Poeple to the rescue of Egypt's economy

Marwa Hussein, Tuesday 8 Feb 2011

Text messages spread solutions to counter the collapse of the economy

Stock exchange
In this 27 January 2011 file photo, an Egyptian family walks past the closed Egyptian stock exchange building in downtown Cairo, Egypt. (AP)

For two days, the messages have been circulating on mobile phones and internet. “Each one of us should invest LE100 in the stock exchange as soon as it opens so that we can counter the effect of the withdrawal of foreign investors and prevent it from crashing.” “Don’t withdraw more money from banks than what you really need, don’t buy US dollars to benefit from rates, and don’t transfer money out of the country.”

Solutions proposed by young Egyptians to sustain the economy as the banks opened their doors on Sunday 6 January, after one full week of closure while the opening of the stock market was postponed until next Sunday.

How feasible are those propositions, especially that concerning the stock market? Mostafa Badra, chief executive officer of EAC Holding, has a clear idea about how to apply it. “The solution is that the people who want to help, go to the bank and invest in investment funds of the banks”, says Badra believing it’s the most practical way to help the stock market.

“The cost of registering in brokerage societies can cost more the LE100. On the other hand, the investment funds have diversified portfolios and are less affected per personal desires,” adds Badra.

Many banks have reported outflows to be much less than expected. Hisham Ezz El-Arab, the chairman of Commercial International Bank Egypt (CIB), said money leaving his bank yesterday was just around 20 per cent of the CIB's forecasts. In fact, his bank was able to realize a surplus.

“Lot of people came to deposit cash. I think people trust themselves,” says Ezz El-Arab who received messages asking people to support their economy. “I called one of the numbers sending the messages and the guy who answered me was from one of the youth movements who called for the protest,” he said, adding that many people who work in the building where he lives said they will invest the LE100 to support the market. “Anyhow, it’s only about the price of one kilo of meat,” one of them told the CIB chairman.

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