Egypt stocks fall further as Saudi stocks, oil prices slide

Randa Ali , Sunday 23 Aug 2015

Egypt's main index drops as the Saudi stock market reacts to falling oil prices and a negative credit rating from Fitch on Friday

stock exchange in Cairo
File Photo: The Egyptian Exchange bell is seen at the stock exchange in Cairo, in this April 1, 2013 (Reuters)

Egypt's main EGX30 index fell by 5.42 percent Sunday to 6,784 points, its lowest level since December 2013, as Saudi stocks plunge and oil prices continue to slide.

On Friday, prices of US oil dropped two percent below the $40 per barrel threshold for the first time since the 2009 financial crisis.

The Egyptian market dipped early Sunday after the main Saudi stock index fell 5.2 percent to 7.596 points.

Saudi's market plunge is in response to the further decline of oil prices and the decision Friday by credit rating agency Fitch to lower its outlook for the kingdom's foreign and local currency issuer default ratings to "negative" from "stable," reported Reuters.

"The global markets have all been affected for a week, and the sliding became more intense on Thursday and Friday. Hence it has its effect on the market here and that of the Gulf," Wafik Dawoud, portfolio manager at Compass Capital told Ahram Online. 

He explained that globally, the reasons "which led to the domino effect" are attached to the slow growth in China and the price of oil.

Dawoud added that Egypt is not specifically attached to what is happening in Saudi Arabia where oil is their biggest GDP indicator though it still affects nearby markets.

"There are several investors who are investing in both Saudi and Egyptian markets, so when an institute decides to sell, it sells in all markets.

"It's a temporary fall but a vigorous one and it will take some time for recovery," Dawoud concluded.

Arabs were the largest net sellers for LE9 million ($1 million).

Egypt's largest private lender, the Commercial International Bank (CIB), which accounts 22 percent of the main index market cap, saw its share price fall 5.20 percent Sunday to trade at LE45.


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