The Egyptian Stock Exchange ignored the “Moody’s” report, and ended the day’s trading with a collective rise in the indices. The market capital of the listed shares increased by 0.73%, with shares gaining 8.3 billion pounds, after the market capitalization rose from 1128 billion pounds at the close of trading on Tuesday, to about 1136.3 billion pounds at the close of trading on Wednesday.
Moody’s, the credit rating agency, had announced that the rating of Egypt’s foreign and local currency issues at “B3” would be under review.
Inflation in Egyptian cities slowed down to 30.6% in April
And the agency indicated in a recent research note that this trend comes with the aim of reducing, attributing this to slower-than-expected progress in selling assets owned by the Egyptian state. She stated that the review with the aim of downgrading the rating reflects the increasing risks of sovereign liquidity and the ability to bear debt, explaining that the slow progress in the asset sale strategy threatens to undermine financing plans in Egypt, weaken foreign exchange liquidity and undermine confidence in the currency.
The main index of the Egyptian Stock Exchange, “EGX30”, increased by 0.97%, adding about 168 points to close at 17326 points to 17494 points. The index of small and medium-sized stocks, “EGX70”, increased by 0.65%, gaining about 20 points, after rising from 3029 points to 3049 points. The broader “EGX 100” index increased by 0.92%, adding about 43 points, after it rose from 4,597 points to 4,640 points.
And Moody’s mentioned in its report that the adverse effects of inflation and borrowing costs, as well as the negative valuation effects on foreign currency debt resulting from the weakness of the pound, exacerbate debt sustainability risks.
According to the memorandum, the review period will focus on the government’s ability to complete the targeted asset sales of $2 billion necessary to meet the financing goals of the International Monetary Fund’s program for the 2023 fiscal year ending next June, and to prove the feasibility of the program’s external financing strategy, which relies heavily on asset sales.
The review period will also focus on the authorities’ ability to boost net international reserves in accordance with the IMF’s three-month quantitative program targets and support confidence in the currency.
A few days ago, Fitch Ratings downgraded Egypt’s long-term sovereign rating from “B +” to “B”, while adjusting the outlook from stable to negative.
Commenting on Fitch’s decision, the Egyptian Minister of Finance, Mohamed Maait, said that the agency’s decision reflects its view of the estimates of the external financing needs of the Egyptian economy, in light of the unfavorable global financial market conditions for all emerging countries.
He pointed out that its decision reflects the estimates and analyzes of the institution in light of the continued exposure of the Egyptian economy to difficult external pressures as a result of the complex global challenges represented by the negative repercussions of the war in Europe, the global wave of inflation, high interest rates and lending, and the cost of financing due to the restrictive policies of central banks around the world.
He pointed out that all these crises led to a wave of capital outflows from emerging markets, including Egypt, in favor of developed countries and markets, which coincides with the difficulty of accessing global markets, and the economic uncertainty that investors suffer from.
Maait explained that the Egyptian economy managed to attract large foreign investments during the first half of the current fiscal year, and also attracted financial resources from many international institutions, despite the severity of global pressures and challenges, and the Egyptian economy still has the ability to attract foreign inflows.
He pointed out that the measures and measures taken by the Egyptian government and the reforms it implements to empower the local and foreign private sector contribute to the rapid return of the Egyptian economy to strong and sustainable growth.