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Market Report: Major stocks slip into red as smaller stocks gain A surprisingly minor drop for OHD, after the executive chairman, Samih Sawiris, is sentenced for manipulating stock prices and providing incorrect financial data
Egyptian stocks slipped into the red on Sunday after it had posted minor gains by the end of last week, as investors turn away from big caps towards smaller stocks. Bourse's main benchmark, EGX30, dipped 0.67 per cent to reach 4,647 points, while the broader index, EGX70, surged 1.78 per cent. EGX70 hosts smaller stocks in terms of capital and is generally characterised by speculative activity. “Gains in EGX70 shares are directly attributed to Egyptian individuals' speculative trading, who dominate the market at the expense of foreign and Arab investors,” says Eissa Fathy,vice president of the securities division at Cairo's Chamber of Commerce. Egyptians made up almost 97 per cent of total trade, net buying at LE1.7 million. Foreigners were the main sellers at LE1.9 million, despite their low contribution. EGX70 shares unusually commanded the session's turnover contributing to more than one third of the day's LE257.6 million volume. EGX30 stocks were less active, making up 26 per cent of total trading. “Turnover remains to be at thin levels, but I expect the market to pick up after the holy month is over,” Fathy indicates. He explains that a much awaited calm in global markets would help rejuvenate the struggling Bourse. “The reaction to Ben Bernanke's speech is a very good sign of a possible recovery,” he said. World stocks rose one per cent, while the dollar fell on Friday as the Federal Reserve chairperson left the door open for future US economic stimulus. Bernanke said the central bank's policy panel would meet for two days in September instead of one to discuss additional monetary stimulus, offering some hope to investors. Fathy also hopes that that the return to the four hour session span, which was truncated to three hours due to Ramadan, would boost the exchange. Today's results are well represented in stocks with a turnout of 89 advancing (mostly low caps) and 69 declining out of 172 traded shares. Almost all major stocks dropped today, with Commercial International Bank, Talaat Mostafa Group and Alexandria Mineral Oils losing 1.5 per cent, 1.25 per cent and 4.09 per cent respectively. Citadel Capital shed 6.86 per cent to close at LE3.81 per share. Orascom Development Holding (OHD) declined by 1.79 per cent to reach LE7.7 per share, despite news about sentencing the company's top man to prison. Samih Sawiris, executive chairman of OHD was sentenced to two years in prison for manipulating the firm's stock price and providing incorrect financial data. The business tycoon was also fined LE50 thousand and denied the right to trade in the stock market for one year. The company said it would appeal against the verdict, which it said was “not final, and its execution is not binding at this time.” Fathy believes that OHD stock value loss today was very reasonable given the magnitude of the news. “The company did not witness a further stock plunge probably because of the session's low turnover.”
