In 2000, the 2-year old Euro bottomed, losing some 30 percent of its value. 2001 might restore the now forgotten hopes of a European reserve currency.
At home, OT’s IPO went through in 2000 while TE didn’t, caught between the flu that beleaguered telcoms abroad and weak market conditions.
In 2000, the outbreak of the Middle East crisis has unsurprisingly shaken foreign investors’ confidence within the region. Ironically, higher oil prices, which ensued and have left economists elsewhere wondering about the effects of a negative supply-side shock on growth, boded well for Egypt, which saw oil export revenues shoot up 127 percent in FY2000.
In 2000, the Egyptian stock market has moved a step closer to maturity. The new Capital Market Law to be presented to the new parliament includes disclosure requirements, minority interest rights, professional conduct regulations, and introduces securitization procedures among other needed innovations.
In 2000, Egypt has rightly acknowledged the importance of belonging to trading blocs to market exports. As such, the CO-MESA agreement established a free trade area (FTA) between Egypt and 8 other African countries and has thus paved the way for more serious cooperation within the continent. Furthermore, the Egyptian European Partnership Agreement negotiations initiated in 1995 have reached the final stages and await approval from the Egyptian Cabinet.
In 2000, the November parliamentary elections granted the NDP 85 percent of the seats versus 94 percent in the last elections with a considerably larger number of seats captured by independents and opposition parties.
In 2000, the liquidity squeeze that drained the Egyptian economy in 1999 started to ease, as the Central Bank of Egypt has adopted a more flexible exchange rate policy and all eyes are set on the new parliament to pass market-oriented legislation to prime the pump.
Although the PAMI index ended 37.4 percent lower than the beginning of January, long-term prospects for the Egyptian stock market remain strong. The stable macro picture of average GDP growth of 5.7 percent over the past 5 years and high earnings growth of major listed companies coupled with relatively low P/E's allow investors to buy stocks at attractive prices not seen elsewhere in other emerging markets. With Egypt's addition in May 2001 to the Morgan Stanley Emerging Markets Free Index, the prospects become even brighter. Morgan Stanley's indices are highly regarded in the business world and function as a monitoring tool for foreign investors. With greater foreign recognition, more foreign portfolio investment is sure to follow.
Prime Securities S.A.E.
© 2001 Mena Report (www.menareport.com)
