Egyptian stocks started the week on the retreat as the country’s presidential race gained a controversial new candidate and uncertainty continued over long-awaited takeover deals for some of the exchange’s largest firms.
The benchmark EGX30 fell 1.42 per cent to 4,947 points as stocks took an across-the-board battering and turnover plunged to just LE219.9 million ($36.4 million) – around a third of what analysts describe as a ‘healthy’ level. The broader EGX70 fell a yet-greater 2.4 per cent.
The announcement Saturday night that the second-in-command of the Muslim Brotherhood, Egypt’s most organised political force, is aiming to stand for president led some to connect the news with the market’s plunge.
Analysts, however, warned against making such a link.
"It’s not wise to put the market’s drop down to the nomination of [Khairat] El-Shater," Ashraf Abdel-Aziz, head of institution sales in Arabeya Online Securities, told Ahram Online.
"In fact we have conflicting news on both the political and economic fronts. You've got the deals of Djezzy and Mobinil too – we’ve heard news about them but no actions have been taken."
The two Egypt-affiliated mobile phone operators are entangled in long-awaited takeover deals. France Telecom is said to be finalising a controlling stake in Egypt’s Mobinil, while the Algerian government aims to nationalise Algiers-based Djezzy, a subsidiary of Egypt’s Orascom Telecom Holding, itself now owned by Russia-focused telecommunications giant Vimpelcom.
But despite recent reports of valuations, investors are still awaiting definitive news.
Market analysts say a positive result for either deal could reinvigorate Egypt’s exchange, which has charted world-beating growth since the start of 2012 but has been hobbled recently by a squeeze in liquidity.
From Sunday’s 173 listed stocks, a mere 20 gained in value while 141 lost, and the remainder stayed the same.
The banking sector was the only one to chart an overall gain, fuelled by a rise of 1.48 per cent for shares in the Commercial International Bank (CIB), which saw over LE36 million in turnover and was the sole major firm to finish in the green.
“We saw some positive sentiment from foreign investors,” said Abdel-Aziz. “That might be linked to CIB’s climb.”
Non-Arabs made up some 24 per cent of the day’s trade, an unusually high proportion for the Sunday holiday. Foreign institutions were particularly bullish, going against the day’s tide to scoop up a net LE21.67 million in stocks.
There was scant good news elsewhere, as Orascom Telecom – connected to the Djezzy deal by ownership, although it claims to be unaware of the details of the Algerian negotiations, saw its shares tumble 4.16 per cent. Shares in its former affiliate, Orascom Telecom Media and Technology, dipped 2.76 per cent.
The real estate sector, home to several major firms, took a battering too. SODIC stocks tumbled 3.71 per cent following reports that the government’s New Urban Communities Authority is planning to annul one of its land deals.
Other companies in the sector felt the pain too, with shares in the Talaat Moustafa Group slipping 2.43 per cent and developer Amer Holding losing 2.78 per cent.
The country’s largest listed firm, Orascom Construction Industries, fell a significant 1.88 per cent.
Middle-size firms weren’t spared either. Swiss-based Orascom Development Holding, which on Saturday reported $77 million of net losses for its hotel and resort operations in 2011, saw its shares plunge 4.1 per cent.
Egypt’s only listed car-maker couldn’t overcome the slump either, with shares in GB Auto slipping 1.05 per cent despite the release of new data at the weekend showing an annual upturn in passenger car sales.