Egypt stocks drop as trading stagnates

Eid holidays, not Sinai explosions, dealt the harshest blow to the struggling market, causing the Bourse to slip 0.77 per cent to close at 4,383 points

Egypt stocks slid deeper into red Thursday as trading hit new lows due to the holiday season while analysts downplay the effect of a fresh gas pipeline explosion in Sinai.
The main benchmark, EGX30 dropped 0.77 per cent to close at 4,383.5 points. The broader index, EGX70 saw a similar decline of 0.81 per cent.
"Traders are still on vacation or still in Hajj [Islamic duty], and business activity as a whole has slowed down," says Issa Fathy, vice president of the securities division in Cairo Chamber of Commerce.
Trading volume fell to EGP151 million ($25.2 million) on Thursday, dipping further below Wednesday's plummet of EGP177 million.
Some reports attributed the stalemate in the already struggling Bourse to the explosion in the gas pipeline early Thursday. Saboteurs blew up the gas pipeline between Egypt, Israel and Jordan in Northern Sinai using remote controlled bombs, forcing it to shut down.
This explosion is the sixth of its kind since a popular uprising ousted President Hosni Mubarak in February.
For his part, Fathy extenuated the effect of the blasts.
"The market has gotten used to such events, it may have been influential the first time it occurred, but its reoccurrence minimized its influence,"
However small, Fathy still explains that such events cast a negative shadow on the business atmosphere in Egypt's. "The continous expolsions certainly do not help anyone, but they aren't as damaging as they used to be,"
Out of 171 stocks traded today, 108 dropped while 45 gained.
Among the most significant losers was Orascom Construction Industries (OCI), which dropped 1.26 per cent to close at LE237 per share. Commercial International Bank (CIB) was another major loser shedding 1.04 per cent to close at LE26.6 per share.
Both OCI and CIB, along with Telecom Egypt were the most active stocks of the day making up almost a quarter of total turnover at LE35 million.
Egyptians led the trade Thursday, contributing to 93 per cent of the day's turnover, net-buyers of LE17.m in stocks. Other Arabs and foreign investors, in contrast, were net-sellers.
"Our market is starting to be more influenced by foreign markets as things begin to relatively calm down domestically," Fathy adds.
European and US markets have been fluctuating over the past two days as doubts grew over soverign debt of Italy as well as the fate of Greece's bailout.
Today, European markets rebounded as the latest Italian debt auction went better than many had expected, adding to the positive sentiment inItaly, while in Greece, politicians tried again to agree on a new leader, with former ECB vice-president Lucas Papademos back in the frame.
Fathy postulates that the Egyptian market reacted to the European markets as it had opened on a sharper drop, but eased upwards as Euromarkets started to recover.