Egypt Stocks Drop to Lowest in Six Weeks After Islamist Attacks

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Egyptian stocks sank to the lowest level in more than six weeks after Islamist militants killed scores of security personnel in Sinai and the nation’s prosecutor general was assassinated in Cairo.

The EGX 30 Index of shares retreated 0.7 percent to 8,314.72 at the close in Cairo. Stocks resumed trading after a two-day public holiday to mark the second anniversary of President Mohamed Mursi’s ouster and the start of Egypt’s fiscal year. The gauge has declined 6.9 percent this year, making it the fourth-worst performer among 93 gauges tracked by Bloomberg.

More than 60 security personnel and six civilians were killed Wednesday by assailants using rockets and car bombs mostly in or around the town of Sheikh Zuwayid, according to the security directorate in north Sinai, which borders Israel and the Gaza Strip. The armed forces said 17 troops were killed, and it has regained control and killed at least 100 militants.

“Confidence has definitely been shaken,” Mohamed Radwan, the head of equities at Cairo-based Pharos Holding, said by phone. “We’re seeing a rapid sequence of events including a political assassination for the first time, and a high number of casualties in the attack on the military. It all suggests escalation from both sides going forward.”

Assassination

President Abdel-Fattah El-Sisi vowed this week to intensify a crackdown on militants, and his government rushed to tighten laws after Wednesday’s attack. Violence in Egypt threatens to undercut efforts by El-Sisi to persuade investors that the Arab world’s most populous nation is stabilizing after years of unrest and that its economy can recover from stagnation since President Hosni Mubarak’s ouster in 2011.

Egypt’s authorities accuse the Muslim Brotherhood of being responsible for much of the violence. The anniversary of the toppling of Mursi, who was a Brotherhood member, sparked an increase in attacks, including the killing this week of chief prosecutor Hisham Barakat.

Barakat played a key role in getting the Brotherhood organization declared a terrorist group, freezing its assets and bringing its backers to court.

Egyptian stocks have “in recent years become somewhat enured to this type of activity, but the scale of recent events is greater than we have seen of late,” Julian Bruce, the head of institutional trading at EFG-Hermes U.A.E. Ltd. in Dubai, said in an e-mailed note to clients before the market opened. “I’m not expecting a panicky, high-volume ripcord to be pulled, more of a buyers’ strike.”

Talaat Moustafa Group Holding, the biggest publicly traded property developer, led decliners with a 1.8 percent loss on almost four times its three-month average daily volume. Telecom Egypt Co. rose 1.4 percent after the government, an 80 percent shareholder, said it plans to let the company offer mobile services.

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