Egypt’s IPOs fuel market momentum

After recording growth of more than 30% last year, the Egyptian Stock Exchange (EGX) has faced a challenging few months, with a drop in the benchmark index. However, a flurry of initial public offerings (IPOs), a shake up in the EGX’s indices and more bond issues on the horizon suggest renewed confidence in the bourse, as Egyptian corporates and the government tap into investor interest in MENA assets.
Confidence on the up

The Egyptian stock market grew by 31.6% in 2014, according to EGX data, and consumer confidence remains on the rise, buoyed by anticipated economic growth of around 5-6% this year, Mohamed Younes, chairman of Concord International Investments Group, an investment management company, told OBG. “There’s more interest from international investors in the Egyptian market,” Younes remarked. “The market has been untapped for a long time and is undervalued, so there are good price-to-earnings ratios. We’ve seen premiums over offerings after recent IPOs.”

Indeed, a spate of IPOs have seen the EGX establish itself as one of the most active regional markets in the year to date in terms of new listings. On June 25, the EGX saw its largest floatation since 2007 when property firm Emaar Misr, part of the UAE-based Emaar Properties, placed 90m shares on the exchange. The offering, priced at LE3.8 per share ($0.50 at the time of the float), was oversubscribed by some 36 times, according to EGX officials. However, its share price eased in the following weeks, prompting the company to deploy a LE342m ($44m) stabilisation fund to buy back shares.