Egypt Stocks Surge on Bets Devaluation Will Drive Growth Rebound
EghtesadOnline: Egyptian stocks advanced the most in more than two months as investors bet that policy makers may devalue the country’s currency as soon as this week, luring back foreign investors and giving a lift to an embattled economy.
According to Bloomberg, the EGX 30 Index gained 3.2 percent, the most among more than 90 indexes tracked by Bloomberg globally after Ghanian equities, to close at 8,133.12. Financial stocks, such as Commercial International Bank Egypt, the country’s largest listed company, and firms linked to tourism and real estate, including Talaat Moustafa Group, were among the biggest contributors to the index’s rise.
The market is reacting positively on expectations that “a devaluation might take place this week,” said Mohamed Radwan, the head of equities at Cairo-based Pharos Holding. “This foreign-currency issue has been ongoing for the past year and a half. You need to resolve it once and for all to attract foreign investments.”
Speculation mounted over the weekend that a cut in value for the Egyptian pound was imminent after the central bank governor met with President Abdel-Fattah El-Sisi on Saturday. Investment bank Beltone Financial said on Sunday it was expecting the move "within hours." Egyptian media on Monday ran reports on a coming flotation or devaluation.
Commercial International Bank rose 3 percent and Talaat Moustafa Group advanced 5.2 percent, its biggest increase since July.
The country has been suffering from a foreign-currency crunchthat has hurt economic growth, forcing regulators to impose capital controls that have helped keep investors away for fear of being unable to repatriate profits. The Egyptian government says a $12 billion loan deal with the International Monetary Fund will restore investor confidence, balance the budget and ease the dollar shortage.