Tackling state companies

Tackling state companies

The time is right for further initial public offerings (IPOs) of shares in both private and state-owned companies, the chair of Egypt's Financial Regulatory Authority (FRA) recently stated.

Over the past couple of years share offerings in various publicly owned companies have been put off due to unfavourable market conditions, first the emerging markets crisis of 2018 and then the Covid-19 coronavirus pandemic.

But this appears to be changing, according to Ahmed Hafez, head of Middle East and North Africa (MENA) research at Renaissance Capital. In the medium-term, market conditions should be favourable for share offerings, he told the Weekly.

Valuations are still cheap, but once offerings start with the more lucrative sectors, other could follow, he said.

There have been consistent inflows into equity funds in China and other Asian markets, and Egypt could also see investments, Hafez said. A research note by Renaissance Capital issued this week said that "backed by a more bullish case for emerging markets, equity funds have been seeing strong inflows over the past couple of months.“

It said that some of these inflows could find their way into the Egyptian market, adding that "foreigners ended the first two weeks of January buying