Wael Ziada, a financial analyst, has said in an interview with Al-Masry Al-Youm that the Egyptian Stock Exchange has since the beginning of the year been adversely affected by global events, such as the Greek and Chinese economic crises, and terrorist acts, such as the assassination of the Prosecutor General.
He also said that positive news may not push the stock market up if economic conditions are weak, pointing to the gas field discovery that coincided with a decline in oil prices.
Q: How do you see the developments in the stock market in the past few months?
A: At the beginning of the year, the Egyptian Stock Exchange recorded a trading volume of more than LE189 billion, the highest since 2010. Then it went up again before the Sharm el-Sheikh Economic Conference. After that, dealing was normal, with slight rises and drops in the shares.
Q: Why was there a sharp drop last month?
A: It was due to the Greek and Chinese economic crises, the depreciation of the euro, the assassination of the Prosecutor General and the devaluation of the Egyptian pound against the dollar.
Q: Why did the Chinese economic crisis have such a great impact on global markets?
A: China is a major investor in international trade. It imports raw materials from emerging markets and exports them to Europe and the United States.
Q: Has the devaluation of the Chinese currency affected the Egyptian Stock Exchange?
A: Of course. Add to it the drop in oil prices, which has denigrated the discovery of the gas field in the Mediterranean, even though it should raise Egypt’s credit ratings.
Q: Why did positive news, such as the opening of the new Suez Canal and the discovery of the gas field, not impact the market?
A: Positive news has little impact if the general economy is weak. I expect this situation will continue for the next three to six months, unless tax reforms and amendments to the investment laws are introduced.
Q: Do you think demand for various financial services in Egypt is weak?
A: Growth in the financial services and funding markets needs a solid industrial base.
Edited translation from Al-Masry Al-Youm
