Last Update 22:12
Monday, 13 July 2020

Market Report: Egypt stocks tumble 4.15 pct as Morsi defies military

Shares see across-the-board falls as president's decision to reinstate parliament sparks investors' fears of fresh political uncertainty

Ahram Online, Monday 9 Jul 2012
Egypt exchange
Egypt stocks see major losses after Sunday's announcement (Photo: AP)
Views: 769
Views: 769

Egyptian stocks plummeted on Monday following the president's surprise decision to reinstate parliament, reversing a mid-June court ruling and potentially sparking a confrontation with the country's military council.

The benchmark EGX30 tumbled 4.15 per cent to close out the session at 4,699 points. The broader EGX70 also shed 3.96 per cent.
"The stock market reacted positively when Morsi won, but his decision regarding the parliament has been taken as totally negative," said Issa Fathy, president of the securities division in Cairo's Chamber of Commerce.
President Mohamed Morsi issued a presidential decree Sunday afternoon revoking the Supreme Council of the Armed Forces' (SCAF) decision to dissolve the People's Assembly. The SCAF decree followed a 14 June judgement by the High Constitutional Court (HCC) that found the parliamentary elections law unconstitutional.
Morsi's move, which aims to restore parliament and restore its powers detailed in the March 2011 Constitutional Declaration, has seen mixed reactions in the political sphere. 
The HCC has said its previous decision was final and binding, raising the spectre of a clash between SCAF and the president and his Muslim Brotherhood supporters.
This uncertainty took a heavy toll on the stock exchange. From the 173 shares traded on Monday, 162 lost value and a mere seven gained.
"The bourse works via investors' expectations," Fathy explained. 
"When a president was elected they expected the country to stabilise so heavy investments were injected in the market. But now investors seem to be expecting the worst."
Among the biggest losers was luxury real estate developer, the Talaat Mostafa Group (TMG), which plunged a near-maximum 9.3 per cent to close at LE1.53 per share.
Egyptian judges recommended on Sunday that a court cancel the settlement of a drawn-out legal dispute over TMG's flagship real estate project, auguring more turmoil for the struggling property sector.
"TMG received a double hit. One from political uncertainty and the other from the court recommendation," Fathy said.
Trade in Egypt's largest-listed developer made up 13.3 per cent -- LE57.2 million -- of the day’s total turnover, which hit LE429 million ($71.5 million).
Other blue chips charted mixed performances.
Orascom Telecom and Media Technology (OTMT) was one of the better performers, slipping just 1.9 per cent in trade that effectively cancelled out its climb the day before.
On Sunday, OTMT traded against the tide to climb 1.96 per cent and see LE94 million in turnover.
"There are some positive forces inside the market cushioning the drops of some shares," said  Fathy. "These are speculators hoping for a swift resolution of the political crisis."
Non-Arab foreign investors were the main selling force on Monday, netting LE63 million in sales and making up 17 per cent to total trade.
Foreigners continued their recent selling streak, which began even while the market as a whole was benefitting from the euphoria of Morsi election.
"Foreigners have been involved in a general selling trend over the past three or four months. Nothing is new today," said Fathy.
Other blue-chips such as Orascom Construction Industries, Telecom Egypt, and Commercial International Bank (CIB) dropped 3.5, 3.9 and 5.1 per cent, respectively.
Short link:



© 2010 Ahram Online.