Foreigners Aren’t Yet Done Selling Egyptian Assets

CAIRO (Capital Markets in Africa) – Foreign investors are accelerating their sales of Egyptian securities amid growing skepticism over the country’s economic outlook and while they ponder a more negative environment for emerging markets.

Investors from abroad were net sellers of stocks and bonds each session this month through Tuesday, data provided by the stock exchange and compiled by Bloomberg show. On Sept. 5, foreign outflows reached almost 1 billion Egyptian pounds ($52 million), the most for a single session in close to 19 months. The country’s main index dipped into a bear market earlier this week.

Many investors were bullish on Egyptian assets earlier this year amid expectations the country would move forward with reforms and that a decrease in benchmark interest rates would follow the currency devaluation of 2016. Sentiment deteriorated as worries about the state of broader emerging markets took hold, with valuations for stocks in Cairo dropping to the cheapest levels in two years.

“Foreigners may find current prices attractive, but they want more clarity on economic indicators, the direction of foreign currency and government decisions,” said Mohamed Ashmawy, the head of institutional sales at Cairo-based Prime Securities. Investors are in no rush to return before liquidity improves and there is greater visibility on stock prices, inflation, interest rates and proposed initial public offerings by state-run companies, he said.

The recent selloff might have an impact on the government’s plan to sell stakes it holds in companies already listed, along with IPOs. The government is planning to offer either new stakes or additional holdings in more than 20 state-run companies as part of a plan to revamp the public sector.

The EGX 30 fell 3.8 percent on Wednesday, extending its drop this week to 7.9 percent, set for the worst five-day performance since January 2016.

Source: Bloomberg Business News