Egyptian stocks plunged into the red Monday as investors sidestepped the Bourse for the safer haven of treasury bills while disputes over the country’s political transition slashed trading volume to its lowest level in over six years.
The benchmark EGX30 fell 2.79 per cent to 4,076.9 points, reversing Sunday’s gains to bind the index to a position last seen in March 2009. The broader EGX70 tumbled an even greater 3.15 per cent, reflecting an across the board pasting for high and low-cap stocks alike.
Analysts said index falls were a partial result of treasury bills tempting investors out of the equities market.
"The government has offered treasury bills at good rates, which attracted investors who saw them safer than the stocks which are risky assets," explained Mohamed Seddiek, head of research at Prime brokerage.
Egyptian treasury bill yields retreated at an auction on Sunday after having shot above 13 per cent last month, a level bankers said was more than the central bank had previously been prepared to pay.
Total market turnover tumbled to LE178.13 million on Sunday, its lowest point in 2011 -- a year already synonymous with stifled trade in the aftermath of January’s uprising.
Recent disagreements between Egypt’s political parties, activist groups and the ruling military over election laws and the renewal of the country’s much-reviled emergency law seemed to be behind the caution, analysts said.
Ashraf Abdel-Aziz, head of institutions sales at Arabeya Online Securities called Monday a “new black day”, admitting he and his colleagues were trading in the dark, uncertain what was driving stock performance.
From 182 listed stocks, 15 gained in value while 154 declined, with all sectors but pharmaceuticals failing to see green.
The Bourse’s largest listed firm Orascom Construction (OCI), responsible for LE21m or 12 per cent of total trade, was hit hard, its shares falling 5.4 per cent.
Omar Darwish, assistant manager for MENA markets at CI Capital, justified the drop as a natural correction following the company’s first dividend distribution.
“Stock really fell around 2.5 per cent rather than the actual 5.4 per cent,” he said. The second phase of dividend distributions will be on 5 October.
The real estate sector also took heavy losses after Sunday’s strong rally. High-caps like SODIC stumbled 4.13 per cent while beleaguered developer Palm Hills slipped 3.08 per cent.
The Talaat Moustafa Group (TMGH) gained the day before on expectations a long-awaited court ruling for the Madinaty project would go in its favour, but news that the firm’s lawyer expects a further postponement hobbled stocks by 2.38 per cent.
Legal issues also weighed on steel maker Ezz El-Dekheila as a court case over its privatisation was postponed until early November, pushing stocks down 6.36 per cent.
Pharmaceuticals, a sector often suited to defensive buys, managed to buck the day’s trend. A solid 3 per cent gain for Egyptian International Pharmaceutical Industries and a 2.35 per cent rise for Medical Union Pharmaceutical pulled the entire sector marginally into the green.
Foreign investors, responsible for a quarter of the day’s trade, were marginal net-buyers of LE5.17 million of stock. Egyptians made up two-thirds of the day’s trade but sold LE6.45m more in stocks than they had bought.