Market Report: Egypt stocks fall hard on global pressures

Main index plummets to a 30-month low, slipping a further 2.35 per cent as tumbling US and European stocks add to local worries

Egyptian stocks slumped again on Sunday as bubbling political tensions and widespread strikes combined with global market turmoil to prompt a retreat of local investors.
The benchmark EGX30 fell 2.35 per cent to 4,233 points, deepening the losses of mid-last week and closing at its lowest level since March 2009. All Arab markets took a dip in the week's first session but Egypt's was the worst hit.
"Egypt quickly feels the effect of any global fluctuations," said Ashraf Abdel Aziz, head of institution sales at Arabeya Online Securities. "What happened in the European markets on Thursday caused the sharp dip today."
European stocks tumbled nearly 4 per cent on Thursday on the back of the continent's debt crisis, dragging global equities to a fresh one-year low. Shares on the continent stabilised slightly on Friday, managing to eke out small gains at the same time as US equities recorded their worst weekly loss since the 2008 financial crisis.
From Egypt's 181 listed stocks, 159 lost value and just six gained, with all market sectors either finishing in the red or stagnating. The broader EGX70, which tracks more speculator-friendly mid-range stock, tumbled twice as far, losing 4.89 per cent.
EFF Hermes was the only blue-chip firm left standing, edging up 0.24 per cent as high-caps like Commercial International Bank, Citadel Capital, Orascom Telecom and Oracom Construction fell around it.
The basic resources sector led the decline, falling 4.9 per cent, although it was lower-cap stocks that saw the biggest drops. The General Company For Land Reclamation, Development & Reconstruction and Cairo Development and Investment both lost over 9 per cent.
Foreign investors, limited to around 12.7 per cent of the market on the Sunday holiday, punched above their weight to become the session's only net-buyers. Egyptians, by contrast, made up around 80 per cent of trade and sold a net LE7.016m.
Total turnover was just LE216.8 million, the second-lowest figure in some seven years and low even by the standards of recent months which have seen trade fall to a mere tenth of its pre-Revolution average.
Mohamed Metwally, a trader at Prime Securities, says this level of trade has become the new reality due to the lack of a timetable for Egypt's political transition.
"It will remain low until parliamentary and presidential elections are successfully held. No foreign investor will look to Egyptian market in absence of a clear transition scenario," he says.
Last week's renationalisation of three formerly state-owned firms years after their sales is also worrying investors, say market analysts.
Nonetheless, certain stocks were likely to see climbs in the coming days now they had fallen to attractive levels, Metwally predicted, citing that the Commerical International Bank, whose performance is often a gauge of foreign institution interest, will soon see a revival.
But it is the situation beyond Egypt that will determine performance.
"If USA and European markets continue to tumble -- and I expect they will -- we will take further slips. No central bank is without investments in american debt, including ours," he said.
"Unless there is good news, like acquisition agreements, nothing will save the market."