Egypt’s benchmark index, the EGX30, gained slightly on 20 August, days after the the army’s forceful removal of Muslim Brotherhood protesters that resulted in more than 900 deaths. It rose 1.08 per cent on 20 August, following a decrease of 0.1 per cent on 19 August.

However the index’s increase did not erase the drop of 3.87 per cent on 18 August, the first day of opening after the exchange had been closed for three days.

The fall brought the market back to levels seen before the protests in June calling for former president Mohamed Mursi to step down, which prompted investors to sell off stocks in anticipation of political unrest in the country. The day after the army’s coup, local investors regained confidence causing the stock market index to surge 7.3 per cent, but it has now slumped again. Over the past week, the EGX30 decreased 2.9 per cent, whereas the year-to-date drop is 1.4 per cent.

Mainly local investors have been putting money in Egyptian stocks in recent weeks. The majority of foreign investors on the other hand pulled out of Cairo’s stock market in the months leading up to the protests, though many are still unable to repatriate their funds because of a lack of foreign exchange funds in the country.

“The two trading sessions after 18 August saw a correction, as no news is perceived as positive news to local investors,” said Allen Sandeep, Research Director at Giza-based Naeem Holding. “Foreigners including from the GCC are still adopting a wait and see approach.”

Egypt’s stock exchange resumed regular trading hours on 20 August after exchange and central bank had been operating on shorter hours for several days.

The recent violence has led to a rise in Egypt’s five-year credit default swaps, the cost of insuring its debt, to over 800 basis points – the highest in more than a month.