Egyptian officials haven't exactly reassured foreign investors of late, and allegations of stock market manipulation should be investigated in full, writes Ibrahim Nafie The main index of the Egyptian stock market dipped 14 per cent, a record slump that must have caused frustration among small investors in particular. The Ministry of Investment said in a statement that the drop was normal; one that reflected the international trend following the fall in commodity prices. The drop may have been also related to the decrease in interest rates on major international currencies in recent weeks. In my opinion, the downward trend of the stock market was related to the fall in regional stock markets, especially in the Gulf. During the two days in which the Egyptian stock market fell, Arab investors sold remarkably more than they bought. Evidently, they were trying to cover their financial positions at home by liquidating some of their holdings in Egypt. The stock market has begun offering a daily report on the transactions of Arab investors, one that separates this group from other international investors. This is good, for it allows analysts to separate international from regional influences. Other local factors may have played a role in depressing Egyptian stocks. Some of the statements made in the World Economic Forum by Egyptian officials were unfortunate, especially those related to political developments and the future of reform in the country. On the economics side, some experts and officials displayed hasty optimism, a few going as far as claiming that the Sharm El-Sheikh conference would boost Egyptian stock prices. In hindsight, theirs was a premature prediction. I believe that the Sharm El-Sheikh conference will have a positive impact on the economy, in terms of increased direct foreign investment and growth rates. But considering instability in world and regional stock markets, we should refrain from making rosy predictions, at least for the time being. On the politics side, senior National Democratic Party officials said that they understood the position of the opposition, recognised that criticism is the mainstay of democratic reform, and were willing to tolerate the harsh language of opposition newspapers. Some made it clear that differences exist everywhere, even inside the ranks of the ruling party itself. In their view, it is not the difference of opinion that matters, but only the way of expressing different opinions. This is all very well. And yet others point out that the police have been using excessive force with political opponents, a matter that tarnishes not only Egypt's reputation but also the future of political and democratic change in the country. There is another thing that I find worrying. Some people have hinted that the Egyptian stock market was being tampered with. The allegations triggered a protest by small investors in the stock exchange last Tuesday. A member of the Shura Council went as far as stating that fluctuations of the Egyptian stock market were the outcome of a Zionist scheme; the work of a certain individual known to him by name. He even offered to name the individual in question if asked to. Such claims cannot be overlooked. We cannot tolerate tampering with the stock exchange or the future of the economy. I therefore call on competent authorities to investigate such allegations in full and issue a statement clarifying the matter. This would be more helpful than the Ministry of Investment telling us not to worry because fluctuations happen everywhere.
