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Egypt's Stock Market to Reopen Tuesday, Faces Selloff

CNBC.com
Monday, 28 Feb 2011 | 1:09 PM ET

Egypt’s stock market is braced for a possible sell-off of shares when trading resumes on Tuesday after being closed for more than a month because of the country's political crisis.

The exchange has introduced measures to curb potential panic selling, mindful that investors may turn away from the risk and uncertainty surrounding the country’s future.

An anti-government protestor holds a blooded Egyptian flag in Tahrir Square on February 3, 2011 in Cairo, Egypt.
Getty Images
An anti-government protestor holds a blooded Egyptian flag in Tahrir Square on February 3, 2011 in Cairo, Egypt.

Weeks of protests, which culminated in the ousting of President Hosni Mubarak, have left Egypt’s political and economic outlook shrouded in uncertainty.

“The Financial Supervising Authority of Egypt and the Egyptian Exchange implemented some temporary measures that should be used to lower the volatility in our markets and these measures are just temporary,” Mohamed Farid Saleh, Vice Chairman of the Egyptian Exchange told CNBC on Monday.

“In addition to that, we requested some extra disclosure from companies related to their performance and potential implications related to what has been happening recently in Egypt,” he said.

Saleh did not provide further details on the temporary measures that will be taken, but Reuters cited state news agency MENA as saying the bourse will suspend trading for 30 minutes if the benchmark index declines by 3 percent and for the remainder of the session if it falls by 6 percent.

Egypt’s stock market plunged over 16 percent in two days prior to its suspension on Jan. 27, while the Egyptian pound fell to its lowest in six years.

Regulators and exchange officials have been wary of reopening the exchange in the wake of the crisis.

Saleh said that the exchange wanted to make sure of everyone is “on a level playing field related to the information available in the market”.

Middle East Turmoil
Middle East Turmoil

The exchange would also make sure former ministers and prominent businessmen pending trial on suspicion of wasting public funds would not be able to smuggle money out via the exchange.

“This of course we are monitoring significantly and excessively,” Saleh said.

He added the bourse could not prevent investors from pulling their money out in search of greater stability, but stressed the Egyptian economy would improve following the unrest in the country and would ultimately lead to an improved stock market.

“Capital flight, this is at the end an investment decision by foreign and domestic investors whether to increase their investments or decrease their investments,” Saleh said.

“I believe in the medium term, not even in the long term, Egypt will be witnessing a transformation in the economy,” he said.

Contact Europe: Economy

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