CAIRO: Egyptian stocks hit a two-year low Tuesday as traders returned from a week-long religious and national holiday to find little to cheer about amid a financial crisis that has shaken global markets.
The Cairo and Alexandria Stock Exchange’s benchmark CASE 30 Index was down by over 16.6 percent, to 5,888.59, in midmorning trading, a drop that analysts attributed to the market reacting to precipitous slides in other world markets over the past few days.
So far this year, the CASE is down over 4,650 points, or 44 percent.
CASE officials temporarily halted trading after shares of several major companies plummeted below the 10 percent threshold, Egypt’s Middle East News Agency reported.
Analysts said some companies saw their shares drop by as much as 40 percent, albeit on low volume trading.
“There is an element of panic in the market, said Wael Ziada, head of Egypt research with EFG Hermes. Ultimately, “it’s not very different from the losses in the markets, in general, over the past few days.
World markets rebounded on Tuesday, a day after tumbling with the Dow Jones Industrial Average falling more than 800 points before recovering in the final 90 minutes of the session to finish down 370 points. The Dow appeared set for a slightly higher opening as investors held out hope that central banks worldwide would cut interest rates to help alleviate turmoil in the credit markets.
This is just the [Egyptian] market catching up with what is happening, said Ziada, cautioning, however, that the main trend, which is significant volatility, will continue for sometime.
The slump marked a more than two-year low for the market, when the CASE 30 stood at 5904.79 points on Aug. 20, 2006.
Ziada said that some of the heavyweight companies comprising the CASE 30 saw their share values plunge, with Orascom Construction Industries down 20 percent, Orascom Telecom down by slightly more than 10 percent and CIB, the country s biggest commercial bank, falling as much as 40 percent on small volume activity.
The CASE was closed for a week as Egypt celebrated the end of the Muslim holy month of Ramadan and the anniversary of the October 6, 1973, war with Israel.
The fall resulted largely from indiscriminate light retail selling, said Angus Blair, head of investment bank Beltone Financial.
Because Egypt is a largely cash-driven, liquid economy, the drop was hard to justify, he said. This isn t like Dubai, he said. In many ways, we re under-leveraged.
This does not mean Egypt is immune to a global slowdown, Blair said.
Exports could slip if a recession curbs buying power in Europe and the United States – Egypt s two largest trading partners.
Tourism from these areas could also decline, though shrinking budgets may prompt vacationers to seek cheaper alternatives to places like Dubai.
A few big investors could come in and change things very quickly, Blair added. And that could happen tomorrow or the day after. -Additional reporting by Daily News Egypt reporter Alex Dziadosz and AP Writer Maggie Michael.