Global Arab Network | Egypt Stock Exchange Re-Open on 34 Billion Loss

Translate this article to your language:

GANPublications

e-Publications

Add Site to Favorites

Add Page to Favorites

Make Homepage

Share This Page

RSS Feed

--------------------------------------------------------------------------------------------------------------------
| |

Egypt Stock Exchange Re-Open on 34 Billion Loss

Global Arab Network - - Gamal Ragay

Wednesday, 23 March 2011 22:32

Egypt (Cairo) - Three main indexes of Egypt's Stock Exchange (ESE) plummeted on Wednesday, and lost about LE 34 Billion on the first day of resumption of trading after a 55-day shutdown due to the January 25 popular uprising which ousted former President Hosni Mubarak, the matter which forced the bourse to suspend the trading for half an hour.

The ESE sources told the Egyptian Middle East News Agency (MENA) that the market plummet declined to LE 374 billion against LE 407 billion prior to the resumption of trading.

The market brokers attributed this sharp loss to the heavy plummeting of the leading stocks at the bourse, including Ezz Steel, Orascom Construction , Orascom Telecom, Palm Hills, Hermes, and Talaat Mustafa . The benchmark, EGX, bled 560 points, 9.9 % of thee value, settling at the level of 5,085.58 points, according to the website of the bourse.

The other main index, EGX-70, dipped 5 %, 27 points, to 509.92 points. The bearish trend spread to the other index, EGX-100, losing 7.2% of the value, some 62 points, falling to 822.65 points.

Hefty stock sell-off has apparently caused the downturn of the main indices, and the dramatic bearish performance prompted managers to halt trade for half an hour. The Egyptian bourse had shed LE 70 million upon its closing on January 29, following a wave of falls related to the 2008 global financial meltdown, which had sent jittery ripples to the local market.
Abdel Salam, chairman of Misr for Central Clearing, who will supervise the exchange activities for six months, replaces resigned bourse chairman, Khaled Serri Siyam.

Stocks put in their worse performance in 13 months, with the stock exchange's benchmark index EGX 30 slumping nearly 16 per cent in the two days the exchange was reopened on January 26.

Eighteen days of mass street protests which forced Mubarak to step down on February 11, disrupted bourse trading until measures were taken to ensure the market's gradual return to normal operations, including encouraging steps to lure traders to buy in to increase demand.

The Egyptian bourse has frozen assets of more than 150 people, mostly charged with corruption and misappropriation of state funds, since Mubarak's resignation on February 11, pending state investigations.

The European Union (EU) was also reported to have agreed Monday to freeze the Mubarak assets, his two sons and their wives.

Abdel Salam urged mainly small investors to avoid a wave of selling when the bourse opens tomorrow, stressing that trading will eventually return to its normal level in a short time.

Amid fears of a possible conspiracy by some businessmen of the toppled regime to cause stock prices to thud down, economic experts and analysts urged the government to take all needed precautionary measures as Egypt's stock exchange reopens Wednesday.

Fears are that these conniving businessmen will try to stir panic in the bourse in their attempt to feed a counter-revolution, which Egypt's Caretaker Prime Minister Essam Sharaf has recently spoke about, the experts say.

They voiced hope that the bourse's performance will be balanced tomorrow to restore investors' confidence.

The heads of two securities companies expected that the bourse will not suffer a collapse.

One of them predicted a shocking drop just in the first few days and the other expected what he termed as a logical decline ranging between 3 and 5 percent.

Economic expert Omar Abdel-Fattah expected purchases to be focused on benchmark EGX 30 index.

He cautioned that there will be some problems with regard to stocks of companies whose owners face funds and assets freeze.

He expected some indexes - of interest to individual investors - like EGX 70 to plummet because of huge debts to brokerage companies.

He highlighted the importance of monitoring selling operations through offshore funds which are owned by Egyptian businessmen and registered under foreign names. He warned that this could be manipulated as a rapid way for smuggling money abroad away from any scrutiny.

He also called for suspending a mechanism of transferring shares to Global Depository Receipts (GDR) in the coming days because this could also be used for money trafficking.

The Egyptian government is keen on taking all measures to support the Stock Exchange, said an official source with the Ministry of Finance on Tuesday.

In press statements, the source noted that there is more than one mechanism for buttressing the bourse such as purchase of stocks and shares through brokers.

Also, these mechanisms include purchase of securities of investment funds that are affiliated to the commercial banks operating in Egypt, he said, adding that these funds hit 34 in number.

The government, he pointed out, has adopted all measures to protect small investors in the exchange.

Global Arab Network

Add comment

The opinions of the authors in articles published are theirs alone and do not necessarily reflect the views of Global Arab Network
------------------------------------------------------------------------------
Published comments are the opinions of private individuals and do not reflect the views of Global Arab Network