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Dim international and domestic news pushes EGX down - Daily News Egypt

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Dim international and domestic news pushes EGX down

EFG-Hermes unlikely to use stabilisation fund to support Emaar Misr’s stock in next 30 days, an official said


Reports on the Greek economic crisis, the drop in China’s capital market, and the domestic fears of militant attacks continue to strike the Egyptian stock market, with the main index declining for the third consecutive day.

On Tuesday, the main index EGX-30 declined by 1.5% to register 7752.94 points, the lowest in 15 months. EGX-70, which represents small and medium enterprises, dropped by 1.4%, while broader index EGX-100 inched down by 1.54%.

The capital market lost around EGP 4.88bn on Tuesday and the trading day closed with 104 decliners, 17 gainers and 36 unchanged. The market shed EGP 11.9bn the day before.

Not one specific reason explains the decline the Egyptian Exchange is witnessing, deputy CEO of HC Securities and Investments Mahmoud Metwally said, highlighting that the negative domestic and international news are a recipe for this decline.

“China is going through significant correction and has lost 30% of its value in one week,” Metwally said.

“There are shock waves from Greece and Puerto Rico,” he added, explaining that these circumstances make investors hesitant.

On Sunday night, Greece held a referendum that received a 60% “No” on applying additional austerity measures, which was the main demand of the International Monetary Fund and Germany.

Metwally added that the domestic news is not promising in light of the latest “terrorist events in Egypt”.

A militant attack took place on several army checkpoints last week in North Sinai. Earlier this month, Prosecutor General Hisham Barakat was assassinated.

Metwally added that “Ramadan is a slow month for the gulf investors”.

On Tuesday, Egyptian and Arab investors were inclined to buy, while foreign investors went for selling their shares.

Earlier this week,  trading on Emaar Misr stocks began. The much-promoted stock did not meet expectations with the value of the share suffering a hit on its first day of trading as its value dropped by 3.5%. The following day, the share plummeted significantly by over 10%.

“ A stabilisation fund was created with a value amounting to 15% of the IPO,” a well-informed source told the Daily News Egypt, adding that such a fund is used to support the share.

The source, who requested anonymity, said that it is most likely that the asset management company, EFG-Hermes, will decide to support the shares after at least one month.

“EFG-Hermes might not decide to purchase the total 15% and may opt for less than that,” the source said, stressing that “it’s the management’s decision after all”.

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