Egyptian stocks plunge nearly 10%
Egyptian stocks plunge nearly 10%
More than 500 people have been injured in protests since Friday, when Egyptians awoke to news Mursi had issued a decree temporarily widening his powers and shielding his decisions from judicial review.
Yesterday’s stock market fall of nearly 10 percent — halted only by automatic curbs — was the worst since the uprising that toppled Hosni Mubarak in February, 2011.
Investors had grown more confident in recent months that a legitimately elected government would help Egypt put its economic and political problems behind it. The stock market’s main index had risen 35 percent since Mursi’s victory. It closed yesterday at its lowest level since July 31.
Political turmoil also raised the cost of government borrowing at a treasury bill auction yesterday.
“Investors know that Mursi’s decisions will not be accepted and that there will be clashes on the street,” said Osama Mourad of Arab Financial Brokerage.
Just last week, investor confidence was helped by a preliminary agreement with the International Monetary Fund over a $ 4.8 billion loan needed to shore up state finances.
Saudi Arabia’s shares also slumped yesterday, dragging the market down to a 10-month low as the Egyptian crisis spooked regional investors, while other Gulf markets closed mixed.
The Kingdom’s heavyweight sectors — petrochemicals and banking — were the main drag. Saudi Basic Industries Corp. (SABIC), the world’s largest chemicals producer fell 2.3 percent. Al-Rajhi Bank dropped 1.2 percent and Samba Financial Group shed 2.2 percent.
The Tadawul All-Share Index dropped 2.1 percent to its lowest close since Jan. 25 and marked its biggest one-day loss since early June.
“The index broke the key support of 6,550 sharply to the down side,” said Mohabeldeen Agena, head of technical analysis at Cairo’s Beltone Financial. “We are expecting the bears to continue pushing it downward toward 6,300 levels."
In Dubai, property stocks helped lift the index, which gained 0.3 percent, after plans announced for a new mega project in the emirate.
Dubai’s Emaar Properties climbed 2.2 percent, Drake & Scull added 0.6 percent and builder Arabtec rose 1.3 percent.
“Real estate stocks are back on the move with Dubai’s plans,” said a Dubai-based analyst.
“This not only gives the market a signal that strong demand is back on track but also a positive push to market sentiment and appetite for these highly liquid stocks.”
Abu Dhabi’s Dana Gas climbed 5.1 percent, the most active stock on the index. The natural gas producer, in talks to restructure a $ 920 million Islamic bond, is offering bondholders cash and an average 8 percent coupon on two new sukuks to replace the existing one, two sources said.
In Kuwait, the index slipped 0.2 percent from Thursday’s five-week high as retail investors booked recent gains.
“It was a seller’s market with retail investors making a quick buck — people were buying again into small and big-cap stocks which is a good sign,” said Fouad Darwish, head of brokerage at Global Investment House. “They believe the momentum will continue.”
The market has gained around 4 percent since slumping to an eight-year low hit on Nov. 4, in part due to state-linked funds buying bluechip stocks to stabilize the market.
Dawish said this buying was muted on Sunday as the market held its ground.
Elsewhere, Qatar Navigation jumped 6.4 percent after the company said it scraped plans for a 20 percent capital increase. Doha’s benchmark rose 0.5 percent to its highest close since Nov. 15.