CAIRO: Egypt’s benchmark index fell on political anxiety after the Muslim Brotherhood announced in a policy u-turn that it was fielding a candidate for the presidency, traders said.
The index dipped 1.2 percent as investors worry about the potential reaction to the decision, either from the ruling military council or from liberal parties. The policy change compounded tension over the writing of a new constitution.
“There is pessimism in the market, or at least caution, about the Muslim Brotherhood’s announcement to run for the presidency,” said a trader who declined to be named.
“People are afraid we are running into a religious dictatorship or a clash between the Islamists and the military rulers,” the trader added.
All but four companies on the 30-firm index were lower, with Orascom Construction pulling it down the most after a delay to a shareholder meeting to approve a demerger of its construction and fertilizer businesses, traders said.
OCI reported a 34 percent drop in quarterly net income last week, missing expectations after being hit by debt restructuring and other charges. OCI slid 2 percent.
OTMT shed 2.8 percent as traders await more clarity over a planned sale of its stake in Egyptian mobile company Mobinil to France Telecom.
Real estate firms also weighed on the index.
SODIC said in a release to the bourse that it had received notice from the New Urban Communities Authority (NUCA) that the body had decided to cancel the firm’s purchase of a plot for its Eastown project on the edge of Cairo.
The firm said it was appealing the decision, but an expected legal tussle drove SODIC shares down 5.2 percent.
“The news of the cancellation of Eastown’s land plot was not expected by the market, and is definitely negative, not only for SODIC, but for the entire real estate sector and investment climate in Egypt,” Beltone Financial said in a note.
“The disputes over land ownership have been a significant overhang over the past period for the entire sector,” the investment bank added. “While the ruling at hand is by no means final, it manifests the significant risk that many developers remain exposed to.”
Talaat Moustafa Group, the country’s biggest listed developer, dropped 2.7 percent. Amer Group and Egyptian Resorts slid 2.8 percent and 4.4 percent respectively.
Palm Hills tumbled 4 percent after the firm’s shareholders decided against distributing a dividend for 2011 results, the firm said in a disclosure note to the exchange. It posted a full-year net loss of LE 331.3 million ($55 million) after sales revenue plunged 68 percent.
“People are scared,” Nader Khedr of Blom Egypt Securities said. “The market is already suffering from its own lack of clarity. When you add the political situation to this, it is something else entirely.”