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Market Report: Presidential uncertainties drive down Egypt stocks

Uncertain future of Egypt's upcoming presidential election adversely impacts Thursday's trading session

Ahram Online, Thursday 10 May 2012
Egyptian Stock Exchange
Traders work at the Egyptian Stock Exchange in Cairo (Photo: AP)
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Egypt stocks ended the week in the red with all indices declining in value due to ongoing uncertainties regarding Egypt's first post-Mubarak presidential election, slated for 23/24 May.

The benchmark EGX30 index declined 0.3 per cent for the day, to alight at 5,015 points.

"The market is currently suffering a disturbance with foreigners and Arabs holding off on making investments," market expert Mostafa Badra said.

Badra added that, despite the prime minister’s statement on Wednesday in which he referred to Egypt’s budding economic recovery, market performance nevertheless remained poor.

On Wednesday evening, an administrative court in the Nile Delta city of Benha ruled to suspend upcoming presidential elections for administrative reasons. Egypt's Supreme Presidential Electoral Commission, however, later announced that polling would be conducted on schedule.

Foreigners and Arab investors were net sellers on Thursday at LE36.4 million and LE5.1 million respectively, while Egyptians were net buyers at LE41.5 million.

The broader EGX70 index, meanwhile, also declined slightly, falling 0.2 per cent for the day.

Most blue-chip stocks also slumped in Thursday’s trading, with the exception of a few shares led by Commercial International Bank (CIB), which rose by 0.2 per cent.

"We expected better than this, since the bank just achieved good first-quarter results," Ashraf Abdel-Aziz, head of institutional sales at Cairo-based brokerage Arabeya Online, said.

On Wednesday, CIB reported a net income of LE505 million in the first quarter of this year, representing a 64 per cent increase year-on-year.

Ezz Steel and Talaat Mostafa Group, meanwhile, also recorded gains, rising by 1.4 and 1.8 per cent for the day, respectively.

Telecommunications shares fell across the board, with Orascom Telecom, Mobinil and Telecom Egypt dipping by 0.6, 0.03 and 1.4 per cent, respectively.

"Investors are worried about the fourth mobile network’s licence, since it remains unclear whether or not the government will approve it," Badra commented.

On Monday, reports emerged that Egypt would soon see a fourth mobile-phone service provider after the country's telecoms watchdog announced plans to begin accepting tenders for a virtual network licence.

Of 177 listed stocks, 65 gained on Thursday while 84 recorded losses. Daily turnover was low, meanwhile, standing at a mere LE276.1 million.

"Turnover did not exceed LE300 million for the entire week," Badra noted. "This confirms that investors have lost their appetites."

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