CAIRO/LONDON - Egypt’s reputation as an emerging market star lost some of its sparkle last month when street protests revealed a population yet to benefit from years of economic reforms that had impressed investors. That reality check may prove to be uncomfortable.
Yet investors fear authorities might roll back measures such as a cut in subsidies for fuel and other goods which have proved painful for Egyptians, a third of whom live below the poverty line. In a possible first sign of such slippage, the supply ministry said it had returned 1.8 million people to its food subsidy plan since February, following earlier cuts in the program.
“The reality is that as a foreign investment destination these past few years Egypt has not been attractive beyond the sale of short term debt, thanks to offering some of the highest interest rates on the market,” said Timothy Kaldas from the Tahrir Institute for Middle East Policy. Equities listed on Cairo’s $12.2 billion bourse have also been popular: MSCI’s Egypt stock index .dMIEG00000PUS has soared 32% since the start of the year compared to the overall emerging equity index .MSCIEF which has eked out a 3.6% gain over the same period.
But Hasnain Malik, managing director, frontier markets equity strategy at Tellimer, said last week's fall of 6% in the benchmark“The Egypt market is still attractive compared to other emerging markets,” he said.
3arabawy This Cairo
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