Egyptian Stocks Rise as Investors Prepare for Pound Devaluation

CAIRO, Egypt, Capital Markets in Africa: Egyptian stocks rallied to the highest level in more than a year as investors increased their holdings on bets that a currency devaluation would lure foreigners to the nation’s assets.

The EGX 30 Index advanced 1.9 percent, the most in the world among more than 90 indexes tracked by Bloomberg globally after Argentinian equities. Commercial International Bank Egypt, the country’s biggest listed company, climbed to a record and was the biggest contributor to the gauge’s gains.

North Africa’s biggest economy is in talks with the International Monetary Fund for a loan, a deal that will likely involve the devaluation of its currency in an effort to attract foreign capital and revive economic growth. Egypt’s main stocks gauge has risen almost 19 percent since the Central Bank Governor Tarek Amer spoke favourably of a currency devaluation on July 3, compared with an advance of approximately 4 percent advance for MSCI Inc.’s emerging-markets index. The pound, meanwhile, slumped more than 10 percent in black market trading over that period.

“Everyone is putting in the markets the pounds they have,” said Mostafa Abdel Aziz, the head of brokerage at Cairo-based Beltone Financial Holding Co. “People believe the IMF talks will succeed, leading to a devaluation.”

The EGX 30 advanced to 8,255.36 at the close in Cairo, the highest level since July 2015 as traders exchanged 380 million shares, more than double the 20-day average. Commercial International added 2.7 percent to the highest level since it went public in 1997. The company accounts for almost 40 percent of Egypt’s main stock index.

Source: Bloomberg Business News

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