Last Update 21:14
Tuesday, 28 January 2020

Egypt’s bourse continues losses for third session in a row

The Egyptian stocks lost EGP 66.02 billion since Sunday

Doaa A.Moneim , Tuesday 24 Sep 2019
Stock Exchange
Traders work at the Egyptian Stock Exchange in Cairo (Photo: Reuters)
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The Egyptian bourse continues its losses for the third session in a row, with the closing session on Tuesday recording losses of EGP 21.83 billion.

Since Sunday, Egypt's stock market has lost a total of EGP 66.02 billion amid a significant foreign selling movement. The EGX30 index dropped by 4.2 percent by the end of Tuesday’s closing session, recording 13,170 points.

The market capitalisation has fallen from EGP 738 billion in last week's session to EGP 702.3 in Sunday’s session, with total losses exceeding EGP 35 billion. In Monday’s session, the losses receded to EGP 8.19 billion, but they surged again in today’s session to record losses exceeding EGP 21 billion.

The deputy head of the securities division at the Cairo Chamber of Commerce, Mohamed Maher, told Ahram Online that the performance was due to ongoing calls for protests against the government.

“Egypt’s media have contributed to this bad performance because all mass communication media, especially the state-owned ones, have not clarified the truth of the situation, and the matter has helped deepen investors’ fears,” Maher said.

He said that the business community is expecting the upcoming meeting of the Central Bank of Egypt’s Monetary Policy Committee (MPC) on Thursday to see interest rate cuts of not less than 1.5 percent.

“If the MPC cuts interest rates at the anticipated average, it will be a good push for a better performance of all the Egyptian Exchange’s indices,” he said.

On the other hand, the head of the Egyptian Capital Market Association Hany Tawfik told Ahram Online that since the drop in the EGX’s indices on Sunday all expectations indicate further losses.

“The bourse’s sworn enemy is instability and uncertainty, especially on political and economic issues. The protest calls have definitely caused this bad performance, forcing the foreign indirect investors and the owners of short-term investments to exit the Egyptian stock market and sell their shares,” Tawfik said.

For the first time since 2016, Egypt’s stock exchange suspended trading for 30 minutes on Sunday after the EGX100 index fell by 5 percent.

The bourse lost EGP 35.7 billion in Sunday’s session, with a significant slump in foreign purchasing volume.

Moreover, according to Tawfik, brokerage companies that lent their customers in case they could not bear the total shares cost, resorted to a compulsory sell for shares that they bear its costs which called in the stock market with “margin calls”, thus the shares owners is forced to liquidate their shares to deal with the matter.

To cope with the current situation, Tawfik said that policy-makers must take real actions to restore the state of stability to the Egyptian street and to the domestic market through a number of procedures that guarantee a decent life for the Egyptian citizen, more easy terms for business community, and an applying of the decrees and laws that were issued over the few past years and had not been implemented on the ground.

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