Market Report: Overseas troubles prolong slide in Egypt stocks

Ahram Online, Wednesday 22 Jun 2011

Benchmark drops for third day running as foreign investors take their cues from turbulent international markets

stock market
Third time unlucky - stocks take yet another dip (Photo: Reuters)

Egypt's stock benchmark dipped for a third consecutive day on Wednesday, slipping 1 per cent to 5,473 points as overseas economic troubles prompted foreign investors to rein in their activities.

The EGX30 climbed to a three-month high of 5,628 on Sunday but has declined every day since, shedding a total of 155 points.
Isaa Fathy, vice president of the securities division at the Chamber of Commerce, thinks that non-Arab investors, who made up 27.2 per cent of the day's trade, played a key role in the market's regression. The Greek crisis, poor economic news from the US and resultant turbulence in international markets,  created a 'perfect storm', making foreigners tread carefully, net-selling around LE15.7 in stocks.
"It is common that foreigners reduce their investments in developing markets in such situations," says Fathy.
Individuals also outpaced investors, a familiar sign in a cautious market. From 181 listed stocks, just 26 gained while 147 declined in Wednesday trade. Most sectors finished in the red, the remainder failing to move. 
Smaller firms dominated the lists of biggest gains and losers: the Alexandria National Company for Financial Investment finished up 4.89 per cent, while
TransOcean Tours slipped 5 per cent.
The only noticeable effect of news on the market came when shares in private equity firm Citadel Capital rose 1.84 per cent on the announcement it was holding possible buy-out talks with more than one investor.
Market turnover was a unusually low LE432.6 million, extending the gradual slide from Monday's LE666.6 million. Fathy, however, sees this as potentially positive.
"The turnover going down in parallel with the falling of the index is a good sign. It means that sellers don’t want to sell more," he says.
"Since the reopening of the stock market in March, the maximum number of session going downward was three. That makes me expect that tomorrow we will see the market again in the green. If not, it will be a first."
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