The Egyptian stock market continues to digest the prospects for growth in Mubarak-less future, the sentiment over the last two months has been decidedly positive. The benchmark EGX 30 Index, after a nice rebound over the past 2 months, is now up 44% for the year.
The Egyptian economy is in the process of recovering from the regime change and associated turmoil that occurred in the first half of last year. Egypt possessed one of the worst performing equity markets in 2011 so even with a strong 2011, investors have a lot of ground to make up. Much of the market's current optimism hangs on successful completion of an IMF loan agreement. Discussions have been going on since January and an agreement won't be finalized until at least November, but the latest reports have had a positive tone (
courtesy of 4-traders.com):
On August 22, Christine Lagarde, the IMF's managing
director, was in Cairo where she met with President Mohamed
Morsi and other Egyptian government officials. At the
end of her meetings, she announced that the new government
has officially requested an IMF program and that the Fund
will respond as quickly as possible to this request.
A Fund mission will visit Cairo in September to hold
discussions, and the parties plan to reach agreement in
November.
The Egyptian pound has remained stable throughout 2012 but we know that the Egyptian central bank has been an active participant in the currency markets to bolster their currency (the following chart shows the EGX 30 Index alongside the USD / Egyptian pound cross in % terms):
We were unable to locate a resource to indicate how much existing firepower (foreign reserves) the central bank had remaining in their battle to support the pound but one thing we know for sure is that it is a finite amount.
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