Egypt Stock Trading Slumps to Five-Year Low Before Protests

Trading in Egypt’s benchmark stock index, the world’s worst performer in June, tumbled to the lowest level by value in five years, on concern anti-government protests will bring the nation to a “tipping point.”

Shares of about 70 million Egyptian pounds ($10 million) were traded yesterday, the lowest since Bloomberg started tracking the data in August 2008. About 156 million pounds changed hands today, compared with a 12-month average of about 400 million pounds.

Egypt’s stocks have slumped 14 percent in June, the most among 94 gauges tracked by Bloomberg, amid growing polarization between supporters and opponents of the North African country’s Islamist government. Both sides are calling for nationwide demonstrations on June 30, the one-year anniversary of President Mohamed Mursi taking office. The average daily value of traded shares has dropped 41 percent this month from the one-year average, according to data compiled by Bloomberg.

“We’re at a point where the regime’s inflexibility with the opposition and lack of achievements over the past year has pushed the country to what many see as a tipping point,” Tamer Nigm, head of sales trading at Cairo-based Watheeqa Securities, said by phone. “Thin trading shows investors are taking the prospect seriously.”

The EGX 30 Index on June 12 entered a so-called bear market after tumbling 23 percent from a peak in September. MSCI Inc. last week said it may review Egypt’s 12 year-old emerging-market status for a possible downgrade should the nation’s currency shortage worsen.

New Governors

The EGX 30 Index rose 1.2 percent to 4,658.53 at the close in Cairo after retreating 1 percent yesterday. The gauge’s 14-day relative strength index has been below 30 since June 9, a level that indicates to some analysts that a security is oversold and poised to advance.

Mursi appointed new governors last night for 17 out of Egypt’s 27 provinces, including seven from among his main backers, the Muslim Brotherhood. His opponents, who say they have collected millions of petitions, are planning to demand his resignation at the protests, as well as call for early presidential elections.

“Investors now see any rebound in the market as an exit opportunity as confidence has evaporated ahead of the planned protests,” Nigm said. “We may be looking at a period where extraordinarily low volumes become the norm.”

Before it's here, it's on the Bloomberg Terminal.