Egyptian Stocks Drop on Missing Airliner; Mideast Markets Slump

  • Investors fear potential impact on tourism: Compass Capital
  • U.A.E., Saudi, Qatari shares retreat as oil slides second day

Egyptian stocks declined after the nation’s flagship airline said one of its passenger planes went missing on the way back to Cairo from Paris. Most equities dropped across the Middle East as oil retreated.

The EGX 30 Index fell 1.8 percent to 7,499.49 at the close. About 538 million Egyptian pounds ($61 million) of shares traded, 21 percent less than the market’s full day average over the past three months. Qatar’s QE Index lost 2 percent, the most in six weeks.

The North African country sent out naval search ships after an EgyptAir flight carrying 66 people disappeared over the Mediterranean Sea on Thursday morning. Tourist arrivals in Egypt, which counts on the industry as one of its biggest sources of foreign currency, have slumped by more than 40 percent since the bombing of a Russian jetliner over Sinai in October killed all 224 passengers. The possibility of a terrorist attack is higher than technical failure, but remains speculation, Civil Aviation Minister Sherif Fathy said Thursday in a televised news conference in Cairo.

“There’s negative sentiment from the presumptive plane crash, because it conjures up memories of the Russian plane,” said Cairo-based Ashraf Akhnoukh, the manager for Middle East and North Africa at Commercial International Brokerage Co.

Forwards Drop

Egypt’s $48 billion equity market is coming off its best three-day performance in a month, data compiled by Bloomberg show. Commercial International Bank Egypt, the country’s biggest publicly traded company that makes up more than a third of the benchmark, retreated the most in more than three months.

The Egyptian pound was unchanged, having been pegged by the central bank at 8.88 per dollar since the regulator devalued it by 13 percent in March. The currency’s six- and 12-month non-deliverable forwards fell to the weakest levels since Bloomberg started tracking them in 2007. The contracts lost 2.3 percent and 1.6 percent, respectively, to 10.11 and 11.05 per dollar at 3:11 p.m. in Cairo.

“If there’s suspicion that it is a terror act, it will have an impact on the market because it sends a message that if you are betting on a recovery in terrorism, you’d better forget it,” said Wafik Dawood, a portfolio manager at Cairo-based Compass Capital.

CIB fell 2.5 percent. Investors converted 6.8 million of the bank’s local shares into global depository receipts in London this week, pushing up the ratio of GDRs to total stock to 31 percent, according to Egyptian Exchange data. That’s two percentage points away from the maximum allowed by the bourse. The practice has been increasingly used by dollar-strapped foreign companies as a way to buy hard currency to fund imports and repatriate dividends.

Gulf Selloff

In the six-nation Gulf Cooperation Council, real estate services company Ezdan Holding Group fell 3 percent, making it the biggest contributor to losses in Qatar. Dubai’s DFM General Index dropped 1.7 percent, and Saudi Arabia’s Tadawul All Share Index retreated 0.6 percent. Abu Dhabi’s ADX General Index declined 1.8 percent. Gauges in Kuwait, Oman and Bahrain all decreased less than 1 percent.

Brent crude, the region’s biggest export, declined 1.9 percent to $48 a barrel after U.S. crude inventories rose unexpectedly, keeping supplies at the highest level in more than 80 years.

Israel’s TA-25 Index retreated 0.4 percent as of 4:03 p.m. in Tel Aviv.

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