How has Covid-19 affected capital markets in Egypt?

As one of the few countries which are forecast to grow in 2020 and the only forecast to grow in the MENA region this year, Egypt’s economy has remained remarkably resilient. This is closely linked to the well capitalised financial services sector which has ensured credit has flowed to companies and individuals during the height of the pandemic.

In the exclusive vidcast with Oxford Business Group, chairman and managing director of HC Securities, Hussein Choucri, discussed how capital markets specifically have also been stable, with volumes on the exchange being high thanks to government interventions to ensure liquidity. Activity on capital markets in the lead up to the pandemic was healthy, with around LE 5.2bn of new issuances between 2018-19. He mentioned that while there has not yet been any such activity during 2020, there was a highly successful Sukuk this year, the first of its kind in Egypt. More broadly, the lower interest rates could translate into more fixed income debt issuance going forward.

More private equity activity is financing fintech start-ups over the long term, thanks to the government’s goal to boost financial inclusion. In spite of the negative toll the pandemic has had on the wider economy, the surge in usage of mobile financial technology has been a positive sign that could lead to a more inclusive and democratised financial sector.

Choucri concluded the vidcast by predicting that the above-mentioned factors, combined with a resilient economy during Covid-19 could see a boom in activity in a number of segments of the financial services sector following the pandemic, in particular a number of IPOs. As the economic rebound gains momentum across all sectors, he predicts that this will be met with increased activity in capital markets and financing in general, to address the wider needs of a dynamic economy.