Mina Rafik: There are factors affecting inflation, most notably the decline of the Egyptian pound and the increase in fuel prices
The head of research at El Marwa Securities, Mina Rafik, said that trading volumes during the month of Ramadan on the Egyptian Stock Exchange are characterized by a decline, while investors are anticipating the external conditions and the continuation of the Russian-Ukrainian war and its impact on the global economy.
He stated in an interview with Al-Arabiya that investors are also watching more than one indicator, most notably inflation, which reached 32.7% last March on an annual basis, but it declined on a monthly basis, and there are several factors affecting inflation, most notably the decline in the value of the pound and the increase in fuel prices.
Rafik said that the certificates issued by the banks following the Central Bank raised the interest by 200 basis, did not affect the liquidity levels directed to the Stock Exchange.
He explained that raising interest negatively affects the cost of financing for companies, but at the same time, if it was high, it would attract investors due to its low risks, unlike the money market, which is characterized by risk.
He stated that the highest certificates that were offered with a return rate of 22%, or even those that preceded it with a return of 25%, are insufficient to face inflation, whose basic rate exceeded 40% last February.
“The interest on certificates is not attractive to investors because the real interest is negative, given that the level of inflation is around 40%, and the return on certificates is regarding 22%,” according to Rafik.
He said that the Egyptian Stock Exchange achieved very good gains with the liberalization of the exchange rate, because many exporting companies benefited from this step, because liquidity tends to large stocks, whose returns are high and whose risks are less hedged once morest the decline in the exchange rate.
He stated that investors looking for safe havens were turning to gold instead of certificates.
