The revolution has touched the lives of Egyptians working in various industries. Al-Ahram Weekly listens to some personal accounts On the back of an unstable and blurred political scene, the Egyptian stock market staged a downhill struggle. Since political unrest erupted in Egypt last January, the country's stock market has been suffering steep losses. The overall decline of the Egyptian stock market's benchmark index EGX30, since the start of the year, has mounted to 47 per cent. Mohamed Hassan, a stock trader, narrated that the market's struggle started even before the revolution began. Starting 23 January, he said, large numbers of foreign investors sold their stocks. This was due to news spread on social networks that a mass protest was scheduled to take place two days later. Consequently, foreigners started selling their portfolios in an attempt to limit their exposure to any risk. On Tuesday 25 January, some investors further sold their stocks. However, the selling activity was not fierce. "It was just the first day of the revolution and people started taking to the streets in the afternoon," Hassan said. However, things started to look grim the following day when the stock market witnessed "an unprecedented wave of selling", according to Hassan. On 26 January, the day after the protests first flared, EGX30 fell 6.1 per cent and fell another 10.5 per cent on 27 January amid heavy selling from investors fleeing the market. Nonetheless, Hassan stated, other investors bought stocks to benefit from low prices. "They bought stocks on speculation that things would soon be under control," he said. However, protests mounted and trading in the local bourse was suspended for five weeks. A long period of bourse suspension failed to improve the situation. Hassan stated that when the bourse reopened in March, it witnessed a second wave of selling. He attributed this to the fact that most investors in the bourse, at that time, were local retail investors and local funds. "Retail investors wanted to sell their portfolios as most of them were indebted," he said. Hassan pointed out that local investors suggested using the Investor Protection Fund's money (LE850 million) in order to back the market in light of its critical situation. However, the then minister of finance, Samir Radwan, and the chairman of the Egyptian stock exchange, Mohamed Abdel-Salam, refused the proposal. "They did not want to pool such funds and lose them immediately." The trader stated that although the bourse slumped fiercely when it reopened, it began to recover three days later. However, the recovery did not last. Hassan stated the stock market kept reeling from fluctuations as a result of the continuous strikes and riots the country witnessed and, above all, from the prevailing sense of instability and insecurity. In fact, the EGX30 suffered deep losses as an immediate reaction to the clashes that took place, last October, in central Cairo between security forces and Coptic Christians, as well as the renewed unrest in Tahrir Square which was dubbed as the revolution's second wave in November. This is in addition to other external factors like the euro debt crisis which deepened the already gloomy atmosphere. According to Hassan, the market would not rebound unless foreign investors, who fled the market, return. However, he believes that investors would not come back any soon amid the prevailing sense of instability and Egypt's fiscal challenges represented in a widening budget deficit, along with dwindling foreign currency reserves. Nonetheless, the trader affirmed that foreign investors would come back once stability and security are restored. According to the Central Bank of Egypt (CBE), capital outflows from Egypt since the beginning of the revolution amount to $9 billion, of which half a billion were outflows from the stock market only. Regarding the current situation of the stock market, Hassan stated that the market is normally fluctuating between selling and buying activities. Most investors are locals with a small portion of foreigners. "We are optimistic and waiting for some positive news that could pull the market upwards." Hassan believes that the first meeting of the newly elected parliament on 23 January 2012 could boost the market. Nesma Nowar By Nesma Nowar
