x Abu Dhabi, UAEMonday 22 January 2018

Global fund managers not worried about Egypt crisis

Financial markets display signs that international investors are less concerned with Egypt's political upheaval.

International investors are growing less concerned with the political crisis in Egypt.

Companies with securities trading on foreign exchanges have witnessed sharp price increases, while the cost of insuring against a sovereign default continues to fall.

Insuring US$10 million (Dh36.7m) of Egyptian debt now costs $345,000, down from a high last week of $450,000.

International fund managers also now expect a short-term increase in exporters' share prices when the Egyptian market reopens again on Sunday.

Egyptian companies' global depositary receipts (GDR) - shares listed on foreign exchanges - have rebounded about 10 per cent on the London Stock Exchange since the Egyptian market closed on February 2.


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The GDR of Orascom Construction Industries fell 33 per cent on the London Stock Exchange ahead of the Egyptian stock market close, but has since rebounded 23 per cent to 41p.

"The Egyptian market was down 21 per cent before it closed," Rami Sidani, head of MENA portfolio management at Schroders said.

"But if you look at the global depositary receipts, these are a lot higher since then."

"We expect an uptick in exporters prices when the market reopens," Mr Sidani said.

The Egyptian pound's fall in value against the US dollar is likely to benefit exporters because their goods can be sold more cheaply abroad.

"Their revenues will be in US dollars, but their cost base is in Eqyptian pounds," Mr Sidani said.