EGYPTIAN CAPITAL MARKETS.

Author:Smith, Pamela Ann
 
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Egypt is the favoured place for foreign investment in the Mediterranean countries of the Middle East and North Africa, according to bankers, analysts and investors who attended an international conference in London at the end of March. The conference -- "Mediterranean Capital Markets", was sponsored by the European Union in Brussels and by the London daily, the Financial Times, and was attended by some 350 participants from the Mediterranean countries, Europe and the US.

Several financial analysts suggested that the region would soon become the target for a "massive influx" of funds, partly as a result of investor disenchantment with markets in Asia. More positively, the region's relative isolation in the past from the adverse effects of globalisation and its recent economic reforms were also cited as major attractions.

"There have been enormous strides in terms of economic performance," remarked Angus Blair, Head of Research for the region at the Dutch international bank, ABN AMRO. Foreign exchange reserves were growing, budget deficits improving, inflation was low and central banks were taking a greater role in regulating markets, he added.

Blair estimated that some "$2 billion in equity flows plus new debt instruments" had been invested in the region in the past year. Markets which had been overlooked in the past three years were now being viewed with enthusiasm by investors around the world. "We remain very bullish indeed regarding the future of the Mediterranean," he told the audience.

The prospect of a combined Euro-Mediterranean stock exchange by the year 2010 situated within a European free trade zone was cited by another speaker, Dr. Cecilia Danieli, as a prime reason for investor interest in manufacturing projects. Chairman of Italy's Danieli and C. Officine Meccaniche, whose company has set up a joint venture to produce steel products in Egypt, she noted in particular Egypt's "low prices for power" which amounted to "less than one-half" the world average, and the rise of a new middle class of consumers.

"Reforms to promote privatisation and the creation of more sophisticated financial instruments, such as debt/equity swaps were another important factor in Egypt's favour," she added.

"The region's capital markets offered investors important opportunities to diversify their portfolios," observed Mohamed El-Erian, European head of emerging markets at Salomon Smith Barney. "Countries such as Egypt, Jordan, Morocco, Tunisia and...

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