Many different factors helped the Egyptian market indices achieve exceptional momentum during the year 2023, at a time when public finances are facing pressures, with the decline in the value of the Egyptian pound, which encouraged investment in assets to financially hedge against the risks resulting from that gap, and with the inflationary pressures imposed itself on the scene.
Egypt Stock Exchange indices also benefited during the year from many government moves, including the government offering programme.
Annual performance
The Egyptian Stock Exchange (the main index EGX30) achieved gains of about 70.5 percent, which is an unprecedented historical figure, as statistics showed that profits in 2023 exceeded all previous years, exceeding 700 billion Egyptian pounds, equivalent to more than two-thirds of the market value of listed companies.
The numbers achieved by the Egyptian Stock Exchange made it among the best stock markets in the world during the current year, thanks to the strong demand for stocks, in order to hedge against possible declines in the value of the Egyptian pound, in addition to benefiting from the distinctive and successive government offerings throughout the year.
The market capitalization of companies listed on the Egyptian Stock Exchange jumped from 961 billion pounds in 2022, to about 1.7 trillion pounds by the end of 2023, an increase of more than 75 percent over the previous year.
The main stock index, “EGX30”, rose from the level of 14,598 points at the end of 2022, to more than 24,894 points on the last trading day of 2023, as part of a series of unprecedented records this year.
At the same time, the small and medium-sized stock index, EGX70, jumped by a huge rise of more than 95 percent, recording 5,473 points, instead of 2,801 points by the end of 2022.
In addition, the broader EGX100 index rose with gains of more than 90 percent, recording 7,880 points, compared to 4,145 points at the end of 2022.
Height factors
For her part, Hanan Ramses, financial markets expert and member of the Board of Directors of Al-Hurria Trading Company, enumerated in exclusive statements to the “Eqtisad Sky News Arabia” website the factors that contributed to the momentum achieved by the Egyptian Stock Exchange indices during the year, as follows:
- State ownership document and listing government companies on the stock exchange. This is what attracted Arab traders, who were the first nucleus for the rise in stock market indices and the increase in trading value, with Egyptian traders beginning to head in the same direction as well.
- Changing market leaders had a positive impact on the performance of stock market indices. Such as changing the Chairman of the Financial Supervision Authority and the Chairman of the Stock Exchange (..) This led to a return of interest in trading on the Stock Exchange and taking it a prominent position among the categories of traders.
- The difference in the exchange rate… (and expectations of devaluation of the currency), which gives purchasing power to Arab and foreign traders, and this makes stock market indices rise and attracts traders to buy, including Egyptians as well. To preserve their money against the risks of inflation, which made the stock exchange a safe alternative for dealing and investing in Egypt.
- The use of electronic trading applications, which attracted traders after the dealer started trading on his own, and one of the groups that became most interested in them are young people. Especially after the Financial Supervision Authority allowed those aged 16 to 21 years to trade without the guardianship of their father, and this led to a recovery in trading values.
The financial markets expert adds: “All of this led to the Egyptian Stock Exchange achieving historic increases during the year, reaching about 70 percent.”
Ramses expresses a very optimistic point of view, supported by purchases by Arabs and fears of measures to move the pound against the dollar, which is still the thing that has the most control over dealers’ transactions, and the one that is most cautious by the stock exchange.
Regarding the companies and sectors that are expected to rise further during 2024, she believes that the non-banking financial services sector is one of the sectors in which many of its shares are priced below their market value.
In addition to the electronic payment sector, which witnessed strong movements, mergers and exchanges between companies in this sector. In addition to the chemicals sector, especially the fertilizer sector, which is receiving interest from Arab and foreign customers, as well as the health care and pharmaceutical sector; As they are sectors with continuous demand and promising investment opportunities in the coming period, their prices still do not reflect their true value, according to the estimates of Hanan Ramses, a financial markets expert and member of the Board of Directors of Al-Hurria Trading Company.
For his part, the Managing Director of IDT Consulting and Systems, Mohamed Saeed, told the “Eqtisad Sky News Arabia” website that the Egyptian Stock Exchange witnessed during the year 2023 a collective rise in all sectors with variation in the performance of those sectors, indicating that this rise continued over the course of 18 years. One month, specifically from mid-2022.
Regarding the factors that led to the rise, he explained that they are due to the significantly high inflation rates in Egypt and the devaluation of the currency to approximately a third of its value during the same period, in addition to the acquisitions that took place, especially by Arab parties during the previous period, especially in the petrochemical sector.
Regarding the indicators for the new year, Saeed expects the stock market to continue its momentum, pointing out that this rise and the stock market’s maintenance of its upward trend in the coming period will continue in light of the instability of the exchange market and expectations of a further decline in the Egyptian pound.
Regarding the sectors and companies expected to achieve the best performance on the Egyptian Stock Exchange during 2024, Saeed divides these sectors into two parts, the first for the short to medium term, which is the non-banking financial services sector; The second is in the medium to long term, most notably the real estate sector.
2023-12-31 13:31:42
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