Foreign Inflows Into Egypt Hit Record Highs Following Currency Devaluation 2

Foreign investors are buying into Egypt

Egypt’s stock markets are at an interesting junction. With political turmoil taking a backseat, investors are now seemingly more worried about the country’s currency. Last year, Egypt floated its currency, and devalued, leading to a 50% depreciation. However, this bolstered Egypt’s stock markets and led to massive buying by foreign investors.

The past few months have seen renewed investor interest in Egypt’s debt and equity markets. As per a report from Egypt’s finance ministry, foreign investors bought nearly $3.3 billion worth of treasuries by mid-March 2017.

Foreign inflows to Egypt’s stock market have now touched the highest levels since the 2011 uprising and investors are taking advantage of low dollar based valuations.
The increased flow of dollars has also enabled the government to speed up its disbursements to foreign investors, whose dividends and profits had been stuck in Egypt because of currency shortages, according to bankers. Further, they expect Egypt to benefit from China’s One Belt One Road project. The benchmark EGX 30 Index has surged 61% in the past one year.

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Among the exchange traded funds investing in Egypt equities, the Market Vectors Egypt Index ETF (EGPT) has seen the highest inflows YTD amounting to $21.3 million. In 2016, the EGPT ETF witnessed inflows of $12.2 million. The WisdomTree Middle East Dividend Fund (GULF) or the VanEck Vectors Africa Index ETF (AFK) witnessed outflows of $1.03 million and $1.8 million YTD.

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