Having rallied by about 8 per cent since last month mainly on expectations that the government would reach a deal with the International Monetary Fund, Egypt’s EGX 30 index has not significantly reversed its gains despite the departure of the IMF team this week without an agreement.

The reason for the apparent resilience, analysts say, lies in announcements that Qatar and Libya had agreed to give Egypt $5bn in aid helping to prop up its floundering economy and shoring up dangerously low foreign reserves.

“I think $5bn will give us some energy and a breathing space,” says Osama Mourad, chief executive officer of Arab Finance, a brokerage. “Unfortunately, however, it will delay any restructuring or reform policies.”

Analysts also note that the IMF statement saying that talks with Egypt would continue on the sidelines of its spring meetings in Washington have rekindled hopes that a deal was still possible, despite the pessimism of many observers.

Mr Mourad pointed out that the devaluation of the Egyptian pound by about 12 per cent since the beginning of the year, when the Central Bank of Egypt started rationing the amount of dollars it offers to the market, has helped make equities cheaper, encouraging some buying.

Overall, however, the bourse, seen as one of the best performers in the world in 2012, has declined by about 12 per cent over the past six months and trading volumes remain slim at between 300m-400m Egyptian pounds.

The market’s fortunes, analysts note, have closely followed the rollercoaster trajectory of Egyptian politics since the uprising which toppled Hosni Mubarak as president in 2011.

Karim Khadr, head of research at CI Capital, said that last year’s high points coincided with the aftermath of the second round of the parliamentary election when it became clear that the Muslim Brotherhood would dominate parliament, raising hopes of stable government.

There was a similar peak, he noted, in September several weeks after Mohamed Morsi, the elected Islamist president, took power, again on the promise of stability allowing a deal with the IMF.

But Mr Morsi’s speech on October 6 pledging to target companies, which he did not name, but accused of corruption and tax evasion, immediately caused the index to plummet, says Mr Khadr.

“This was not pro-investment,” he adds.

The confusion in recent weeks about the introduction of a capital-gains tax and a 1/1,000 levy on stock exchange transactions is also being seen as damaging to a fragile and badly bruised investment atmosphere.

In a sign of the continuing disarray in government policy, the tax authority imposed in late March then promptly retracted a 10 per cent capital gains tax on shareholders in National Société Générale Bank which has been bought by Qatar National Bank.

The authorities have now announced at last that plans for a tax on dividends and another on gains from acquisitions would be scrapped.

They will, however, retain the 1/1,000 levy on bourse transactions, though brokers say that with the market in the doldrums this is not the right moment to impose it.

“It will definitely slow down trading,” says Mr Mourad. “It sounds like it is a small levy, but it is not. The average brokerage commission is between 2 to 3 /1,000, so we will have increased the cost of trading by 33 to 50 per cent.”

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