Why Investors Prefer Egypt Among the Emerging Markets

Published May 28th, 2019 - 08:00 GMT
Egypt will remain attractive for investors compared to other emerging markets.
Egypt will remain attractive for investors compared to other emerging markets. (Shutterstock)
Highlights
Egypt’s debt is offering some of the biggest returns among developing nations.

Foreign investors came to Egypt for what Renaissance Capital said could be the “best reform story” in emerging markets and stayed for this year’s biggest carry-trade return. 


Just one cut in interest rates by Egypt in over a year, coupled with a dovish shift by global central banks, has powered gains in the pound that are second only to Russia’s ruble among all currencies tracked by Bloomberg in 2019.

Egypt’s debt is offering some of the biggest returns among developing nations, with the yield on its one-year T-bill around 17 percent, or more than triple the average for local-currency debt in emerging markets. 

“Egypt will remain attractive for investors compared to other emerging markets because its interest rate should remain relatively high, its currency position is good, and the country’s risk profile is low compared to other emerging peers,” said Mohamed Abu Basha, head of macroeconomic analysis at EFG Hermes. 

The currency is trading at the strongest in more than two years after gaining over 6 percent against the dollar in 2019, Bloomberg reported.

Meanwhile, the Egyptian Exchange has held discussions with 79 companies in 10 economic sectors since October 2018 as part of its efforts to promote the registration of new companies in the stock exchange since the launch of the new system, Client Relation Management (CRM). 

EGX clarified that these discussions came after eight months of the development and launch of CRM to follow the target companies to be listed on the stock exchange.  

This is carried out through the collection of data on firms that perform transfers on non-listed securities (orders market, over the counter), and companies registered at the central storage system of Misr for Central Clearing, Depository & Registry Company, in addition to companies registered at the General Authority for Investment.  

The report divided the companies into three sections; companies showing a positive interest in listing on the stock exchange, firms showing hesitant interest and need more knowledge and understanding, and companies showing interest but believe that the current time is not appropriate for enrollment. 


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