Bull run is big change from 2011

Egypt's stock market has rallied 50 per cent so far this year, as foreign investors pile up cash into equities whose valuations are deemed attractive.

The bull run is a marked difference from the cost of insuring sovereign debt against default, which rose more than anywhere else in the world in the past month.

But fund managers are not fully convinced that the long-term picture is clear.

"To me the risk is high," said Tariq Qaqish, the deputy head of asset management at Al Mal Capital in Dubai.

"We prefer to stay away, in the long term, the outlook appears really vague."

Al Mal Capital is underweight on Egyptian assets.

For National Bank of Abu Dhabi, the alarm was triggered when Orascom Construction Industries was singled out during president Mohammed Morsi's speech at the Euromoney conference held in Egypt last September. In his speech, he accused the company of having owed money in taxes.

"We pulled out after that incident," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi.

Egypt's benchmark has outperformed most equity indexes globally, with the EGX 30 Index up 50 per cent since January.

That compares with a decline of 45 per cent last year, after the popular uprising ousted president Hosni Mubarak, who had ruled the country for three decades.

But credit default swaps rose 79 basis points to 486 driven by headline risk, after violent clashes by the presidential palace, as protesters threatened to boycott Mr Morsi's draft constitution.