CAIRO: Parliamentary elections in some countries can be major market movers, closely linked to potential legislative changes that affect stakeholders and foreign investors, who keep a close eye on political developments.
Egypt’s business climate, however, remained relatively calm as Sunday’s elections got underway, with thin trading as the benchmark index opened flat.
"The market [was] flat because no one is really expecting any surprises in the results of the parliamentary elections," Karim Hosny, a trader in Pharos Securities, told Reuters.
The EGX 30 closed slightly lower at 6,789, down 0.7 percent, Reuters reported.
Angus Blair, head of research at Cairo-based investment bank Beltone Financial, told Daily News Egypt, “Investors usually take parliamentary elections in their stride.”
Investors will take more interest in the deeper details regarding policies that may be expected as an outcome of the elections, he added. Between Sunday’s parliamentary elections and Egypt’s presidential elections in September, “investors will be watching policies closely.”
“I’m not surprised that the markets did not react as the parliamentary elections are more about [political] power sharing rather than policy changes,” said Magda Kandil, director of research at the Egyptian Center for Economic Studies.
According to Kandil, investors realize that political and economic agendas are not affected by the elections.
Using the US as a “glaring contrast,” she said that after the recent general midterm elections, which the Republican Party dominated, the stock market performance improved.
“As investors were growing frustrated about the direction of economic policies, the Republican’s political victory meant that they had more power to restrain [US] President Obama’s economic policies and legislations, giving investors more confidence,” she said.
The general midterm elections in the US “mean a lot, but in Egypt, parliament is not that powerful and investors are neither encouraged nor discouraged by the outcomes,” she added.
“This is because, policy making power in Egypt is concentrated in the hands of the president, the prime minister and the cabinet,” she concluded.
At this year’s Euromoney conference in September, departing investment minister Mahmoud Mohieldin had commented on the upcoming elections, saying that the uncertainty “has not and will not affect investors.”
“I have been talking recently to a significant number of very large investors and they all see that there is no cause for concern. In the 2005 and 2006 election years, some people expected it to be a problem but those were the years with the highest investment figures in recent years.”
