COVID-19 infects EGX: stocks plunge to lowest level since 2008 financial crisis

Alyaa Stohy
5 Min Read
A general view of the Egyptian Exchange (EGX) in Cairo August 18, 2013. Egypt's stock market fell sharply on Sunday as it resumed trading after hundreds of people were killed in a crackdown by the army-backed government on supporters of the Muslim Brotherhood. Banks and the stock market reopened for the first time since Wednesday's carnage, with shares rapidly falling 2.5 percent. REUTERS/Louafi Larbi (EGYPT - Tags: POLITICS CIVIL UNREST BUSINESS)

The Egyptian Exchange (EGX) transactions has been on the sale rack in the beginning of the week leading to major losses, in conjunction with more declines in local and global financial markets due to the increasing fears of the spread of Coronavirus (COVID-19). This caused the local and international stock exchanges last week to see the worst performance since the financial crisis in 2008.

After the World Health Organization (WHO) upgraded global risk of the Coronavirus outbreak to “very high” and the spread of the virus in 54 countries around the world causing the death of 2,924 people while 85,403 more are infected, a state of sale dominated EGX transactions leading to major losses, in conjunction with the declines in the local and global financial markets due to the increasing fears of the spread of Coronavirus. This caused the local and international stock exchanges last week to see the worst performance since 2008.

stock market pundits expected the EGX to continue its downturn this week.

The EGX decided to stop the trading session for half an hour on Sunday, and later resumed the trading as the EGX100 index dropped 5% to 1,243 points level.
Moreover, the Financial Regulatory Authority (FRA) announced some exceptional measures to address the consequences of the EGX fall due to Coronavirus, as it amended the provisions dealing with treasury shares, in light of recent events and developments that have occurred in global financial markets and the sharp wave of decline witnessed by Arab and foreign exchanges. It is also an attempt to protect Egyptian financial markets and the rights of those trading in it.

Mohamed El-Aasar, head of technical analysis department at Aman Securities, expects the EGX’s losses to continue this week, breaking its support levels, most prominently the 12,000 points level. Once it breaks down, the primary general trend of the market will turn to a downside direction.
Ibrahim El Nemr, head of technical analysis at Naeem Securities, said the market broke an important support level at 13,000 points, approaching the 12,000 level which the market has not seen since the global crisis.

He pointed out that breaking the level of 12,000 points would nominate the market for further declines during the upcoming period, pointing out that the market needs supportive measures in next few months with the investors’ reluctance to trade in EGX.

Moatasem El-Shahidi, vice chairperson of Horizon Securities, described Sunday’s tradings as “panicing” and reflecting exaggerated reactions by investors because of the fear from the Coronavirus, at a time with sharp declines in the Gulf and global markets this morning.

The market recorded trading value of EGP 597.9m, through the circulation of 172.5m shares, by implementing 22.600 sales and purchases, after trading was carried out on the shares of 166 listed companies. Out of those, three shares increased and the prices of 135 securities fell, while the prices of 28 other shares have not changed others, making the market capital of the listed shares settle at the level of EGP 634.9bn.

Net dealings of Arabs alone went towards buying with a value of EGP 11.2m, with a 7.6% acquisition of buying and selling operations on shares, while net transactions of Egyptians and foreigners went towards selling, recording EGP 1.7m and EGP 9.4m, respectively, with a 75.6% acquisition, and 16.1% trades.

Individuals executed 58.3% of transactions, heading towards purchase with the exception of Arab individuals who recorded a net sale of EGP 4.4m, while corporates acquired 41.6% of trades heading towards sale, with the exception of Arab corporates. As they registered net purchase of EGP 15.7m, while Egyptian and foreign institutions recorded net sale value of EGP 11.2m and EGP 9.5m, respectively.

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