Egypt's Market Skids Another 3% As Unrest Grows
Continued political unrest caused Egypt’s benchmark stock index to decline further on Monday, with added pressure coming from the selloff in other global markets.
The market lost 2.93 percent to close at 5116 points, underscoring Egypt's position as the worst emerging market so far this year.
In a further move to appease protestors, the Egyptian Prime Minister Essam Sharaf is expected to announce a major cabinet reshuffle.
Wael Ziada, Head of Research at EFG-Hermes in Cairo, told CNBC that “with the political scene what it is at the moment, you cannot rule out volatility in the stock market” and that most of the today’s decline was “due to the political situation.”
Ziada admitted that although the situation remained unclear in the short-term, he remained positive about the longer term prospects.
Given the ongoing volatility, a swift response to demands of protestors, or striking a broader deal, may give the market an inflexion point.
“I think we will have a response from the government and the Supreme Council of the Armed Forces in the next two-three days … we might see a reshuffle”, Osama Mourad, CEO of ArabFinance Brokerage told CNBC. That, he says, would bring about a quick rebound, with telcos seen outperforming.
A stock that bucked the broadly negative trend was Olympic Financial Investments, which jumped 6.64 percent after Sweden’s Electrolux agreed to buy 52 percent of the company in cash from Paradise Capital.
It said the Mandatory Tender Offer was expected to be finalized at the end of July beginning of August 2011, with plans to delist the company going forward. The deal values the company at around $409 million based on 60 million shares outstanding.
In a posted video, Electrolux chief executive Keith McLoughlin said it was the right time, despite the revolution and expected turbulence for next 12-24 months. He added that it was "a great opportunity for shareholders long term” and that they were “quite excited”.
Laggards in Monday’s trade included Egyptian Resorts and Citadel Capital, which lost 5.31 percent and 4.24 percent respectively.
The Market Vectors ETF Egypt opened over 3.5 percent lower, while the Egyptian Pound continued to hold steady after closing at 5.95 against the USD in the previous session.