Kevin Daly, investment manager at Aberdeen Asset Management, expected foreign funds flowing into Egypt in recent weeks to be funds intended to hedge against a depreciating currency, noting that it takes some time for foreign investment to return to the country. Egyptian market.
Daly added in an interview with Al Arabiya today Sunday that the initial influx of foreign investors returning to Egypt was in the structure of so-called hedging deals, meaning that investors were buying short-term sovereign bonds for 6 months. or a year and are insured against a drop in the currency in the forward market. All of this can be a technical description, but is tantamount to guaranteeing the investor a return of 4% or 5% over a certain period of time or higher, depending on the investment.
“Therefore, the money that came back at the beginning was defensive, but what we have seen over the last week and the last two weeks, as well as some reports from the banks, spoke of the return of foreign investors to the bond market due to the inverse yield curve, meaning that the yield on short-term bonds is higher than the yield on bonds. and we are looking into it now because our investment in Egypt was great in 2017 and late 2020 or even early 2021.
Daley explained that foreign investors’ interest in Egyptian companies tends to be buying shares directly off the stock exchange, pointing to the importance of Gulf capital, which is considered a long-term investment in the Egyptian economy.
He said a recently released report from the International Monetary Fund stated a goal to raise $2.5 billion from privatizations by mid-2023.
These amounts are obtained through the privatization of assets and the stock exchange, but there are some investors who want to buy real shares in Egypt and will not do it through the stock exchange, but will want to buy them directly,” the message says. manager in Aberdeen.
He continued: “Gulf money can come, but this money takes time and does not appear overnight, but most importantly, if investments are returned, then these are real flows, not short-term investment portfolios, and this is much more important in the context of the restoration of economic stability and strengthening foreign exchange reserves, and we will monitor the situation over time.” next two or three years.
He pointed out, “In the beginning, some may prefer to wait and see. If you are a foreign investor, you may prefer to wait, but this is a vision for privatization.”
