Egyptian bourse hits 2-year low as foreigners continue to dump shares

Ahram Online , Wednesday 13 Jan 2016

Cairo stock market (Reuters)
Cairo stock market (Reuters)

Egypt’s main index hit its lowest level in more than two years on Wednesday as foreign investors continued vending their shares.

Benchmark index EGX30 dipped 4 percent to 6,205 points with daily stock turnover registered at around LE675 million.

"Foreign investors are exiting the market," Eissa Fathy, vice head of the Securities Division at the Cairo Chamber of Commerce, told Ahram Online.

Non-Arab foreign investors were net sellers to the tune of LE21 million.

"There was definitely selling pressure from institutions," Ihab Saied, senior financial analyst at Cairo-based Osool Brokerage, told Ahram Online.

Earlier this week, the Central Bank of Egypt issued new regulations to widen the scope of bank clients and to encourage SME funding.

The CBE also gave a three-year grace period for banks to limit their loans to a single client to 15 percent of the bank's Tier One capital, down from 20 percent previously. The move aims to expand the banks' client base and mitigate the risks of lending to a few select large clients.

Both banks and large companies that are listed in the exchange expect to be negatively impacted by the new Central Bank regulations, said Saied.

However, Fathy said banks could profit from targeting their funds towards SMEs.

Blue chip Commercial International Bank (CIB) dipped 3.13 percent to LE32.85 per share and Credit Agricole Egypt declined 0.79 percent to LE19.9 per share.

Orascom Telecom for Media and Technology fell 6.25 percent to LE0.58 per share and Juhayna Food Industries dropped 1.35 percent to LE7.3 per share.

Leading steel manufacturer Ezz Steel lost 7.51 percent to LE7.3 per share.

The new CBE regulations also stipulate that the total instalments for a personal car or a non-mortgage housing loan not exceed 35 percent of the client’s monthly net income, a move that aims to secure debt repayment. 

However, this also limits the funding for cars and houses, negatively impacting automotive and real estate companies, said Saied.

Automotive assembler GB Auto declined 3.53 percent to LE3 a share and real estate developer SODIC saw the largest decline in the main index, falling 8.64 per share. TMG holding, one of the leading real estate developers, plunged 5.44 percent to LE5.69 per share.

Foreign investors are also exiting the market in apprehension of deepening instability in the region, said Fathy.

Broader index EGX70 dropped 3.76 percent.

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