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Tuesday, 24 December 2019

Egypt listed among top African bond markets for next year

Egypt set to be among top African bond markets in 2020: Global investors have “reaped rich rewards” from African countries’ debt markets, which have outperformed all other EM regions in 2019, Bloomberg’s Paul Wallace says. The strong performance should be sustained in 2020 “if the world’s major central banks remain dovish,” pushing investors seeking higher yields to African markets including Egypt, Angola, Ghana, Ethiopia, and Nigeria. “Egypt remains a favorite among portfolio investors. Carry traders, attracted by yields of around 14% on [EGP] bonds, have flocked to the Arab nation. The currency has rallied 12% this year, its best performance in at least 25 years,” Bloomberg says.

Where will the EGP settle in 2020? Bloomberg notes that Societe Generale expects the EGP strengthen 4.5% next year to hit EGP 15.35 against the greenback.

The EGP has offered the second-best carry trade in the world over the past five years, outperformed only by the RUB, the business information service notes. At 72.9%, the Russian currency has delivered more than double the 30.0% carry trade return the EGP has been able to offer investors, making it a safe haven currency amid trade war concerns. The RUB’s stellar performance comes five years after the Russian central bank let the currency float, which initially triggered a “nosedive” in 2014.

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