Egypt market rebounds from early losses

AP News
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Posted: Nov 23, 2011 8:49 AM
Egypt market rebounds from early losses

Egypt's benchmark stock index rebounded on Wednesday, ending a 10-day losing streak as investors stepped in for bargains after escalating protests against the military rulers and violence battered the market and raised questions about the country's political stability.

The Egyptian Exchange's EXG30 index ended the day about 1 percent higher at 3,717 points, partly reversing the previous day's nearly 4.8 percent slide. Brokers, however, were not optimistic that the gains could be sustained, given continued clashes between protesters in Cairo's Tahrir Square and security forces and the activists' rejection of concessions offered late Tuesday by Egypt's military ruler, Field Marshal Hussein Tantawi.

Tantawi, in a bid to end days of violent demonstrations that have left dozens dead, offered to hold a referendum that would allow Egyptians to decide whether the military should return to its barracks. The military took power following the ouster of President Hosni Mubarak in mid-February.

"The general situation is not encouraging," said Khaled Nagah, senior broker with Mega Investments. "Tahrir still hasn't calmed down, and it's unlikely that tomorrow there will be any significant gains in the market."

Nagah said that Western and Arab investors are leaving the market and that "there's no buying power and no liquidity."

"As long as the situation continues like this in Tahrir, the stock market is not safe to invest in, even though there are great bargains to be had," he said.

The past few days of losses on the exchange have pushed its year-to-date losses to almost 48 percent, making it one of the worst performing markets in the world.

Traders said the losses so far this year have reached nearly 190 billion Egyptian pounds ($31.8 billion), of which 12 billion came in Tuesday's session.

The clashes and continued protests come days before the Nov. 28 parliamentary vote _ a ballot that was to be a milestone moment in Egypt's transition to democracy after nearly 30 years of authoritarian rule by Mubarak. But the violence, and calls by some for a second revolution, have cast a pall on the process and raised questions about whether it will go ahead as scheduled.

They also underscore a rift in Egypt, where youth activists and their backers maintain that the military has largely undercut the earlier popular uprising by pursuing the same policies as Mubarak's regime.

Their complaints reverberate against criticism by millions of others who feel that the constant protests and strikes since Mubarak handed over power have done nothing but batter the economy and make their lives even more difficult.

The Egyptian pound again breached the 6 pounds to the U.S. dollar mark on Wednesday, according to currency website, XE.com. The government has been intervening for months to keep that from happening.

Further reflecting how investors view the current political situation in Egypt, the country's five-year credit default swaps _ the cost of insuring its sovereign debt against default _ climbed by 7.26 basis points to reach 552.26 basis points, according to market data provider CMA.