Egypt’s Equities Take a Hit from the Soccer Riots – Will this have a Long-Term Effect on the Market?

There is no question that 2011 was a very tough year for Egyptian equities, which lost approximately half of their value.  But the Egyptian markets performance in January was staggering. It ranked near the top of Big Emerging Economies for increase of share prices.

But, questions are now being raised as to whether Wednesday’s soccer riots, which left 74 dead, will halt the country’s economic recovery. In response to the riots, on Thursday Egypt’s EGX dropped almost 5 percent.

But, opinions from Cairo and London are that Egypt’s political risks have decreased, and that a strong “law and order” response by authorities will provide additional confidence to the market.

While most investors remain somewhat bullish on Egypt, Citigroup is optimistic.  The firm’s middle east equity analyst, Hasnain Malik has indicated that Citi was one of the few firms that were bullish on the country.

Since the market decline after the riots, almost half of the loss has been recovered. And, stunningly Egypt’s EGX index is till up over 25 percent since the beginning of the year.