Egypt’s EGX continues losses for third session in row

The Egyptian bourse continues its losses for the third session in a row, with the closing session on Tuesday recording losses worth 21.83 billion Egyptian pounds ($1.3 billion).

Since Sunday, Egypt’s stock market has lost a total of 66.02 billion pounds amid a significant foreign selling movement. The EGX30 index dropped by 4.2 percent at the end of Tuesday’s closing session, recording 13,170 points.

The market capitalisation has fallen from 738 billion pounds in last week’s session to 702.3 pounds in Sunday’s session, with total losses exceeding 35 billion pounds.

In Monday’s session, the losses receded to 8.19 billion pounds, but they surged again in today’s session to record losses exceeding 21 billion pounds.

The deputy head of the securities division at the Cairo Chamber of Commerce, Mohamed Maher, told Ahram Online that the performance was due to ongoing calls for protests against the government.

“Egypt’s media have contributed to this bad performance because all mass communication media, especially the state-owned ones, have not clarified the truth of the situation, and the matter has helped deepen investors’ fears,” Maher said.

He said that the business community is expecting the upcoming meeting of the Central Bank of Egypt’s Monetary Policy Committee (MPC) on Thursday to see interest rate cuts of not less than 1.5 percent.

“If the MPC cuts interest rates at the anticipated average, it will be a good push for a better performance of all the Egyptian Exchange’s indices,” he said.

On the other hand, the head of the Egyptian Capital Market Association Hany Tawfik told Ahram Online that since the drop in the EGX’s indices on Sunday all expectations indicate further losses.

“The bourse’s sworn enemy is instability and uncertainty, especially on political and economic issues. The protest calls have definitely caused this bad performance, forcing the foreign indirect investors and the owners of short-term investments to exit the Egyptian stock market and sell their shares,” Tawfik said.

For the first time since 2016, Egypt’s stock exchange suspended trading for 30 minutes on Sunday after the EGX100 index fell by 5 percent.

The bourse lost 35.7 billion pounds in Sunday’s session, with a significant slump in foreign purchasing volume.

Moreover, according to Tawfik, brokerage companies that lent their customers in case they could not bear the total shares cost, resorted to a compulsory sell for shares that they bear its costs which called in the stock market with margin calls, thus the shares owners is forced to liquidate their shares to deal with the matter.

To cope with the current situation, Tawfik said that policy-makers must take real actions to restore the state of stability to the Egyptian street and to the domestic market through a number of procedures that guarantee a decent life for the Egyptian citizen, more easy terms for business community, and an applying of the decrees and laws that were issued over the few past years and had not been implemented on the ground.

Source: Ahram Online