Egypt’s benchmark stock index dropped the most in three weeks and dollar bonds fell after President Mohamed Mursi reinstated parliament, reversing the military’s decision.
The EGX 30 Index (EGX30) slumped 4.2 percent, the most since June 19, to 4,698.52 at the close in Cairo. The gauge had fallen as much as 5.5 percent before Parliament Speaker Saad El-Katatni called the legislature to convene tomorrow. The nation’s 5.75 percent dollar bonds due April 2020 fell for the first time in seven days, sending the yield five basis points, or 0.05 percentage point, higher to 6.25 percent at 4:36 p.m. in Cairo.
Mursi’s decree, which also called for a fresh parliamentary vote within 60 days after the approval of a new constitution in a public referendum, came after the military last month dissolved the assembly and assumed legislative authority. The military’s move followed a decision by the high court that the law that governed voting for the Islamist-controlled chamber was unconstitutional. Until his election last month, Mursi was the chairman of the Freedom and Justice Party, the political arm of the Muslim Brotherhood.
“The drop is a little stronger than we expected,” said Teymour El-Derini, Cairo-based director of Middle East and North Africa sales trading at Naeem Brokerage. “Parliament may be reinstated but it will be powerless. This is round one between the Brotherhood and the military, and it will likely continue to have a negative effect on the market.”
The Supreme Council of the Armed Forces, which took over executive powers from the ousted Hosni Mubarak until Mursi’s election, convened an emergency meeting last night to discuss Mursi’s decree, the official Middle East News Agency reported. Members of parliament were allowed into the legislature’s building today, the agency said separately.
Real-estate developer Talaat Moustafa Group Holding (TMGH), plunged 9.3 percent, the most since March last year, to 3.99 pounds. Commercial International Bank Egypt SAE (COMI), the country’s biggest publicly traded lender, fell 5.1 percent to 27.55 pounds.
The Egyptian pound, subject to managed float, weakened 0.1 percent to 6.0614 a dollar, extending its losses since the start of last year’s uprising to about 4 percent. One-year non- deliverable forwards were unchanged at 7.45 a dollar, indicating investors expect the pound to plunge 19 percent within 12 months.
The country met its 3 billion-pound ($495 million) fundraising target at an auction of treasury bonds today as yields were little changed. The country sold five-year notes at yields ranging from 16.52 percent to 16.61 percent, according to central bank data on Bloomberg. It sold 1 billion pounds of 10- year securities at yields between 16.95 percent and 17.05 percent, the data show.
To contact the editor responsible for this story: Claudia Maedler at email@example.com