Today’s Trading Playbook
KEY THEMES
Consumption is key to Egypt’s economic growth, representing more than 80% of GDP historically. Thus, it makes sense that the Egyptian government along with the Central Bank of Egypt are now joining forces to stimulate private consumption via several initiatives. This has a dual positive impact. On one hand, it will support Egyptian citizens in maintaining their standards of living, especially when it comes to durable goods (such as cars and home appliances). On the other hand, these initiatives will also stimulate local manufacturing and consumer product sales.
POSITIVE
AUTO, MTIE, HRHO, RAYA, SRWA, AIH: We note six stocks that can benefit off this theme. First and foremost, AUTO (please see Chart of the Day below) could benefit off yet another national car replacement program, having succeeded in the National Taxi Replacement Initiative launched back in April 2009. Also, MTIE could benefit from new demand for consumer products as a result of the abovementioned initiatives. Its sales of electronic and electric appliances fell in Q1 2020 by one third to EGP1.44bn. Home appliances make up around 14% of MTIE’s sales. On the financing front, HRHO’s ValU and RAYA’s Aman should eventually see such demand filter through to their consumer finance business. Also, SRWA, a leading car financing business, and AIH’s Rawaj could yet be two other beneficiaries.
Now, on to the top news and analysis for the day.