The Egyptian Stock Exchange ignored the report of Moody’s and ended the day’s trading with a collective increase in indices. Listed shares’ market capital increased 0.73%, with shares up £8.3bn after market capitalization rose from £1,128bn at the close of trading on Tuesday to around £1,136.3bn at the close of trading on Wednesday.
Moody’s rating agency announced that the rating of Egyptian bonds in foreign and local currency at the level of “B3” will be reviewed.
Inflation in Egyptian cities slowed to 30.6% in April
And the agency pointed out in a recent research note that the trend is on a downward trend, attributing this to slower-than-expected progress in the sale of assets owned by the Egyptian state. She said the downgrade reflects growing risks to sovereign liquidity and debt-carrying capacity, explaining that slow progress on the asset sale strategy threatens to undermine funding plans in Egypt, dampen FX liquidity and undermine confidence in the currency.
The main index of the Egyptian Stock Exchange “EGX30” rose by 0.97%, adding about 168 points to close at 17326 points against 17494 points. The EGX70 index of small and medium-sized companies rose 0.65%, gaining about 20 points after rising from 3029 to 3049 points. The broader EGX 100 index rose 0.92%, gaining about 43 points after rising from 4597 points to 4640 points.
And Moody’s mentioned in its report that the adverse effects of inflation and borrowing costs, as well as the negative impact on the valuation of foreign currency debt as a result of the weakness of the pound, exacerbate the risks of debt sustainability.
According to the memorandum, the review period will focus on the government’s ability to complete the targeted sale of $2 billion in assets needed to meet funding targets for the International Monetary Fund program for fiscal year 2023 ending next June and to prove the feasibility of the program’s external financing strategy, which in largely dependent on the sale of assets.
The review period will also focus on the authorities’ ability to increase net international reserves in line with the IMF’s three-month quantitative program targets and maintain 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, Egyptian Finance Minister Mohamed Maait said the agency’s decision reflects his assessment of the Egyptian economy’s need for external financing in light of the unfavorable global financial market conditions for all developing countries.
He indicated that his decision reflects the assessments and analysis of the institution in the light of the ongoing impact on the Egyptian economy of complex external pressures as a result of complex global problems represented by the negative effects of the war in Europe, the global wave of inflation, high interest rates and lending, and the cost of financing due to behind the restrictive policies of central banks around the world.
He pointed out that all these crises have resulted in a wave of capital outflow from emerging markets, including Egypt, in favor of developed countries and markets, which coincides with the difficulty of accessing world markets and the economic uncertainty that investors suffer from.
Maait explained that the Egyptian economy has managed to attract large foreign investment during the first half of the current financial year, as well as attract the financial resources of many international organizations, despite the severity of global pressure and challenges, and the Egyptian economy still has the opportunity to attract foreign flows.
He noted that the measures and measures taken by the Egyptian government and the reforms it is implementing to empower the local and foreign private sector contribute to the early return of the Egyptian economy to strong and sustainable growth.
