Egypt tops emerging equities in H1; BRICs weak

Egyptian stocks topped returns on emerging equity markets in the first six months of 2012 with a rise of 30 per cent, well above the broader MSCI emerging stock index, where spectacular first quarter gains crumbled under the impact of the euro crisis.

MSCI's dollar-based emerging equity index has fallen 1 per cent in the first six months of 2012, after dropping more than 20 per cent in 2011.

The index rallied 13.6 per cent in January-March, its best first quarter performance since 1992, but surrendered these gains as Europe's debt and banking crisis spread and investors worried about Chinese and U.S. growth.

"It's been a difficult environment for emerging markets...a case of risk-on and risk-off," said Jeff Chowdhry, who helps manage $4.5 billion in emerging equities at F&C Investments.

"In the next six months, the euro crisis will continue to cast a shadow over the asset class so I don't expect any sustained rally unless we get some resolution."

The index lags MSCI's world index as the second year in a row. But it hides sharply diverging performances.

Egypt's strong rally after Mohamed Mursi became the country's first democratically elected president has made it the best performing emerging equity market, with gains of 32 per cent. However, it is yet to entirely recoup its 2011 losses.