The Egyptian Stock Exchange (EGX) is expected to continue its upward trend following the country's interest rate cuts. The Monetary Policy Committee reduced Egypt's benchmark deposit rate by 150 basis points, setting the new rate at 14.25 percent, and its lending rate at 15.25 percent.
According to Mohamed Abu Basha, a lead Macroeconomic analyst at EFG-Hermes, the reduction is larger than expected and will be well received by markets. He believes that the cut will provoke the capital expenditure cycle and boost business investment.
Notably, Egypt's EGX 30 stock market index has risen by over 7% this month alone, making it the world's best performing major gauge. This performance stands in contrast to peer markets, which have fallen by as much as 5% this month.
The anticipation of lower interest rates has helped protect Egypt's Stock market from global tensions, allowing it to outperform its peers. The country's central bank aims to achieve a price stability over the medium term and targets an inflation of 9 percent with a 3 percent margin towards the end of 2020.
