Egypt’s Stock Market Becomes Clear Victim of Weekend Protests
Egypt’s Stock Market Becomes Clear Victim of Weekend Protests
(Bloomberg) -- The stock market in Egypt is so far a clear victim of the unhappy memories that protests in the North African country have prompted among investors, who are selling off fast.
The main index in Cairo lost about 11% in three days following small anti-government demonstrations that started Friday. Even though the rallies didn’t last past Sunday or expand beyond several hundred participants, share-sale orders are piling up -- mostly from foreigners, in a market that until the end of last week was among the top four performers globally, in dollar terms.
The EGX 30 Index measured in Egyptian pounds lost 4.2% Tuesday, and is now close to going flat for the year. Data from the stock exchange showed that traders from outside Arab countries were net sellers in the past two sessions, while domestic and other Arab investors were buyers. Some analysts say that locals were squeezed by margin calls as foreigners disbursed shares.
The gauge has posted its longest losing streak since 2015, and if it drops every session this week, the consecutive decline will be the worst since 2011, the year former President Hosni Mubarak was ousted. That’s surprising for a market that has lured overweight calls from abroad amid attractive valuations, macroeconomic reforms, a stable currency and declining interest rates.
“While the protests last weekend seems to have been quite small in numbers, it is the fact that it’s the first real protests since 2013 that is significant,” said Mathias Althoff, a money manager in Stockholm at Tundra Fonder, which holds Egyptian stocks. “The market reaction looks an overreaction, but if things escalate to larger protests coming weeks, we are likely to see investor risk appetite decrease substantially. Situations like these are notoriously hard to predict.”
--With assistance from Paul Wallace.
To contact the reporter on this story: Filipe Pacheco in Dubai at fpacheco4@bloomberg.net
To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Tom Lavell, Jon Menon
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