Egyptian Stocks Face Another 10% Plunge
The Egyptian stock market will likely tumble another 10 percent before investors put some cash in and try to stage a rally, after which the benchmark index could regain a third of its losses, according to historical trends, Robin Griffiths, technical strategist at Cazenove Capital, told CNBC Monday.
In times of crisis markets fall at least 25 percent, and with the EGX-30 index down 15 percent there's another 10 percent to go before meeting some resitance, Griffiths said.
“And the rules about the rally are it will try to retrace about a third of what it’s lost," he said.
"If you have a rally and it can’t retrace a third of what its lost, it will go lower to the next level (of about a 33 percent drop)." “When we get into (political situations), where there is not enough data to make logical decisions, markets resort to emotional decisions and the way the human brain works, especially crowds of humans, is it goes in proportion,” he said.
Looking to the currency, the dollar was already "beating up the Egyptian pound" at a rate of 6.5 percent a year, and with the dollar to likely see strength as investors become risk averse, "the rate at which the dollar goes (up) will almost certainly go up now," he added.
