After political instability and repeated protests swept the country, the Egyptian government is injecting money into the economy, bolstering the Egypt related exchange traded fund, with the Egyptian benchmark edging to its highest level in almost three years.
The Market Vectors Egypt ETF (NYSEArca: EGPT) has surged 52.2% since the June 24 low. EGPT is now up 8.8% year-to-date. [Egypt ETF Sees Best Rally in a Year on Political Stability]
On Monday, the Egyptian government announced a better-than-expected $4.36 billion stimulus package, reports Yousef Gamal El-Din for CNBC.
“We expected back in July when we upgraded our rating on Egypt to ‘overweight’ that the market would reach 6,300 points, so at these levels, three weeks before referendum, the market has rallied ahead of itself a bit,” Karim Khadr, head of research at CI Capital, said in the article.
Meanwhile, the central bank is following a loose monetary policy, cutting benchmark rates in three of the last four Monetary Policy Committee meetings.
The government is shooting for 3.5% economic growth in the year ending June 2014.
Central bank governor Hisham Ramez recently revealed that some capital controls could be eased next month, including a limit of $100,000 for foreing currency transfers abroad.
“The government has stated that they do want to continue having open markets after they get over this problem with foreign exchange limitation,” Mark Mobius, executive chairman of Franklin Templeton Emerging Markets Group, said in the article. “So the orientation is positive.”
Looking ahead, a referendum on a revised constitution is expected to take place January 14 and 15 next year, with parliamentary and presidential elections to follow later in the year.
Market Vectors Egypt ETF
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Max Chen contributed to this article.
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