A general view of the Egyptian stock exchange in Cairo August 18, 2013. (Photo: Reuters)
Egypt's stocks slumped as trading resumed on Sunday after hundreds of people were killed in widespread clashes between security forces and supporters of the Muslim Brotherhood the week prior, prompting an international backlash at the country's interim government.
The Bourse's main index, EGX30, fell 3.87 percent to sit at 5,334 points. The drop was apparently driven by the withdrawal of non-Arab foreign investors who finished the session on a net selling position of LE80m. They made up nearly a quarter of the day's LE335.5 million ($48m) turnover.
Egyptian investors were net-buyers at a just LE75 million despite making up two thirds of trading volume.
"Nothing is clear at this point, the fate of Egypt relations with the world is seriously being questioned," Mohamed Amir, a stock market analyst told Ahram Online. "We might see a real exodus of foreign investments if the bloodshed leads to international isolation."
The European Union on Sunday said it plans to review its relationship with Egypt and adopt measures to prevent further escalation of the violence. Several countries across the world, including the US and Germany as well as the United Nations have condemned the ongoing bloodshed. Last week, Denmark suspended aid to Egypt.
EGX30 fell 1.7 percent on Wednesday when security forces moved to clear two protest sites in Cairo where supporters of ousted President Mohamed Morsi were holding camp. The stock market was shutdown on Thursday as violence escalated and a 7pm curfew was put in place.
Sunday's trade was shortened to three hours from four as security on the streets remains volatile.
The Commercial International Bank (CIB) led the market's slump, marking a turnover of LE61 million and dropping 5.54 percent to close at LE35.63 per share.
Palm Hills Development, EFG Hermes and Ezz Steel dropped 2.93, 4.86 and 3.09 percent, respectively.
The market embarked on an upward trend since the army ousted president Morsi on 3 July following mass protests against him, hitting a six-month high a day before the crackdown began on Wednesday. According to Amir, the slump is very likely to sharpen as the political crisis elongates.
The Egyptian government hinted on Saturday it might ban the Muslim Brotherhood; a move that would bury an already frail chance of a peaceful end to the showdown in Egypt.
"There will be no reconciliation with those whose hands have been stained with blood and who turned weapons against the state and its institutions," Prime Minister Hazem El-Biblawi told reporters on Saturday.
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