Egypt’s biggest stock-market rally in more than a year had foreign investors selling holdings on concern the military-backed political transition will delay the nation’s economic recovery.
While local buying sent the benchmark Index soaring by 7.3 per cent, non-Arab foreign investors were net sellers of about 103 million Egyptian pounds ($15m) of shares, the most since March 28.
Bloomberg News reported that Egypt’s $1bn of Eurobonds due 2020 gained for a second day, extending Thursday’s record slide in yields.
Interim President, Adly Mansour – sworn in after protests prompted the army to overthrow Egypt’s first freely-elected leader – inherits the worst economic slump in two decades and the biggest budget deficit relative to economic output in the Middle East.
Egypt’s bid for a $4.8bn International Monetary Fund loan has yet to be accepted, leaving the country reliant on foreign aid.
“Egypt’s economic fundamentals remain unchanged, so the market gave foreign investors the chance to sell into the rally,” Ahmad Alanani, Dubai-based director for the Middle East at Exotix Ltd., said by phone. “The political picture today is more polarised than ever before.”
The Egyptian authorities moved to arrest and impose travel bans on ousted President Mohamed Mursi and other Islamist leaders, according to state-run media. Mursi supporters are scheduled to protest across the North African nation today.
Yields on the government’s 2020 benchmark bonds declined 10 basis points to 9.18 per cent by 4:29pm in Cairo, extending the 148 basis point plunge, according to data compiled by Bloomberg.
The Market Vectors Egypt Index rose by 2.2 per cent to $42.99, poised for the highest closing price since June 3. Circle Oil Plc, the Limerick, Ireland-based oil producer with assets in Egypt, rallied by 5.2 per cent in London to 17.75 pence.