CAIRO: Capital market and financial experts have agreed that the Egyptian Stock Exchange is isolated from the crisis affecting the Irish banking sector, which does not have close ties with Egyptian banks.
According to state-run daily Al-Ahram, this explains foreign investors’ increased trading in the Egyptian Stock Exchange, which recorded net stock purchases of LE 7.5 billion since the beginning of 2010, thus revealing foreign investors’ confidence in the Egypt’s capital market.
Sherif Cararah, the managing director of EFG Hermes, told the official news portal Egynews.net that there was no negative impact of Ireland’s banking crisis on Egyptian markets, adding that investors all over the world are looking for markets safe for investment.
“We have done tours in the past weeks in London and New York, and we have had a large number of requests by foreign investors on selected shares that they were unable to attain due to [market scarcity] and to the shares being held by institutions and individual investors,” Cararah was quoted as saying..
“The Irish banking and debt crisis is pretty well contained within the European and US banking systems,” said Angus Blair, the head of research at Beltone Financial.
“Egypt’s strong economic growth, liquidity in the banking system and in the economy at large, and its high interest rates compared to other countries, means that it continues to enjoy support and interest from international investors,” Blair told Daily News Egypt.
“However, the indirect effects, low consumer confidence, and the pressure on other governments and banks will mean that consumer spending across the Eurozone area will be affected negatively … this will mean slower growth of tourist arrivals from the Eurozone area to Egypt,” Blair added.
Amid concerns in Europe that the crisis could spread across Ireland, Greece, Portugal and Spain, Ireland’s Minister of Finance Brian Lenihan confirmed Sunday that Ireland will ask international lenders for help, Reuters reported. Lenihan added that he will present the plan to the cabinet later in the day at a meeting to approve a four-year austerity program.
Sources have told Reuters that Ireland may need €45–90 billion ($63–126 billion), depending on whether it solely needs assistance for its banks or for its public debt as well.
Blair said that news of a potential loan to Ireland has given some comfort to investors, and that it should help to alleviate some of the pressure on the Euro.
“The global markets, however, will remain highly sensitive to bad news for the foreseeable future,” said Blair.
Although many experts see hope in the Irish bailout, there is still concern with regards to the long-term effects of the crisis.
Chief economist for Unicredit bank Marco Annunziata told AFP that although help for Ireland might calm the markets temporarily, “the real question which the markets are asking is what will happen after two years, at the end of the support programs? Will it be really possible to avoid a restructuring of debt for these countries as EU leaders say?”
