Referendum Initial Results; Short-Term Positive Outlook For EGX: Experts
A number of capital market experts expects that the constitutional referendum initial results will have a short-term positive impact on the performance of the Egyptian Exchange (EGX) alongside its indices.
The experts attributed the short-term positive impact to the fact that the majority of Egyptians chose to move forward towards building up state institutions and towards electing a new parliament within the coming period.
Yousef El-Far, Naeem Holding Managing Director, has asserted that the impact of both ‘Yes’ or ‘No’ votes actually will not differ much on Egypt’s economic system. He explained that the national economy still lacks the signs of stability missing since the outbreak of the revolution.
“Egypt’s economy has not managed yet to get through the two-year phase of political and security unrests.” El-Far added
El-Far forecasted that the initial results of the constitutional referendum will have a short-term positive impact on the performance of the EGX and indices as well as on the trading volumes and values alongside on the return of the foreign investors.
Mohamed Saeed – Portfolio Manager at IDT Consulting & Systems, said ‘Yes’ vote will have a short-term positive impact on the Egyptian market.
He explained that the Egyptian government alongside the political powers that support the draft constitution will try to inject liquidity for the EGX in order to emphasize the remarkable effect brought by approving the draft as it will contribute to boosting the national economy.
“The government will also try to bolster the investors’ confidence in the Egyptian economy as the ruling system will have clear vision and features after ratifying the constitution.” Saeed added
“Accordingly, there will be a gradual improvement in the market performance as well as in trading volumes and values.”
Saeed said he is not certain about the long-term effect of the ‘Yes’ vote whether it will lead to stability and improvement in the economic situation or to further deterioration.
Moreover, Saeed stated that ratifying the new draft amid the absence of broad consensus is ‘trap’ for the economy and the country in general.
Mohamed ElSayeh, executive at LEPON Securities Broker, agreed with Mohamed Saeed saying: “We cannot forecast the long-term impact amid the state of anxiety the economic sector is witnessing nowadays.”
“Investors read worrisome news about the Egyptian currency alongside floating rumors amid the low foreign cash reserves.” ElSayeh added
ElSayeh also noted that the state of anxiety will be for a long period as the investors and the economic sector in general await the repercussions of ratifying the draft whether the country will witness more protests against the new constitution or not.
