Egypt Stock Exchange To Re-Open as Chairman Resigns

Egypt's stock exchange will re-open Wednesday after being closed for more than seven weeks, a spokesman for the exchange said on Monday as the country's new Prime Minister accepted the resignation of the exchange's chairman.

Egyptian anti-government protesters wave a Tunisian flag along with national banners during continuing demonstrations in Cairo's landmark Tahrir Square.
Patrick Baz | AFP | Getty Images
Egyptian anti-government protesters wave a Tunisian flag along with national banners during continuing demonstrations in Cairo's landmark Tahrir Square.

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

Khaled Serry Seyam, Chairman of the EGX, had tendered his resignation in protest of the continued closure of the market.

Mohamed Abdelsalam, previously chairman of the EGX Clearing Settlement and Central Depository will take over from Seyam for six months, the exchange said.

An Egyptian cabinet spokesperson said the decision came after all measures had been taken "to ensure safe opening" of the bourse.

A majority of Egyptians approved amendments to the constitution in a referendum on Saturday in one of the country’s first tests of democracy since Mubarak resigned last month, but the country’s stock market remains closed amid heated debates as to whether the suggested amendments are sufficient.

Osama Mourad, CEO of ArabFinance Brokerage, argued the exchange had been closed for “too long” and for “no logical reason”.

“The more time passes, the higher the selling pressure becomes”, he said.

Still, Mourad was not worried about the severity of an expected sell-off, saying that “exchanges go up and down; any decline is an opportunity for local and foreign investors”.

A senior source told CNBC last week that the prolonged suspension of the market appears to indicate that "the government is avoiding the issue."

Egypt's Finance Minister Samir Radwan earlier admitted that he expects "a landing, but we want it to be a soft landing. That's why we wanted to put everything in place before reopening." He has maintained that the EGX would resume trading before March 28.

MSCI, which manages the index, begins to consider delisting markets if they are closed for more than 40 business days. The EGX would then face the prospect of a reclassification to stand-alone status.

On the Road to Stability?

The 77 percent approval in the referendum also allows for early elections to take place later this year.

Many of those who supported the amendments felt that it would accelerate the road back to stability. A curfew is still in place between midnight and 6 am.

Although anticipated, the result is seen as playing into the hands of existing political parties such as the Muslim Brotherhood, and the recently deposed National Democratic Party (NDP). Critics argue that more time is needed to allow newer and smaller parties to get organized before elections.

The Supreme Council of the Armed Forces has repeatedly made it clear that it wants to hand over power to an elected government as soon as possible.

Turnout was low by most standards, but at 41 percent it was nonetheless significant given the widespread voter apathy that existed before.

Credit rating agencies maintain that a successful political transition in the post-Mubarak interlude will be critical.