Market Report: Egyptian stocks share global pain

Ahram Online, Tuesday 19 Jul 2011

Egypt's main benchmark slips for a second day, following the downward trend of worldwide equities to lose 0.59 per cent

Stock market
Another day of life on the Bourse (Photo: Reuters)

Egyptian stocks edged further into the red Monday, sapped by sell-offs of high-cap shares on the back of ongoing political uncertainty and weak global markets.

The EGX30 benchmark closed the day 0.59 per cent down at 5,144 points, mirroring stock exchange indexes across the Arab world, all of which - with the exception of Saudi Arabia and Kuwait - brokered modest losses.
 
"The political picture is unclear, nobody knows when power will be transferred," says Walaa Hazem, asset manager at HC Securities. 
 
"This kind of political ambiguity affects investors. When the military council took power it said it would hand government to civilians in six months but five have passed and there 's still no fixed date for elections."
 
Telecom Egypt saw the day's highest turnover -- LE65.1 million of a total LE410.257 million -- but stock sell offs dipped its value 0.44 per cent, combining with the firm's high market capitalisation to weaken the entire EGX30.
 
It was a similar story for chemicals firm Egyptian Financial & Industrial where offloads of relatively high-cap stock meant its 3.12 per cent drop reverberated across the market.
 
Profit-taking took its toll too, as previous gainers like Kafr El-Zayat Pesticides and El Watany Bank of Egypt finished down 6.25 per cent and 4.7 per cent respectively.
 
But it wasn't all losses; the EGX70 gained 1.48 per cent as lower-cap stocks benefited from speculative, riskier trade from individuals who made up 64 per cent of total trade.
 
Isolated larger stocks saw strong gains too; Zahraa Maadi Investment and Development finished up 8.75 per cent, the  Egyptian Real Estate Group  up 7.39 per cent.
 
From the day's 182 listed stocks, 71 gained and 96 declined.
 
European markets closed on a four month low on Monday on concerns over an upcoming second bailout for Greece and mixed reactions to bank stress tests.
 
"It’s normal that foreigners’ presence in the market regress as a consequence of the fall of international markets. Investors are facing problems in their own markets and have not enough liquidity," says Hazem.
 
Foreign presence edged up as a proportion of the market on Tuesday, reaching 27.3 per cent, but activity was mainly sell-offs, with them offloading a total of LE29.8 million in stock.
 
Arabs and Egyptians, by contrast, were net-buyers.
 
"There is not purchasing power to push the market up right now. The small declines we're seeing are normal fluctuations," Hazem explains.
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