CAIRO: On the heels of the bourse crash last week, opposition MP Mohamed Moustafa Sherdy submitted an inquiry to the Prime Minister and Minister of Finance, demanding a probe into reasons behind the relentless collapse.
“These days, Egypt’s stock market is getting hit hardest than any other market worldwide, Sherdy said. “We want to know why this is happening. Has there been an investigation into the matter? Is there room for market manipulation? Why is the bourse collapsing?
Last week, the bourse took the steepest nosedive in the entire year, plummeting 7.39 percent. On Wednesday, the market sank 4.9 percent to its lowest point since September 3, in what some traders called a panic attack.
“What is happening is extreme. Panic is driving everybody to sell, Hashem Ghoneim, chief executive of El Nour Securities, told Reuters.
“Worldwide, when stock markets collapse, officials explain why this is happening and pinpoint steps taken to prevent further declines, explained Sherdy adding that the same should be applicable in Egypt.
Egypt’s benchmark CASE 30 index has lost about 30 percent of its value since peaking on April 22 above 12,000 points. The index closed at 8,327.9 points on Sunday.
Analysts cited high inflation, chalked at a fresh record high of 23.1 percent last Sunday, and rising interest rates as the “driving forces pushing foreign investors to dump the Egyptian stock market. The price hikes approved by parliament on May 5 – which made gas and other goods more expensive – vexed some investors, and the bourse has been tumbling since then.
On Sunday, regional investment bank Beltone Financial dubbed the Egyptian stock market the only “under performer market in the entire region and advised investors to reduce or hold buying. Beltone explained the index was breaking resistance levels so easily.
“The index broke our first down side target of 8,500 points and is approaching the second target at 7,500 points.
By contrast, regional stock markets in Saudi Arabia and the Emirates were rated “equal performer, while markets in Qatar, Kuwait, Bahrain, and Oman outperformed the regional market trend and received an “add target.
“What is happening in the Egyptian market these days is most risky to small-sized retailers, Sherdy said. “If officials approach the matter with more transparency, they will look into reasons behind this market crash, and then the bourse will become more manageable.
Sherdy, who addressed his inquiry to Prime Minister Ahmed Nazif and Finance Minister Youssef Botrous Ghali, is not confident he will receive a reply.
“A reply could take up to one month, six months, or I can get no reply at all.