Egypt’s stock market crashes 10% over government turmoil
Egyptian Share Prices Drop 9.6%
Egyptian share prices plunged the most in over a year on Sunday as renewed protests, sparked by President Mohammad Mursi’s decision to grant himself sweeping new powers, unnerved investors already jittery about the prospects for the country’s economy.
Divisions in Egypt have deepened over the past few days as thousands of people have mounted competing demonstrations backing and opposing President Mursi’s controversial decrees, issued late Thursday, which consolidate his power and sideline the judiciary.
The benchmark EGX-30 Index closed down 9.6 per cent at 4917.73 on Sunday, wiping out the modest gains of last week that followed the signing of a preliminary agreement on a $4.8 billion loan from the International Monetary Fund. It was the biggest daily decline in Egyptian shares since the immediate aftermath of the revolution that toppled former President Hosni Mubarak in February 2011.
“There is short-term sentiment to worry about, but also a medium term impact to fundamentals,” said Mike Millar, head of research at Cairo-based Naeem Brokerage.
Markets are concerned that the renewed protests could delay the arrival of much-needed financing from the IMF and other donors, and could prolong the political uncertainty which has paralysed decision-making on economic issues since the revolution.
“In the very short term, investors should seek protection in defensives, or stock with little Egypt exposure. There are also a handful of stocks traded on the EGX that derive little or none of their revenue from inside Egypt,” Millar said.
Egypt’s economy has been hurt badly by a sharp drop in tourism and foreign investment since the revolution. Prior to this, the country was long viewed as an emerging-market star, with rapid expansion fuelled by decades of stability and the Mideast’s largest population.