Egyptian shares rallied to the highest level since May 26 after MSCI Inc. (MSCI) said it’s no longer considering downgrading the country to frontier status.
The benchmark EGX 30 Index climbed 1.7 percent to 8,708.69 at the close in Cairo. That takes its increase for the year to 28 percent, fourth best among more than 90 gauges tracked globally by Bloomberg. Commercial International Bank Egypt SAE, the country’s biggest publicly traded lender, rose 2.5 percent.
MSCI said yesterday a “substantial” increase in Egypt’s foreign currency reserves put to rest concerns about a shortage that prompted the threat of a reclassification review last year. Egypt, a member of MSCI’s Emerging Markets Index since 2001, had four companies making up 0.2 percent of the gauge as of May 30, according to data compiled by Bloomberg.
MSCI’s decision is “a relief to investors,” Ashraf Akhnoukh, a Cairo-based manager for the Middle East and North Africa at Commercial International Brokerage Co., said by phone. The possibility of a downgrade “was a burden on the market. Now that it’s been cleared, it’s definitely behind the positive sentiment we’re seeing today,” he said.
Egypt’s net international reserves stood at $17.3 billion at the end of May, a 7.9 percent increase from a year earlier, according to central bank data. The Egyptian pound has strengthened in black market trading after former army chief Abdel-Fattah El-Sisi won last month’s presidential election.
About 1.1 billion pounds ($154 million) of shares traded, compared with a one year average of 613 million pounds. Commercial International rose to 37.43 pounds.
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