Egypt should top of investors’ agenda: Renaissance Capital

CAIRO – 3 May 2017: Renaissance Capital announced three takeaways from the second annual Egypt Investor Conference held in CapeTown last week: corporates welcomed Egypt’s flotation of its local currency, wages have been adjusted equitably and energy subsidy reform is under way, it said in a Wednesday report.

Over 70 investors and company executives attended over 200 one-on-one meetings during the conference, hosted in Cape Town by the top ranking investment bank April 24-25.

“Corporates welcomed the pound flotation, despite its negative short-term impact on volumes and margins. Wages have been adjusted equitably, in our view. Energy subsidy reform is under way, gas supply is improving for industrials, and the Zohr gas field appears to be on track for year-end production,” Renaissance Capital said in the report.

Renaissance Capital predicts Egypt’s growth to be 3 percent this fiscal year (to end June 30) and to double to 6 percent in the next three fiscal years, starting in 2017/2018.

Charles Robertson, Renaissance Capital’s global chief economist, said he sees several reasons why Egypt should be on top of investors’ agendas. “The Egyptian pound is the cheapest in the Middle East and Africa. There is an already demonstrated commitment to tough fiscal reform, such as removing energy subsidies, with external backing from the IMF.”

Egypt has huge potential for credit growth and high interest rates are attracting portfolio inflows, the report read.

Roberts predicted a credit rating upgrade from the second half of 2017 or beyond. He also said, “Egypt is relatively insulated from a U.S. recession or a U.S.-China trade war,” adding that political risks are priced in to FX and bonds.