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Egypt's stock market in biggest loss since May, pound picks up - Daily News Egypt

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Egypt’s stock market in biggest loss since May, pound picks up

CAIRO: Egypt’s main index posted its biggest decline since May 25, driven down by foreign investors concerned that the political chaos that unseated Tunisia’s leader could spread to other Arab countries, traders said. The Egyptian pound, however, strengthened against the US dollar after concern over political turmoil pushed it on Monday to its lowest level …


CAIRO: Egypt’s main index posted its biggest decline since May 25, driven down by foreign investors concerned that the political chaos that unseated Tunisia’s leader could spread to other Arab countries, traders said.

The Egyptian pound, however, strengthened against the US dollar after concern over political turmoil pushed it on Monday to its lowest level in nearly six years.

The pound firmed to around 5.8180 to the dollar, said a trader.

Traders say that with Egyptian share prices declining, it is almost certain the central bank has been intervening to support the pound by selling dollars.

Egypt’s 30-firm index declined 3.1 percent, with all but one stock, EFG Hermes, losing.

"Foreigners are net sellers in the market," said Mohamed Radwan of Pharos Securities. "Escalating events in the region are just making some foreign investors bearish about the region from a macro perspective, especially the political risk."

Amr El-Feky of Cairo Capital Securities, said, "Tunisia’s events, followed by the man who set himself on fire in Egypt yesterday, gave a bad picture of the region’s markets to foreign investors, who quickly reacted with heavy selling.”

An Egyptian set himself on fire near parliament on Monday and a second man did the same on Tuesday, the latest echo of a self-immolation in Tunisia that spurred protests which brought down its president.

Credit Suisse on Monday downgraded its rating on Egyptian equities from overweight to neutral on the prospect of rising domestic inflation and political uncertainty.

Orascom Telecom dropped 5.6 percent, CIB 4.6 percent, and Orascom Construction 3.8 percent. Investment bank EFG-Hermes climbed 2.1 percent after having tumbled 6.4 percent on Monday.

"It’s up on the loss," said Radwan. "Somebody lifted some shares at the end of the day…. EFG was the only blue chip that was able to maintain its price above yesterday’s low of the day. End-of-the-day buyers came in and lifted the stock."

On Monday the pound traded at as low as 5.8263 to the dollar, down from around 5.7980 on Sunday.

"Definitely they are intervening. It’s all about money that is flowing out of the country," said one trader.

Economists say the central bank is likely to use its unofficial reserves to ensure that any weakening in the pound is gradual so Egyptian depositors do not take fright and shift their cash into dollars.

They say weakness on the equity markets seems to be largely driven by retail investors.

 

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https://www.dailynewsegypt.com/2011/01/18/egypts-stock-market-in-biggest-loss-since-may-pound-picks-up/
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