Financial stocks led the rally in Egypt’s bourse on Wednesday, as favourable news from the exchange’s chairman and the prospect of a speedy trial for the country’s deposed president helped spur an upswing in domestic buying.

The EGX30 gained 1.17 per cent to finish at 5.381 points, stalling its reverse of the last two days and remaining defiantly above the 5,249 mark at which it started on Sunday morning.

“The market reacted to two main pieces of news not attached to company performance and resulted in high stock trades – over LE600 million, which is good in our present circumstances,” says Eissa Fatehy, deputy chairman of the Commerce Chamber of Financial Stocks.

Stock exchange chairman Mohammed Abdel Salam yesterday denied reports that the government would impose taxes on profits made on the Bourse. Fatehy believes this sparked great confidence when trading resumed.

Even more significant was the Tuesday evening announcement that former President Hosni Mubarak would face trial on charges of corruption and conspiring to kill protesters, answering a major demand of Egyptians who had threatened a ‘second revolution’ at the weekend.

“This calmed fears among investors that we might see more trouble on Friday,” says Fatehy.

Gains and losses were almost evenly split among the exchange’s 182 listed stocks with 79 finishing up and 83 down in equities trade worth a total of LE626.5 million.

Financial firms were the biggest beneficiaries as investment bank EFG-Hermes led the charge, gaining 7.33 per cent.  Egyptian Financial & Industrial was closed behind, up 6.84 per cent.

“Banks are a proxy for the market and a good mirror for what will happen,” says Walaa Hazem, asset manager at HC Securities. “If people are buying financial stocks it’s often a sign they are bullish about the economy as a whole.” 

But he advises caution despite the optimistic mood: “The market is not cheap and current prices are unsustainable,” Hazem says.

Finance and real estate accounted for the largest volume of Wednesday trades, but gains for the latter sector were weaker, reflecting ongoing concerns about the land bank of high-cap the Talaat Moustafa Group.

Confirming the bullish mood, Egyptians upped their trade stake to 79 per cent and performed net-buys of LE125.7 million. The involvement of Arabs and other foreigners fell accordingly, with non-Arabs selling off a net value of LE127.3 million.