Egypt Stocks Stumble on Cabinet Uncertainties

Egypt's stock market ended in the red on Sunday on the back of ongoing uncertainty over the shape of Egypt's incoming government and the approach of the Islamic fasting month of Ramadan, set to begin later this week. Egypt's benchmark EGX30 index fell by 2 per cent on Sunday to alight at 4,719 points. Out of 167 shares traded, 144 lost value while only 14 registered gains. "The president was inaugurated two weeks ago but we still don't have a cabinet," capital markets expert Mostafa Badra told Ahram Online in reference to the ongoing ambiguity surrounding Egypt's incoming government under recently-inaugurated President Mohamed Morsi.

Several names have been suggested to head up the new government, but a final date for cabinet appointments has yet to be announced. "Meanwhile, there has been a wave of labour unrest across the country and businessmen are being forced to close their companies," Badra added.

Recent days have witnessed a spate of labour strikes in both the public and private sectors, the most prominent of which was staged by workers at the country's most prominent ceramic producer, Ceramica Cleopatra. After the imposition of a travel ban on company owner Mohamed Abul-Enein, rumours circulated that he intended to liquidate his lucrative investments in Egypt to flee the "stress" brought on by chronic labour disputes. Individuals dominated Sunday trading at 86 per cent, which Badra attributed to wariness among institutional investors regarding the future viability of Egypt's business climate.

Trading volume fell to LE161 million (some $27 million) on Sunday, disappointing many observers who had thought the election of a new president would put an end to the political uncertainty that has dogged Egypt since last year's Tahrir Square uprising that culminated in the ouster of president Hosni Mubarak. According to Badra, however, the market's recent poor performance might also be attributed to seasonal factors. "Ramadan is coming up and the market might already be preparing itself for the slowdown," he said.

The Islamic fasting month of Ramadan – and the summer season in general, when many Egyptians flock to Egypt's north coast to escape the heat – has traditionally represented a low season in terms of stock market activity. Egypt's bourse will reduce the duration of its daily trading sessions by one hour during Ramadan, a move expected to have an impact on trade volumes.

Orascom Telecom and Media Technology was the most active share in Sunday's session, chalking up some LE63 million in total daily turnover. The share price fell by 3.27 per cent for the day, as Monday will be the final claim day for the firm's LE1.05 dividend. Real estate stocks declined, meanwhile, with Palm Hills dropping by 4.5 per cent for the day; Talaat Moustafa Group by 3.3 per cent; and the Amer Group by 4.4 per cent.