Jump on board and get ready for a tour of the Middle Eastern markets! In this new 4-part deep dive series, we'll explore the most relevant public companies on MENA stock markets, starting with the Egyptian Exchange. Don't worry, though, we'll make sure the ride doesn't get stuck in the Suez Canal à la Ever Given. In the coming deep dives within this series, we’ll also explore the Saudi Arabia, UAE, Kuwait, Qatar, and Bahrain stock markets.
The Egyptian Exchange (EGX) comprises two exchanges, Cairo Stock Exchange and Alexandria Stock Exchange, both under the same board of directors and trading system, and together boasting a current market cap of about $41.5b. The Egyptian stock exchange went through some difficult years recently – specifically during the Egyptian revolution in 2011 when it plummeted 6.25%. This is still half of the 12% drop in the US markets when Covid-19 “got real” last March, though!
In recent years, these exchanges have been growing (in fact, into one of the region’s fastest-growing) and now has an impressive pipeline of IPOs. In fact, The head of Egypt’s Financial Regulation Authority has announced that the government will be launching a program of IPOs starting September this year. What this means is that two or three companies should be listed by the end of the year. Now, this may not be as "heavy" as international markets, but we’re still going to give Egypt the little extra spotlight today by zooming in on its star publicly-listed companies across three major expanding sectors: financial, healthcare, and communication services.
When it comes to banks, Egypt is not lacking big name listings. Among the publicly traded ones, the biggest ones are Commercial International Bank (CIB), Housing and Development Bank (HDBK), National Bank Of Kuwait Egypt (NBKE), and Al Baraka Bank Egypt (SAUD) – and no, not a relative of ours. CIB even appears on Forbes' Top 100 Companies in the Middle East list.
The investment segment of financial services is pretty hefty on the stock market too. A whole bunch of shareholding companies are up there, among which are Al Arafa Investment And Consulting (AIVC), Saudi Egyptian Investment & Finance (SEIG), Nile City Investment (NCIN), and Alexandria National Company For Financial Investments (ANFI). In fact, ANFI did so well last year (a net profit of $290,000 in 2020, versus a net loss of $45,200 in 2019) that it might soon be acquired by Zeta Investment via a mandatory tender offer. Also, Aman Holding might soon join the crew as the Raya Holding for Financial Investments (RAYA) subsidiary is eyeing an IPO.
But we just can't move on without mentioning the country's dynamic FinTech landscape! Last August, Egypt landed its first FinTech unicorn, e-payments platform Fawry. Fawry’s success was facilitated by new legislation and regulatory changes that unleashed a surge in new FinTech investments – about time! This definitely makes us anticipate even more FinTech giants from the land of the pyramids.
Back in 2020, Egypt's largest investments weren't just in FinTech, but in healthcare. Not hard to guess why in times of a global pandemic; still, this year too, the sector is in the spotlight and its biggest players continue to do better and better.
Publicly-listed healthcare companies worth mentioning are Egyptian pharma companies Alexandria Co for Pharmaceutical and Chemical Industries (AXPH), Minapharm Pharmaceuticals (MIPH), and October Pharma (OP) – which, btw, registered a 402% profit leap in this year's Q1!
Another relevant healthcare institution in the country is Alexandria New Medical Center (AMES) that rose its Q1 profits by 38%, and whose 51.5% stake was just recently acquired by ADCB. Ameco Medical Industries (AMECO) is having a pretty good time too – it’s the Middle East's largest disposable single-use syringe manufacturer and producer of hypodermic needles and transfusion sets, which means they're just going crazy in times of the vaccine rollout.
The London-listed healthcare company Integrated Diagnostics Holdings (IDH) has also received approval for a dual listing of its ordinary shares on EGX, becoming the sole dual-listed Egyptian company on both EGX and London Stock Exchange.
As the country becomes one of the most avant-garde in the region, its communications sector must also keep pace. Egypt’s telecom market is one of the largest in Africa, even the Arab World at large, and in 2019 the sector contributed $5.9b to the Egyptian GDP, which was approximately 4% of the total economy.
At the same time, the industry is characterized by fierce competition, particularly in the mobile and broadband sectors. Currently, there are four major companies which offer mobile communication services: Orange (ORA), Vodafone (VOD), Etisalat (ETISALAT), and We by Telecom Egypt (ETEL). Sounds like Egyptians get quite a selection of mobile data roaming plans to choose from!
Cairo-based Global Telecom Holding Company (GTH), however, is the largest in the industry and has even managed to make it in the Forbes' Top 100 Companies list with assets of $5.3b.