Peaceful voting process triggers a buying spree in Egypt. (Photo: Reuters)
The stock market closed in the green on Tuesday amid trouble-free voting in Egypt’s first post-revolution parliamentary polls. The benchmark EGX30 index jumped 5.48 per cent, offsetting some of last week’s losses.
At the close of the day’s trading, the EGX30 stood at 3,987 points while total daily turnover amounted to LE417 million.
“It’s the best day since the revolution,” crowed market expert Mustafa Badra.
The market lost around 12 per cent of its value in the first three days of last week following violent clashes in and around Cairo’s Tahrir Square. It subsequently regained 1.1 and 1.7 per cent in the last two days of the week.
The EGX30 index has tumbled a whopping 47 per cent since the beginning of the year.
The market was closed on Monday for Election Day and on Sunday for the Islamic New Year.
Most experts attributed Tuesday’s strong performance to smooth voting in the parliamentary polls.
Trading was temporarily halted in the morning session after the broader-based EGX100 index surged 5.01 per cent.
“We thought the market might regress after trading was suspended, but it continued to surge,” said Badra. “Turnover, meanwhile, was very high given the current low share prices.”
All three stock indices gained more than 5 per cent on Tuesday, with the EGX70 rising by 7.96 per cent and the EGX100 by 6.66 per cent.
Out of 189 listed stocks, 180 finished the day in the green, with seven losing value and two remaining unchanged. Meanwhile, 11 sectors rose in value, five remained unchanged and only one – the healthcare and pharmaceuticals sector – finished up the day in the red.
News of a Wednesday court review of Six of October Development & Investment (SODIC) over corruption allegations did not prevent shares in the company from increasing 6.88 per cent for the day.
“The market was mainly affected by political news and little else,” said Badra.
The day’s top gainer was Wadi Kom Ombo Land Reclamation, shares of which rose in value by a full 10 per cent. A number of other shares similarly rose by more than 9 per cent for the day.
Blue chips, meanwhile, such as Orascom Construction Industries (OCI) and Commercial International Bank (CIB), increased by 4.29 and 7.5 per cent, respectively.
Egyptian and Arab investors were the day’s net buyers, while foreigners generally represented net sellers.
“Foreigners are waiting to see political stability,” said Badra. “If we can achieve this, the stock market will bloom.”
During Egypt’s January uprising, foreign investors dumped Egyptian securities en masse, and their respective stake in the country has continued to dwindle as they choose not to roll over maturing treasury bills.
“At the moment, we’re being very careful,” Raj Morjaria, a partner at London-based private equity fund Aureos Capital, told Reuters. “We just want to stand back."
Morjaria added that Aureos was unlikely to boost its investments in Egypt before 2013.