Egypt Shares Drop as Economy Concern Outweighs Vote

Egypt Shares Drop as Economy Concern Outweighs Vote
Orascom Telecom Holding SAE headquarters stand at Nile City Towers, in Cairo. Photographer: Shawn Baldwin/Bloomberg

Egyptian stocks fell for the first time in four days as concern that the government will fail to revive economic growth overshadowed initial results showing a draft constitution won approval.

Palm Hills Developments SAE, a developer of luxury real estate, tumbled the most since Dec. 6. Orascom Telecom Holding, a mobile phone operator, dropped 2.1 percent.

The EGX 30 Index declined 1.5 percent to 5,362.16 at the close in Cairo, the biggest retreat since Dec. 10. The benchmark gauge has still advanced 48 percent this year, the sharpest rally since 2007. Elsewhere in the Middle East, the Bloomberg GCC 200 Index of the biggest companies in the six-nation Gulf Cooperation Council, slipped 0.2 percent today.

“In theory, the constitution’s approval means we’re on the road to stability,” said Ashraf Akhnoukh, Cairo-based manager for Middle East and North Africa markets at Commercial International Brokerage Co. “But in reality, the economy remains a huge challenge and it’s a big question whether this government will be able to stimulate recovery.”

Islamists who support President Mohamed Mursi said 64 percent of voters backed the charter. Still, unrest in the month leading up to the vote had forced the government to delay a $4.8 billion International Monetary Fund loan seen crucial to revive the economy, which U.K.-based consulting firm Maplecroft says won’t grow enough over the next three years to prevent unemployment from rising.

The volume of shares changing hands in Egyptian stocks was 50 percent more than the average of the last 10 days, according to data compiled by Bloomberg.

Plunging Reserves

Growth may average 3 percent over the next three years, according to Maplecroft. The pound, subject to managed float, is trading at the lowest level since 2004 as the country struggles to stem the decline in foreign-currency reserves, which have plunged 58 percent since last year’s uprising.

Palm Hills declined 2.8 percent to 2.45 pounds. Orascom Telecom dropped to 3.82 pounds.

Dubai’s DFM General Index gained 0.4 percent to 1,606.92 at the close in the emirate, the highest since Dec. 10.

Air Arabia rose 2.7 percent to 80.2 fils, the highest since March 2011. The company was the second-most traded stock in the index. Air Arabia’s 2012 profit may jump 44 percent to 387 million dirhams ($105 million), according to the average estimate of eight analysts on Bloomberg.

Payout Expectation

“Investors are positioning themselves in anticipation of the dividends for 2012,” said Samer Darwiche, Dubai-based analyst at Gulfmena Investments Ltd.

The Sharjah-based airline last paid a cash dividend of 0.06 dirham a share for 2011, when profit dropped 12 percent, data compiled by Bloomberg show.

Abu Dhabi’s ADX General Index rose 0.5 percent, Oman’s MSM30 Index gained 0.3 percent and Bahrain’s measure added 0.7 percent. Kuwait’s index fell 0.3 percent, Qatar’s QE Index retreated 0.2 percent and Saudi Arabia’s Tadawul All Share Index dropped 0.2 percent.

Israel’s TA-25 Index declined 0.5 percent. The country’s benchmark bonds rose, pushing the yield down two basis points to 3.74 percent.

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