Market Report: Egypt shares tumble 2.2 per cent on nationalisation, global fears

Marwa hussein, Thursday 22 Sep 2011

Early week's rally is quickly forgotten as local woes combine with worldwide market turmoil to push the exchange deeper into the red

Stock Market
An overwhelming majority of shares were in the red Thursday (Photo:Reuters)

Egyptian stocks ended the week on a firmly negative note Thursday, brought low by investor unease over the renationalisation of local companies and a gloomy outlook for global markets.

The EGX30 benchmark fell 2.21 per cent to land at 4,333.75 points with the market recording a limited LE300 million in trade.
 
"Today seems to be pushing the market to a new low level," said capital markets expert Moustafa Badra. "We are getting close to the lowest level of 4,200 points. I hope it won't fall further, but it's possible."
 
On Wednesday an Egyptian court ordered three privatised companies be returned to state ownership: El-Nasr Boilers and Pressure Vessels Manufacturing, Tanta Flax & Oil and Misr Shebin El Kom Spinning and Weaving.
 
Badra believes the legal move, coming on top of recent turmoil, stifled buyer confidence.
 
"Several privatised companies are listed on the Bourse. This decree, along with the recent decision to withdraw five licences for iron producers, can be worrying to investors," he said.
 
The replacement of the Bourse's chairman on Wednesday afternoon also had an negative impact on trade, according to some commentators, with
Mohamed Omran, the deputy chairman of the exchange between 2006 and 2010, assuming the post held by Mohamed Abdel Salam at relatively short notice.
 
The international market, to which Egypt's Bourse is usually sensitive, was no help in stabilising the situation.
 
Most international exchanged dipped further on Thursday on worries about global growth after sobering predictions from the US Federal Reserve and data from China suggested manufacturing activity was slowing. European shares opened sharply lower, the London FTSE dipping 4 per cent by mid-morning.
 
Of the 30 high-cap stocks that form the EGX30, 29 ended the day in the red. El Sewedy Electric was the only gainer, up 1.49 per cent following disputed reports of a commission to handle $300m of energy projects in Ethiopia.
 
The telecoms sector continued to pull the market lower, still affected by conflicting news about Orascom Telecom's (OT) potential sale of its Algerian subsidiary and Mobinil's role in the sale of Orange Switzerland by its owner France Telecom.
 
OT dipped a further 5.11 per cent while Mobinil lost 3.34 per cent.
 
The broader EGX70 and EGX100 indexes were also dragged deeper in the red, plunging  2.75 and 2.49 per cent respectively.
 
"Individuals reversed their strategy, shifting from sellers to buyers ... recording a net flow of L.E1.8 million while institutions closed as net sellers," said a market note from Sigma Securities.
 
Foreigners and Egyptians were the day's net-buyers while other Arabs were net-sellers. from the day's 180 traded stocks, 156 lost value, 18 gained and 6 remained unchanged.
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