Egypt’s Capital Market: the Present and the Future

Change is one of life’s norms, and it is necessary to cope with it if we seek continuity, and Egypt’s capital market is not isolated from a financial world full of changes.
By Amr Hussein Elalfy, MBA, CFA

8/21/17 12:48 AM

Human nature usually tends to avoid change and prefer stability. But the present - and inevitably the future - is affected by the so-called “disruptive technologies”. The disruption here is not in the negative sense but in terms of development and evolution. Indeed, without thinking out of the box there will be no change and there will be no development.

For example, had it not been for new ideas and the rebellion against the status quo, we would not have had services such as Uber (the world's largest taxi company without cars) and Facebook (the most attractive social networking site in the world without producing content) and Alibaba (the world's largest retailer by value without inventory), and Airbnb (the world's largest housing provider without real estate assets).

The secret? It's creativity! But if we examine the state of Egypt’s capital market, we will find the following:

  • The only direction investors can profit in is the uptrend.
  • The only asset class that investors can trade with high liquidity is equities.
  • To settle their transactions, investors have to wait a day or two.
  • The only market available for investors to trade securities is the Egyptian Exchange.

Now, let's imagine that investors can profit in all market situations whether sideways, up-trending, or down-trending. They can trade different asset classes, ranging from equities to futures, options, currencies, and commodities. They can buy and sell instantly and without having to wait for a day or two. They can even do this through more than one exchange! Well, the latter point might be far-fetched, but surely the first through the third points are achievable on Day One.

Ironically, what I mentioned above does not amount to what we call "disruptive technologies". It is only what is needed in any capital market to competitively attract financial investments internally and externally. In other words, this is only the minimum that must be available to have an efficient and fair market. Can we dream of this or will the status quo remain forever? Hopefully, the new board of directors of the Egyptian Exchange will stir things up.

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