Egypt shares plunge on unrest

AP News
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Posted: Jul 11, 2011 10:14 AM
Egypt shares plunge on unrest

Egypt's benchmark stock index dropped almost 3 perecnt Monday, dragged down by concerns of mounting unrest in the Arab world's most populous nation.

The decline built on the EGX30 index's nearly 1.7 percent decline a day earlier and reflected the continuing fears in the country five months after the ouster of former President Hosni Mubarak.

Two days after a Friday protest in Cairo's central Tahrir Square that drew tens of thousands, demonstrators were still camped out there, demanding accountability of former officials and justice for nearly 900 people killed in the mass uprising against Egypt's leader of nearly 30 years.

Brokers said foreign and institutional investors were dumping their shares in the market, with buyers largely limited to Gulf Arab and some individual investors.

"We haven't seen events like these since the revolution," said Khaled Naga, a senior broker at Mega Investments. "These are difficult days."

"So long as you see tents in Tahrir and protests in Suez, you'll see the market in the red, continuously," he said.

Suez, at the southern tip of the Suez Canal, has seen some of the rowdiest protests in the last two days, with protesters blocking traffic on a main highway to a couple of Red Sea ports, and the military clashing with them to disperse the demonstrations.

The EGX30 closed 2.93 percent lower, at 5,116 points, and the market's year-to-date losses were in excess of 28 percent.

Losses covered all sectors. Shares of Commercial International Bank, Egypt's largest publicly traded bank, were down 4 percent while shares of the Egyptian Company for Mobile Services, or Mobinil, the country's largest mobile phone service provider by subscribers, dropped 1.77 percent. Ezz Steel's stocks were off 2.9 percent.

The Egyptian stock market, like the broader economy, has been hard hit by the protests that ousted Mubarak and that have continued in the months since then.

Economic growth projections for fiscal 2011-2012 have been slashed to about 3 percent, or half the earlier forecasts and economists worry that the Egyptian pound faces serious devaluation pressure as foreign currency reserves are drawn down on a monthly basis to cover spending and other costs.

Officials have set a new budget that boosts spending on social services in a bid to placate protesters, and also raised the minimum wage.

But the changes have fallen short of expectations, and near daily protests underpin the tense situation in the country ahead of parliamentary elections slated for September and a presidential vote expected a month later.

Protesters argue that the current transitional government and the country's military rulers are moving too slowly on reforms and that the changes under way are largely cosmetic.

Among the demands is the trial of former regime officials, the prosecution of police accused of killing protesters and the purging of Mubarak loyalists from the country's institutions. Meanwhile, workers are pushing for higher pay, better work conditions and more rights in a labor showdown some fear will only futher stall economic revival efforts.