The Secretary General of the Union of Arab Chambers, Dr. Khaled Hanafy, pointed out that “the Corona pandemic and its associated political responses have led to a large wave of capital reallocation between markets and asset classes,” considering that “the work of capital markets is closely related to technology more than ever." Adding that "the year 2021 will constitute an important paradigm shift in capital markets, as technology trends will take multiple forms as financial entities focus on technology resources to take advantage of core competencies, create value differentials, and work with partners or external contractors for commodity activities".
Hanafy's words came during his participation in the working session that was held within the activities of the annual meeting of the Arab Federation of Exchanges, entitled: "Commodities Trading: Spot versus Derivatives Markets."
He also affirmed that “commodity trade is necessary to serve as a platform for traders, and to encourage small traders and producers to enter the formal trade system, which would lead to price stability, prevent monopolistic practices, eliminate randomness in trade and increase opportunities for exporting products, which will provide a degree of protection for small farmers and producers."
Hanafy believes that "commodity risk management is necessary to mitigate risks that are an integral part of commodity trade."
He added: “it is a new market era with the increase in the digitization of entire commodity value chains, as companies need to develop a completely new operating model that is ready to respond to this turmoil, considering that commodity exchanges are almost absent from the Arab scene, with the exception of the Dubai Gold and Commodities Exchange, which was established in 2005 as the first exchange for commodity derivatives in the Arab Gulf region, and played a pioneering role in developing the regional market for commodities’ derivatives.
He continued: Egypt also recently announced plans to launch a commodity exchange, which will start trading wheat, rice, oils and sugar in the first half of 2021.
Hanady considered that "the process of digital transformation is changing rapidly and has become the face of economic and social development around the world. The Corona pandemic has accelerated this phenomenon in ways and to an extent that was unimaginable only one year ago, and from this standpoint the Arab financial markets need to seize the untapped opportunities provided by the commodity exchanges, as in fact, commodity indices represent strong diversification factors and safe havens for the stock markets and can improve the performance of the stock portfolio in the markets.
