The Egyptian market re-opened a few days ago and the result has been tremendously surprising on the positive side, not only by how quickly this market has found it legs again, but especially it is the high speed at which things are progressing that is impressive.
Foreigners are buying: on Thursday, March 24, the first full trading day since the markets closure, around 76% of the total activity was seen by foreigners, resulting in only 10% of the selling flows! This exercise of value hunting shows that there is confidence from abroad that things are going to be very fine in Egypt.
Retail Investors are also buying. Flows from private investors made up for rouglhy 16% and was strongly biased to the buying side. This again echoes that local investors also see a great future for the country.
Other interesting conclusions are that despite having been stopped for so long, the Egyptian market was able to restart with most of its liquidity in place. If it would come to the point that Egypt’s position in the MSCI EM index would be re-considered, the high level of liquidity would very much weigh in favour of keeping Egypt as a major constituent. It is after all one of Africa’s most important markets and economies…
At Silk Invest we have been very positive at all times, but we are really trying to get used how fast this is all going.
Early on in January, before the political events were triggered in Egypt, we had reduced our positions in Egypt by taking profit, not because we saw the event coming, but because we wanted to allocate more to Nigeria, Ghana and Kenya. We also had an amount of cash ‘dry powder’ which we have been putting to work today in the Egyptian Stock market. So far so good as this positioning is allowing us to capture very good value at these levels.
Here’s an interview that features, amongst others, Daniel Broby, our CIO.
click here to see the interview on Reuters Insider
on Thursday, march 28 we saw the market close with 108 stocks up, 58 stocks down, and 5 unchanged.
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