Caution and relief at end of Egypt's first trading day

Marwa Hussein, Michael Gunn, Wednesday 23 Mar 2011

Index dips 9 per cent as stock market resumes after seven-week closure

Egypt
A trader works during Egypt's Bourse reopening session after a nearly two-month closure. (Photo: Nasser Nasser, AP)

Stock exchange officials shrugged off a sharp dip in the market as trading restarted Wednesday, saying Egypt's economic troubles were "the price of freedom". 

The bourse lost US$6.2 billion of its market value in the first day of stock market activity for seven weeks.

"The economic losses Egypt has suffered is nothing compared to the freedom we've gained," Mohammed Abdel-Salam, chairman of the Bourse, told a press conference.

EGX 30, the main stock index of the Egyptian Bourse fell 8.92 per cent to 5,141 points after the three-hour trading session which followed 38 business days of closure.

The market was suspended for a half-hour at the beginning of Wednesday’s session after the index plummeted more than 9 per cent within minutes of reopening.

Orascom Telecom (OT) and the Sinai Ciment Company saw marked gains amongst firms on the most active shares list. Orascom rose 5 per cent and Sinai Cement 10 per cent, according to Reuters. The stock market's official website was impossible to access all day, apparently due to server issues.

The telecom sector topped the most active sectors list in terms of turnover, representing 8.94 per cent of total market activity.

"The price of Orascom Telecom shares is close to the GDR listed on London's stock market, that is why it did not fall. It's also common in such moments that investors are attracted to companies that have assets and investments abroad," says Mostafa Badra, CEO of EAC Holding.

Badra told Ahram Online that transactions of stakes in companies played a large role in domestic turnover, giving the examples of Beltone Financial which saw 400,000 of its stakes traded.

According to Sigma Securities, domestic investors were net buyers. In contrast, foreigners and Arabs were net sellers.

Bourse chairman Abdel-Salam told Ahram Online that foreign investors had practically no impact on Wednesday's market. Sigma Securities figures showed they were involved with 7.7 per cent of transactions.

"I don't think [foreigners] are willing to purchase until the political and economic situation stabilises," says Walaa Hazem of HC Securities and Investments. "It's going to increase gradually as the economy picks up, tourism rises and foreign exchange rates improve. Everything works together."

Trading in financial stocks was also limited, a natural companion to economic caution, says Hazem."Banks are the mirror of the economy, so when there is uncertainty people are especially careful about this sector."

During his press conference, Abel-Salam also announced that two of the 46 companies currently suspended from trading will be allowed to resume after they make full disclosures on their finances and interests.

Relief at the resumption of trade was palpable on the trading floor, where the 1:30pm closing bell was accompanied by cheers and applause.

Some expressed regret the Bourse had been closed so long. "The perfect time to reopen was the day after Mubarak was ousted," said Abdel-Salam.

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