Morsi's Corruption Remarks Drive Egypt Bourse Down

Egypt market plummeted on Monday as investors were driven off by President Morsi' comments about looming crackdown on 'corruption' in his 2-hour showcase speech Saturday, according to a market analyst. Morsi revealed while speaking at Cairo Stadium that unnamed companies had committed violations, saying governmental watchdogs would investigate the alleged corruption. By the time the stock exchange closed on Sunday, rumours over the names of these companies started to circulate. Up till press time, however, the anonymous companies remain unknown. In an attempt to salvage the situation, some heavyweights sent statements to the exchange saying they are not among the companies Morsi referred to during his speech However, the market shed a myriad of points gained over the past few weeks.

The main EGX30 index dropped 2.42 per cent to sit at 5,587 points. Turnover also dropped to a lower-than-average level of LE592 million ($99 million). "Investors were disappointed and doubtful towards several listed heavyweight shares after the comments of Egypt's president," Capital market expert, Mostafa Badra, told Ahram Online. Talaat Mostafa Group (TMG), Egypt's largest real estate developer, shed a whopping 9.8 per cent. Following Morsi's remarks about corruption, a local newspaper reported that the government would withdraw the land of TMG's landmark Madinaty project. TMG sent a statement to the exchange denying the news and confirming the legal status of Madinaty's land, only to close trading at LE4.6 per share. Along with TMG, Badra pointed out that Orascom Construction Industries (OCI) and SODIC were most affected by Morsi's comments. OCI, the market's largest listed company by market capitalisation, sent a statement to the exchange denying that it had evaded paying taxes, as reported by some online and printed news outlets.

OCI was the most active share in today's session at a LE112 million turnover. It shed 3.4 per cent to close at LE278.43 per share. Palm Hills Development, EFG-Hermes and Ezz Steel were among the most prominent losers, dropping 5.11, 1.53 and 8 per cent respectively. All three companies were frequently accused of corruption over the past couple of years. Most of such accusations, however, proved to be false. The Commercial International Bank (CIB) was the only blue-chip gainer as "investors felt it's the sole stable stock which does not face troubles," according to Badra. It gained 0.74 per cent to close at LE35.46 per share. Non-Arab foreign investors were the main driving force behind today's dip, net-selling at LE53.2 million and making up 19 per cent of trade. Egyptian investors comprised 68 per cent of the session's total trade, and were at LE23 million as net-buyers. The session was covered in red across the board, with 133 shares dropping value and only 21 gaining out of 175 shares.