A SUPPLEMENT TO EUROMONEY/APRIL 1999: EGYPT
The rebirth of Egyptian securities
The eight years since the start of the Mubarak government's economic structural adjustment programme have been patchy for Egypt's capital markets. Although the Cairo stock exchange has a venerable past - it was founded in 1903 - it has struggled to re-establish itself after the end of president Nasser's Arab socialist experiment. Stock market levels were hit first by the Asian and then by the Russian crisis (although Egypt has survived better than many other emerging markets), and have languished at pre-1997 prices. So far the domestic bond market has been non-existent as Egyptian corporates waited for the government to issue internationally and set a benchmark for borrowing. Plans for a $300 million Eurobond deal were shelved by the government at the end of 1997 because of the inflated cost of emerging-market borrowing caused by Asian contagion. The deal then failed to materialize in 1998.
But this year looks considerably more promising for the Egyptian capital markets. Investors will be heartened by the macroeconomic health of the country: growth has been around 5% each year since the mid-1990s and is expected to increase to almost 6% in 2000; inflation is below 4%; and the budget deficit is around 1% of GDP.