The Egyptian Exchange (EGX) is slowly showing signs of a comeback following steady gains at the start of the year.

The EGX30, the benchmark, closed 2.36 per cent higher to 3,735.64 points on 10 January, the highest in three weeks led by gains from Orascom Construction Industries (OCIC) and Orascom Developing Holding AG (ODHN).

OCIC, which signed a contract to build the Grand Egyptian Museum, saw its stock rise 1.7 per cent to £E207.

Ezz Steel also gained 1.1 per cent to £E3.68 ($0.61) on 9 January after reporting a net profit of $93m for the first nine-months of 2011.

One of the biggest losers is state-owned company Telecom Egypt, which saw its shares fall 0.7 per cent to £E13.4. The board has been struggling to find a new chief executive officer, but the members are due to meet this week to appoint someone.

After the 25 January revolution, the country’s economy stalled, and trade and tourism, one of the biggest contributors to gross domestic product (GDP), fell dramatically.

“Generally there are a lot of eyes on Egypt, in terms of progress politically and economically,” says Tarek Lotfy, managing director of capital markets at UAE investment bank Arqaam Capital.

The picture seems bleak when considering the drastic fall in the country’s foreign reserves, which is down to about $18bn at the end of December 2011, a drop of $2bn from the month prior, despite $1bn in treasury bills and $270m from the Arab Monetary Fund. As of the end of December 2008, Egypt’s foreign reserves stood at $33bn.

 A delegation from the IMF is set to descend on Cairo next week to discuss a possible $3.2bn loan to help the country get back on track and boost market activity.

And Mahmoud Isa, the country’s trade and foreign Industry minister, is due to take a delegation to Washington on 17 January to discuss an emergency aid package to Cairo.  

“Egypt was an extremely important market, in terms of the diversity of its exchange, the MSCI weighting, regional and international participation. It had a lot of investment made into it,” says Lotfy.

Yet this investment declined drastically as the EGX became the biggest loser in 2011, dropping about 35 per cent.

Yet there is still a simmer of confidence that political stability will eventually return to the country, but until then investors continue to adopt a wait and see approach to the EGX.

“There is a great deal of negativity that is being priced in Egypt, from political stability, impact of weakened tourism [to] devaluation, but we are starting to see steps being taken in terms of parliamentary and presidential elections, and the transfer of power from the Supreme Council of the Armed Forces (SCAF) to an elected government. Once that happens we will see investors starting to look at Egypt again,” says Lotfy.