps maintain market valuations and prevents acquisitions of companies that trade at less than their fair market value, Soliman said, adding that increased local investments also attract foreign retail investors to our local market, helping to ensure coverage in big IPOs.

Soliman also wants to see more “postal investments” in the bourse, Hapi reports, without giving any further information. We expect the comment is a reflection of the fact that Egypt Post is sitting on bns of EGP worth of deposits by small account holders across the nation — a portion of which might be well invested in EGX-listed equities. Separately, Egypt Post announced plans last year to debut its private equity arm Post for Investment (PFI) on the EGX. PFI is a private equity firm that invests in industries including telecom, non-bank financial services, outdoor ads, and real estate. The company has stakes in bold-name businesses including Etisalat Misr, microfinance player Tamweely, and SME investment firm Ayady.

How do ins. and pension funds usually invest? Local ins. companies often focus their investments in debt (both sovereign and corporate). The social security and pensions law requires that public pension and social ins. funds invest no less than 75% of their capital in treasury bills and bonds, according to Youm7, with the remainder divided among a range of investment tools. The state ins. fund for public-sector workers invested a mere 1% of its total funds in the EGX in 2019, according to the fund’s then-head Mohamed Seoudi.

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