Egypt has always been a frustrating market for emerging markets investors. With 80 million people and a tradition of education, it is larger and more established than most nations in the Middle East and Africa. Investors have long had the expectation that Egypt would be the Next Big Thing. The country has been independent of Great Britain since 1952, and it experienced another revolution early this year. What, if anything, does that mean for investors?
It means a lot more uncertainty. One of the issues affecting Egypt is tension between conservative Muslims who would like the country to be more religious and secular Egyptians, many of whom are also Muslim, who would like the country to focus on being a modern economic power. Neither group seemed happy with the government, the result being riots in the spring of 2011 and the overthrow of Hosni Mubarak, who was the fourth president of Egypt. Elections have been scheduled for November 28, and much hinges on them. Will the people of Egypt be able to come together? What will the new nation look like? And, will the new government support economic growth, or will it have other priorities?
This is a high-risk situation. It’s too soon to know if the new government will be friendly to commercial interests, or even able to hold the country together until the next election.
Type of government: Republic
Major industries: Cement, chemicals, construction, energy, food processing, hydrocarbons, light manufacturing, metals, pharmaceuticals, telecommunications, textiles, transportation
Median age of population: 24.3
GDP per capita: $6,200
MSCI 2010 equity market return: In local currency 15.45%; In US dollars 9.55%
Currency: Egyptian pound (also known as gineih)
English-language newspaper: Daily News Egypt