CONVENTIONAL wisdom suggests investors dislike ­uncertainty and few things signal instability more than the toppling of an elected government by the military.

Yet Egypt's flagship EGX-30 stock market index quickly regained the ground it lost after the July 3 toppling of former president Mohamed Mursi. Even after weakness in the last few days, it is only slightly below this mark.

This is despite long-running violence in the aftermath and a wider global sell-off that affected markets around the globe.

However, the index remains down on heights reached before the initial 2011 revolution that saw long-standing president Hosni Mubarak swept from power.

But while equity investors appear relatively relaxed about recent events, debt market players are more wary and there are fears that economic development will remain hamstrung until stability returns to the country.

Frances Hudson, global ­thematics strategist at Edinburgh funds house Standard Life Investments, said that the Egyptian stock market has qualities attractive to overseas investors.

"Because of its colonial history it has had the institutions in place for quite some time and has a market that functions more that western ones," she said.

It is also notable that investors have few alternatives to the Egyptian market if they are seeking exposure to North Africa and the Middle East.

Ms Hudson added: "It (Egypt) has been more open than some of the other markets in the Middle East and North Africa region. It has got a fairly well ­established stock market and, unlike some places, the involvement of the government in the stock market has not been that great."

However, debt investors appear more cautious.

Anthony Simond, portfolio manager at Aberdeen Asset Management, said: "Prior to the revolution, the local debt market was something that investors played to quite a large extent."

He said the lure of double-digit yields and an attractive currency meant that many used it in carry trades, investing cheap money borrowed elsewhere. This enthusiasm has waned.

"Since the revolution, the local debt market held by foreigners dropped from 20% of the total market to much less than 1%," Mr Simond said.

A drop in yields on local currency debt in an auction at the weekend has been attributed to greater availability of Egyptian pounds rather than an improved view of the country's credit.

Mr Simond said that there had briefly been renewed interest in dollar denominated Egyptian paper after the assumption of power by the military led many top anticipate greater stability.

"I think the violence in August has really put paid to that. People are going to be sitting on the sidelines biding their time," he said.

Worries about economic upheaval have been moderated by the willingness of some Arab states to pour money into Egypt.

Within 24 hours of Mr Mursi being deposed, the United Arab Emirates, Saudi Arabia and Kuwait together offered $12 billion (£7.7bn) in aid.

Nevertheless, foreign investment has been affected, with British companies leading the way in withdrawing funds from Egypt.

A recent report from the United States Bureau of Economic and Business Affairs said: "Until security and stability return to the country and greater clarity is achieved in the political transition, Egypt is unlikely to see substantial investment inflows."

The oil sector is being closely watched. A number of British oil companies have activities in Egypt including Aberdeen-based Dana Petroleum. Some staff have been moved out of the country during the recent strife.

Egypt also owes at least $5 billion to oil companies producing oil and gas on its territory, with half of it overdue, as it struggles to maintain subsidies for domestic fuel. Dana alone is owed $230m by Egypt for gas supplies. BP and BG are owed even more.

In recent days, Egypt's petroleum ministry has insisted the country is preparing a timetable for paying the arrears, to encourage foreign oil firms to remain.

But concern remains that there is little sign of broader reform.

In a recent note for clients, Bank of America Merrill Lynch analyst Turker Hamzaoglu suggested there would be a "continued macroeconomic muddle-through" as aid from Arab nations gave the government breathing space.

He added: "In the absence of political stability, implementation of economic reforms will remain challenging."

The Egyptian economy is expected to grow just 2.6% this year and 3.8% next year - down from 5.1% growth in the year before revolution. And a quarter of Egypt's 84m people live below the poverty line of $1.65 a day.

WJ Dorman, an Egypt expert and honorary fellow at Edinburgh University, argues that the problems facing Egyptian policymakers are longstanding.

He characterises the Egyptian economy as a form of crony capitalism led by an elite close to the Government and the military happy to live off foreign currency from the tourist trade or remitted from overseas rather than build a broader-based economy.

He noted that attempts by Mr Mursi to increase the tax take and improve the public finances had been shortlived. He sees little sign that impetus has increased.

"In the short term, the economy has been pushed off the agenda," he said.