Even though it took a hit and dropped 4% this past week, the Egyptian stock market, as measured by the benchmark EGX 30 Index, is still up 42.7% for the year. This put it a close second behind Venezuela for best performing equity market in 2012. Here's the top 10:
Egyptian stocks were one of the worst performers in 2011 having dropped 49% (third worst), due in no small part to the revolution that occurred at the beginning of the year. The strong rebound this year hinges on the successful completion of a loan package in the amount of $3.2 billion that is being negotiated with the IMF.
Here are more details from the Abu Dhabi based The National:
The cash is needed to help to bolster confidence in the economy and shore up the government's increasingly shaky finances. Egypt's budget deficit for the financial year ending in June is expected to reach 11.7 per cent of GDP, higher than previous estimates of 10 per cent, official data showed last week.[...]
But the loan deal is far from certain. Egypt's interim military rulers last June spurned an earlier IMF offer, prompted by concerns about saddling future elected governments with unwanted foreign debt.
Back in June of last year equities were in the middle of a nice recovery from the decline that took place during the overthrow. But when the IMF deal fell through, they started dropping again and continued to drop steadily for the remainder of the year.
We imagine that the Egyptian authorities will be well aware of the above chart during this second attempt at a loan agreement and will be especially motivated to get a deal done.
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