Market Report: Egypt stocks fall but decline rate eases
Egypt stocks closed in the red for the sixth consecutive day on Wednesday with the benchmark EGX30 index slipping 0.11 per cent to close the day at 3,702 points.
The market has been trading downward since last Thursday, shedding more than 200 points as political unrest shadows Egypt’s first post-Mubarak parliamentary polls. On Tuesday alone, the market fell by a whopping 2.5 per cent.
"The market has yet to recover from the trauma caused by the recent bloodshed in downtown Cairo," said Ashraf Abdel Aziz, head of institutional sales at Arabeya Online Securities.
Since last Friday, Egypt has witnessed ongoing skirmishes between anti-government protesters and security forces in and around Cairo’s flashpoint Tahrir Square that have left at least 12 dead and hundreds injured.
"Security problems have the sharpest effect on the market, and any market recovery will come within this context,” said Abdel Aziz. “Political and economic solutions, on the other hand, have a more long term effect."
Today’s trading saw numerous ups and downs, with certain EGX30 stocks performing slightly better than others. Telecom Egypt (TE), Commercial International Bank (CIB) and EFG Hermes, for example, gained 1.15, 0.5 and 1.85 per cent respectively.
In a report issued Wednesday, Cairo-based investment bank Beltone Financial advised investors to take up positions on fundamentally robust companies. It cited Orascom Construction Industries (OCI), Juhayna, GB Auto, TMGH, TE and CIB as among the safest bets.
OCI, the exchange’s largest listed share in terms of capitalisation, gained 0.11 per cent to close the day out at LE202.83 per share.
The company on Wednesday announced plans to list shares in its construction business on the Egyptian stock exchange in a demerger process that it hopes to complete in the first quarter of 2012.
"It’s not yet clear how the market will react to this news,” said Abdel Aziz. “Investment banks’ research departments have yet to fill us in on this matter."