The ceasefire is already being felt in the markets, with the EGX30 up 4.1% by the end of trading yesterday, marking its biggest one day jump since 19 May 2024 and outperforming regional peers. The EGP also gained around 2.5% on the greenback by the times bank tellers shut up shop for the day, with National Bank of Egypt and Banque Misr buying the USD for EGP 53.27 and selling for EGP 53.37, while CIB had a buy price of EGP 53.33 and sell price of EGP 53.43

Analysts expect the EGP to maintain its recovery momentum if the ceasefire holds and a potential broader agreement between Washington and Tehran materializes. The renewal of GCC deposits is cited as a critical pillar supporting FX reserves and long-term exchange rate stability.

Initial investor optimism also sparked a “strong return of foreign investment into debt instruments on the secondary market today, with inflows reaching approximately USD 800 mn today alone,” a source in the banking sector tells EnterpriseAM, adding that the momentum could carry into the primary market during Thursday’s session. Another banking source tells us that inflows yesterday pushed interbank transactions to breach the USD 1 bn mark.

Why it matters: The rush back to the secondary debt market and a welcome rally at the bourse seems — at least so far — to suggest that the long-term damage this war will have on the economy could be less (and shorter-lived) than originally feared.

The recent period of volatility saw regional capital play a stabilizing role, with our source noting that “inflows of Arab investments compensated for the gap left by the exit of hot money from investment funds and foreign investors,” which helped anchor the exchange rate and maintain USD liquidity, ultimately slowing the pace of the EGP's depreciation.

While over at the EGX, “the froth that burst today is one-third of what should have been the true correction,” Al Ahly Pharos Head of Research Hany Genena tells us, adding that lower energy prices could push the index back above 50k and put the 60k target back in play.

Businesses, consumers, and government will all get a nice shot in the arm if tankers start moving through Hormuz again. “We imported USD 21 bn of crude oil [...] This bill, if the war had continued, would have jumped to maybe USD 35 bn,” he said, warning that the increase would have strained the budget, balance of payments, and the EGP. The easing will feed directly into equities — provided the ceasefire holds.

Genena also signalled a move away from war-driven hedges toward recovery plays, telling us that “we are not bullish on commodities.” He explained that “our best exposures will be domestic cyclicals: e-payments, non-bank finance, and telecom.”

As for whether this marks a structural shift in risk, Genena is dismissive. “I’m not a very strong believer in new normals [...]” he said, pointing to a likely return of capital once macro stability is restored.

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