Egyptian stocks slipped deeper into the red Tuesday as high-yield treasury bill sales lured off potential investors while ongoing legal cases involving major firms sapped confidence in the business sector.
The benchmark EGX30 closed down 1.26 per cent at 4,025.7 points, its second consecutive day of losses, with high-caps bearing the brunt. The broader EGX70 fared slightly better, slipping 0.87 per cent.
"The market is seeing its worst days," said Mohamed Metwally, a trader at Prime Securities.
"There's a liquidity crunch and shares are below their 2005 values. Many have fallen below even their nominal values or those they had after the 2008 crash."
Total market turnover was LE203.976 million, a marginal improvement on Monday when trade thinned to LE178.13m, its lowest in nearly a decade.
Traders put much of the blame on the Egyptian government and Central Bank, which has been auctioning treasury bills at unprecedented high yields of up to 13 per cent in a drive to bolster weakened state coffers.
"These are attracting all the liquidity from the market," complained Metwally. "The yields are like the rates in Greece or other defaulting countries. They're not only hurting stock market but giving the wrong signal about the economy."
Despite such options, foreigner investors remained the day's biggest buyers, making up 22 per cent of trade and finishing the session with a net-total of LE15.4m in stocks. Egyptians, who made up nearly 70 per cent, were net-sellers.
"Foreigners are still buying but it's very little -- not enough to pull up the market," said Metwally.
From the day's 180 listed stocks, 134 lost value and 32 posted gains, reflecting the market's dearth of good news. Personal and household products and travel and leisure were the only sectors to see green, with appliance maker Olympic Group bucking the downward trend to gain 5.3 per cent.
A press report that Standard Chartered is prepping a bid for a majority stake in Piraeus Bank Egypt sparkes some confidence among market-watchers, but a lack of further details blunted its impact.
The Bourse's largest listed firm, Orascom Construction Industries (OCI), dipped 0.85 per cent after its announcement that subsidiaries had agreed loans worth $1.9 billion with international banks failed to impress.
Ongoing legal battles took their toll too, as embattled property developer Talaat Moustafa Group returned to the courtroom on Tuesday morning, hoping a year-long dispute over its purchase of state-owned land would finally be put to rest.
But the court's decision to delay a verdict until 25 October sparked both clashes in the courtroom and a 4 per cent drop for its high-cap stock. The losses spread to the rest of the sector, with Palm Hills and SODIC finishing down 3.2 and 1 per cent respectively.
The spare of corruption cases, which include firms tied to steel tycoon Ahmed Ezz, have led to a revival of claims a supposedly populist government is either not doing enough to protect high-worth companies or -- worse -- is actively seeking their failure.
"We're seeing a kind of stealth nationalisation here," lamented Metwally. "They are sending the signal that the government wants to renationalise all these companies, but won't announce it outright."
The rest of the week shows little room for respite, believe traders. The Bourse will be closed on Thursday for the October War anniversary and not resume until Sunday, with traders expecting stocks to continue their southward direction in the one day remaining.