Daily News Egypt

Egypt stocks drop to 8-week lows on funding fears - Daily News Egypt

Advertising Area



Advertising Area




Egypt stocks drop to 8-week lows on funding fears

By Tom Pfeiffer and Patrick Werr / Reuters CAIRO: Egyptian stocks fell to eight-week lows on Monday after the Muslim Brotherhood challenged the government to change the terms of an emergency IMF loan, showing political powers remain far apart on how to stave off a payments crisis. Muslim Brotherhood presidential candidate Khairat El-Shater said he had …


By Tom Pfeiffer and Patrick Werr / Reuters

CAIRO: Egyptian stocks fell to eight-week lows on Monday after the Muslim Brotherhood challenged the government to change the terms of an emergency IMF loan, showing political powers remain far apart on how to stave off a payments crisis.

Muslim Brotherhood presidential candidate Khairat El-Shater said he had told the army-backed interim government it should either postpone borrowing from the IMF or speed up the formation of a new government.

“It is not logical that I approve a loan that the transitional government would take for two or three months, then demand that I, as a permanent government, repay,” Shater said in an interview with Reuters.

Sealing the $3.2 billion IMF facility would reassure investors shaken by more than a year of political and economic turmoil but the IMF said last week there was no timeline to conclude the loan talks.

Shater’s comments are “definitely a negative and no one will be buying in the market until there is clarity on the government’s IMF loan talks,” said Teymour El-Derini of Naeem Brokerage.

The benchmark Egyptian index ended down 2.73 percent at 4,593.52 points, its lowest level since Feb. 7. Among the biggest decliners, Ezz Steel and property developer Palm Hills both fell 7 percent.

Political convulsions and street violence last year deepened the risk of a balance of payments crisis but a period of relative calm and a successful parliamentary vote convinced some investors the worst had passed, sending the stock market soaring 51 percent in the first months of 2012.

Funding gap

The IMF has said that before it agrees to a loan, the government must first sell the plan to the country’s political groupings, especially the Brotherhood’s Freedom and Justice Party, which won nearly half the seats in a new parliament.

“The improvement in sentiment that we have seen over recent weeks is in part due to expectations of IMF cash being disbursed sooner rather than later, and this could dent some of those hopes,” said Liz Martins, an economist at HSBC.

“Egypt still has a huge funding gap, and any delay increases the chances of a disorderly currency devaluation,” she said.

Egypt has spent more than $20 billion in foreign reserves to prop up its currency since an uprising last year toppled its president, limiting its slide against the dollar despite the loss of some main sources of foreign exchange.

Foreign reserves fell another $600 million in March to $15.12 billion.

Orascom Telecom Media and Technology slid 7.3 percent and soaked up the biggest volume on the Egyptian Exchange on Monday.

OTMT signed a preliminary deal in February to sell its stake in Egyptian mobile operator Mobinil to France Telecom.

Concern that the French company has not yet made a tender offer for Mobinil minorities is likely to weigh on the stock in coming days if no such offer emerges, Derini said. He said fear of a drop in Egypt’s currency could overshadow the deal.

“If investors are holding Mobinil as they see a 10 percent gain when the tender offer happens, if the currency loses 5-6 percent in the next month there’s no point holding the name. Mobinil is meant to be one of the safer players,” Derini said.

Advertising Area

Advertising Area



https://www.dailynewsegypt.com/2012/04/09/egypt-stocks-drop-to-8-week-lows-on-funding-fears/
Breaking News

No current breaking news

Daily News Egypt Android App Available for free download on Google play
View
Daily News Egypt Ios App Available for free download on APP Store
View