Slow stock exchange trading in anticipation of election results

5 Min Read
Egyptian stock market

By Ahmad Ramadan

Egyptian stock market

Several financial markets experts differed in their opinions about the movements of the stock market after the completion of presidential runoff while a state of anticipation and caution have taken over traders. Some experts had the opinion that the completion of the elections is a positive step and that it will be reflected in the behaviour of traders, especially after the judicial rulings to dissolve parliament and to strike down the political isolation law. The experts considered that re-established confidence in the state’s intuitions.

However, some analysts said that the nature of the transactions will not differ greatly from those in the previous period because of the state of tension and apprehension that have taken hold of investors. They also referred to the popular divisions over the two presidential candidates which could be reflected in objections to the election result when it is announced.

Mohamed Maher, Vice President of the Board of Directors of Prime Holding, expected that the stock market would see a positive performance in its first session after the complication of the second round of presidential elections. He attributed his expectation to the realization of one of the most important achievements of the revolution: the right to choose the president in freedom and transparency for the first time in the country’s history.

He added that the constitutional court’s rulings to dissolve parliament and to strike down the political isolation law confirm the effectiveness of the state’s institutions and its ability to rely on the ruling constitution which sets the various powers. He said that the rulings would positively impact the political situation in the country.

He stressed that the market response to the second round of elections depend in the first place on the reaction of the political street, especially because of the large split between the two candidates for the position of president, with the expectation that the difference in the results will be relatively less. He said that the interaction of the stock market with the event will be the other side of the coin to the reaction of the street.

Ahmad Khaled, the president of the analysis division of the securities trading company Arabeya Online, said that the market transactions before the announcement of the results of the second round did not differ greatly from previous transactions with regards to falling values and trading volume, as well as the incidental changes in most of the leading stocks.

Khaled expected one of two scenarios, one positive and one negative, after the announcement of the results of the second round. The positive scenario would take place if the political street is satisfied with the results. In that case, the main index will be pushed toward the main resistance level at 4,550 points and then break through it and continue on to test resistance levels at 4,700 and 4,800 points, supported by relatively active trading volumes.

He said that the negative scenario could result in the case of tension and protests after the announcement of the election results. He added that in that scenario assumes that the index will break through the main support level at 4,300 points then continue toward the lower limits of support levels at 4,100 and 4,000 points. The indices would then witness more losses after that.

The main index EGX30 dropped 1.6% in during trading last week to close at 4,419 points. The index EGX70 dropped 1.4 % to close at 392.6 points while the index EGX100 dropped 3.1% to close at 677.62 points.

The value of trading during the week’s transactions equalled roughly EGP 1.005bn with 372.946 million stocks traded in 67.722 thousand deals. Market capitalization of listed shares dropped to EGP 321.31bn.

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