Egypt shares hit 14-month high on funding hope
Cairo, September 4, 2012
Egypt's benchmark share index rose 2 per cent on Tuesday to its highest since June 2011 as retail investors moved into the market, optimistic that government efforts to bolster an ailing economy are bearing fruit.
In the last four months, Qatar, Saudi Arabia and the Jeddah-based Islamic Development Bank have pledged more than $5 billion to help Egypt stave off a balance of payments crisis.
The government formed by new Islamist President Mohamed Mursi has also accelerated talks on a $4.8 billion International Monetary Fund loan, he lping to re assure still wary foreign inv estors that the country is likely to avoid a currency or debt crisis.
The talks follow more than a year of institutional confusion and policy lethargy since the overthrow of Hosni Mubarak in a popular uprising, and analysts say Egypt now has a better chance to avert a currency default.
A U.S. official said on Monday that Washington was close to a deal with Egypt for $1 billion in debt relief, though obstacles remained.
These are reported to involve a mix of debt payment waivers and debt swaps, and it was not immediately clear when an agreement might be announced.
Cairo's EGX30 share index was at 5,563.54 points at 0940 GMT. If it holds at this level it will be its biggest one-day gain since July 31. It has surged 36 percent since Mursi emerged as winner of the election and is up 51 percent this year.
International investors have been anxious about buying Egyptian assets because of concern about a possible devaluation, given the country's dwindling foreign exchange reserves, but fears are easing that a more deep-seated cur rency or debt crisis cou ld break out.
'More foreign investors will be looking at Egyptian companies for strategic investments in the coming months as it continues on the march to stability and fears subside of a sharp devaluation,' said Emad Mostaque, Mena strategist at Religare Capital Markets, in a client note.
Traders said the market was dominated by local retail investors on Tuesday, suggesting gains were driven more by broad sentiment than specific news events such as the U.S. debt relief talks.
'Local retail is pushing this market higher and higher,' said Teymour el-Derini at brokerage Naeem. 'Fundamental investors are only 10 percent of the market today... I don't expect a correction any time soon.'
Among the most active stocks, Orascom Telecom Holding gained 2.5 percent and Orascom Construction, which reports second-quarter results this week, rose 2.4 percent.
Bank NSGB, which parent company Societe Generale is in talks to sell to Qatar's QNB, was up 4.6 percent after having risen by the exchange's 10 percent limit on Sunday and Monday. – Reuters