Egypt has been battling to resuscitate its economy since 2011; fighting currency depreciation and facing a travel ban from Russia. After letting its pound float and receiving a $12 billion loan from the IMF in November, Egypt is starting to see potential growth in its economy.
The loan is the largest of its kind on record in the Middle East, and came just days after Egypt allowed its pound to float freely in a bid to end a crippling currency crisis that cut the currency's value by more than half and prevented imports of consumer goods that even included food staples such as sugar.
In addition to the loan and the variability in the pound;
The successful sale of Eurobonds has encouraged carry-trade investors who have invested more than $2 billion since the float, as per the Central Bank of Egypt. Egypt's stock market is one the best performers in emerging markets and the best in Africa.
As a consequence of allowing the currency to weaken;
The inflation rate reached 28.1 percent in January on an annualized basis, its highest level since December 1989 and eroding consumers' purchasing power. The spike was largely propelled by a 37.3 percent increase in food prices.
Geographically, Egypt rests at an excellent position to become the next leading automobile manufacturer hub.
The good news is that Egypt’s large consumer market and strong logistical network ties to Asia, Europe and Africa makes it a good manufacturing destination. Over time, manufacturing can help the economy’s export base, while creating desperately needed jobs for its 90 million inhabitants. Egypt’s automotive industry has become one of the largest in Africa, producing more than 100,000 vehicles a year and employing 75,000 workers.
Source: Emerging-Market:Egypt
Will Egypt bounce back from its unfortunate economic downfall and emerge as a profitable option for foreign investment?
I have no clue, but thanks for the interesting post...
The intricacies of inflation - debt - unemployment - interest - GDP growth always make my head spin since it's been so long since I've taken a macro course...every time I read about hyperinflation, I just think how lucky the US is for having the world's reserve currency...that is a real blessing.
One of my more lengthier posts that's for sure. Whenever I read or hear about hyperinflation, It reminds me of Zimbabwe's currency. That's the example all my professors use to explain hyperinflation to us undergrads.
Egypt (Originally Posted: 01/28/2011)
Is today's turmoil in Egypt just an excuse to take profits?
Why did this affect djia/nasdaq more than the n.korean issue a month or so ago?
Well, oil is up big today on this unrest and I think equities were already due for a pullback and had GDP come in this morning below expectation.
Oil's up. Bad news for industry. Nobody honestly thought there was more than a 10% chance things would blow up, and even then, there was no real guarantee it would affect business in S Korea.
Long-term political self-determination is good for Egypt. But short-term the odds of an overthrow are looking more like 50:50, it's occuring in a very dangerous part of the world, and the country controls a lot of oil derricks and the Suez Canal.
This is probably much worse news for Europe than the US, but it's not like it's some border flare-up between two nuclear powers where cooler heads are probably going to prevail.
I agree on the pull back due. and mediocre earnings from big names today. dunno if suez canal would be closed though.. this is more civil unrest but who knows..
interesting to hear opinions
This wasn't a pullback driven by a few earnings, look at the swaps, fx and commodity markets, instability is driving this imo. GDP was below expectations, but in the details it was actually pretty good.
suez canal. if it gets shut, loads of things will get destroyed.
Prop up the government, last thing we need is an another Islamic dictatorship.
The government is a dictatorship
Typical US hypocrisy.
We're supposedly the biggest backers of democracy across the world and yet we secretly (seems like it's not that secret anymore though) want to keep Mubarak in power.
Mubarak in power despite him being a repressive dictator means:
Suez canal won't shut down. APA is also a good buy on this sell-off. Last I checked the oil fields were not in downtown Cairo, lol.
do you really think APA is good buy now? or did you just hear it on cnbc? i heard it on cnbc.. but i never trust folks talking their book there. i know little abuot APA
Main opponent to Mubarak, ElBaradei in Egypt was the former weapons inspector for the UN.
I think the US needs to keep a hands-off approach to this- and maybe start thinking about getting diplomatic personnel out of the country. Given the main political opponent to Mubarak is relatively friendly to the west and relatively sane, this looks more like the ouster of a corrupt dictator rather than the rise of the Ayatollah.
The last thing we want is to prop up a corrupt dictator when the alternative is honest and relatively friendly to the US. Especially when that alternative won the Nobel Peace Prize.
Hopefully cooler heads will prevail- both in Egypt and the west- and this will either remain a moderate revolution to oust a corrupt dictator or die down rather than turn into an anti-American Islamist revolt.
If the the government falls, I highly doubt that El Baradei will be able to achieve substantive power. The Muslim Brotherhood is by far the largest, most organized and most popular bloc of Egyptian politics.
Supporting Egypt's regime is out of the question. By support, we mean provide weapons and vehicles so the security forces can brutalize the people. Something that should be completely out of the question.
Good news being the main political opposition to Hosni Mubarak does not believe in extremism or hostility
http://en.wikipedia.org/wiki/Muslim_Brotherhood
Apparently Dictatorships work in the Middle East. We remove Saddam and get shit on for it. The ME is not ready for true freedom.
Egypt falls and an extreme Islamic government will be installed. This will be bad for moderate Egyptians, bad for the USA and bad for a secular and tolerant world.
You really think women, Christians and moderates in Egypt are going to be able to quiet the extremists in a political vacuum ??
Sadly, supporting a dictator who keeps the extremists in line is better than the alternative.
If I thought that the Middle East would be tolerant and truly free, I would 100% support this.
Do you even know why the Egyptian people are protesting?
They are sick of issues ranging from corruption, high unemployment to lack of freedom.
Mohamed El Baradei seems to be a likely candidate for a new government, and according to him, he is an "agent of change and an advocate for democracy".
The last thing that Egyptians need is a dictator.
It is of course blatant hypocrisy if we back Mubarak or if we install some other US puppet, but that doesnt mean it wont happen. As we speak I bet the Saudis are on the phone with the white house begging them not to let this domino fall because they could be next. We have now had two regimes fall in the last two weeks...one explosion in "the House of Saud" in this environment and the market reaction would be massive. Carter abandoned the Shah of Iran in 1979 and a theocratic dictatorship followed. Pragmatism and support of freedom are colliding...we will se which side Obama stands on.
Sure, Middle Eastern Freedom which means you are free as long as you are not
1) Jewish 2) Christian 3) A woman 4) Non Religious
This shit is not some peaceful revolution. Taliban 10x
Dude ffs stop trying to spread lies. Yes middle east has its problems but it isn't as bad as you make it out
For example, the Muslim Brotherhood party in Kuwait opposes suffrage for women.9 The Brotherhood condemned terrorism and the 9/11 attacks,1011 but whether or not it has ties to terrorism is a matter of dispute.12 Its position on violence has also caused disputes within the movement, with advocates of violence at times breaking away to form groups such as the Al-Gama'a al-Islamiyya (The Islamic Group) and Al Takfir Wal Hijra (Excommunication and Migration).13
Opposed womens right to vote.
Positions on violence cause disputes and members support breaking away.
Yeah, here comes freedom and tolerance for all.
but let's be clear...if we back mubarak we cannot say we back democracy or freedom because we dont. we will be backing a brutal dictator who imprisons opponents, oversees a police force that uses terror to crack down on civilian protests, and would never hold a real election. It may be the "right decision" but let's drop the whole "we stand for freedom" bullshit and just admit we will support anybody who is friendly to our interests.
Exactly.
We only have to go back several decades to see other cases of blatant hypocrisy supporting brutal dictators that treated their people like shit but stayed in power because of their loyalty to the US and its interests in the region.
Pinochet of Chile (finally arrested in 1998 for his crimes against humanity) Roberto Suazo Cordova of Honduras and of course drug dealing dictator Manuel Noriega of Panama
Let's just hope this turns into Lebanon's Green Revolution rather than the Shah's downfall. And for the record, it's been at least a decade since Islamists came to power on the back of a revolution.
Wow, I am starting to become a fan of EOK. The USA can support te current regime and still be pro freedo . Democracy without a bill or rights is nothing more than mob rule.
I'm sorry, but allowing Egypt to become a radical Islamic state is in no ones interests.
Anyone who thinks the established rule will fall and western style freedom and tolerance will emerge is living in a day dream.
Obama just totally copped out and supports mubarak as long as he "reforms" (yeah right). What a shame for the people in Egypt who bravely went out today and risked their lives. And BTW most of the weapons used against those people were provided by the US. Obama is all about the status quo and like the above poster he doesnt think Muslims are capable of governing their own lives so he prefers to do it for them. ...Just another pathetic day for the US empire...
Yup there's a reason why we give them $1.3bln in aid every year (My 3bln was too high earlier) and it has nothing to do with us being charitable and certainly nothing Mubarak and the Egyptian government has done to deserve it.
Pretty much as long as the status quo is in place the American empire is happy
And more rhetoric coming from Obama with no substance behind it. Clearly "calm and peaceful" demonstration that Obama and Hillary Clinton suggest against Mubarak's government has done nothing up until now, it certainly will do nothing in the future.
When Obama said he wants "calm and peaceful protest" that was code for "if protestors show up again tommorow, we support Mubarak trouncing them".
Your damn if you do your damn if you don't.
If Egypt goes to some Islamic fundamentalist leadership, very likely the US loses an ally and influence on oil in the region.
If the UN guy, allows a good correct democratic revolution. The US now has to compete with Russia/China, which means losing an ally, Egypt selling/trading to the "highest bidder", actually making correct economic decisions.
If you keep the current crazy guy in charge and tell him to crush this thing overnight. It's business as usual.
The Eqyptians will not accept a 'western puppet' such as ElBaradei, just as they no longer seem to be accepting a dictatorship under Mubarak. Hopefully the US will have learnt from the mistakes they made in Iraq, and understand that injecting someone who they see as fit is not what the Eqyptians want. ElBaradei may be seen as a figure befitting the cause from a western point of view, but I seriously doubt that he touts enough influence within Egypt to galvanise a consolidated opposition.
If the US was to push for the removal of Mubarak, it could potentially leave a hotbed of instability, open to influence from a wide variety of extremeism. If you promote democracy, you have to be willing to face the consequences.
As a result, I don't think Obama has any choice other than to support Mubarak at present. I think Israel and the Saudis will be significantly influencing the US policy in the next few days, and if they're comfortable with the likely 'beneficiary' from this ( as in the next party / leader), we might be in for a swift change on the US stance.
UGH how did this turn into politics... did the market oversell friday was the point. geez. you people are supposed to be capitalists not politicians.
As Bruce Kovner put it when talking about the troubles of New Zealand's Finance Minister, " My job is to do the puzzle with him and figure out what he is going to decide, and what the consequences of his actions will be that he or the market doesn't anticipate. That to me, in itself, is tremendous fun."
You asked the question, you get the opinions...
hmm, situation in Egypt is probably going to play out like this. Mubarak will cut a deal with military leaders. The military will back up the current gov. He will resign soon after this. Someone in the military will take his place.
Sounds about right..
Egypt needs democracy more than ever.
http://www.youtube.com/embed/ThvBJMzmSZI
http://www.bp.com/sectiongenericarticle.do?categoryId=457&contentId=200…
If it gets anymore out of hand, BP will have to stop their production
I'm watching bloomberg tv right now....people are saying this could be like the fall of the Berlin Wall for the Arab world. This could be a pivotal test of Obama's diplomatic skills.
A lot of people have been claiming that Tunisia influenced the Egyptians. If the Saudis are inspired by the Tunisians and Egyptians, and the "House of Saud" is disturbed, we could have real problems.
Sounds like The Muslim Brotherhood will be the successors. What's the deal with the Brotherhood? Are they radical?
I very much doubt Saudi will fall as much as I wish it would
Egypt, I Heart You! (Originally Posted: 09/14/2012)
When I involuntarily found myself on the verge of adulthood some years ago, I packed up shop and off I flew. I landed in Egypt (don’t ask) and I fell madly in love with it that I vowed never to return to cold, passionless USA ever again. From that point on, I’ve had a relentless and vicious on-again-off-again relationship with that country that made me question my sanity and entertain the idea that I might suffer a psychological imbalance.
A few days ago I landed at Cairo International Airport after a few re-routed flights that were the aftermath of Egypt Air’s one day protest, lost my bags, got caught up in the American Embassy’s protest traffic and learned that my best friend was arrested for riot and violence acts against members of the armed forces. I could tell this trip was going so smooth, it was slippery. I am here on a business-ish trip and finally got a chance to meet with my contacts yesterday and I couldn’t be happier with the outcome of our talks. These investors are hungry and have enough fear in their hearts and doubts about the efficiency of the Egyptian system that makes them want to flea their country for safer havens. To most of them those greener pastors are in the USA, others find comfort in the altitudes of Brazil or the padded banks of Switzerland.
It made me happy to hear that I can offer them investment opportunities wherever they want to plant their money and watch it grow. I could actually bring in business and my bonus will be huge; I thought to myself. Then a persisting question bothered me and boggled my jet lagged brain: If all the seasoned investors with money big enough to make a difference export their wealth to other markets, who will rebuild Egypt?
I was furious, angered, and felt a little protective over Egypt that drove me insane many a times than I care to admit. Who will rebuild Egypt? I got my answer when I spent a few hours with old friends and their friends and their expat friends at a “qahwa” (a local neighborhood coffee shop where you usually have coffee or tea and play board games).
Oh, the joy of hearing all those young people eager to make their home a better place, their fresh ideas and business ventures, the drive fueling their hunger and most importantly, their belief in their country that powers their patience and resilience.
Businesses run by younger founders and owners are popping up all over the place, from home baked bagel shops and traditional tiny restaurants to tourism agencies and medical centers.
Knowing the Egyptians and experiencing their passionate nature and enthusiastic outbursts first hand, I have not the slightest doubt in my heart that the Spring Generation will achieve what they have set their minds to. It might take a while, the ride might be exhausting at best but they will get there, and maybe only then, opportunities will unveil for bigger investors with more money and the true attractive nature of the country will drop it’s ugly temporarily unstable mask.
I know I am already plotting down a game plan for my investment here, what about you? Will you ever consider Egypt? If not, why so?
In before the shit storm.
I'm no expert on Egypt BY ANY MEANS, but it seems to me that the "Spring Generation" is a massive and unadulterated failure. They elected theocrats who are saber rattling for war with Israel. They elected theocrats who have even less respect for religious minorities than their predecessors. They elected theocrats who are clammoring for bans on bikinis and for the destruction of the Great Pyramids. To top it off, their people are rioting at the U.S. Embassy for no real specific reason.
I'm really not sure how you could possibly have any optimism at all about the so-called "Spring Generation". Democracy without the rule of law or constitutional limits and protections is simply a dictatorship by any other name. It's the dictatorship of the majority--and in this case probably a scenario of "one man, one vote, one time."
Exactly, I think the OP has his head up his ass since he cannot see that the only difference between the "Spring generation" and the older generations, is that these loonies have access to the internet.
Isn't that what you want though, some misconstrued, F-ed up definition of "freedom"?
Anyway, apologies to the OP for going off-topic there.
Egypt has a massive, well-educated labor force. Labor is cheap, too. The country itself is fertile for competition from foreign (regional and international) firms to set up shop and watch the money flow in. I remember a friend telling me about how bad some of the companies were in Egypt but they were making a ton of money because there was no competition in sight. His line of business has only 1 major company taking up 80%+ of the market share, and their products were just complete garbage. And trust me, that company and that industry are not unique cases.
A country governed by a "Supreme Council of Armed Forces" which has abrogated the constitution , and by President Mohammed Morsi of the Muslim Brotherhood.
DEMOCRACY!! Mmmm ... mmmmmm!!
Actually , I stand corrected. They haven't abrogated the constitution , they have held it in abeyance
They look like a cross between Iran circa 1975 and the US circa 1780...no longer operating on the old system, but certainly not operating at full capacity. I wish them luck, and may be affiliated in some nominal way, but there is plenty more upheaval to come. I give them about a 70% chance of having a functioning nation, and a 30% chance of a new totalitarian regimine establishing itself. Give or take.
I wish them well
They seem less upset about the continuous murder and abuse of Coptic Egyptians, "virginity tests" which I guess is the radical Islamic-compliant way to say child molestation, and more upset over a YouTube video. I am less optimistic than you.
Sad, since the region does have potential. Look at Dubai; even though they had a huge real estate bubble, at least they're on the map now. Or, look at some of the areas in the Kurdish area of north Iraq where a lot of frontier market investors have been putting in capital (oil E&P).
I'm not going to argue about the political situation, but it is fair to say that there are roughly 84 million Egyptians in Egypt, the actions of a couple of hundred thousands or even millions of them are no indication of how the rest of them behave or believe.
Please, do not believe everything you read or hear in the media. Most of what they are trying to change, specifically the bigger issues like "virginity tests" (which by the way, only happens in the bottom of the ignorant crowds) do not make international headlines.
Alright , so in your opinion - what is Egyptian society like on a scale of 1. Afghanistan under the Taliban to 10. Amsterdam (Actually , Amsterdam can get pretty racist but I digress) ?
Do you realize this makes you look like the caricature of a clueless upper middle class girl abroad , blithely praising those whose problems she knows nothing about?
I agree with you OP. The idea to ban alcohol that was voiced was months ago is exactly what the tourism industry needs to flourish. We already have islamic-banking, so why not islamic-tourism?! Egypt has strong politicians with real support, not ones who get to the cabinet with less than half of the population voting for them (in 2000). Electing muslim party is a strong sign of unity, we will be able to build a democracy and show to the racists that democracy and Quran are compatible. Salam Aleikum!
Flower popped in a desert after an oil-rain.Please, please tell me this entire post was sarcasm. If saracasm, spot on and it made me laugh out loud. If not sarcasm, then I'll say that this line of thinking would be funny if it weren't so sad.
Satire, surely.
I don't buy it.
I'd probably invest in Greece before Egypt. just sayin
Actually , I think I read something about Egyptian bonds being backed by the US govt temporarily. So I might have to disagree there
the truth about egypt:
http://www.youtube.com/embed/p7gL9ofxl0g
Egypt is a shit country that is an economic wasteland that has trended significantly more conservative in the past few decades. It doesn't have much in natural resources compared to the size of the population so per capita income/wealth will always be low.
Egypt is the Devry of the world. United States is the Rutgers and England the Harvard
Harvard has a queen?
.
I want to call you Cleopatra, queen of denial.
See what I did there!
This started as interesting, and this morning it has become:
GS makes juvenile assumptions and has no sense to say "oh, my bad" when shown otherwise, and looks silly arguing.
Disincentivy has an extensive and multifaceted understanding of this region that is not appreciated by college student.
Several other voices spouting vague things about freedom and such, but no knowledge of situation beyond network news sound bites.
Closing Remarks:
King Solomon, why don't you enlighten us further with your wisdom and tell us what you know, instead of giving us your half-baked "view from 20,000 feet". Most people can see that both Dis and I have valid points to make. And that we are, sometimes, talking past each other. There are clearly many well respected foreign policy experts who support my point of view, and there may well be some who support hers.
My contention is that she, being an upper/upper middle class Egyptian, western educated, English speaking, cosmopolitan and well-travelled is too sanguine about Egypt's further prospects and too far removed from the experience of the average Egyptian to make sound judgments about their intentions and political ideals. We are about to head into an American election, where we will no doubt hear countless assertions about how upper and upper middle class elites are not in tune with the pulse of the nation, and not in touch with the regular priorities of the citizenry. Why is it so outlandish to assume that this is true for other nations as well? Namely, Egypt
You have not as yet earned your position to talk about this topic from 'above the fray'. Because from what I can tell, you've added fuck all to this discussion. Which part of my argument do you disagree with, and why?
Can you not Google at least?
Have your banks/universities not renewed your economist subscription?
Reading this thread one gets the impression that it was a desert with bearded men shooting at one another with rocket launchers and AK-47s. For all of its economic problems (and they are serious), conditions in Egypt are not that bad.
Egypt is a $230 billion p.a. economy. It has an industrial base from Automobile manufacturing (Kia, Mercedes, Peugeot, etc...) and steel to textiles, chemicals and construction. Beyond that the service sector is massive given the size of the country. Telecoms and financial services are large sectors and Tourism is an important export sector with over 12 million visitors annually.
The main long term issues will be dealing with how to finance economic development and the state's programmes to tackle widespread poverty while at the same time dealing the consequences of the previous government's crony capitalism and neo-libralism. There are serious short term problems that can derail this though, like the dwindling Forex reserves (which is why tourism exports are so important) and the need to borrow from the IMF (talks this month).
I think we are too quick to associate elections with democracy and liberalism. I think it is our optimistic and hopeful nature. I also think that we are too quick to equate democracy with economic growth. A quick look at China disputes the latter. We also have these polarised models of how the world is. If it isn't atheist, then it is theocratic, if it isn't submissive then it is aggressive, etc... None of this is useful in assessing a situation and it impedes making good decisions, especially with regards to investments.
Sure the average Egyptian protestor wants justice, self determination and other rights and has sacrificed a lot, but the transition from the previous authoritarian government to some form of democracy is not guaranteed, nor is it going to be smooth. We don't know whether Egypt will remain authoritarian or if it will develop a more democratic political system like Malaysia, Morocco or Turkey over time (decades at least).
Would I invest in Egypt? Maybe. In an export based sector, or in the sea side hotels.
Democracy is the belief that the common people know what they want, and deserve to get it good and hard. H.L. Mencken
Investing - Implications of Egypt for the Financial Markets (Originally Posted: 02/03/2011)
As the crisis in Egypt continues to brew, what are the implications for the Western markets? The S&P 500 took a dip on Friday as people became wary of the problems in Egypt. This week, the S&P 500 seems to shrug off those worries as earnings from companies continue to beat expectations, painting a slightly more optimistic picture. But will this optimism last? I believe that the problems in Egypt are just beginning. The riots are going to intensify and affect many of the neighboring countries. Will the S&P eventually go into a double dip? What's more interesting is that the Canadian market has actually rallied due to its high % of energy companies. It seems like the S&P/TSX would actually be a great index to invest in. For those of you looking to invest in index funds, what's your plan? Are you sitting on the sidelines in cash waiting for the next dip? Are you buying the S&P/TSX? Are you buying the S&P?
long crude - i like mmr and egy
I bought in OIL and AFK.
Long sand. That shit is gonna skyrocket
If you don't mind me asking, why do you think this? I am on the opposite side, in that Mubarak will be pushed out in the next couple of weeks and someone else will take control until the elections in September. Unfortunately, those elections could spell trouble as well. Keeping a close eye on Egypt..
I don't believe the doom scenario in Egypt is going to happen and it is unclear what bamlnite thinks will happen as an effect in which countries. In fact, i bought the thinly traded EGPT waiting for a rebound. Of course i dont have any special insight, just guessing.
Shipping companies
Agree shipping companies...the situation is not going to be resolved anytime soon. mubarak will likely fight tooth and nail to hang on to his seat.
Are you guys longing spot or futures?
what would be an appropriate investment strategy if you expected that the turmoil:
a) ends next week b) continues for another 6 months
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