Maged Shawqi wasn't sacked, but rather had asked to be relieved of his post, Egypt's Minister of Investment Mahmoud Mohieddin made clear on Saturday after naming Khaled Serry Siam as new chief of the Egyptian Exchange, replacing Shawqi. While many analysts said the move wouldn't have a "crucial impact" on trading, others argued that market volatility would persist. Hours after his appointment, which is effective as of July 15, Siam unveiled that increasing confidence and attracting more liquidity "will be a priority". "We will focus on the Nile Exchange and boosting the bond market. People should realise the importance of a stock market in economy. [So] raising public awareness and enriching their financial culture will be on the agenda," Siam told the local press on Sunday. Shawqi, who took the helm of Egypt's bourse in 2005, has been under fire for what the local media claimed heavy losses that hit small retailers. But the market's ups and downs have been a global trend, analysts say. "Since 2008, volatility has been taking its toll on world markets. The whole world has felt the pinch of the US sub-prime mortgage, global downturn, Dubai debt crisis and Greece's fallout. In all cases, Egypt's bourse has been affected like any other stock market in the world," a technical analyst told the Egyptian Mail on condition of anonymity. "Shawqi's resignation shouldn't be considered as a reaction to declines in stocks. In 2008, shares were hit hard, incurring massive losses, and Shawqi remained in his post," he said. A financial thunderstorm hit Dubai in November, shaking world markets after Dubai World said it wanted to postpone debt payments. The announcement sent shock waves around financial markets worldwide. Until the global downturn, Egypt's economy grew by an average of seven per cent in 2007 and 2008. In 2009, it slowed to 4.7 per cent, according to the Ministry of Finance. The world economy shrank 0.6 per cent in 2009 as a result of the global downturn. "No one can deny the developments made by Shawqi over the past five years. The trading system was overhauled in a way that ensured speed and exactitude. The Nile Exchange was created to boost small and medium scale enterprises (SMEs). New indexes were launched to give an in-depth and detailed picture of the market," he said, referring to the EGX 70 and EGX 100 indexes, which measure 70 and 100 of Egyptian small and mid caps respectively. "Some people look at the bourse chief as a coach of a football team. If the team loses, he takes the rap for it. This is very superficial. Share prices are set by investors, who buy and sell on their own free will," he explained. How would this 'bourse reshuffle' affect trading volume and share prices in the short-term? "Given that we are now well into summer, trading is relatively light, particularly with the holy fasting month of Ramadan due in August. Volatility is expected to continue in the coming weeks. In the short-term, the market will remain in the area of 5,700-6,500 points," he forecast. "Change is a positive aspect in general. But timing is a problem. Some investors might think that Shawqi was sacked despite confirmations from the Ministry of Investment that he asked to be relieved of his post," Hany Riyad, an analyst at Cairo-based Financial and Legal Consultants Centre, told this newspaper. The new bourse chief eyes raising liquidity, but he didn't give any details about how to achieve that, according to Riyad. "The question is how. Liquidity depends basically on optimism, which is a psychological factor that no-one controls," Riyad argued. Stock markets are motivated by either greed or fear. The world is still in a recovery from the worst recession since the 1930s. Therefore, worries about the health of global economy are controlling markets worldwide. "The outlook of world economy plays a major role in driving investors worldwide," he said. Earlier this month, the International Monetary Fund (IMF) raised its 2010 global output forecast to 4.6 per cent from 4.2 per cent in April's review of the global economy, but kept its 2011 view unchanged at 4.3 per cent. Meanwhile, the World Bank said recovery was "fragile and expected to slow in the second half of 2010" as the growth impact of fiscal and monetary measures wane and the current inventory cycle runs its course. "The new chief will need to carry on development schemes. Focus should be turned to speeding up the trading system. I think it's about time for the bourse to take up T+0 settlements," he added, referring to T+0 trading settlement system, by which traded securities are settled on the same day.
