Foreign investment in EGP bonds has now exceeded its pre-covid peak, after continuing to stage a rebound from pandemic-induced lows in March through the second half of 2020 and into 2021, the local press reports, citing an anonymous government source. Total holdings now stand at some USD 29 bn, up from USD 26 bn in mid-January and above the USD 27.8 bn high seen in February before the covid-inspired emerging-market sell-off that saw foreigners dump some USD 18 bn of Egyptian bonds.

What’s driving the rebound? Foreign portfolio investment is increasing by more than USD 1 bn each month, driven by the high yields and low inflation that offer some of the best real returns in the world, the person said.

Egyptian assets were hammered by the covid-19 sell-off in the spring: Investors sold more than 60% of their holdings of Egyptian bills and bonds between March and May as capital fled emerging markets in response to the escalating pandemic. Over the three months foreign holdings fell from almost USD 28 bn to just USD 10.4 bn. The money soon came roaring back. Holdings more than doubled in the following five months to hit USD 21.1 bn by mid-October. It was part of a reversal of flows that the minister described yesterday as a “very big shift.”