Egypt's stock market dropped Thursday to a five-month low amid foreign broad sell-off driven by index compiler MSCI's decision to reduce the country's weighting in its emerging markets index. The bourse's Thursday losses are amounting to 9.6 billion Egyptian pounds (US$1.26 billion). The market capitalization has hit 482.232 billion pounds during the closing session of Thursday. MCSI Worrisome Remarks Morgan Stanley Commercial Index threatened the Egyptian Stock Exchange (EGX) with deletion from its emerging markets index, after removing Telecom Egypt Company from its index, according to a statement. "We may lead to Egypt being removed from the index if it continues with its poor performance," MSCI said in a statement on its website. In the index compiler MSCI's semi-annual review on Tuesday, four companies only remain currently in the index they are EFG-Hermes, Commercial International Bank, Global Telecom and Orascom Telecom.- which analysts said was the minimum required for a country to stay in the benchmark. Also, Morgan Stanley will be adding Sidi Krir to the MSCI Egypt Small Cap Index at the end of May, while Maridive & Oil Services will be removed from the index. "The fall to three stocks does indirectly put Egypt's emerging market status at risk: the index becomes less diverse -CIB is now 72 percent of the MSCI Egypt index - and investor interest could fall, leading to lower turnover and market cap," EFG Hermes said. The expected exit of foreign funds from Telecom Egypt could be complicated by foreign currency shortages in the country, it added. Indices Egypt's benchmark index, EGX30 sank by 2.62 percent to 8303.37 points. EGX20 dived by 3.69 percent to 8501.34 points. In addition, the mid- and small-cap index EGX70 inched down by 3.12 percent to 439.7 points. The price index, EGX100 plunged by 2.23 percent to 923.41 points. Turnovers humble again On Thursday, the bourse's trading volume has recorded 174.134 million securities, with turnovers closed at EGP 912.680 million, exchanged through 23.533 thousand transactions. Also during the closing session, 180 listed securities have been traded in; 133 declined, 18 advanced; while 25 kept their previous levels. Investors' Activities The non-Arab foreign investors were net sellers on Thursday seizing 15.81% of the total market, with a net equity of EGP 46.953 million, excluding the deals. On the contrary, local and Arab investors were net buyers capturing 77.37% and 6.82% respectively of the total markets, with a net equity of EGP 1.961 million and EGP 44.991 million, respectively, excluding the deals.
