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Strikes, shortages drive Egypt's stocks lower Wednesday

Lukewarm reaction to new PM Hisham Kandil, labour disputes, electricity and diesel shortages, Ramadan see Egypt's stocks finish down 1.53 pct Wednesday

Ahram Online, Wednesday 25 Jul 2012
(Photo: Reuters)
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Views: 711

Egypt's stock market ended in the red on Wednesday for the second day in a row with the EGX30 plunging 1.53 per cent to 4,745.50.

Capital markets expert Mostafa Badra attributed the fall to the fact that investors are not satisfied with Egypt’s current economic outlook.

He said that the Egyptian economy is being hampered by labour strikes, electricity blackouts and diesel shortages. “All these problems add to the already existing economic challenges which in turn affect the stock market negatively.”

This month has witnessed a spate of labour strikes. Most notably at Cleopatra Ceramics, which led to stoppages at the factory in Ain El-Sokhna and ten in Ramadan.

There is also a strike at Ghazl Al-Mahalla, Egypt's largest textile spinning firm, which brought production to a halt last week.

Power cuts spread across Egypt this week despite promises by government officials that the crisis would gradually ease.

“Over the last two months we have witnessed weak market performance on the back of the deteriorating economy,” Badra told Ahram Online.

Moreover, Badra said the current political uncertainties have a huge negative effect on the stock market.

The naming of Hisham Kandil as prime minister on Tuesday had failed to inject any positive sentiment that could pull the market upwards, Badra said.

Ramadan is another factor for the market’s weak performance, according to Badra. The Islamic month of fasting traditionally represents a low season in terms of stock market activity.

Egypt's bourse has reduced its trading day by one hour during Ramadan, a move that has impacted trade volumes.

Foreign investors were net sellers Wednesday, whilst Egyptian and Arab investors were net buyers.

The financial sector topped the market in terms of turnover recording LE56.9 million, representing 27 per cent of total market activity. The telecom sector came in second in terms of turnover hitting LE54.2 million, representing 25 per cent of total market activity.

Of 154 shares traded on Wednesday, 36 closed in green while 103 closed in red.

Total turnover for the day was LE212 million.

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