Egypt’s markets: strong start to 2012 may not be sustained

On the back of a smooth start to the new parliament, Egyptian equities have jumped by 5.4% so far this week, and CDS premia have fallen by around 70 basis points. However, since last year’s revolution, Egyptian markets have been driven by political developments. Since political uncertainty is far from over and economic problems are yet to be addressed, we don’t think that a sustained recovery in Egypt’s financial markets is on the way.