The Egyptian Exchange (EGX) has witnessed a wide wave of decline, which prompted the stock exchange to stop trading temporarily, in conjunction with the decline of most local and global stock markets as individual investors fear the spread of a new strain of COVID-19 in Egypt. The EGX lost EGP 20bn in less than two hours.
The EGX suspended transactions on 131 stocks of listed companies, after Britain announced the emergence of a new strain of COVID-19, which was translated into strong declines and the suspension of trading for half an hour at the beginning of the Monday session.
The EGX ended trading on Sunday down by 2.83%, and the benchmark EGX30 fell to 10,581 points.
European markets were also exposed to a strong sale wave, as the STOXX 600 index lost 2.4% of its value, to record 386.6 points.
Dow Jones futures contracts for US stocks also fell by more than 500 points, reaching 30,179 points during the same period, and the Standard & Poor’s and Nasdaq indices fell by 2% and 1%, respectively.
Shawkat El-Maraghy, managing director of Prime Securities, said that the Egyptian Exchange was directly affected by the fears of global market investors of the new coronavirus strain. He attributed the panic that the EGX witnessed at Monday’s session to the nature of the Egyptian market, of which 70% is controlled by individuals.
He explained that when institutions constitute less than 50% of any market, it will be always exposed to severe and frequent fluctuations.
El-Marghy advised individual dealers at the present time to adopt a wait-and-see approach and reduce the marginal purchase until the situation stabilises, and not to sell if a large proportion of the shares were borrowed.