Egypt stocks gain most in the world
Index rallied 3.5%, the biggest increase in more than six months
Egyptian stocks rose the most in the world on speculation more foreign cash may be lured to the bourse after the central bank repaid money owed to overseas investors.
The EGX 30 Index rallied 3.5 per cent, the biggest increase in more than six months, as the value of shares traded climbed to the highest since July. The central bank said on Tuesday it has paid $547.2 million (Dh2 billion) owed to foreigners who had invested in the North African nation’s stocks and bonds, clearing a queue that built up as officials battled a dollar shortage in the wake of the 2011 uprising.
The move is a boost to Egyptian equities, which have been battered by almost five years of political unrest, nationwide energy shortages and lack of hardcurrency that have weighed on corporate profits. The country’s stocks now have the smallest weighting on MSCI Inc’s emerging-market gauge after those of Malta.
Restrictions on cash flowing abroad and the subsequent lineup of investors waiting to repatriate their money is one of the main reasons the market is the world’s fourth-worst performer this year.
“Clearing the backlog is a big deal for the stock market today, it’s a very healthy signal,” said Radi Elhelw, the Cairo- based executive director for Arqaam Securities Brokerage SAE. “We absolutely think foreigners will put their money back in this market. If the foreign exchange situation is fixed, with a devaluation or otherwise, they’re going to come back in like a herd.”
The pound’s official rate, which is controlled by the central bank, was unchanged at 7.8301 per dollar on Wednesday, or about 9 per cent more expensive than its value in the black market, according to a Bloomberg survey of dealers in Cairo and Alexandria. The regulator is due to hold a regular dollar sale to lenders tomorrow.