The State of the Egyptian Stock Market

Despite the recent economic downturn, digital investing has gone up in Egypt. A report by Statista notes that the total transaction value of the digital investment market is expected to reach $4.08 billion (E£126.07 billion) in 2023, with projected growth totaling $9.96 billion (E£307.76 billion) by 2027. This growth is reflected in the Egyptian Exchange (EGX), the country’s stock exchange, which has seen positive performance in early June. In particular, the EGX100 index climbed by 8.2% to hit 5,333.34 points, reaching an all-time high.

Given the generally good outlook of the Egyptian stock market, more investors are chipping into local investments and bringing a wave of changes to the market. This article will explore the current state of the Egyptian stock market and upcoming events.

Combatting recession

Egypt is under unceasing economic pressure. With Covid and Russia’s war in Ukraine exacerbating local problems, the Egyptian pound has recently fallen to record lows, and inflation has risen above 20%. To resolve this economic crisis, Egypt sought a $3 billion (E£92 billion) financial support package from the International Monetary Fund (IMF), where the country committed to a flexible currency, a more significant role for the private sector, and monetary and fiscal reforms.

Privatization initiatives

As part of an effort to deliver on this promise, reduce the country’s economic struggles, and attract foreign capital, Egypt’s Prime Minister Mostafa Mabouly revealed that 32 Egyptian state companies would either be listed on the EGX or sold to strategic investors. The country expects to sell enterprises worth $40 billion (E£1235.98 billion) within three years, raising the contribution of the private sector to the nation’s economic activity from 30% to 65%. Notable companies selling stakes include the chemical sector, Paints and Chemical Industries Co. and Kerir Petrochemicals Co., as well as two of its national army companies, Wataniya and Safi. Through these stock market sales, the government may be able to rebuild its foreign exchange reserves and boost the value of the Egyptian pound.

Rising online brokerages

Given this shift towards privatization, EGX is expected to expand tremendously— encouraging more international online brokerage to accommodate the Egyptian market. Arguably, one of the most popular trading platforms is MetaTrader4, used by market traders and online brokerage services worldwide. Not only does the platform enable traders to follow market trends, but they can also enhance their trading experience through charts, automated advisors, trading signals, and technical indicators. Another appealing feature of MetaTrader4 is that the platform is free-of-charge. This aligns with Islam — the most prominent religion in Egypt — which otherwise forbids participation in usury or business practices that involve charging interest.

In addition to facilitating trades locally, international brokerages encourage foreign investors to join the Egyptian market. One of the leading brokers in this initiative is the CFI Financial Group. The company operates in 10 countries, with eight international licenses from top-tier regulators, including FCA in the UK, CySEC in Cyprus, and the Dubai Financial Services Authority in the UAE. It now supports the EGX as a promising market, as there are plenty of investment incentives and attractive factors in its diversified economy. Currently, CFI is set to expand into four new countries before the end of 2023 to encourage stronger competition in the Egyptian market.

Although the Egyptian economy is imperfect, the stock market’s future looks promising. Previously governmental shares are shifting to the public sector, and more online brokerages are entering the market, giving more opportunities for the local economy to recover and grow.