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Protests jolt Egypt's stock market to second biggest drop in history

By Christopher Le Coq CAIRO: Egypt's main EGX 30 index closed 10.52 percent lower on Thursday, at 5,646.5 points, its second sharpest drop in history.

The Egyptian Exchange suspended trading early in the day for 40 minutes, when the index was down 6.24 percent at 5,916.74 points, and then resumed trading at 11:30.

Minutes later the benchmark index dipped lower to 8 percent and then to more than 10.72 percent before starting to pick up slowly, ending the day 10.52 percent lower.

The broader EGX 70 also dropped 15.42 percent on Thursday while the EGX 100 fell 14.02 percent.

Investors' fears were fueled by continued clashes between protesters and security forces that raged for a second day into the late hours of Wednesday night. A larger turnout is expected for demonstrations planned after Friday morning prayer, with many expecting protests to swell to their biggest numbers yet.

On Wednesday, the market took a steep fall with the EGX 30 closing 6.14 percent lower at 6,310.44 points, the broader EGX 70 losing 10 percent and the EGX 100 falling 9.14 percent.

Upon reopening Thursday morning with a steep decline, a trader at CI Capital said, "It is a panic," referring to investors' sell-off in the market.

Mohamed Elzayat, analyst at CI Capital, said, "Big investors, hedge funds and institutions are less nervous than retail investors."

In total, 1.1 billion in volume was traded on the market, said CI Capital's head of research Mona Mansour.

By the end of the day, total market capitalization reached LE 406.9 billion, according to the stock exchange website. The market has lost more than $10 billion.

According to an emailed summary of the day's activity from the exchange, institutional investors constituted 57 percent of trading while individuals made up 43 percent.

Egyptians sold stocks in the amount of LE 609.3 million and bought stocks worth LE 640.1 million while foreign investors sold stocks worth LE 549.2 million and bought worth 496.7. Arabs sold LE 83.83 million and bought LE 105.6 million.

Mansour could not confirm whether the buying witnessed by institutional investors was the result of calls from the EGX administration for them to re-invest the market, stating that it would be pure speculation.

After trading resumed, a spokesperson at the Egyptian Exchange told Daily News Egypt that the administration at the exchange -- without specifying which officials -- were in discussions with major institutional investors in a bid to shore up confidence, urging them to avoid the panic and re-invest in the market.

Only five stocks actually gained points, while the rest sustained losses today. Ceramic and Porcelain and Egyptian Real Estate Group were the day's biggest losers, dropping 24.89 and 24.26 percent, respectively, while Golden Textiles and Clothes Wool was a winner, gaining 9.47 percent.

Some of the biggest stock losses include El Ezz Porcelain (14.6 percent), Ezz Steel (12.9) percent and Ezz Aldekhela Steel - Alexandria (15.18 percent). Orascom Construction Industries (OCI) dropped 10.7 percent, Palm Hills Development 11.29 percent and Commercial International Bank 8.93 percent.

The Egyptian pound also continues its slide, falling to 5.854 against the green back, Mansour noted. The day before it closed at 5.8300 against the US dollar, the lowest since January 2005.

Mansour indicated that T-bills experienced a selloff, as well.

Both the decline of the Egyptian currency as well as the selling of Treasury bills came as "unsurprising," she said, owing to the market's sharp plunge.

Serious unease within the tourism sector, a key component of the Egyptian economy, remains relatively acute. "There have been a few cancelations," a high-level representative of Emeco Travel told Daily News Egypt, "but nothing major so far."

The representative said that his company has yet to issue any official announcements or warnings to its customers or employees, adding that sites throughout the country were operating as usual.

Nevertheless, he pointed out that should the unrest and violent clashes on the streets continue into and throughout next week, industry insiders would begin bracing for a spike in cancellations.

He added that traditionally February is the most robust travel month for foreign tourists in Egypt, but that given the images of tear gas and beatings in international media reports, he projected -- as a very preliminary and off the cuff estimate -- a potential 20 percent decrease in activity.

A spokesperson from Thomas Cook, the UK travel company, told the Telegraph, a daily UK newspaper, "We continue to monitor the situation in Egypt...Our experienced teams on the ground assure us that no tourist areas at the Red Sea have been affected in any way by the recent demonstrations." -Additional reporting by Amira Salah-Ahmed

© Daily News Egypt 2011