Market Report: Slow trading day for Egypt's stocks amid echo of vacation

Bassem Abo Alabass and Ahmed Feteha, Wednesday 27 Jul 2011

The main indices drop for the third consecutive day on big caps, spelling bad news in a slow trading day undermined by the summer holidays

stock exchange market
Staff at Egypt's stock exchange market monitoring electronic stock boards (Photo: AP)

Egypt’s main EGX30 index continued its slight decline for the third consecutive day, falling by 0.73 per cent.

“The suspension of trading on major shares due to the delay in submitting financial statements are shaking investors' confidence in the market,” commented Mostafa Badra, a capital markets expert

"When big companies such as Ezz Steel act in such a way, the investor hesitates to inject funds in the bourse for fear he wouldn’t be able to retrieve them when he pleases," added Badra.

From 181 listed stocks, only 33 saw gains and 134 declined in a session that saw a low turnover of LE296.5 million due to the vacation and looming Ramadan.

Foreign investors made up 25.4 per cent of the day's activity and were net sellers, for the first time in this week, to the tune of LE10.1 million. Egyptian and Arab investors, meanwhile, were net buyers of LE5.2 million and LE4.8 million respectively.

Travel and leisure is the only sector to remain in the northern direction, with a surge in tourism resorts by 1.8 per cent. "This is not a reflection of the fundamentals of the sector; it is mostly speculation attempts by some investors," Badra comments.

Badra indicates points to the current turmoil, whether in local politics or international finance, as another broader reason to explain market behaviour. “Even if Egypt was able to overcome local problems, international trouble will continue to overshadow the troubled bourse,” he says.

Market heavyweights displayed a decline, starting with Orascom Construction Industries (OCI), which recorded a loss of 0.3 per cent, although it achieved the highest turnover in the session, with LE37 million in the bag.

TMG stock was down by 2 per cent, with SODIC and Palm Hills losing 1.2 and 0.9 per cent respectively.

Mobinil's drop by 0.9 per cent reflected the announcement on Wednesday that the mobile phone operator recorded a net loss in Q2. The Egyptian company's improvement in revenues was offset by sizeable one-off levies due to a change in the tax code. The net loss of LE108.5 million ($18.2m) compares to net profits of LE378.7 million for the same period in 2010.

Stock in Ezz Steel continues to drop, today by 2.1 per cent despite a resumption in its trading.

CI Capital stocks plunged by 2.1 per cent as Abraaj Capital announced Tuesday that it is no longer exploring buying a stake in Egypt's Citadel Capital.

Dubai-based Abraaj Capital, a leading private equity and asset management group, was earlier reported as conducting preliminary talks to enter into a strategic partnership with Egypt's Citadel Capital.

The broader EGX70 and EGX100 indices also saw drops by 1.5 and 1.1 per cent respectively.

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