Egypt’s stock market is a paradox. Political tensions are getting worse, the economy is deteriorating and foreign exchange reserves are falling dangerously low. And yet equities are up nearly 40 per cent, the biggest gain in the world for 2012.
Clearly investors are betting that the closer the country edges to economic collapse, the greater the chances of the politicians seeing sense and the IMF leading an early bail-out. But what if they’re wrong?
The scope for disappointment is, to put it mildly, considerable. Even after Tuesday’s profit-taking, which saw the EGX30 index slip 1.7 per cent, the market is up 39.8 per cent on the year, in both local currency and dollar terms.
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