Ever since the Egypt’s military took over after massive protests rocked the country, cheap valuations and political stability bolstered Egyptian stocks and country-specific exchange traded fund.
The Market Vectors Egypt ETF (NYSEArca: EGPT) has surged 35.8% since the June 24 low. EGPT, though, is still down 2.1% year-to-date.
The Egyptian benchmark EGX 30 Index increased 18% in the third quarter, the largest advance since the 24% advance in the third quarter last year, reports Ahmed A. Namatalla for Bloomberg.
Investment Minister Osama Saleh attributes the uptick to Egyptian investors who are returning after the military took over on July 3 from President Mohamed Mursi.
“There has been local demand seen in the stock market, which will attract foreign buyers,” Investment Minister Saleh said in the article. “Investors are becoming more confident in the new cabinet and new administration expectations, which is partly responsible for the rise in assets.”
Parliamentary elections could take place as soon as the first quarter of 2014.
“The military’s action was viewed as bringing more stability,” Walid Mourad, a manager at ING Investment Management Middle East Ltd., said in the Bloomberg article. “There are buying opportunities if investors are selective.”
High dividend yields in Egyptian stocks have also helped attract investment interest. EGPT has a 7.68% 12-month yield.
“Dividend-paying stocks are definitely providing an attractive entry point for some investors now,” Hany Genena, head of research at Pharos Holding, said in the article. “The absence of investments over the last three years has forced companies to settle debt and return cash to their shareholders until the political and economic outlook becomes clear.”
However, Egypt’s economy is still in tatters after the popular uprising in 2011 forced out President Hosni Mubarak, with growth at about 2% for a third year, its worst slump in two decades. [Political Violence Ignites Sell-Off in Egypt ETF]
Market Vectors Egypt ETF
For more information on Egypt, visit our Egypt category.
Max Chen contributed to this article.