In a year expected to be difficult on all economic levels, Ahmed Saleh, head of financial portfolios at Naeem Holding, told Daily News Egypt about possible economic scenarios in 2017, as well as the possible challenges and opportunities of the year based on the speculations of the foreign exchange rate, interest rate, volume of cash flows, and hoped results during this critical phase of an expected shift.
To what extent will the economy bear more pressures in 2017?
It is clear that the reform decisions will continue throughout 2017 in a way that creates more economic pressure on all sectors. However, it will represent the foundation year for an economic take-off. It is likely for the US dollar price to decline during the second half of the year as an initial sign of economic reforms because it is difficult for conditions to improve with the continuous breakdown of prices, which leads to further recession.
How do you see the future of the US dollar after the liberalisation of the exchange rate?
The dollar changes have become the main indicator of the economic climate in Egypt. It is expected that there will be a balance between the currency’s supply and demand by the end of 2017 with a hope of refreshment of dollar resources and support from the gradual return of tourism, starting with Russian tourism, the increase of natural gas production, and foreign investments flow.
Foreign investments began to flow through the Egyptian Exchange (EGX). What are your expectations for these investments in 2017?
Capital markets are always ahead of economic speculations and events, reflecting a clearer picture of the near future. This emphasises the importance of an optimistic outlook of the rates of foreign investments and economic activities in 2017. The EGX should continue an upward pattern with more investments flow; however, the EGX indices will not achieve the same leap with a 70% increase, but will continue in hopes that a new leap is achieved once the dollar declines against the Egyptian pound. There is room for achieving more capital investments in the EGX as long as economic reforms are continuing down the right path.
What about the way international funds view the EGX? Do foreigners feel like they have achieved enough profits?
Foreign investors are not content with what they have achieved from the EGX profits during the past period. Moreover, there are many investors, portfolios, and foreign funds that have not taken their first step towards Egyptian shares after waiting for the local currency to stabilise. However, they have a positive outlook of the economic situation. The moment the local currency announces its strength, the market will witness higher unprecedented investment inflow.
What economic challenges are more vicious during this phase of shifting?
The exchange rate and the interest rate are the most vicious challenges, as they are considered the spearhead in the war to achieve economic transformation. The exchange rate must create a solid ground for receiving investments. The interest rate cannot continue at these high levels, and it is likely to decline during the second half of 2017. If any increase occurred, it would be very limited and temporary, as the general direction shows that the interest rate will decline. This is necessary for liquidity flowing into the economy instead of banks, and the difficulty of liquidity in financing investments.
How do you face the challenges as one of the most prominent companies at asset management? What are your future plans?
The company has recently completed wide-scale restructuring processes and has obtained many licences. It has also expanded in foreign markets and is currently looking into a number of thoughts and products to be launched in 2017 in a way that suits this current phase. Its fund management also aims to achieve a noticeable growth in 2017, creating one of the largest five revenues on investment funds. The company also aims to increase its managed funds by 30%, which is from EGP 2.5bn to EGP 3.235bn.