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Recent political tensions bring January 2011 scenario to mind at EGX - Daily News Egypt

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Recent political tensions bring January 2011 scenario to mind at EGX

MPC meeting will end the bleeding of the stock market, says HC

The Egyptian Exchange (EGX) is witnessing unjustified concerns over the extent to which political tensions in Egypt may escalate, as investors fear the January 2011 scenario when the EGX incurred heavy losses. A random sale wave dominated the last three trading sessions, in which the EGX capital lost over EGP 36bn and its indexes bled 8%, while the EGX30 alone lost 4.2%, with the index closing at 13,170 points.

Shawkat El-Maraghy, managing director of HC Securities and Investment, said the declines witnessed in the EGX are unjustified, as the tension in Egyptian streets are not that big. He noted that uncertainty experienced among investors are mere worries of further escalations.

He pointed out that the state of anxiety and fears extended to foreign investors, as brokerage companies have received questions from foreign investors about the situation in the EGX, which demonstrates their fear of political escalation. It was very clear in their tendency to sell three times the level of purchases.

El-Maraghy believes that the EGX will continue to bleed during the remaining two sessions of this week, but less frequently as the market will absorb the investors’ concerns when next Friday goes peacefully.

He confirmed that the next meeting of the Central Bank of Egypt’s Monetary Policy Committee (MPC) on Thursday to determine the interest rate will bring down the curtain on the EGX losses, and will end the state of anxiety among investors.

The EGX has suspended trading on 25 securities for 10 minutes in this morning trading, after exceeding the allowed decline level of 5%, among a wave of strong declines dominating trading since the beginning of the week, extended into  Tuesday’s trading session.

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