Political uncertainty drives Egypt stocks to 6-week low
Egypt stocks slid to a 6-week low on Tuesday as the country's presidential election result cast its shadow on the exchange.
The main EGX30 index dropped 1.14 per cent to finish at 4,684. The broader EGX70 slipped 1.2 per cent.
"The result of the election has caused a new wave of uncertainty in Egypt," Issa Fathy, vice president of the securities division at Cairo's Chamber of Commerce told Ahram Online.
"The protests on Monday night testify to the unstable status of the Egyptian street," he added.
The market has lost 288 points since Sunday as the two candidates who qualified for the presidential runoff on 16-17 June gained just 50 per cent of total vote.
"Investors are afraid because there are now two extreme candidates facing one another. No one will invest heavily in Egypt until after the election," Amr Chamel of Cairo-based Pharos Securities told Reuters.
A few thousand protesters marched in Cairo and Alexandria after the Supreme Presidential Electoral Committee (SPEC) announced that the presidential runoff would be between the Muslim Brotherhood's Mohamed Mursi and Mubarak's former prime minister Ahmed Shafiq.
Unknown individuals ransacked and set fire to Shafiq's presidential campaign headquarters in Dokki, Cairo. Security forces arrested those suspected of starting the blaze. Fire trucks brought the fire under control a short while later.
"What is happening is that the sellers in the market are selling more and the buyers are waiting for a further drop in prices," Fathy explained.
"Like tennis, the market requires calmness to be able to perform well," he added.
Out of 168 shares on Tuesday, 119 lost value while 31 gained. Total turnover reached LE252 million, which is very low compared to the LE1 or LE2 billion seen at times when the market is surging.
Orascom Construction Industries (OCI), made up more than a quarter of the day's trading at LE63 million. "OCI helped cushion today's market's drop due to the positive news about a fertiliser sale deal," Fathy indicated.
OCI, the largest share by market capitalisation, said on Tuesday it would earn $605 million from the sale of its 16.8 per cent stake in US grains merchant Gavilon to Japanese trading house Marubeni. OCI said it bought its stake in Gavilon in July 2008 for $340 million.
Nevertheless, OCI dropped 0.5 per cent to close at LE264.65 per share.
Non-Arab foreign investors made up 29 per cent of trading and exited the market heavily at a net-sales amounting LE66 million. Arab and Egyptian investors were net-buyers in today's session.
Selling by foreigners was reflected in the 1.14 per cent drop in the share price of the Commercial International Bank (CIB) which made up some 12 percent of the day's total turnover.
"OCI and CIB are some of more solid shares in the stock exchange," Fathy indicated. "But the quality of the market precedes the quality of the product; and our market is going through a tough time now,"
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