Egypt stocks see little growth after EFG-Hermes news (Photo: Reuters)
Egypt's major stocks flatlined on Wednesday as reports that the joint chief executives of the country's leading investment bank will stand trial for corruption put the brakes on a potential market rally.
The benchmark EGX30 opened with a small rise but slumped just before midday, eventually closing the session up a mere 0.04 per cent at 4,685.8 points.
It was the main index's first overall gain in four days, but not matched by the broader EGX70 which slipped 0.21 per cent.
"The market started seeing weakness in the last hour of the session after news broke about Mubarak's sons and two co-chairmen of EFG-Hermes," said Teymour El-Derini of Cairo-based Naeem Brokerage.
"That led a small sell off coming from the retail side to lead the market to a flat close."
Egyptian state television reported late on Wednesday morning that the two sons of Egypt's deposed president and the two chief executives of investment bank EFG-Hermes are to stand trial alongside five others for corrupt stock exchange dealings.
Gamal and Alaa Mubarak, already standing trial for graft with their father, are being charged with EFG-Hermes co-chief executives, Hassan Heikal and Yasser El-Mallawany. The accusations related to the sale of El-Watany Bank of Egypt (AWB).
Trade in EFG-Hermes was eventually suspended, but not before the firm saw LE42.85 million in trade.
AWB, perhaps surprisingly, was one of the day's biggest gainers, its shares closing Wednesday up 8.65 per cent.
Total market turnover was a low LE326.67 million ($54.04m), much of it coming in the last half-hour before the session's 2.30 pm close.
From the day's 168 listed stocks, 56 gained in value and 89 declined.
Landline monopoly Telecom Egypt made up over 35 per cent of total turnover, the vast majority in bulk cross-trades, with stock edging up 0.9 per cent.
Solid gains for market heavyweight Commercial International Bank, up 1.24 per cent, helped boost the index. But an overall climb was limited by the performance of major firms like SODIC, down 0.88 per cent, and Orascom Telecom, which lost 0.96 per cent.
Foreign investors were the driving force behind the declines, selling LE127.4 million more in stocks than they bought. Non-Egyptian Arabs, however, picked up most of the slack.
The EFG-Hermes news comes on top of political tensions which are already troubling the stock exchange.
The benchmark index lost 3.5 per cent on Sunday and 1.3 per cent on Monday after it became clear that Ahmed Shafiq, an ex-Mubarak regime man, would be pitted against the Muslim Brotherhood's Mohamed Morsi in the 16--17 June run-off vote.
The index fell a further 1.1 per cent on Tuesday to a six-week low after an arson attack on Shafiq's headquarters added to the tension surrounding the landmark election.
The verdict in the trial of ousted President Hosni Mubarak, due on Saturday, is a further cloud hanging over Egyptian stocks
A not-guilty verdict would probably work against Ahmed Shafiq, who was Mubarak's last prime minister, in the presidential election run-off but analysts say any violent street protests against such a verdict could work in his favour.
"The consequences of Mubarak's verdict could be huge, whether for Shafiq's candidacy or for the street," said Ahmed Abu Taleb of Pharos Securities. "Next week all depends on Saturday's verdict. Volatility will be high."