After declining almost 50% as a result of political and economic uncertainty in 2011, Egyptian equities and the related stock exchange traded fund have vaulted 30% so far this year.
Van Eck’s Market Vectors Egypt Index ETF (NYSEArca: EGPT - News ) was up 1.9% at last check Wednesday amid reports at least 73 Egyptians were killed in violence following a soccer match in Port Said. The fund has gained 29.5% year-to-date.
Traders believe the country’s successful and fair parliamentary elections are a stabilizing factor in the region, Matt Smith and Yasmine Saieh report for Reuters .
“Having an elected parliament is a main reason behind the gains we are seeing today and we expect to see more gains in the coming weeks,” Mina Iskander of Egyptian investment bank EFG-Hermes, said in the article.
“Foreign buyers are now interested to invest in the Egyptian market, especially after the elections to parliament ended well, which made them feel good about progress in the political system,” Ahmed Khalil, a trader at Cairo Capital Securities said in another Reuters report. “As long as the process of reestablishing the state’s major institutions continues, we are most likely going to see more gains in the Egyptian market.”
Other analysts, though, theorize that Egyptian investors, who were unable to move large cash holdings out of the country during last year’s volatile political environment, are now moving back into local equities.
Nevertheless, Egypt’s economy is still on the mend and the government is struggling to get its finances in order.
“I don’t think we will have a long rise in the market,” Iskander cautioned. “It will go up for few weeks over that feeling of optimism, but could go down later when companies start releasing their annual earnings, which given the current political situation are not expected to be good.”
Van Eck’s Market Vectors Egypt Index ETF
For more information on Egypt, visit our Egypt category .
Max Chen contributed to this article.
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