Egypt's Stock Market to Resume Trading on March 1 After One-Month Shutdown
Egypt Bourse to Resume Trading Tomorrow as Gulf Stocks Drop
Andrew Burton/Bloomberg
Egypt’s bourse will resume trading tomorrow as unrest in neighboring Libya is causing stocks in the region to tumble.
Egypt’s bourse will resume trading tomorrow as unrest in neighboring Libya is causing stocks in the region to tumble. Photographer: Andrew Burton/Bloomberg
Feb. 25 (Bloomberg) -- Raymond Baker, director of global financial integrity at the Center for International Policy, talks about Switzerland's decision to freeze the assets of Libyan leader Muammar Qaddafi and former Egyptian President Hosni Mubarak. He speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (Source: Bloomberg)
Egypt’s bourse, shut for a month because of the popular uprising that ousted President Hosni Mubarak, will resume trading tomorrow as unrest in Libya and Oman is causing stocks in the region to tumble.
Dubai’s benchmark DFM General Index plunged 3.8 percent to the lowest level since June 2004 at the 2 p.m. close in the emirate. The Bloomberg GCC200 Index of companies in the Persian Gulf has lost 9.8 percent since Jan. 27, the last day shares in Egypt traded. The global depository receipts of Orascom Telecom Holding SAE also slid.
“The market should have opened much earlier,” said Walaa Hazem, who helps manage $1 billion in Egyptian equities and fixed income as vice president for asset management at HC Securities & Investment in Cairo. “Locking people’s money is something very bad. This will put selling pressure on the market, in addition to the regional turmoil and the economic slowdown.”
Unrest in the Middle East and North Africa has also spread to Bahrain, Algeria, Morocco, Jordan, Iraq and Yemen. While trading has been suspended, the heads of some companies with ties to Mubarak’s regime, such as Ezz Steel, have been put under investigation on fraud charges. Finance Minister Samir Radwan said Feb. 12 the popular uprising may slow economic growth this fiscal year to about 4 percent compared with an earlier estimate of 6 percent.
EFSA Resignation
Egypt’s Financial Supervisory Authority, which regulates financial markets, said on Feb. 19 it will limit daily share price movement to 10 percent, lower the cash reserve requirement for brokerages to 5 percent of their capital from 10 percent and reduce the trading session to three hours from four. Ziad Bahaa El-Din, the agency’s chairman, resigned yesterday, according to a cabinet statement.
The political turmoil raised borrowing costs, with yields on treasury bills hovering around two-year highs since Mubarak’s Feb. 11 resignation. Egypt yesterday sold 2 billion pounds ($340 million) in 91-day bills and 3 billion pounds in 273-day notes in an auction, falling short of its 3.5 billion pound goal, according data on the Ministry of Finance’s website. Samy Khallaf, Radwan’s public debt adviser, declined to comment.
“The high yields, especially on the longer-term notes, are a big concern because the government is becoming unable to cover its intended issuances,” said Moustafa Assal, managing director of Cairo-based Beltone Financial’s fixed income unit. “They will not come down unless there’s political stability.”
Yields Climb
The yield on Egypt’s 5.75 percent dollar bond due 2020 has dropped 36 basis points to 6.85 percent since reaching a high of 7.21 percent on Jan. 31, according to data compiled by Bloomberg. That compares to a yield of 5.16 percent at the beginning of the year.
The cost of insuring government debt against default rose to 375 basis points today from 366 at the close in London on Feb. 25, according to CMA prices for credit-default swaps. It reached the highest since April 2009 of 442 on Jan. 31.
Public prosecutors have referred executives of some companies to trial on charges of corruption. Apart from Ahmed Ezz, who is chairman of the country’s biggest producer of the metal, the list also includes Yasseen Mansour, chief executive officer of Palm Hills Development SAE, a Cairo-based real-estate developer. Both companies have said their operations are run independently of the chairmen. Ezz was cut to “sell” from “neutral” at investment bank EFG-Hermes Holding SAE, which also lowered Palm Hills to “neutral” from “buy.”
‘Better Position’
The global depository receipts of Orascom Telecom, the country’s largest mobile network operator by subscribers, lost 6.7 percent at 2:28 p.m. in London today. The shares have dropped 5.8 percent since Jan. 27.
Some industries, such as food and telecommunications, will be in a “better position” than others when the market opens, Hazem said. “People are still going to eat and talk on the telephone,” he said, singling out fixed-line operator Telecom Egypt. Commercial International Bank, National Societe Generale Bank SAE and Credit Agricole Egypt SAE “won’t have good growth stories but they have strong balance sheets.”
The Egyptian uprising was inspired by a revolt that led to the ouster of Tunisian President Zine El Abidine Ben Ali on Jan. 14. In Libya, Muammar Qaddafi, in power since 1969, is facing a rebellion, which has taken over the eastern part of the country.
Dubai Shares
The turmoil in Libya sent crude oil for April delivery up as much as 5.4 percent to $103.41 a barrel on Feb. 24, the highest intraday price since September 2008, on estimates that the country has lost as much as two-thirds of its oil output. The contract rose as much as 2.1 percent to $99.96 a barrel today. Libya is the largest holder of oil reserves in Africa.
Oman’s MSM30 Index tumbled 4.9 percent, the most since January 2009. Hundreds of Omanis, many unemployed, gathered in a sit-in for a second day in the city of Sohar, refusing to go home after the nation’s ruler pledged to provide jobs following clashes that left two dead.
“With no clear end to the geo-political turmoil in the region, local investors are erring on the side of caution,” said Amro Halwani, senior equity sales trader at Shuaa Capital PSC in Riyadh. “The regional uncertainty, with Libya this week’s reason to sell, has pushed fundamentals out of the picture. The surge in oil is an ongoing threat of a possible derailing in the global economic recovery, and gave investors a reason to move away from riskier assets.”
To contact the reporter on this story: Alaa Shahine in Dubai at asalha@bloomberg.net
To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net
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