It has become a clich to say that the Egyptian economy is globalizing. In this process, the country s stock market has certainly not been left behind. Foreign portfolio transactions on the Cairo Stock Exchange often exceed 50 per cent of the total trading volume. This makes the stock exchange one of the most internationalized sectors of the economy, together with the traditionally export-oriented sectors such as petroleum and tourism. However, while a ton of petroleum products has a uniform price worldwide, irrespective of its source, share prices of companies or banks, such as Suez Cement or CIB, are deeply affected by the perceptions of international investors.
Share prices mirror the earning potential of a company.
This, in turn, reflects factors intrinsic to the company as well as external macro-economic determinants such as monetary and trade policies, exchange rate stability and the political environment. In comparison, Morocco and Turkey have a ratio of 20, Greece 27 and Portugal 35, reflecting their common market prospects. Much of these differences in valuation are related to the international investors perceptions of events likely to affect companies growth prospects. The international perception of the Egyptian market has recently been affected by many events. The Luxor massacre last November and its negative effect on tourism tops the list.