Confidence unshaken

A stock market awareness conference showed that small investors are not intimidated by the fluctuations the market witnessed earlier this year. Sherine Abdel-Razek reports

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Small investors shouldered the bulk of the losses incurred by the market earlier this year with even the luckiest losing around 20 per cent of their holdings' value. This loss remained uncompensated for, even with revivals in the market. That is, until now. Ruined by these bad investments, one would have expected investors to have abandoned the stock market and gone for a less risky kind of investment. Nothing could be further from the truth, as the Cairo and Alexandria Stock Exchange (CASE)'s fourth "Step by Step" stock market awareness conference showed.

"Of course I lost a lot last year but I still have investments in the stock exchange, I can't pull out as now I want to compensate for my earlier losses.", remarked Nabil Abul-Hagag, a physician in his early 50s attending one of the conference educational sessions.

Abul-Hagag was one of many investors lured by the plethora of initial public offerings (IPOs) and the spiralling increases in stock market returns which began in mid 2005 and resulted in the market increasing in value by 125 per cent over the year. At the end of 2005, his friends who had been realising double digit profits on their stock market investments encouraged him to enter the market. "We lacked the required background to understand the rules of the game and we depended on each other's non-professional advice to deal with our portfolios and, as is obvious in hindsight, we suffered heavy losses when the market changed its direction in February and March 2006," he remarked.

"I am here to learn more about the exchange and the different techniques that can be used. I want my investment decision to be based on knowledge this time," he added.

Around 12 open lectures introduced the public to the basics of stock market investment, together with more sophisticated new practices like margin trading, short selling and online trading. There was also greater focus on "the technical analysis of share performance", a method of predicting the future performance of the stock by analysing its past movements, with three lectures dedicated to the term.

The three-day conference was organised by CASE and the Capital Market Authority. It was sponsored by a number of brokerages as well as data dissemination companies and newspapers. The aim is to boost the general public's awareness of, and correct its misconceptions about, capital market investing. In addition, CASE distributed free educational booklets comprising definitions of stock market terms and a clear guide to how to invest for the first time in the market.

"I have been investing in the market for around 10 years now. I have been losing for some time but accumulated experience makes me believe that at a point of time my investments will start to yield good returns. It is the way the capital market works: in cycles with ups and downs," said Mandy Bayoumi, an engineer attending the session on intra-day trading.

While Bayoumi seems to already have the requisite basic background, he said he is attending the conference to learn more about the new techniques introduced in the market this year.

"I found this lecture very useful. I want also to know more about online trading as I don't want the fuss of dealing with brokers any more."

Through online trading, introduced into the local market less than four months ago, investors can buy and sell securities online by logging on to a brokerage firm's password-protected website that is electronically connected to the CASE's trading engine.

"It is a new practice, and in any case my brokerage have never helped me in taking any of my previous investment decisions. So why don't I depend on myself from A to Z, especially taking into account that the fees of the online trading are just 0.003 per cent of the deal," noted Abul-Hagag.

The interest in online trading was obvious during the conference, with the booths of Arabeya On Line, EFG-Hermes and CIBC, the first three brokerages to acquire online trading licences, busy with investors asking about all the details of the new practice.

"It is the next big thing in the market and it has a very strong potential to grow," said Ayman Sadeq, marketing manager at Arabeya On Line, the first Egyptian company to acquire an online trading licence.

Attendees of the conference included a large number of university students as well as retired people with both groups showing interest in investing in the market.

"Today we received some students who were asking if they can open an account with us if they are less than 21 years old. This generation seems to be really interested in the market, no matter what they hear about its risks," said an EFG-Hermes employee at the company's booth.

Awad Abul-Fotouh, a pensioner who was attending the "Introduction to investment funds" session said that he wants to invest part of his retirement bonus in a halal (religiously allowed) investment. "The eligibility of bank deposits is still questionable and I heard about Islamic funds traded in the market and wanted to know more about them."

"My wife does not like the idea as she is afraid of losing the money as one of her relatives did this year. However, I believe that unless there is a risk that makes the yield not fixed, the investment is not compliant with Islamic law."