Egypt Stock Index Hits Lowest Level in Nearly Two Months
Traders at the Egyptian Stock Exchange reacted negatively to developments over the weekend, pushing the benchmark index EGX30 1.67% lower to 5270, its lowest level in almost two months.
Although no major outbreaks of violence were reported during the large demonstration in Tahrir Square, the continued presence of thousands of protestors and concerns about the wider security situation in the country, notably in Suez, were enough to keep investors anxious.
The state-owned Middle East News Agency (MENA) quoted Suez Canal official Ahmed Al Manakhly as saying the crucial waterway remained operational despite the turmoil.
Further reports emerged that protestors, as many as a 1,000 on Saturday night, blocked one of the main road arteries leading to the port city. As of Sunday afternoon, the military is said to have dispersed those crowds. There have however been renewed threats of road blocks if demands are not met.
Apart from being a strategic waterway for global trade, the Suez Canal is an important source of foreign currency for Egypt. Numbers just released by the government on Sunday showed that canal revenues increased by 16% year-on-year in June to $445.2 million.
In February of this year, the EIA estimated that roughly 3.1 million barrels per day of crude oil pass through the Suez Canal or the SUMED pipeline, amounting to some 6% of all daily global waterborne oil movements. The report went on to point out that even in a Suez Canal closure scenario, given the costs, “even a significant increase in tanker rates would have little impact on delivered oil prices”.
The economy has taken a major hit since the revolution, and the Tahrir Square sit-in showed no signs of abating after protestors were left disappointed following a speech by Egyptian Prime Minister Essam Sharaf.
In an attempt to placate the crowds, Sharaf said in a televised address that he had issued orders to speed up the trials of those accused of killing protestors during the revolution.
Tahrir at the moment is reminiscent of the persistence of protestors during the Jan. 25 revolution that brought down former President Hosni Mubarak. They have once again taken the security of the landmark square into their own hands, but many often do not have the energy after a long night to check every single bag thoroughly for weapons.
Having spent a lot of time with protestors there, and given previous incidents, a common concern remains a possible violent escalation to the peaceful demonstration. There have already been several reports of foiled attempts to bring arms into the square.
As for the first trading day of the week, it was a broadly negative market. Real estate stocks took a drubbing with TMG Holding and Palm Hills losing 4.92% and 1.65% respectively. The Market Vectors ETF Egypt closed 0.53% lower on Friday.
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