DUBAI (Reuters) - Middle Eastern funds plan to increase their investments in Egypt, despite recent political protests, while keeping their exposure in the rest of the region at current levels, according to a Reuters poll.
Five of nine managers polled said they would increase their investments in Egypt, despite protests last month, amid improved economic indicators.
Last week, Egypt reported its lowest headline inflation rate in almost seven years, paving the way for further interest rate cuts.
However, last month’s protests, rare during the tenure of President Abdel Fattah al-Sisi, showed that much of the population has yet to benefit from years of economic reforms.
Although the protests had initially wiped out its gains from the start of the year, Egypt's main share index .EGX30 has mostly rebounded and is up 9.72% this year, beating several other regional markets.
“Undoubtedly, [Egypt is] the most interesting story in MENA. The events in the last two weeks and the sharp market recovery is evidence that the risk-to-reward is very favorable,” said Vrajesh Bhandari, senior portfolio manager at Al Mal Capital.
“If the rate cuts come in as expected, we think next year could be similar,” he added.
Most of the fund managers polled said they were keeping their allocations in the United Arab Emirates, Saudi Arabia, Qatar, Turkey, and Kuwait equal.
Bhandari said some investors are “reducing exposure to the region in light of higher geopolitical risks. To them, the flow events are largely done and overall growth is not very exciting compared to other emerging markets.”
Editing by Deepa Babington