Problems with regulation and monitoring as well as the lack of a mature, aware investor base are the main obstacles facing Egypt’s stock exchange in the coming period, Khaled Serry Siam, the bourse’s new chairman, said.
Speaking at this week’s Euromoney conference in a session titled “Rebuilding Trust,” Siam summarized the attractiveness of Egypt’s markets by saying that the exchange rate is efficient and stable, with no restrictions on foreign investment or repatriation of capital and profit.
Siam said that new measure and regulations are being developed to tighten monitoring transactions and trading — the exchange has been criticized for allowing procedural violations, insider trading and errors in the financials of listed companies.
“An in-house surveillance system is being developed with real time, online functionality and complete range of alerts and freezes on the transaction or trading of a company’s stock,” said Siam.
“There is no doubt that there are violations,” he said, “but there are ways to regulate it.”
The unsuccessful Nilex — a stock exchange for small and medium enterprises — can be attributed to the inefficient auction system it runs on, Siam said. Investors do not know much about the 16 companies listed on the index, calling on the media to create more awareness about the companies.
“The financial institution which advises the Nilex companies has not done its research and we will make sure to work with them to improve on that,” he concluded, adding that the responsibility does not only lie solely with the exchange, but also the financial auditors of listed companies.
“I am happy to announce that there is an oversight board which constantly monitors financials of any company we suspect of violations and prepares reports for the exchange,” he said.
“Egypt has a high revenue growth and strong operating performance of all banks,” he said. “The stock exchange in Egypt is one of the oldest in the world. We have a strong core of diversified sectors with promising investment opportunities.”
A total of 77 percent of investors are Egyptian, compared to 23 percent Arab and non-Arab.
Comparing Egypt to Arab markets, he said in 2009, Egypt was on top with 35 percent, followed by Saudi Arabia with 27 percent.