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Egypt Bourse's Broad Index Closes Down 8.95 Percent

CNBC.com and Reuters
Wednesday, 23 Mar 2011 | 8:10 AM ET

The Egyptian stock exchange's broad index closed 8.95 percent lower on Wednesday in the first trading session since January.

Inside the EgyptStock Exchange just before its reopening.
CNBC
Inside the EgyptStock Exchange just before its reopening.

Many major shares plunged by the 10 percent limit when the stock exchange reopened having been closed since Jan.27 because of the political turmoil that ousted Hosni Mubarak.

The benchmark EGX30 index plunged 8.9 percent to 5,143 points.

Trading had been suspended just moments after the exchange re-opened as circuit breakers halted trade following sharp falls, but trading resumed later on in the session.

Trading was initially halted on Jan 27.after the benchmarkindex fell over 10 percent as a revolution shook the countryand eventually led to the downfall of President Hosni Mubarak.

Egypt's finance minister Samir Radwan told CNBC at the exchange Wednesday morning that he was not concerned about the suspension.

"Whatever happens...we will do what it takes to restore the continuation of the stock exchange," he said.

"The appetite for the Egyptian economy is fantastic so I'm not at all worried. The closure was necessary...we had a revolution...we have to put things into perspective," he added.

Mohamed Abdelsalam, Chairman of the Egyptian stock exchange earlier on Wednesday predicted the market would "stop to take a breath" but it would continue trading.

On Tuesday, he said the trading day would be reduced to three hours from four hours and circuit breakers would kick in and stop trading for 30 minutes if the wider EGX 100 index lost more than 5 percent.

If the index fell further to reach a total of 10 percent, trading would be suspended for the entire session.

For the narrower EGX 30, the percentages were at 3 percent (for a suspension of 30 minutes) and 6 percent (for a suspension of the remainder of the session).

Existing circuit breakers governing individual stock trading remained in place.

Middle East Turmoil
Middle East Turmoil

Abdelsalam, who took over as chairman on Monday after his predecessor resigned in protest at the continued closure of the market, said a fund "to create demand side in the trading session" open to "all the people who love Egypt" would start "very soon."

The exchange is also looking to provide support for clients of brokers with trouble meeting high margin requirements.

Right now the Cairo stock exchange is "a great opportunity to make money" as the low prices expected are "less than the real value of the shares," Abdelsalam said.

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