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00:00I would like to welcome Mr. Zwael Ainaba, Vice President of Taikon, to the Egyptian market.
00:08Welcome, Mr. Zwael, and thank you for being here.
00:11What happened today?
00:13800 points.
00:15What is different from the beginning of this week?
00:18And what motivated the market to get 26,100 points back, in your opinion?
00:22We can say that this week, the negatives have fallen, and the positives have started to emerge.
00:32What are the positives that we are waiting for?
00:34The negatives were, of course, the political aspect, and the tensions on the borders between the civil war in Gaza.
00:42And there was a very large profit margin.
00:46I expect that the positives will start to affect the market, and we will see a wave of new rises starting from this week.
00:52What are the positives?
00:53First, we entered Morgan Stanley again, and we had expected this from you a month ago.
00:58And we said that we will enter Morgan Stanley again.
01:00And the balance of the balance sheets for some of the stocks.
01:03I found that it has a strong liquidity, like Hermes and Nusrafa.
01:06The second thing is that the results of the business have grown by about 100% in many leading companies.
01:12One of them is the State Trade Bank, the first quarter, which has grown by about 95%.
01:16The large growth, despite the decrease in prices, has made the profit margins in Egypt very low, less than five times.
01:23Because most of the companies, for example, the CIB, had a profit margin of eight times a month.
01:30When the results of the first quarter were shown, and the share price decreased significantly, the profit margin became less than five times.
01:37Therefore, there is a strong liquidity, and I expect that the rise will continue.
01:42On the contrary, I can tell you that there is a new wave of rises, which will be strengthened next week,
01:48when the Central Bank will decrease the profit margin, as I expect, and we will say our judgments together.
01:53Let's go back to Morgan Stanley.
01:55As we can see, there are clear reactions to the stocks that entered and left Morgan Stanley, including Hermes.
02:03Since yesterday's meeting, the stock price has risen by 3%, and it did not decline despite leaving the small companies, Mr. Zua'il.
02:14How do we justify this adherence to Hermes?
02:18Meanwhile, Mustafa was also under some pressure, despite this entry of the small companies.
02:28As for Hermes, we said that the negatives have increased in prices.
02:32It was expected that Hermes would leave the index, because its performance during the past year was poor on the screen, and it began to weaken gradually.
02:40There were expectations that it would leave, so this exit from the region of 20 pounds to 14 pounds was priced.
02:47This is a point.
02:48The second point is that it decreased from the Morgan Stanley index to the small companies.
02:53Its liquidity ratio increased, meaning that it was taking a 6% liquidity ratio in the big companies.
02:58When it fell to the small companies, it became 11%.
03:01If we calculated it now, there is liquidity that will enter to buy Hermes, not exit from it.
03:06This is what we saw on the screen.
03:08As for Mustafa, I expect that the positive impact will be within the next week, up to at least May 30.
03:15Why?
03:16Today, by adjusting his weight and entering the big index, he will receive money that may exceed $50 million.
03:25This means that he may need to buy $50 million in about 8 days of work, because it ends in May 30.
03:32I expect that liquidity will begin to enter him next week, and we will see numbers higher than that.
03:38This will affect the index, because Mustafa will occupy a second weight in the index after the International Trade Bank.
03:44Therefore, I expect that the rise will be led by the International Trade Bank, Mustafa and some other companies.
03:51We are talking about interest rates.
03:54Do you expect that there will be a reduction in interest rates?
03:57Mr. Wael, this is a question that was asked last week.
04:03Is the increase in interest rates related to the high interest rates,
04:09strengthening the idea of reducing interest rates in the next meeting?
04:14Or are there other reasons that we can focus on?
04:20No, there are many reasons.
04:22First, the first signs of economic recovery are that there is a reduction in interest rates.
04:27These are the first signs of economic recovery.
04:29When we were increasing interest rates, this year we increased it by 8% in two meetings.
04:342% in the first meeting, then 6% in the second meeting.
04:388%.
04:39That's it.
04:40It came and affected the market.
04:43This is the first point, that there is a reduction in interest rates.
04:46The second point is that the Central Bank has other means other than interest rates.
04:49To control the market in the market.
04:51These are open market operations.
04:53We saw this week that more than a trillion pounds were lost from banks.
04:57This is another way to control the market in the market.
05:02Unlike interest rates.
05:04The third and final point.
05:06The experience has proven that interest rates have nothing to do with inflation in Egypt.
05:10This is not true.
05:13Inflation affects the price of the dollar, not the interest rate.
05:22When the dollar rose, inflation increased.
05:24When the dollar fell, inflation decreased.
05:27We have seen a decline in inflation since January 1 until now.
05:30A gradual decline for two reasons.
05:33First, the dollar fell after it was in the black market by 70 pounds.
05:36Now it is about 48 pounds in the banks.
05:39Second, the dollar was expensive in the year of comparison.
05:44When we compare 2024 to 2023, the dollar was expensive.
05:50This is why there is a decrease in inflation rates since the beginning of the year.
05:55It is a statistical decline.
05:59But the real decline must be felt by the citizen.
06:02Some goods prices have started to fall gradually.
06:05Such as cars and some food products.
06:08But I don't think the decline is over yet.
06:11There is still a continuous decline in the prices of the dollar.
06:14Let's go back to May.
06:16Since there is not much left of May.
06:21All the bets were that there will be a decline in this month.
06:26Even at global levels.
06:28Mr. Zua'il.
06:29The rise of the US markets may have prevented the exit from the markets in May.
06:36Even the Egyptian market is now rising by more than 1,500 points.
06:40Therefore, are we facing a decline that may not remain in May to strengthen the exit from the markets?
06:51As I said before, it is not a condition that every month is the same and every year is the same.
06:56The economic events have a different effect on the stock market.
07:00Although there is a saying,
07:03This saying has not been fulfilled yet.
07:06Neither in the international markets nor in the Egyptian market.
07:08We see that the international markets have reached a historical peak that they have not reached in their entire lives.
07:13They have reached a historical peak in May.
07:15As I said before, the decline has fallen.
07:18We are up 1,500 points from the beginning of May until now.
07:22I say that the wave of profits that the stock market witnessed has ended.
07:26And we will start to fall in this area.
07:29We will see more rise in May.
07:32Especially, as I said before, if the Central Bank is able to lower the interest rate.
07:37This is what I expect.
07:39Does this affect the 70% and the 30%?
07:41Or are we just expecting the leadership movement, Mr. Wael?
07:47If the leader moves, he moves behind the soldiers.
07:49If the leader moves, he moves behind the rest.
07:52But the basis here, we are talking about the EGX30 because
07:56we will start to take part of the money that came to Egypt and was directed to the treasury.
08:01It will start to go to the stock market.
08:03And this is what we saw from the foreign movement this week.
08:06So, it will enter the leadership.
08:08The leadership will move first, and then the branches will come.
08:13So, we will follow the movements until the end of May.
08:17Thank you, Mr. Wael Ainaba, Deputy President of Taikon Company for the Administration of the Preservation and Investment Fund.
08:22You were with us from Cairo. Thank you.
08:26Thank you.