Egypt Stocks Near Record High as Locals Hedge Soaring Inflation

Egypt’s stock market is approaching an all-time high as local investors rush to protect their savings from rampant inflation.

(Bloomberg) — Egypt’s stock market is approaching an all-time high as local investors rush to protect their savings from rampant inflation. 

It’s a pattern that’s played out across the developing world this year in countries that face an economic crisis and a weak currency. The benchmark EGX 30 Index has jumped more than 70% in local currency terms since October, and it’s now roughly 1% away from surpassing the 2018 peak. 

“Egypt’s equities are acting as a hedge against very high inflation, similar to recent times in the likes of Argentina and Nigeria,” said Hasnain Malik, an equity strategist at Tellimer in Dubai. 

Read More: Egypt’s Inflation Hits New Record as Pound Devaluation Looms 

This phenomenon is not unusual. In countries like Turkey and Nigeria, citizens are using equities as a store of value to combat double-digit inflation. 

Turkey’s Borsa Istanbul 100 Index is up over 300% since the start of 2022, while Nigeria’s NGX All Share Index rallied 27% this year. Egypt’s EGX 30 is the 12th-best performer in 2023 among 92 benchmarks tracked by Bloomberg. 

To be sure, an international investor would see their gains completely wiped out if they converted to US dollars. Egypt’s index is down less than 1% in dollar terms year-to-date.

But for locals, the stock market represents a safe haven of sorts. Egyptian investors account for about 85% of the value that changed hands on the stock exchange this year, according to data from the bourse that excludes deals. Retail traders traded 40 billion pounds ($1.3 billion) worth of stocks in July alone, higher than any other investor group during that month. 

Egypt, a top wheat importer, has struggled because of more expensive food prices in the aftermath of Russia’s invasion of Ukraine. The central bank devalued the Egyptian pound three times since March 2022 and investors have said they want to see the currency weaken further before providing more financial support.

As a result, the inflation rate has skyrocketed. In July, consumer prices in urban parts of the country rose an annual 36.5%, hitting another record high. 

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