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Stock market stagnation due to seasonal trend, says consultant - Daily News Egypt

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Stock market stagnation due to seasonal trend, says consultant

CAIRO: Egypt’s main index, EGX30, fell by 0.74 percent reaching 3,627.80 points on Thursday as the market continued to stagnate after a series of low turnovers the past week. Egyptian investors made up about 74 percent of the day’s trading, while Arab investors were about 4.6 percent, and foreign investors made up about 21 percent. …


CAIRO: Egypt’s main index, EGX30, fell by 0.74 percent reaching 3,627.80 points on Thursday as the market continued to stagnate after a series of low turnovers the past week.

Egyptian investors made up about 74 percent of the day’s trading, while Arab investors were about 4.6 percent, and foreign investors made up about 21 percent.

Tarik Salama, a financial consultant, attributed the low turnover rates to the seasonal trend.

"Companies and banks at the end of the year prefer to have all the money with them, so there is no liquidity right now in the market," Salama told Daily News Egypt, "But the market players who usually trade are still there."

EGX20 fell by 0.76 percent on Thursday, losing 9 percent in year to date change, reaching a value of 3,921.93 points, while EGX70 dropped 1.15 percent and lost 0.51 percent, reaching 413.47 points. The broader EGX100 dropped 1.03 percent on Thursday, losing 0.26 percent in year to date change with a value of 641.40 points.

More individuals continued to trade, making up about 64 percent of the day’s trading, while roughly 35 percent could be attributed to institutions.

Not much has changed for the exchange, as buyers and sellers continued to wait and see how the political situation would turn out.

The country witnessed the final and third stage of its first parliamentary elections after the ouster of Hosni Mubarak last January.

The trial of the former president, who is currently charged with the killing of 225 protesters and injuring of over 1,300 in public squares in 10 provinces also resumed this week, with the trial prosecutors labeling the ministry of interior "uncooperative."

Yet, even with the developments this week, Salama attributed the stagnation to the end-of-the-year trends.

"Looking at the past years, there is a correlation between the seasonality, it is normal to have this kind of stagnation now," he added.

"This year there may be a distortion because investors are afraid of the upcoming Jan. 25, if this period goes by smoothly, the market will pick up," he said.

On Jan. 25, it will be one year since Egyptians first took to the streets in unprecedented numbers demanding the fall of Mubarak and his regime. As the anniversary quickly approaches, Salama attributed the low market turnover to fears that there may be more unrest and protests on the streets on this day.

"There may be a few people in Tahrir, I don’t expect there will be a huge turnout. As a result, the market will gain more confidence and we will start seeing improvement in the exchange by March."

Over the coming months, Salama predicted that the market will see a boost as the year progresses and the newly elected parliament assumes its role.

The country’s newly elected parliament, which is dominated by the Muslim Brotherhood’s Freedom and Justice Party followed by the ultra-conservative Salafi Al Nour Party, is expected to formally commence by the end of the month.

However, Egypt’s economic agenda is not expected to change much according to analysts who say the FJP tend to adopt right-wing economic policies, similar to the previous regime.

"The Islamists are very pro-stock exchange, they are heavily invested in the market," said Salama. "The exchange will not suffer because of the new parliament. Some banks, however, might have to introduce more Shariah compliant methods for clients."

Just last Monday, members of the Freedom and Justice Party and Al Nour opened the trading session at the stock exchange in a show of support for trading, stressing that the bourse is "permissible" in Islam.

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https://www.dailynewsegypt.com/2012/01/05/stock-market-stagnation-due-to-seasonal-trend-says-consultant/
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