CAIRO: Egypt’s stock market is seen as a huge investment opportunity in 2018, with interest rates likely to embark on a downward trajectory, according to investors polled by Daily News Egypt.
The survey conducted by Daily News Egypt included company officials, investors, and market analysts.
Most participants in the survey chose healthcare, consumer, and bank stocks as their top picks for 2018.
Investors are also positive about companies winning contracts on large infrastructure projects and say consumer stocks are recovering from the shock of 2016’s currency devaluation.
Egypt’s main stock gauge advanced more than any other in the Middle East in 2017 as the government moves forward with structural reforms, which attracted foreign investors to its debt and equity markets.
Positive sentiment towards equities will continue this year as many stocks trade at attractive valuations, while conditions in the Egyptian economy are supportive.
Khaled Darwish, money manager at CI Capital Asset Management, expects pharmaceutical and healthcare stocks to outperform most of Egypt’s stocks in 2018, with the government introducing a new healthcare act.
“These stocks have a defensive nature. For example, stocks in this sector didn’t suffer as much as others during the 2011 uprising that ousted President Hosni Mubarak,” he said.
The EGX30, measured in local currency, fell 49% that year.
Meanwhile, Radwa El-Swaify, head of research at Pharos, has chosen different stocks from many sectors as Pharos’ top picks for 2018.
Among the top picks for Pharos in 2018 stocks are from the consumer, bank, and infrastructure sectors.
Cairo’s main index increased in value by 21.66% during 2017, as a continuous drop in inflation, positive comments from the Central Bank of Egypt (CBE), and an ongoing programme of economic reforms boosted investor sentiment, especially in the second half of the year.
Samar Soliman, of Egypt-based Okaz Stockbrokers and Investments Consultants, said, “the Egyptian Exchange’s performance in 2017 is a clear reflection of the conducted monetary policies that directly affected the performance of traded companies on the market.”
She added, “in 2018, we expect companies’ earnings from operating profits to affect the stock market the most. In addition to that, economic policies and investment facilities through the new Investment Law should positively reflect on the exchange.”
She added that her top picks for 2018 include pharmaceutical stocks, as the government prepares to apply the new healthcare act.
The proposed universal healthcare system will cover 107 million Egyptians by the time it’s fully implemented in 2032, Deputy Prime Minister Mohamed Maait said last month.
