And The #1 Market For 2012 Is...

Cairo Stock Exchange

Photo: AP Images

Regular readers will know what a monster year that Egypt is having.We practically point it out every day.

Turns out it’s the #1 performing market of the year, according to FT.

Of course it’s a big head scratcher, the fundamentals seem pretty dismal.

The government faces a yawning budget deficit, while the Egyptian central bank’s foreign currency reserves had fallen to $16.4bn by the end of January, covering just three months worth of imports, an acutely low level for a country that buys much of its food from abroad.

The central bank’s reserves have been depleted by defending the Egyptian pound. Yet the currency still hit an eight-year low of E£6.06 to the dollar in late January, compared with E£5.8 at the start of 2011. The admittedly illiquid non-deliverable forward market indicates that investors think the pound could hit E£7.25 a dollar in 12 months

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