Egypt is still on the watch list for the possibility of moving from the “secondary emerging” market category to the “unclassified” market on the FTSE Russell (French) index.

The FTSE Russell Global Stock Index Group kept Egypt and Pakistan on its watch list for a possible downgrade in its global stock index.

Egypt is still on the watch list for possibly moving from the “secondary emerging” market category to “unclassified,” and an update on its status is expected to be issued by the end of next June.

According to Reuters, the stock market classification determined by FTSE Russell includes 5 main grades, which are:

  • Developed markets.

  • Developed emerging markets.

  • Secondary emerging markets.

  • Frontier markets.

  • Unclassified markets.

Pakistan also remained on the watch list for a possible downgrade from a secondary emerging market to a frontier market, and the FTSE said it would announce an update on its status by July 5.

Egypt has made a surprising transformation in recent weeks to become the hottest market in emerging markets (Reuters)

The FTSE's classification affects where the $15.9 trillion in funds that track the index are invested, especially in emerging and frontier markets.

Recently, Egypt, which had been teetering on the brink of its worst currency crisis in decades, has made a surprising turnaround in recent weeks, becoming the hottest emerging market.

Bloomberg said earlier that the announcement of a huge deal to develop the tourism sector worth $35 billion with the United Arab Emirates, which is the largest internal investment in Egypt’s history, seemed like a pivotal shift.

The infusion of capital invested in the deal, mostly in dollars, was a lifeline, enabling Egypt to embark on a series of measures aimed at stabilizing its faltering economy, according to Bloomberg.

Measures included a significant increase in interest rates, to an expansion of the scope of the International Monetary Fund loan.

Anatolia Agency mentioned in a previous report that recently announced investment flows to Egypt indicate renewed international interest in the Egyptian economy.

Countries such as the UAE, Italy and the European Union have pledged investments exceeding $160 billion in the coming years.

However, amid the euphoria surrounding Egypt's new economic vitality, questions remain about the sustainability of this recovery, and Bloomberg says that Egypt has a track record of promising reforms that were followed by reneging on them.

Source: Al Jazeera + Reuters