The stock market main index EGX30 finally ended the sideways movement that dominated over the last few weeks, and fell drastically in Sunday’s session.
The market closed at 4.917 points losing 521 points, that is to say 9.6 per cent of its value in one day. Only Misr conditioning Miraco’s stock recorded a slight increase, 12 remained unchanged and 171 suffered losses.
Almost all indicators turned red in “Black Sunday”, the stock market authority enforced a 30 minute break shortly after the opening of the session and stopped the trade on 88 stocks after they fell beyond the 5 per cent limit.
The chairman of EGX had vowed earlier not to impose any precautionary measures “whatever happens in Sunday’s session” and confirmed his refusal to closing the market.
The dramatic plunge came in reaction to the surprising constitutional declaration issued by President Morsy on Thursday, and the subsequent clashes that took place in Tahrir Square and all over Egypt.
Financial analysts describe the situation as a “historical disaster” with no precedent.
The deputy chairman of Prime Holdings and Investments (PRMH), Mohamed Maher, said, “for the first time we witness such a fall, it didn’t happen in the financial crisis, it didn’t happen in the revolution, either in terms of decrease percentage or market value”, he sees the dip as a translation of the bad situation and the political circumstances, which reflects on the economic performance and the business environment.
“Not only the constitutional declaration, the ambiguity of the futuristic vision contributed to the decline” added Maher, “if the management continues in the same manner it will be dangerous for the investment.”
“The market can recover, if Tuesday passes without escalation” concluded the analyst referring to the demonstrations scheduled for next Tuesday.
“No comment” said Hisham Tawfik chairman of Arabia Online Brokerage, “It’s a historical or a semi historical drop, I don’t remember if we have seen something like this before, and yet we haven’t seen the end of it, things can get worse.” He described the course of the day “Egyptians were mostly selling, they are the closest to the market, Arabs were buying small amounts and in a selective way.”
On his expectations for the future, Tawfik stated “things are unclear, and there are chances for deterioration.” He continued “Even if the president withdraws the decisions, the damage is done and confidence is lost day after day.”
“This is the worst day I’ve seen since I began working in the stock market back in 94, if I’m not mistaken”, commented Ossama Morad, CEO at Arab Finance Brokerage. “There was not a single rebound during the whole session.” “That was expected in the light of the president’s decision, but I didn’t anticipate that the decline will reach 10 per cent” he added.
Morad supported the stock exchange’s chairman decision not to force administrative interventions for any reasons whatsoever, he explained “the stock market is an indicator for the ruler; it helps him to read the reactions for his decisions better than the advisors who have nothing to fear, those who [cry] with their money are more sincere.”
About the events expected on Tuesday, Morad confirmed “what happens in the street doesn’t influence the market; we are used to it since the January revolution, what will damage the market is encroaching the litigation right, and trespassing the human rights.”
“The European Union has adopted a moderate tone in the declaration it has issued, the next step will be for the International Monetary Fund (IMF) to cancel the loan deal, the Egyptian regime will then kneel down because there is no money,” warned the financial expert.
