Italian fund Manager, Azimut expands into Egypt, allocates US$50m to boost stocks in EGX

Italian fund Manager, Azimut expands into Egypt, allocates US$50m to boost stocks in EGX

EGYPT – Azimut Holding SpA, a US$61billion fund manager based in Luxembourg Italy, has expanded its operation into Egypt with the launch the first equity fund manager specialized in Egypt’s securities.

According to a Bloomberg report, Azimut will at the onset of its operations in Egypt allocate $50 million to about 25 stocks traded on the Egyptian Exchange (EGX).

The Italian based fund manager first set it eyes on Egypt in 2019 when it acquired a local investment firm.

The firm has since boosted its workforce and assigned 10 of its top talent to manage investments giving way for the US$50million fund for Egyptian stocks.

While speaking to Bloomberg, Managing Director of Azimut Egypt Ahmed Abo El-Saad said, “Egypt’s 100-million population and the purchasing power of its consumers have the potential to fuel growth for companies as the economy emerges from its coronavirus lockdown.”

El-Saad added that after a hit to equities this year that was more than five times worse than the average for emerging markets, valuations on Cairo stocks are relatively inexpensive.

He explained that this situation may draw investors, including thousands of Egyptians who work abroad who may be keen to increase their exposure to the market.

Abo El Saad described the Egyptian economy as very resilient after the attack of COVID-19.

Azimut Egypt expects growth rate to be between 3- 3.35 percent during 2020, according to Abo el-Saad, clarifying that 80 percent of growth domestic product (GDP) comes from local consumption, and you have population growth that boosts consumption, by nature.

He noted that as many markets displays a disconnect between climbing stock prices and faltering economic prospects, Egypt’s market was the other way around — valuations are far below the financial performance of the companies.

Egypt has achieved a good position in the bond market, particularly after the state resorted to the International Monetary Fund (IMF) in 2019 to secure $12 million loan which pushed it to apply reforms including cutting subsidies and liberalization of its currency.

According to Bloomberg, IMF backed reforms “helped rekindle appetite for the debt, battered in the aftermath of the 2011 uprising.”

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