The Egyptian Exchange rallied during the month of May, buoyed by financial support from Western and regional governments that has helped restore confidence in the market.

The EGX 30 Index, began the month at 5,053 points, but has risen to 5,524 by 31 May as more foreign aid pledges have been made, most recently the G8’s statement that it would provide $20bn to support the economies of Egypt and Tunisia.

The rally is a relief for the market which suffered a disastrous performance when it reopened 27 March after being closed since 27 January because of political protests. On 3 January, the index was at over 7,000 points.

The economy has suffered because of the protests, which has been reflected in the stock market. Gross domestic product (GDP) protracted by 7 per cent in the first quarter of this year, unemployment rose by 3 percentage points to 12 per cent and the country’s largest employer, the tourism sector saw a 60 per cent decline in tourist arrivals in March compared with the same period last year. The government has already spent $15bn to defend its currency.

Reopening the exchange was delayed five times during the political turmoil. In a world record, the exchange stayed closed for almost two months. It was reopened on 22 March and fell by 10 per cent within minutes. The authorities decided to close it again to prevent it falling further.

It was reopened fully on 27 March and faced continuing declines. On 28 March the EGX 30 fell from 5585.35 to 5251.3. The decreasing trend continued throughout April and the first week of May.

“We have seen large scale foreign outflows from the market. Although it is difficult to quantify, it has put pressure on the currency,” says Liz Martins, an economist at HSBC BankMiddle East.

In particular, companies with links to the former regime have been affected. Taalat Moustafa Group, the country’s largest real-estate developer, has seen almost half of its value wiped out. The company is currently involved in a court case after securing land for its Madinaty project without a public auction.

The growth trend began on 9 May, when the EGX 30 opened at 4879.97 and closed at 4934.23. Since then, the bourse has been relative stable on an upward incline, but still has a while to go before it can match pre-revolution performance. The average daily turnover has fallen from $135m to about $84m.

Chairman of the Egyptian Exchange, Mohamed Abdel Salam, embarked on a tour of the region in the last week of May to promote the bourse and assure investors that the government will maintain open-market policies to help induce foreign investment.

About 60 per cent of the buyer investors in the earlier trading sessions were first-time buyers, indicating a sense of optimism in the market. Non-Arabs comprised 30-35 per cent of trade on the EGX before the revolution, this has now increased to 40-45 per cent.

Recent financial pledges from across the globe have been reflected on Egypt’s stock exchange. This includes $4.5bn from the World Bank and $4bn from Saudi Arabia.

“This has helped to stabilise the stock market and its currency,” says Martins. “But the most critical thing now is to receive the money as soon as possible, preferably before the elections.”