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Egypt Stocks Lead Decline in Arab Markets on Debt Crisis, Oil

The Cairo stock exchange
A file photo of the Cairo and Alexandria stock exchange in Egypt. Photographer: Adam Berry/Bloomberg

Egypt shares slumped the most since November, leading a drop in Arab markets, after global stocks tumbled on concern Europe’s debt crisis will spread beyond Greece and slow the global economic recovery. Crude oil fell to $75 a barrel.

Orascom Telecom Holding SAE lost the most this year as Algeria reiterated intentions to buy Orascom’s unit in the country, objecting to a proposed sale to MTN Group Ltd. Air Arabia PJSC dropped the most since March as profit declined. Egypt’s EGX plunged 5.1 percent, the biggest slump since Nov. 30, to 6,756 at the close in Cairo. Dubai’s DFM General Index declined 1.2 percent and Qatar’s QE Index fell 4 percent. Saudi’s benchmark rose 2.4 percent, paring yesterday’s losses.

“The international melt-down scenario related to Greek sovereign debt” is pushing Arab markets lower, said Yazan Abdeen, a Dubai-based fund manager at ING Investment Management (Dubai) Ltd. “If you think in the gloom scenario, international demand falls and hence oil, and that leads to less sovereign government revenue.”

Stocks fell globally last week on concern Europe will be unable to contain the spiraling government debt crisis. European shares tumbled the most in 18 months before euro-region leaders met in Brussels to endorse the Greek bailout. Moody’s Investors Service said banks in Portugal, Spain, Italy, Ireland and the U.K. could be at risk as the threat of contagion grows. The MSCI World Index slid 2.3 percent to 1,099.58 on May 7, the lowest close since Feb. 8.

Orascom Telecom

Egypt’s benchmark followed “suit with the rest of the region and the world for that matter,” said Teymour El-Derini, head of Middle East and North Africa sales at Naeem Brokerage in Cairo.

Orascom Telecom, the Middle East’s biggest mobile-phone company by number of subscribers, dropped 6.7 percent, the most since Dec. 15, to 5.96 Egyptian pounds. Algeria’s government will buy Orascom’s unit in the North African country if it’s offered for sale, Finance Minister Karim Djoudi said on May 6, after the market closed.

Air Arabia, the region’s largest low-cost carrier, retreated 3.4 percent, the most since March 31, to 90.8 fils. First-quarter net income fell more than 50 percent to 50 million dirhams ($14 million) as fuel prices rose and it cut fares to lure passengers amid slowing economic growth in the Middle East.

Saudi Rises

Crude oil tumbled to $75.11 a barrel, capping its biggest weekly decline in 16 months. Oil is up 28 percent in the past 12 months. The six nations of the Gulf Cooperation Council, made up of the United Arab Emirates, Qatar, Saudi Arabia, Kuwait, Oman and Bahrain, supply about a fifth of the world’s oil.

Shares in Saudi Arabia, the world’s biggest oil exporter, declined 4.4 percent yesterday. The country’s market is the only one tracked by Bloomberg News that is open Saturdays. The Tadawul All Share Index gained the most since Sept. 26.

Oil prices are stable and producers expect demand to rise in 2010, Saudi Arabia’s Oil Minister Ali al-Naimi said today. “Oil demand is very good,” he said. “It is going to increase this year.”

The Kuwait Stock Exchange Index retreated 1.9 percent, the most in more than five months. Oman’s MSM30 Index slid 1.1 percent and Bahrain’s gauge dropped 1 percent. Abu Dhabi’s index lost 1.4 percent.

“The sell-off in the regional markets should not be sustainable,” ING’s Abdeen said.

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