Egypt's main priority following the political tumult of the last three years has been to revive its battered economy, and the authorities have moved to reform the country's financial systems in order to regain investor confidence.
The Egyptian Financial Supervisory Authority has issued new regulations, one of which allows insurance companies operating in the country to assign the management of their portfolios to industry specialists such as portfolio and fund managers. Prior to the new legislation, insurance firms could not hire asset management companies.
Moreover, in 2014 Egypt's market regulator approved the launch of the country's first Exchange Traded Funds "XT-Misr", managed by Beltone Asset Management. This had been a very important requirement for investors seeking to diversify their portfolios in the Egyptian market. The ETF began trading in January 2015.
Investors and fund managers were less welcoming of new legislation that introduced a 10% tax on capital gains and dividends made on the Egyptian market. The main stock market index, EGX, fell after the introduction of the new tax, which was seen as making the Egypt Stock Exchange less competitive compared with regional bourses.
The government approved the tax as part of efforts to boost public finances, which have been hit hard by the turmoil that followed the 2011 Arab Spring uprising.
The Egyptian government has taken several measures to convince investors that it is serious about reform and developing the economy. Investors appear to be confident, but the question remains of how long this trust will last.
© Zawya 2015
