The ongoing war has meant that — at least for now — “investors are wary of the whole region,” Zilla Capital Managing Partner Omar El Shenety tells EnterpriseAM. Despite its geographic and political distance from the conflict, “Egypt is not immune; the whole region shares the pains and prospers of economic cycles,” Morpho Investments Founder and Managing Partner Ayman Soliman tells us, explaining that “there is always some sentiment spillover in global capital markets — risk appetite tends to move regionally.”

Exposed? Yes, but for different reasons than the GCC

Although “no country in this region is fully insulated, [...] Egypt faces genuine near-term pressures as a net energy importer in an environment of rising global oil prices,” Foundation Ventures Managing Partner Mazen Nadim tells EnterpriseAM. “Egypt’s risk profile is structurally different from markets closer to the conflict. Its exposure is primarily economic and indirect, and that geographic reality provides a meaningful buffer.” Nadim explains.

For many investors, the risk in Egypt isn’t about security — it’s about confidence in being able to repatriate returns in times of crisis. In contrast to the Gulf’s ability to provide FX liquidity and move capital between borders, previous experience in Egypt leading up to the float of the EGP understandably means this is still a “longstanding concern for investors in Egypt, especially those not using the market primarily as an export,” BMI Senior Country Risk Analyst Abdalla Saleh tells EnterpriseAM.

Don’t expect a lot of investment interest to move here from the GCC

Egypt may seem a more attractive investment decision on paper, but the two geographies appeal to different investors. “Egypt and the GCC, now and in the past, have presented stories that are complementary, not competitive,” Soliman explains.

“What we are seeing now is a very short news cycle,” argues Soliman, pointing to the GCC’s “deep liquidity, strong institutions, and ambitious economic transformation programs,” which will continue to attract investment. “But the GCC has and will remain a destination and Egypt as well will continue to offer scale, demographic momentum, and significant productivity upside,” he added.

If Egypt will compete with anyone, it’s Morocco — our main competitor for FDI, which unlike Egypt has remained mostly isolated from Israel’s war on Gaza and following conflicts, Saleh tells us.

What attracted — and put off — investors in the past will remain

The war will end, and the market fundamentals that initially attracted investors — for both Egypt and the GCC — should still be there. “Egypt’s structural story was strong before this crisis, it remains strong through it, and it will be stronger on the other side of it,” Nadim tells us.

“The conversations we are having with long-term capital are about recognizing a trajectory that was already well established,” Nadim tells us, pointing to the longer-term narrative of “a large economy with a credible reform story, a strategic geographic location, a technically skilled and affordable labor force, and a government that has demonstrated it can manage through adversity.”

While instability may increase caution in emerging markets in the short term, “experienced investors tend to differentiate between brief volatility and structural [potential],” Soliman tells us. “If anything, periods of regional uncertainty often sharpen investors’ focus on markets with deep domestic demand and diversified economic drivers,” he explains.

For the GCC and investors there, supply chain resilience is Egypt’s key appeal

Although “Egypt’s geographic advantages are not new” or unknown, the world is now “paying much closer attention to supply chain resilience,” Nadim tells us. With Egypt already playing a role in facilitating Gulf energy exports via its Sumed pipeline and Red Sea infrastructure, in addition to supporting previously seldom-used land routes to channel goods amid the closure of the Strait of Hormuz, the country is demonstrating its ability to act as a gateway to global markets. Even when the war comes to an end, the memory of the conflict will remain, as will likely the possibility of a renewed conflict in the future and the desire to have working supply chain alternatives.

While investors outside our region may be waiting to carry on as they once did, the same may not be true for Gulf investors with non-supply chain interests in Egypt. “There are concerns that activity on Gulf‑backed tourism projects such as Ras El Hekma and Alam El Roum may ease,” and similar projects in the future may not be pursued as “near‑term economic strains [...] weigh on sentiment towards Egypt,” Saleh says.

What’s next? We can speculate all we want, but the fact is that “appetite will stay untested until the war settles down,” El Shenety tells us, with much yet unknown in terms of how long the war will last or how it will end. While “[i]nvestors are now in a wait-and-see mode until the war settles,” looking ahead, investors will reassess the region and could “realize that the risks of Egypt are much less than the GCC markets from a political standpoint and this may have positive long-term implications on investing in Egypt,” he added.

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