Egyptian Market Tumbles on Presidency Impasse

The benchmark index EGX30 fell 4.23 per cent to 4.087 points amid continued political tension following Egypt's presidential election and consitutional paralysis. Both candidates in the presidential election runoff are claiming victory and official results are not due to be released until Thursday, leading to considerable market volatility.

Amendments to the temporary constitution on Sunday also increased fears of prolonged political tension. "The constitutional situation is very unclear. The parliament was dissolved, which means new elections should take place, and both presidential candidates are claiming election victory - the market cannot stand this ambiguity," Mohamed Metwally, an equity trader at Cairo-based Prime Securities, told Ahram Online.

"Investors are leaving the market and new investors won't come at such a time when nothing is clear," said Metwally. "The coming days will make a big difference. If the president is decided and there is no conflict it could help the market. Then we will only have to elect a new parliament to reassure the market further. However, if the presidential election results are challenged, this could lead to chaos," he added.

Daily turnover stood at LE243 million, which can be attributed to heavy selling on the part of foreign investors. Egyptian and Arab investors, meanwhile, were net buyers for the day, picking up some LE11.4 million and LE8.6 million in stocks respectively. Foreign investors were net sellers for the day, offloading a total of LE20 million worth of shares.

"Foreign investors, who were already wary of the Egyptian market, will likely exit the market in even greater numbers due to the current wave of political uncertainty," said Metwally. Out of 161 listed stocks, 137 fell and 14 gained on Tuesday. Blue chips Orascom Construction Industries (OCI), Telecom Egypt and Orascom Telecom Holding (OT) fell by 5.14, 2.47 and 3.61 per cent respectively.

Orascom Telecom Media and Technology Holding (OTMT) fell by 1.54 per cent, while continuing to lead the market in terms of turnover at LE36.48 million. The broader-based EGX70 and EGX100 indices, too, both fell for the day by 2.38 and 3.03 per cent.