Stock market unaffected by latest violence

The Egyptian main index EGX 30 increased by 0.83 percent on Wednesday, October 9.

Meanwhile, the EGX 70 and EGX 100 gained 0.53 and 0.76 percent, respectively.

The violence outburst of Saturday, October 6 does not appear to have significantly to have much changed the outlook of the Egyptian investors. The EGX 30 had already slightly increased by 0.7 percent on Monday, October 7^th. 57 people died and around 300 were injured during clashes between security forces and opponents to the regime.

In what may look as a paradox, the stock exchange is currently beating records high.

The EGX 30 had not been at such a high level since last January.

It gained more than 12 percent since September 5 and 28.3 percent since June 23.

Over the last month, the EGX 30 has known 15 days of growth against 5 days of decline only.

But despite the high levels of uncertainty and lack of security in the current period, the overall financial situation of the country has considerably improved over the past three months.

The massive aid flowing from the Gulf has relieved considerable pressure on the public coffers and, in turn, on the whole economy. Improved access to finance for the state has dropped interest rates.

Interest rates on 91 day treasury bills have dropped by 3.5 points since July, reaching their lowest levels since the early aftermath of the revolution.

This considerable drop has major consequences on public finance. Planning Minister Ashraf al-Araby told state news agency MENA that the government would spare LE 30 billion over the 2013/14 exercise thanks to this drop.

The Central Bank lowered its main overnight interest rate in August and in September that in turn pushed down the interest rates offered by Egyptian banks.

And lower interest rates mean easier access to credit for investors — and thus more business opportunities.