The EGX closed 1Q in the green, with the headline figure masking a March selloff that marked the first major crack in a 15-month bull run. The benchmark index gained 8.4% to reach 45.3k points in the first quarter of the year, despite dipping 7.9% in March as the Iran war disrupted markets and triggered a pullback in foreign portfolio flows, data from the bourse’s latest quarterly (pdf) and monthly (pdf) reports show.

The macro picture

More than liquidity chasing a trade: “Egypt entered 2026 with genuine macro improvement — the balance of payments strengthening, the current account deficit narrowing, FX stability returning and the external position improving on the back of carry inflows,” EFG Hermes Research Associate Noura El Essawy and EGH Hermes Research Materials MD and Chemicals Research Head Youssef Husseini, tell EnterpriseAM. That backdrop made valuations “increasingly attractive relative to a risk profile that had materially improved,” supporting what they describe as a well-founded equity bid.

This is not the correction we’ve been expecting: “After the strong start to the year, it is normal to see a correction (even if the market remained relatively cheap), but the magnitude and flows suggest it is mostly geopolitics,” Beltone Holding Head of Research Ahmed Hafez tells us.

FX volatility bites

Hot money heads for the exit: While Egypt started the year as a top pick for frontier investors on cheap valuations and macro tailwinds, the conflict forced a reversal of foreign fund inflows seen in January and February, Hafez tells us.

The FX move proved particularly punitive for foreign positioning. The EGP depreciation “raised the mark-to-market cost of EGP-denominated positions for foreign investors simultaneously, compounding the pressure,” Husseini and El Essawy say, describing a rapid unwinding of the pillars that had supported the earlier re-rating.

REMEMBER- Morgan Stanely downgraded its outlook for Egyptian equities to “equal weight” from “overweight” earlier in March, citing the country's vulnerability as a net oil importer with a tourism-reliant economy, and a struggling Suez Canal against a backdrop of regional unrest.

Where the market is holding up

Almost all major sectors closed March in the red as profittaking intensified. Only shipping and transportation services managed to buck the trend, jumping 14.1%. On the flipside, IT, media, and communications lagged the market with a 10.0% drop, followed by food, beverages, and tobacco (-8.3%), healthcare and pharma (-7.4%), and construction (-7.1%).

Parts of the market monetized the macro shock, others absorbed it: Banks and basic resources effectively acted as hedges, with revenue models benefiting from higher rates, currency weakness, and elevated commodity prices, Husseini and El Essawy say. By contrast, consumer-facing sectors — including food, healthcare, and industrials — “import inputs priced in USD, sell domestically in a depreciating currency, and serve consumers whose real purchasing power is being squeezed,” leaving them exposed on the cost side with limited offsets.

Zooming out

How we fared against regional peers: Saudi Arabia’s energy-heavy TASI outperformed the EGX in March with a 5.1% increase as higher oil prices propped up Aramco’s stock. Meanwhile, Abu Dhabi’s ADX (-8.9%) and Dubai’s DFM (-16.4%) bore the brunt of the region’s geopolitical unrest as Dubai’s two growth engines — tourism and real estate — took a hit.

Domestic liquidity is still present, but increasingly selective. “With one of the highest real interest rates globally, the gravitational pull toward fixed income is particularly strong,” Husseini and El Essawy say, pointing to T-bills yielding above 23% versus an equity earnings yield of roughly 7%. Retail dip-buying helped cushion drawdowns, but institutional capital continues to favor fixed income.

Any sustained recovery in flows will likely hinge first on geopolitics. “Geopolitics is the unlock,” Husseini and El Essawy say, arguing that de-escalation is needed to stabilise FX, compress risk premiums, and reopen the path for rate cuts without which equities struggle to compete with fixed income on a risk-adjusted basis.

AND- EFG Hermes arms topped the EGX brokerage league table (pdf) last quarter with a combined market share of 16.8%, followed by Thndr (11.9%) and Mubasher (6.7%). EFG’s two brokerages retained the top spot with a 15.9% market share in March, beating Thndr (12.9%) and Mubasher (6.8%), according to the bourse’s monthly ranking (pdf).

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