Analysts’ Take on Investing in Egypt in 2016!
The countdown to New Year’s brings to Egypt a new down-ticking clock of the January prospective events. No one can tell whether there will be celebrations or unrest, and no one would want any unrest to take place, but financial analyst would definitely take into consideration the economic factor into the financial commentaries.
Here is a scan of what the top Egyptian financial institutions and analysts think:
Mohamed Abu Basha of EFG Hermes in his article about the economic hike in Egypt explains the drop in some indices and speculates an upcoming hike. This article was in December 2015 and speculates a hike in the short-term. Well one would expect a hike on the long-run (in a year or something).
Devaluation Has It All
EFG Hermes puts a lot of weight on the importance of currency devaluation and how it improves competitiveness. Inflation isn’t always bad after all. Good news is that it’s fully governed by the central bank which means it well controlled and wouldn’t slip into extreme inflation. Bad news is that if devaluation isn’t coupled with a booming efficiency, it will keep going in loops forever.
EFG Hermes to Reduce Capital
A capital reduction of around 200 million pounds will take place by terminating some treasury stocks and reducing the number of shares and hence improving the reported Earnings Per Share (EPS). Well, that’s about it for EFG Hermes. And this says a lot about how EFG Hermes performed or speculates the economy to perform in 2016.
The number of stocks that analysts advised to hold has increased lately. This definitely means analysts are skeptical of January 2016 for many reasons: Ethiopia negotiations, local events and currency problems to name a few.
Well, is it Business As Usual?
No, we don’t think it will be Business As Usual (BAU). There will be disruptions in 2016 and probably in 2017. Analysts think so too. We also disagree with analysts that think that controlled currency devaluation will result in Egypt becoming an attractive investment region. We are, on the other hand, very optimistic about the local investments and that’s why our services business focuses on average investors from Egypt building their own economy and our leading star is how the financial services and financial insurance companies built the economy of the Unites States back in the days.