American companies keep eye on Egypt

Egyptians wave the national flag atop of a sign in Egypt's landmark Tahrir Square on July 4, 2013.

American companies are watching events in Egypt closely. Whether they’re selling goods to the 85 million people there or investing in the country’s stocks and bonds, Egyptian politics affects American business. A country under uncertain rule with mass protests in the street doesn’t exactly scream INVEST HERE. But for firms taking a longer view and tolerant of risk, recent developments in Egypt could be positive.

Investing in emerging markets is always a wild ride. That’s even more true in Egypt, so U.S. companies operating there know to expect high risk and quick changes.

“I think a lot of American firms were, by and large, prepared for what happened,” says Geoff Porter of North Africa Risk Consulting, an advisor to businesses working in Egypt. “They shouldn’t have been caught by surprise.”

Investors hate uncertainty like Egypt’s leadership carousel. But they’re not sad to see Mohammed Morsi go. The business community felt he further botched a struggling economy. Porter thinks the coup could be good for business. The thinking for many American investors is that Egypt’s economy can’t get any worse and maybe it’ll improve.

“There are still huge U.S. corporations present in Egypt and I expect them to remain there,” says Mohammad Darwazah with Medley Global Advisors. “I don’t think what has transpired in the past 48 hours or so will really impact that.”

American firms that go to Egypt could many future customers in the country’s young population and substantial middle class. Those working to bring more American business to Egypt are trying to ease investor fears by pointing to what the country could be after political unrest settles.

“In the next week or so there will be a lot of hesitancy,” says Hisham Fahmy, CEO of the American Chamber of Commerce in Egypt. “But I think in the long run, and as before, Egypt has fantastic potential.”

And also, of course, it carries potential risk for American business. But big risks can lead to big rewards. Balancing that is what investors and entrepreneurs do. Egypt is still on their radar.

Mark Garrison: It’s always a wild ride investing in emerging markets. That’s even more true in Egypt. U.S. companies there expect high risk and quick changes.

Geoff Porter: I think a lot of American firms were, by and large, prepared for what happened. They shouldn’t have been caught by surprise.

That’s Geoff Porter of North Africa Risk Consulting, an advisor to businesses working in Egypt. Investors hate uncertainty, but they’re not sad to see Mohammed Morsi go. The business community felt he further botched a struggling economy.

Porter: The coup may actually be good for investment, because there was a real tremendous amount of dissatisfaction with Morsi’s leadership.

The thinking for many American investors is, Egypt’s economy can’t get any worse, and maybe it’ll improve. Mohammad Darwazah with Medley Global Advisors thinks American firms will stay in Egypt. They can find lots of customers in its young population and substantial middle class.

Mohammad Darwazah: There are still huge U.S. corporations present in Egypt and I expect them to remain there and I don’t think what has transpired in the past 48 hours or so will really impact that.

Those working to bring more American business to Egypt are trying to ease fears by pointing to what the country could be after political unrest settles. Hisham Fahmy is CEO of the American Chamber of Commerce in Egypt.

Hisham Fahmy: In the next week or so there will be a lot of hesitancy. But I think in the long run, and as before, Egypt has fantastic potential.

But still plenty of potential risk.

I'm Mark Garrison for Marketplace.

About the author

Mark Garrison is a reporter and substitute host for Marketplace, based in New York.

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