Egypt’s IPO Rush
President el-Sisi of Egypt has a message for us. He’s listing state-run companies on the country’s EGX30 stock exchange; his goal is to catch up with other emerging markets and entice more foreign investment!
Investing isn’t big in Cairo. Egypt’s central exchange lags others in the MENA (Middle East and North Africa) region and is carried by only one company, the Commercial International Bank, up 30% since this time last year. The rest of the index is sparsely traded at best, with fundamental headwinds like volatile inflation and subsidy cuts to blame for low valuations.
However, Egypt’s economic situation is stabilizing at last, and now el-Sisi wants to unlock “growth mode.” One of the ways to do it is by democratizing business ownership, and the country indeed plans to inject more life into its stock market. However, officials remain tight-lipped on what state-run companies are lined up for initial public offerings (IPO).
El-Sisi hasn’t ruled out selling stakes of military-run companies, telling sustainable investing advocates to “get lost.” The IPOs we can definitely reveal are the nation’s largest bank, Banque de Caire, and Heliopolis Housing. The latter property company aims to go public at the end of this month, but Banque de Caire’s been waiting for “conditions to be right” since March 2019. It’s almost as if someone doesn’t want to let go!
These companies could make worthy investments, however. The public was already familiar with electronic payments firm Fawry before it rocketed 31% on its first day of trading last year, and these are also consumer-facing brands. The Invstr community can track the pharaohs with the VanEck Vectors Egypt Index exchange-traded fund, or #EGPT, as we like to call it. Keep an ear to sentiment on the street. This could be the breakthrough Egypt’s been waiting for!