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00:00Mr. Muattasam Al-Shihady, a member of the board of directors of the Horizon company for the circulation of financial documents, joins us, Mr. Muattasam, welcome and welcome to us.
00:08First of all, let me start with you with the movements of Swady Electric and how they reflected on the performance of the stock market and your general assessment of the liquidity levels today in comparison,
00:17not only with the last week, but with the liquidity that we have been witnessing since the beginning of the year, which was mainly motivated by the increase in inflation.
00:27Good evening, ladies and gentlemen, good evening, dear viewers.
00:31I find that Swady Electric today was among the factors that helped the market to rise strongly,
00:39among the factors that helped investors to be more optimistic that the current Egyptian stocks have good buying opportunities,
00:49and there are high profitability rates in these companies that foreign companies can enter,
00:58especially when we look at the Swady Electric deal, we must look at the ownership of Swady Electric.
01:06In Swady Electric, the free circulation is about 31%, and therefore, if there is a 24.5% purchase from the company,
01:16there will be a large percentage of free circulation in the company if the three main shareholders in the company do not decide to enter the deal.
01:30The share of the company must be distinguished by the fact that it is an optional share of the company,
01:34that is, the company buys 24.5% of the company at maximum, and we have a limit of 15%,
01:42which means that they do not want to acquire the management, but they want to acquire a share of the company to participate in the current management in its success.
01:53This means that there are companies that want to acquire a minority share or an uncontrollable share of the company,
02:06and this means that the current management quality and the desire of foreign shareholders to enter Egypt.
02:14We must not forget that the price of the deal with the price of the dollar made there be optimism for more foreign and Arab monetary agreements
02:25for the Egyptian market to help stabilize the exchange market and help increase the indirect investment and direct investment in the market.
02:34Before confirming the deal, it gave the market a different taste and a different color,
02:39which is the green color that we have seen in most of the previous sessions.
02:45As for the liquidity, if we compare today's liquidity with the liquidity of the past two weeks,
02:55we will find that today's liquidity is high, but if we compare it before the compensation process and after the compensation process,
03:02we will find that it is still at a moderate liquidity level compared to before and after the compensation process.
03:09Therefore, I think that the market still has a large trading volume that it will be able to do.
03:16Mr. Ba'ath, in your opinion, do you think that the shares market is competing more strongly than we have seen before,
03:24and this is reflected in the liquidity levels?
03:29Certainly. Savings certificates, risk-free certificates, tax-free certificates.
03:35Therefore, it will be a very strong competitor to the Egyptian market,
03:39but we always look at the liquidity level only, but we also look at the growth rate of the companies we invest in.
03:45If the growth rate of the companies is high, it will make the liquidity level in the market relatively low compared to the returns that will be achieved as a result of the growth.
03:56If the growth rate of the companies is low, then of course the company will be more active,
04:01but we must not forget that this high liquidity level will be temporary,
04:04and the companies and their financial strength and growth and profits will be permanent.
04:08Therefore, many investors know that this liquidity level is temporary,
04:14and they must seize the opportunities in the market during this period.
04:18The decision last week that the Egyptian central bank withdrew 1 trillion pounds from the banks' liquidity in a 27.7% interest rate.
04:25Usually, this means that we are withdrawing from the banks' liquidity, and therefore from the liquidity in the economy,
04:32and this is supposed to reduce inflation.
04:35But are there other factors involved in making this decision
04:41related to the fact that the Egyptian banks refused to reduce the interest rates imposed by the government?
04:49I don't think that the Egyptian banks refused to reduce the interest rates imposed by the government,
04:53but I think that the cost of money on the banks is high,
04:57and as a result, the ratio of the dividend and interest rates is high in the Egyptian central bank.
05:04Therefore, the Egyptian central bank withdrew the liquidity in the market
05:08so that the banks do not face any problems in terms of cost and interest rates.
05:11The second thing is that we expect that reducing the liquidity in the market
05:15will have a major impact on the interest rates imposed on the banks in the coming period,
05:21and I think that there will be an increase, even relatively, in the interest rates.
05:27The third thing is that this will make the banks and the liquid money they have
05:31not compete with foreigners in entering the banks' liquidity market,
05:36and as a result, it will give foreigners the opportunity to enter
05:39and invest more foreign currency in the Egyptian economy
05:43and obtain the treasury balance,
05:46and as a result, the central bank will achieve its goal of attracting more foreign currency into the market,
05:52and its goal is also to protect the banks from raising the cost on them and reducing the interest rates,
05:57and as a result, it will make a decision in favor of the banking system on all sides,
06:03and also in favor of the Egyptian economy to attract more foreign investments in the treasury balance.
06:08Mr. Mu'tasim, there is a consensus that the Central Bank of Egypt will not move on
06:13with regard to the interest rate in the 23rd meeting of May.
06:17When you look at the inflation figures, we had revisions in April.
06:22If you wanted to put a scenario or a justification for the Central Bank of Egypt
06:28to raise the interest rates in the next meeting,
06:32in your opinion, what is this factor and what is this scenario?
06:36Raising the interest rates is very harmful to the economy,
06:41so I don't think that the Central Bank of Egypt, as long as the market has started to respond to the high interest rates,
06:48because we raised 2.6%, i.e. 8% in two months,
06:52and as a result, the interest rate is high,
06:55and the inflation rate was the reason for the Central Bank of Egypt to raise the interest rates with the cooperation process.
07:02I told you that I don't think that the scenario of raising the interest rate
07:05will be a better scenario for the Central Bank of Egypt,
07:08but I think that it is a confirmation of the interest rate at the current stage,
07:12and that the interest rate will be lowered at the end of 2024.
07:16Maybe in the meeting, in my opinion, the last meeting of 2024,
07:19the interest rate will be lowered,
07:22contrary to what some international research centers say.
07:28No, we will lower the interest rate in 2025,
07:31but I think that the Central Bank of Egypt may resort to lowering the interest rate in 2024,
07:35because the interest rate in the market at the moment is believed to be at the same level as investment.
07:39Even if the real interest rates are in the negative range,
07:43that is, if we change the interest rates for inflation, they are still in the negative range.
07:50True, the real interest rates so far are negative,
07:53but I think that there will be an acceleration in the decrease in inflation,
07:56and therefore, I am not saying that this month or next month,
07:59there will be a decrease in the interest rate,
08:01but I think that it will happen at the end of the last quarter of 2024,
08:07and therefore, at this time, the real interest rate in the market will be in the negative range,
08:13and therefore, the Central Bank of Egypt can lower the interest rate at the end of this year.
08:18Mr. Mu'tasem, what are the prospects of inflation,
08:21regardless of what happens to the international commodity markets?
08:25We are seeing the prices of coffee, cocoa, sugar, and many other commodities,
08:31even metals, as if we are in a commodity super cycle.
08:36Are you not afraid that this may prevent the return of the Egyptian inflation rate?
08:44There are some commodities in the international markets whose prices have dropped significantly.
08:49For example, I mentioned sugar.
08:51Sugar has the lowest level in the world.
08:53There are some international commodities whose prices have dropped significantly,
08:57and therefore, I think that the international commodities and their high prices
09:03may be some commodities that have an effect,
09:06but there are some other commodities that have an effect and whose prices have dropped.
09:11But the biggest factor in the inflation in the Egyptian market is the exchange rate,
09:16and therefore, controlling the exchange rate during this period will lead to a great stability.
09:22There is also a clear and noticeable drop in demand in the Egyptian market,
09:26especially in some manufactured goods such as cars,
09:29air conditioners, televisions, and electric devices in general.
09:33There is a clear drop in demand in the Egyptian market,
09:36and therefore, this will also lead to a drop in inflation.
09:40There are some commodities whose prices have fallen significantly.
09:44For example, the prices of dowagin have had a lot of problems.
09:48The dollar exchange rate has increased significantly,
09:51and this will lead to a decrease in inflation.
10:06We should not forget that the year before last was a year of hyperinflation,
10:12and therefore, the year before last was very high,
10:15and this year's comparison will be in favor of a decrease in inflation,
10:19and therefore, the year before last has not had a great impact.
10:22Indeed.
10:23Thank you very much, Mr. Muattasam al-Shahidi,
10:25a member of the Board of Directors of Horizon Corporation for the circulation of financial documents.