Egypt's benchmark stock index pared early gains on Monday, closing up less than 1 percent as buyers stepped back from a rally fueled by bargain hunting that drove prices sharply higher.
The Egyptian Exchange's benchmark EGX30 index gave back much of the more than 7.5 percent in gains accrued earlier in the day. The index had soared by more than 5 percent on Sunday, breaking from losses accrued last week when the market reopened after a nearly two month closure linked to protests that eventually ousted former President Hosni Mubarak. It closed at 5,251 points or just 0.75 percent higher.
"There's a cooling as people re-evaluate their holdings, especially those who were buying aggressively," said Ahmed Hanafi, head of research at Gothour Trading.
The market opened with strong, with the broader EGX100 hitting its 5 percent "circuit breaker" within the first 15 minutes of trading, and prompting a 30 minute suspension of activity for the fourth consecutive session. But buying interest waned after the break and several blue chip stocks that had spiked to near their 10 percent upper limits in the opening minutes of the market retreated sharply.
Commercial International Bank, the country's biggest lender, closed down 3.19 percent at 30.96 pounds while Orascom Telecom pulled back from a 9.9 percent spike to close 0.7 percent in the red at 4.21 pounds.
"People were trying to pull the market forward with small volumes," said Khaled Naga, a broker with Mega Investments, adding that offers at surprisingly high levels ahead of the market's official opening was a key factor in the early rally.
"Put aside what happened in the first half hour," he said. "Today's market was more realistic" in terms of how trading could go for the next few days.
Officials had worried that the Egyptian Exchange's restart after it was shuttered on Jan. 27 would lead to a broad market panic.
In the two trading sessions last week, the market posted declines that pushed the benchmark index's year-to-date losses to over 27 percent. But the moderate gain Monday marked the second consecutive session in which the index climbed.
The uptick offered a measure of good news for Egyptian officials, and came at a time when the economy is expected to take a major hit from the Jan. 25 uprising that ousted Mubarak. Tourism revenues are down, and foreign direct investment is expected to fall short of expectations. Together, the two are key sources of foreign revenue for the government and their drop comes as GDP growth is expected, at best, to come in at half the projected 6 percent rate for the current fiscal year.
Reflecting that some investor concerns are easing, the cost of insuring Egypt's debt tightened. The five-year credit default swap narrowed by 2.39 percent to 331.78 basis points, according to financial data provider CMA.
In the stock market, foreigners accounted for 60 percent of the buying, according to figures released by Mideast investment bank Beltone Financial. Institutional investors accounted for 69 percent of the buying, with retail investors representing the remainder.
Gothour's Hanafi said the heavy presence of foreign buyers was surprising, considering that they had not been this active before the start of the Jan. 25 revolution.
"There's a lack of transparency," he said, arguing that it was not entirely clear which of the institutions were buying. "We need some clarity on this."
Hanafi said the Egyptian buyers who were stepping into the market were playing around with portfolios of between 50,000 pounds to 150,000 pounds ($8,400 to 25,200) _ a far cry from the multimillion pound investments that had been pumped into the market before the uprising.
"The Egyptians already lost heavily," he said. "There's no fresh money they can use to buy."
The exchange's restart since then was delayed several times as officials set up mechanisms to safeguard the market, such as "circuit-breakers" if the EGX100 hits 5 percent and 10 percent, and looked to make sure that officials and businessmen under investigation for alleged corruption were not able to liquidate their holdings.
The links behind these individuals and some of the country's biggest blue chip companies sharply eroded buying sentiment in the first couple of days, prompting many to dump shares even as the companies scrambled to distance themselves from the investigations.
Firmly in the red was Ezz Steel, the company whose chairman, Ahmed Ezz, is among the most high profile businessmen and former party officials facing criminal charges. Ezz's shares were at their 10 percent limit down early in the day, at 11.62 pounds.
Traders had expected a measure of volatility in the market, arguing that a clearer picture would likely not emerge before midweek when investors who were looking to free up capital eased back and more aggressive buyers stepped in.