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Egypt stocks fall on investor anxieties over rejected draft budget

Egypt's main market index drops 1.05 pct as President El-Sisi refuses to ratify next year's budget, prompting fears of tax hikes and austerity measures, adding to end-of-quarter selling pressure

Ahram Online, Wednesday 25 Jun 2014
Egyptian stock exchange
Traders work at the Egyptian stock exchange in Cairo (Photo: Reuters)
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Egypt shares continued to slide Wednesday as uncertainty about the state budget, just a week ahead of the new fiscal year, added to existing selling pressure in the market.

The benchmark EGX30 fell 1.05 percent to 8,082 points, while the broader EGX70 slid 0.92 percent as turnover remained weak at LE528 million.

Egypt’s newly-elected President Abdel-Fattah El-Sisi refused to ratify the 2014-2015 state budget Tuesday on grounds that the forecasted budget deficit was too high, which would raise domestic debt exceedingly.

Egypt's budget deficit is forecasted in 2014/15 to reach 12 percent of GDP, or LE288 billion ($40.2 billion), up from LE240 billion ($33.5 billion) expected by end of June.

“El-Sisi’s stance has raised investor fears that the government will have to resort to tax hikes and drastic fuel subsidy cuts,” an analyst at a Cairo-based investment house told Ahram Online.

Egypt’s market has been mostly in decline since the second half of this month, as local institutions have been under a deadline to realise profits ahead of the end of the fiscal quarter on 30 June.

Non-Arab foreigners were net-sellers Wednesday, to the tune of LE34.4 million, while Egyptians switched to being net-buyers for LE17.4 million.

Highest market cap Commercial International Bank (CIB) dropped 1.04 percent to LE35.28 a share.

In real estate, Palm Hills Development Company was down 3.19 percent to trade at LE3.94, Talaat Mustafa Group Holding 0.82 percent to LE8.46, and Six of October Development and Investment (SODIC) 0.70 percent to LE31.

Orascom Telecom Media And Technology Holding (OTMT) fell 2.50 percent to LE1.17, Global Telecom Holding shed 1.53 percent to LE5.14, and Telecom Egypt slid 0.30 percent to LE13.29.

Egypt-based investment bank EFG-Hermes, on which there is a tender offer for 20 percent of its shares at LE16 a share, saw its share price climb 0.26 percent to LE15.30.

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