Egypt stock market resumes plunge after reopening
Thursday, March 24, 2011
CAIRO (AP) — Trading on Egypt’s stock market was suspended for 30 minutes Thursday after it plunged by over 5 percent within minutes of its opening, marking the second consecutive day of steep declines as investors looked to unload shares after the market’s nearly two month closure.
Wednesday marked the market’s first trading day since almost two months since it was shuttered on Jan. 27 amid mounting mass protests that eventually ousted former President Hosni Mubarak. Prior to its January closure, the market had lost over 16 percent in two consecutive trading days, reflecting investor fears about the descent into apparent chaos of a country once viewed as the most stable in the Arab world.
On Thursday, the Egyptian Exchange’s benchmark EGX30 index was down 6.76 percent, at 4,795 points, according to data on the exchange’s Web site. The drop came after the index plunged 8.9 percent on Wednesday, bringing its year-to-date losses to nearly 28 percent.
“We barely had time to work,” said Khaled Naga, a floor trader with Mega Investments, adding however that investors seemed more optimistic than the previous day when trading was suspended just 16 seconds into the opening session.
Trading was to resume around 11 a.m. Thursday, according to a statement sent by the exchange.
The exchange’s reopening was repeatedly delayed as officials set in place a host of new measures they hoped would allay investor fears and lead to a smooth restart. Among those was the establishment of “circuit-breakers” designed to calm the market. Trading would be suspended for 30 minutes if the broader EGX100 index moves by more than 5 percent and prices would be frozen for the day if it moves 10 percent.
Analysts expected that foreign investors would continue the sell-off from the prior day, leading to a cash flight that would further undercut the nation’s economy.
Broader concerns about the market, along with general unease about direction of the country, have pressured the Egyptian pound. On Thursday, the currency continued to inch closer to the 6 pounds per U.S. dollar mark, and was listed at 5.959 on forex Web site, Xe.com.
Traders said the only sector that appeared to be faring well early Thursday was the cement sector — a sector they said was not particularly representative of the market or the economy.
“Step by step, the market will improve,” said Naga. “I think the stability will surface next week.”
Most blue chip stocks took sharp hits on Wednesday, trading at or near their limit down of 10 percent. Among them was Orascom Construction Industries.
The Egyptian Exchange said several of the 46 companies who shares had been suspended from trading on Wednesday were to trade Thursday. The suspension came as the companies either had failed to comply with requests for full financial disclosure or had submitted incomplete information.
Exchange officials had asked companies to come forward with information about the holdings of former regime officials and wealthy businessmen who are either being investigated for alleged wrongdoing or have had their assets frozen.