Egypt stock index drops over 3 percent

4 Min Read

CAIRO: Egypt’s benchmark stock index plunged by more than 3 percent on Sunday, in a decline brokers attributed to the decision to ban the chairman of a major Mideast private equity firm from traveling abroad pending a corruption investigation.

Egypt’s prosecutor general on Thursday banned Ahmed Heikal, chairman of Citadel Capital, from leaving the country as officials stepped up investigations against former members of the regime and businessmen widely believed by most Egyptians to have benefited at the expense of the state. Reports have indicated that Citadel bought a cement company from the government at a discounted price during the height of Egypt’s privatization program — a claim the equity firm denied.

The Egyptian Exchange’s EGX30 index fell 3.43 percent, its weakest close in more than two weeks. Citadel’s shares shed almost 10 percent, closing at 4.60 Egyptian pounds, according to financial data provider

Moustafa Abdel-Aziz, a senior broker with investment bank Beltone Financial’s brokerage arm, attributed the drop to the announcement of the travel ban, and concerns that it "might raise other cases … against businessmen and companies."

"Everybody is worried, and it makes sense for them to be worried … because the fear is that you might hear of other names in the short term," Abdel-Aziz said.

Heikal has not been officially charged with any crimes.

The prosecutor’s move also appeared to affect the shares of EFG-Hermes, a leading Mideast investment bank. Heikal was an executive board member and managing director of EFG, according to Citadel’s website, before he moved on to set up Citadel. EFG’s shares fell 5.77 percent, closing at 19.59 pounds.

Egyptian officials have stepped up their investigations against former ministers and several businessmen close to the regime of ousted President Hosni Mubarak.

Prosecutors ordered Mubarak and his sons to be detained last week for 15 days pending the investigation of a range of charges, including corruption and the killing of protesters during the uprising that toppled the 82-year-old former leader.

The moves are seen as an attempt by the country’s military leaders to calm critics who believe they are moving too slowly on the promised reforms. But at a time when the country’s economy is facing major challenges in terms of a drop in revenues and foreign investment, analysts and brokers say such moves against businessmen like Heikal are doing little to win over already shaky investor confidence.

There’s "an overall negative sentiment on the market," said Abdel-Aziz, adding that many are increasingly worried that businessmen could become increasingly targeted as officials look to ease political angst in the nation.

The day’s drop in the market dragged the benchmark index’s year-to-date losses to more than 28 percent.

Also falling were shares of investment firm Egypt Kuwait Holding Co., which dropped more than 8 percent following the death of the company’s Kuwaiti chairman Nasser Al-Kharafi.

Al-Kharafi died on Sunday in Cairo after suffering a heart attack, according to Kuwait’s official KUNA news agency.


Share This Article
Leave a comment