The Global Significance of Egypt’s Improving Macro Picture and Sovereign Discount

Egypt Travel Report: Stock Market Discount Widens Despite Numerous Recovery Signals

Egypt's Economic Progress in 2018: Challenges and Opportunities to Examine Moving Forward

Frontier and emerging markets (Vietnam)

Dylan Waller

Thematic (Sector/Industry)

Egypt Financials / Thematic (Sector/Industry)

Egypt's macroeconomic picture has improved further in recent months: Egypt's macroeconomic picture is continuing its path of recovery in recent months and the stock market has also bounced back from its low of December 2018 (the EGX30 is up from around 12,000 to over 15,000).  One of the most positive recovery signals seen recently includes the 100 bps interest rate cut, which was supported by Egypt's inflation falling below the 13% target.  Egypt's economy has also improved in other areas, as seen by its reduced CA deficit, continued favorable level of FX reserves (circa 9 months of import cover), pickup in tourism growth and other forms of broad based growth. The banking sector is an intriguing long term investment: One interesting thing about Egypt specifically includes its demographics and how this is beneficial for the long term growth of its banking sector.  It is intriguing that Egypt is the 3rd most populous country in Africa, while the World Bank recently noted that only 1/3 of the population had a bank account.  The improvement in Egypt's macro picture has resulted in lower NPLs and faster loan growth in the sector, which will be supported further in the long run as more people begin to utilize banking services. Banks are consequently well positioned to deliver double digit growth moving forward. Commercial International Bank, Egypt's largest bank, has improved in many aspects this year and is a stable long term bet on Egypt's long term growth narrative.  Some recent improvements include the reduction of its NPLS, improvement in its NIM and the decline in its cost to income ratio.  The bank also stands out for its strong growth and favorable profitability compared to that of its industry peers.  There are also a large number of smaller banks in Egypt that are trading below book value. Overall, banking and healthcare are some of the safest ways to access Egypt's economic growth, as both of these areas are well positioned to outperform the country's GDP growth.  My previous insight <a href="https://www.smartkarma.com/insights/the-global-significance-of-egypt-s-improving-macro-picture-and-sovereign-discount" target="_blank" data-smartkarma-citation="insights:27558">The Global Significance of Egypt’s Improving Macro Picture and Sovereign Discount</a> outlines some of my optimistic views about Egypt's economy and stock market.

Egypt's macroeconomic picture has improved further in recent months: Egypt's macroeconomic picture is continuing its path of recovery in recent months and the stock market has also bounced back from its low of December 2018 (the EGX30 is up from around 12,000 to over 15,000).  One of the most positive recovery signals seen recently includes the 100 bps interest rate cut, which was supported by Egypt's inflation falling below the 13% target.  Egypt's economy has also improved in other areas, as seen by its reduced CA deficit, continued favorable level of FX reserves (circa 9 months of import cover), pickup in tourism growth and other forms of broad based growth.  The banking sector is an intriguing long term investment: One interesting thing about Egypt specifically includes its demographics and how this is beneficial for the long term growth of its banking sector.  It is intriguing that Egypt is the 3rd most populous country in Africa, while the World Bank recently noted that only 1/3 of the population had a bank account.  The improvement in Egypt's macro picture has resulted in lower NPLs and faster loan growth in the sector, which will be supported further in the long run as more people begin to utilize banking services. Banks are consequently well positioned to deliver double digit growth moving forward.  Commercial International Bank, Egypt's largest bank, has improved in many aspects this year and is a stable long term bet on Egypt's long term growth narrative.  Some recent improvements include the reduction of its NPLS, improvement in its NIM and the decline in its cost to income ratio.  The bank also stands out for its strong growth and favorable profitability compared to that of its industry peers.  There are also a large number of smaller banks in Egypt that are trading below book value.  Overall, banking and healthcare are some of the safest ways to access Egypt's economic growth, as both of these areas are well positioned to outperform the country's GDP growth.  My previous insight The Global Significance of Egypt’s Improving Macro Picture and Sovereign Discount outlines some of my optimistic views about Egypt's economy and stock market.

Egypt Market Update: Improved Macro Picture Bodes Well for Banks