Posted on 22 December 2012
In what is undoubtedly either the most visionary or most stupid
investment of the year Emirates NBD Bank has announced that it is buying
the Egyptian operations of BNP Paribas for $500 million, following
closely on the heels of Qatar National Bank’s acquisition of a majority
stake in SocGen’s Egyptian arm earlier in the month.
So two giant French para-state banks are exiting Egypt, the largest foreign disinvestment this year, and two Gulf banks have stepped in. Are they wisely obeying the Rothschild dictum of buying while there is blood on the streets? Or is this more a question of political support for the ailing Egyptian economy?
Egyptian economy tanks
Certainly claims that Egypt is a rapidly growing emerging market and ripe for investment are ludicrous in the wake of the recent revolution. This has been a disaster for tourism, the country’s biggest foreign currency earner and the flight of capital out of Egypt has been of epic proportions.
Rich Egyptians have always stashed a lot of their money overseas, mindful of the wealth confiscations that followed the 1952 revolution. Cairo is completely ramshackle because rent controls introduced then have never been rescinded and landlords have allowed once beautiful buildings to go to rack and ruin.
This outflow of wealth has turned from a gentle stream to a torrent since the 2011 revolution. The two biggest French banks are the latest to get out of Egypt.
Now admittedly they do have an ulterior motive: eurozone banks are selling out all over the place to rebuild their capital reserves in the wake of the eurozone sovereign debt crisis.
Bold or stupid?
But to invest in Egypt you need a stomach of iron and a deep pocket to live to see better days. How long will it take for the country to settle down? Will the existing owners of capital be able to keep their investments? You just don’t know, many revolutions go through a number of phases and the richer classes can come off very badly.
Of course Egyptian commentators are bound to be patriotic and who can blame them for heralding the investment by the Gulf banks as significant. True, the Egyptian stock market has rallied this year, though it was down 45 per cent last year. Then again foreign currency reserves have dropped from $36 billion two years ago to $15 billion, according to central bank data.
Buying while there is still blood on the streets – and the riots in Cairo this week about the constitutional referendum are just that – can prove highly successful but what if events spin further out of control? Then you are pouring money down the drain.
Source
In what is undoubtedly either the most visionary or most stupid
investment of the year Emirates NBD Bank has announced that it is buying
the Egyptian operations of BNP Paribas for $500 million, following
closely on the heels of Qatar National Bank’s acquisition of a majority
stake in SocGen’s Egyptian arm earlier in the month.So two giant French para-state banks are exiting Egypt, the largest foreign disinvestment this year, and two Gulf banks have stepped in. Are they wisely obeying the Rothschild dictum of buying while there is blood on the streets? Or is this more a question of political support for the ailing Egyptian economy?
Egyptian economy tanks
Certainly claims that Egypt is a rapidly growing emerging market and ripe for investment are ludicrous in the wake of the recent revolution. This has been a disaster for tourism, the country’s biggest foreign currency earner and the flight of capital out of Egypt has been of epic proportions.
Rich Egyptians have always stashed a lot of their money overseas, mindful of the wealth confiscations that followed the 1952 revolution. Cairo is completely ramshackle because rent controls introduced then have never been rescinded and landlords have allowed once beautiful buildings to go to rack and ruin.
This outflow of wealth has turned from a gentle stream to a torrent since the 2011 revolution. The two biggest French banks are the latest to get out of Egypt.
Now admittedly they do have an ulterior motive: eurozone banks are selling out all over the place to rebuild their capital reserves in the wake of the eurozone sovereign debt crisis.
Bold or stupid?
But to invest in Egypt you need a stomach of iron and a deep pocket to live to see better days. How long will it take for the country to settle down? Will the existing owners of capital be able to keep their investments? You just don’t know, many revolutions go through a number of phases and the richer classes can come off very badly.
Of course Egyptian commentators are bound to be patriotic and who can blame them for heralding the investment by the Gulf banks as significant. True, the Egyptian stock market has rallied this year, though it was down 45 per cent last year. Then again foreign currency reserves have dropped from $36 billion two years ago to $15 billion, according to central bank data.
Buying while there is still blood on the streets – and the riots in Cairo this week about the constitutional referendum are just that – can prove highly successful but what if events spin further out of control? Then you are pouring money down the drain.
Source
