Market Report: Salafist threats fail to impact Egyptian markets

Ahram Online , Tuesday 6 Dec 2011

Egyptian stocks ended the day in the green after two sessions of losses, despite controversial statements by a Salafist leader about Islamicising the economy

Stock Market
Ups and downs are expected to continue till the end of the year (Photo:Reuters)

Although the announcement of the new cabinet has not yet been made, Egyptian stocks traded in the green.

The benchmark index EGX30 gained 0.12 per cent after two sessions of loss.

“It's the kind of performance we will see for the rest of the year - one day up, one day down,” said Taymour El-Derini, trader at Naeem Holding.

He described the marginal gains as a return to normality after the last week of gains, which followed relatively smooth parliamentary elections.

“There's no driving force to push up stocks. The only way we'll see a big change is if something major happens in the political scene, and that will only cause a drop. I can't think of anything positive that will boost the market,” said El-Derini.

From the day's 179 traded stocks, 148 gained, 24 lost and seven remained unchanged. Ten sectors finished in the green, two in the red and five remained unchanged.

Market turnover was LE 255.5 million. “Volume is still low so any movement on a single high-cap stock can affect the index,” explained El-Derini.

Big cap OCI topped the market in terms of turnover, recording 42.1 million, but lost 1.10 per cent. Another big cap Commercial International Bank (CIB) also lost 0.86 per cent. National Societe Generale Bank (NSGB) lost 0.42 per cent. The banking sector was one of two sectors which declined.

A Salafist announcement about Islamicising banks affected the sector, but according to El-Derini, “the reaction was a moderate reaction.”

Yasser Burhami, one of Egypt's most prominent Salafist leaders, said during an interview on Monday that a Salafist government would transform all banks into Islamic banks and prevent lenders from charging riba (interest), which is banned by sharia (Islamic law).

“If people really believed what the Salafists said, then stocks would have dropped 10 or 15 per cent. This shows that people don't take their plans seriously. Bank stocks dropped a little but didn't plunge,” said El-Derini.

Domestic investors were the only net buyers, as opposed to foreigners and Arabs who were net sellers. Individuals were net buyers while institutions were net sellers.

“It's not all foreigners selling, as some of the Egyptian media say when they claim there's panic in the markets. There are still some foreigners who are heavy buyers, and not all selling is bad or driven by the political situation,” assured El-Derini.

He expects that Christmas and the holiday season in the west will hit foreign trade in the run up to 25 December.

EGX70 also gained 1.67 per cent and EGX100 1.01 per cent.

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