Egypt Stocks Drop as Share Switch to Beat Dollar Drought Faltersby
Egyptian stocks fell to the lowest level in three months as a share trade that helped investors escape the country’s shortage of dollars neared its limits.
The EGX 30 Index retreated 1.8 percent to 7,203.64 at the close, its lowest level since March 15. Commercial International Bank Egypt, which accounts for almost 40 percent of the index, declined 1.4 percent as trading volumes slumped. Some investors have been buying shares of the lender on the Cairo market, paying in Egyptian pounds, and selling them in London as global depositary receipts for dollars. That trade is set to stall as CIB is pushing up against regulatory limits on how much of the company’s shares can be traded as GDRs.
“Appetite for CIB is fading away because of the GDR conversion limit nearing,” said Mohamed Radwan, the head of equities at Cairo-based Pharos Holding. That’s “resulting in a weak performance by its shares and affecting most stocks,” he said.
Egypt’s biggest listed lender has climbed about three-times as fast as the benchmark index this year, spurred by GDR conversion trades as the country grapples with a foreign-currency shortage amid falling tourism and export income. Big international companies are so desperate to get dollars that they’ve been willing to swallow losses of as much as 30 percent to execute the trades.
About 1.6 million CIB shares traded, more than a third down on the 10-day average.