Market Report: Egypt stocks tumble 3.55 pct amid political showdown

Ahram Online, Sunday 25 Mar 2012

Exchange sees across-the-board losses as tensions build between the country's ruling military and its major political party

Egypt exchange
Major stocks slip into the red on 'political noise' (Photo: AP)

Egyptian stocks plunged on Sunday as a fresh wave of political turbulence put the brakes on investors' appetites and sparked across-the-board sales of high-cap stocks.

The benchmark EGX30 tumbled 3.55 per cent to close out the week's first session at 4,962.4 points. From nearly 180 traded stocks, a mere seven gained in value, as many of Egypt's largest firms took substantial losses.
"There's a lot of political noise that's affecting the market," said Hisham Halaldeen, head of research sales at Naeem Brokerage.
"It's a combination of events. We've had further football violence in Port Said at the weekend, the Freedom and Justice Party in parliament threatening to withdraw confidence in the government, and even SCAF [Egypt's ruling army] saying they might dissolve parliament [if the FJP carries out its threat]."
Fatal clashes between between Masry football club fans and army forces broke out in Port Said late on Friday night. In Cairo, meanwhile, tensions have been rising between SCAF and the Muslim Brotherhood's political wing, the Freedom and Justice Party (FJP) which dominates parliament, with the latter calling for the replacement to what it called the "incompetent" military-appointed government.
After the market closed, the state-run Al-Ahram newspaper announced that Field Marshal Hussein Tantawi would deliver an "important statement" later on Sunday.
The potential for further political turmoil spurred defensive measures from retail shareholders -- both from Egypt and the Gulf -- who drove the market down.
"On Sundays Arab investors are typically most active in terms of selling. The [weekend] holiday means trade from other foreigners is limited," explained Halaldeen.
Non-Egyptian Arab institutions were the day's big sellers, offloading LE30.9 million in shares.
High-cap stocks, which made up nine-tenths of the day's LE362.36 million ($57.5m) turnover bore the brunt. Around a quarter of trade was tied up in shares for three firms -- in Orascom Telecom Media & Technology, Orascom Telecom and Ezz Steel -- all of which posted losses.
Real estate was the most affected -- with stalwarts Palm Hills Development and the Talaat Moustafa Group falling 6.32 and 5.58 per centrespectively -- but losses were almost across the board.
Egypt's largest listed firm, Orascom Construction Industries, slumped 3.47 per cent. Its former affiliate now owned by a Russian telecoms giant, Orascom Telecom Holding, lost 3.73 per cent and reversed the gains in made last week on news of an imminent agreement with Algeria's government on the sale of its Djezzy mobile phone unit.
"[The Djezzy news] should have had a positive effect on shares, but the market sentiment was in the opposite direction," said Halaldeen.
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