Egypt Stocks Best World as Central Bank Eases Dollar Crunch

  • Cleared backlog of cash owed to investors sparks inflow bets
  • Foreigners will `absolutely' put money back in Egypt: Arqaam

Egyptian stocks rose the most in the world on speculation more foreign cash may be lured to the bourse after the central bank repaid money owed to overseas investors.

The EGX 30 Index rallied 3.5 percent, the biggest increase in more than six months, as the value of shares traded climbed to the highest since July. The central bank said on Tuesday it has paid $547.2 million owed to foreigners who had invested in the North African nation’s stocks and bonds, clearing a queue that built up as officials battled a dollar shortage in the wake of the 2011 uprising.

The move is a boost to Egyptian equities, which have been battered by almost five years of political unrest, nationwide energy shortages and lack of hard-currency that have weighed on corporate profits. The country’s stocks now have the smallest weighting on MSCI Inc.’s emerging-market gauge after those of Malta. Restrictions on cash flowing abroad and the subsequent lineup of investors waiting to repatriate their money is one of the main reasons the market is the world’s fourth-worst performer this year.

“Clearing the backlog is a big deal for the stock market today, it’s a very healthy signal,” said Radi Elhelw, the Cairo-based executive director for Arqaam Securities Brokerage SAE. “We absolutely think foreigners will put their money back in this market. If the foreign exchange situation is fixed, with a devaluation or otherwise, they’re going to come back in like a herd.”

Currency

The pound’s official rate, which is controlled by the central bank, was unchanged at 7.8301 per dollar on Wednesday, or about 9 percent more expensive than its value in the black market, according to a Bloomberg survey of dealers in Cairo and Alexandria. The regulator is due to hold a regular dollar sale to lenders tomorrow.

The EGX 30 climbed to 6,649.72 as about 846 million Egyptian pounds ($108 million) worth of shares traded, almost double the market’s three-month daily average.

Commercial International Bank Egypt SAE, the country’s biggest publicly traded bank, contributed most to the gains with a 3.9 percent increase. The company’s London-traded shares climbed 4.2 percent at 12:34 p.m local time. Global Telecom Holding surged 9.4 percent on speculation it will be bought out by parent VimpelCom Ltd., according to Elhelw.

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