As of June 2001, Egyptian equities had attractive valuations with a P/E multiple of 8.3 times earnings and a high dividend yield of 17.06%. Compared to an average P/E ratio of 12.52 times and dividend yield of 3.81% for the Middle East and Africa and a P/E of 17.5 times and dividend yield of 2,17% for the whole IFCG composite, the Egyptian market offers a very good opportunity for equity investments and rank near the top of the S& P/IFCG list of emerging markets.
The Egyptian Stock Exchange has concluded an agreement with the New York Stock Exchange to list selected Egyptian stocks on Wall Street.
As of June 2001, 9 Egyptian companies have their shares traded in the form of GDRs on the London stock exchange. Several Egyptian Companies are currently studying the feasibility of issuing American Depository Receipts (ADRs), which trade exclusively in the US. Both Mobinil and Orascom Construction industries are thinking of launching ADR issues, since the US market provides more capital though it has tougher rules than elsewhere.
Egypt is also participating in the creation of the Arab Corporation for Clearinghouses, which will link up Arab clearinghouses to expedite the development of intra-Arab trade.
There are neither regulatory restrictions precluding foreign participation in the market nor any prohibitions against repatriation of profits. (Few exceptions to this rule exist, not from a regulatory standpoint but because certain companies charters do not permit foreign shareholders).
Foreign investors trading for the period between January and June 30, 2001 amounted to LE3.77 billion, representing almost 18% of total trading over the same period.
Recent Developments in the Capital Market:
- Diversity of investment opportunities and unrestricted foreign access to the Egyptian markets have allowed Egypt to be included in the Morgan Stanley Capital International (MSCI) index in May 2001, with a weight of 0.28% expected to be increased to 0.47% upon future review of the indexs assets. There are 14 companies in the Egypt Index with a total capitalization of US$ 2.53 billion, representing 0.015% of the Morgan Stanleys All Country World Index. The companies in the Egypts Index include such mainstays of the Egyptian stock market as Mobinil, Commercial International Bank, Orascom Telecom, and Orascom Construction.
- In May 2001, a new trading system was successfully implemented. The new system is capable of handling 100,000 transactions per day.
- In June 2001, a sovereign bond issue worth $1.5 billion Eurobond issue in both Europe and the US markets was successfully launched. The interest rate spread reflected a positive assessment of Egypts economic outlook by foreign investors. The bond will serve as a benchmark for other corporate issues.
- An international advisory committee, comprising members from a number of investment banks, to present the foreign perspective was formed.
- The Egyptian Stock Exchange has signed a memorandum of understanding with a number of stock exchanges around the world. It also focused on enhancing investor awareness, information dissemination and training for its staff.
|
