Egypt is less than two months removed from a deadly mosque bombing in the Sinai that killed more than 300. Still, market professionals say the populous North African nation offers significant potential, with some particularly attractive sectors.
“Long-term, Egypt needs better trade relationships and a more stable macro environment,” Kirkegaard said, citing the need for the country to boost its links with the vast European Union market. He pointed to manufacturing, tourism and logistics as sectors that could make Egypt more competitive and boost foreign investment throughout the country.
According to Michael Daoud-Irsaneous, senior vice president of CEEMEA Sales at Auerbach Grayson, investors should also watch consumer consumption this year as inflation normalizes.
“In 2017, investors basically positioned themselves in the banks as well as direct plays on weaker currency,” he said. “In 2018, the focus is shifting more towards consumer names that were under pricing pressure last year because of inflation, but now inflation is coming off.”
Longer-term, foreign direct investment and portfolio investment have jumped significantly after the currency was unpegged from the dollar in 2016. In addition, significant natural gas finds are expecte to be tapped in 2018—a development that led Egypt to announce it would cease liquefied natgas imports once it starts tapping a massive natural gas repository off the country’s coast.
“The Egyptian pound has also been stable since the large devaluation in November 2016, said Anthony Simond, investment manager at Aberdeen Standard Investments told CNBC, adding the currency was likely to appreciate in the near-term.
The country’s presidential election, scheduled to be held in late March, presents the biggest stumbling block to investors. Incumbent Abdel Fattah el-Sisi is widely presumed to be seeking a second term, but told CNBC in an interview last year that he would only run if the public wanted him to do so.
“While we expect the incumbent President Sisi to extend his term in office, there could be some security concerns in the run up to the election, while also the government may loosen its policy in order to boost its popularity,” Simond added.
