Egypt Stocks Plunge 3.5 pct on Presidential Results Fears

Egyptian stocks saw their steepest fall in two months on Sunday as preliminary results from the country's presidential elections indicated a polarising, potentially violent run-off vote in mid-June. The benchmark EGX30 plunged 3.49 per cent to 4,789 points by the close of trade, as all but one heavyweight shares lost value. This performance was mirrored in the broader EGX70, which also lost 3.5 per cent. "The reason for today's drop is definitely political," Walaa Hazem, asset manager at HC Securities told Ahram Online. "It seems that large portions of the population are not content with the results of the elections”.

Hazem said the fact that the two candidates who gained most of the votes in last Wednesday and Thursday's polls -- Ahmed Shafiq and Mohamed Mursi -- received just 50 per cent of the total, showed an equal number unsatisfied with the popular choice. "Egypt is not just divided between two candidates but between many," he added. Market volume was a low LE247 million ($41 million), with non-Arab foreigners making up the majority of trading at 57 per cent. Egyptian involvement was an exceptionally low 41 per cent.

Overseas investors were the day's buyers, scooping up LE16.2 million more in stocks than they sold. Egyptians and other Arabs were net-sellers. "Non-Arab foreign investors were selling over the past few weeks, today is just an exception," Hazem said.

Mobinil, which gained a solid 2.95 per cent, was the only heavyweight to see a climb. Other firms in the index took serious losses, such as TMG Holding (down 7 per cent), Orascom Telecom (down 5.88 per cent), NSGC bank (down 2.65 per cent) and OTMT (down 2.92 per cent). From the day's 175 traded stocks, 164 lost value and only 7 gained.

In the run-up to the second round of presidential elections, slated for 16-17 June, Hazem said the market performance will likely differ from day to day, with little room for prolonged gains or losses. "These are exceptional times -- its not like the old days when company results actually affected the market," Hazem told Ahram Online. He predicted that so-called "defensive" sectors, like cement, food industries and steel, will show the most resistance to heightened tensions.