CI Assets Management (CIAM), subsidiary to CI Capital Holding, is seeking to manage new equity portfolios and funds, in addition to pension and insurance funds, to promote the company’s assets portfolio that currently amounts to about EGP 8bn.
The company also aims to diversify those assets and to compensate the impact resulting from the decisions of the Central Bank of Egypt (CBE) to set a limit on cash capital funds and fixed income by 2% of the bank’s deposits in local currency, which caused big losses for the quality of the company’s funds.
Daily News Egypt sat down with managing director and head of asset management at CI Capital Holding Amr Abol-Enein to talk about his expectations for 2017.
What is your vision for 2017?
I’m generally optimistic about 2017, and I think it will see economic recovery supported by bold economic reforms initiated by the government. The recovery is expected to reflect on the budget of the state and will gradually bear fruit and become visible in the day to day life. So I think that this year will reflect an overall better picture for the Egyptian economy.
Why are you optimistic?
There are good changes, such as the increased remittances of Egyptians abroad that supported the balance in foreign exchange. Also, the size of foreign investments in the Egyptian Exchange (EGX) increased after the currency crisis was resolved, which is expected to be followed by foreign direct investments and is also supported by the devaluation of the Egyptian pound.
The recovery of tourism is also expected this year.
What do you think of the current exchange rate and what are your expectations for the US dollar prices by the end of 2017?
Currently, the exchange rate is determined according to a correct mechanism; however, the current increases reflect the accumulated demand on US dollars, as well as the speculation that had surrounded the currency. This has led to a massive increase in the US dollar price.
I expect that the crisis of the dollar will gradually end with the influx of foreign investment and the return of tourism, which would support the supply of the dollar and drop its price.
What about the interest rate and what are your expectations for the coming period?
I expect interest rates in banks and the US dollar price to decline. They will reach attractive levels and encourage borrowing, which will support the corporate direction for expansion and increase production.
The decline in interest rates will ease the burden of debt on the state budget because the cost of funds paid in the form of benefits would be reduced.
How do foreign investors see the Egyptian economy?
Foreign investors’ thoughts of the Egyptian market dramatically and positively transformed after the country obtained the loan by the International Monetary Fund (IMF). The government’s seriousness about its economic reforms also contributed to that. Also, the resolution of the remittances crisis and the decline in the value of acquisitions which resulted from the devaluation of the currency helped.
Such things support the investment attractiveness of the Egyptian market, so I expect large foreign inflows during 2017, 2018, and the following years.
What is the size of assets managed by the company?
The size of assets under management now is worth EGP 8bn.The company is working to support these assets in the coming period and to compensate the amount that decreased as a result of the CBE’s decisions to set a limit on the size of monetary funds and fixed income, which caused the company heavy losses.
The company plans to compensate these losses through diversifying the size of assets through funds or portfolios.
What are your plans for the future?
We seek to add two new funds to invest in equity and capital funds during the current year. We also compete to manage portfolios of equity of large enterprises, and we are currently negotiating to manage private insurance funds, after the Egyptian Financial Supervisory Authority (EFSA) obliged the funds that exceed assets of EGP 100m to appoint a specialist investment manager.
What about index funds and real estate funds, which the EFSA recently allowed?
The company’s current plan does not include any intention to establish an index fund, but the company is interested to manage real estate funds and would seek to seize any opportunity to manage this kind of funds that invest in an important and vital sector.