CAIRO: Two days back from holiday and still no respite for the Egyptian stock exchange, which has been pummeled alongside emerging markets worldwide since it reopened on Tuesday. Despite a rally near the end of the day, the CASE 30 index fell just over 7 percent yesterday, marking the worst two-day crash since the exchange was formed in 1998. The benchmark CASE 30 index, which plunged more than 16 percent on Tuesday, trimmed some of its losses toward the end of the session after major central banks cut interest rates by half a percentage point in a coordinated action designed to ease fears about the financial crisis. By all means, people are worried, said Mohamed Radwan, a trader at Pharos Securities. Our members are not seeing the bottom yet. Before noon, the CASE 30 was off to a brutal start, down nearly 14 percent in early sessions, making for a two-day tumble of 28 percent. By the end of the day the index cut about half those losses, though still ending down 418.25 points to 5,478.55. The CIBC index dropped 4.52 percent and the Hermes index dropped a little more than 7 percent. There is selling pressure from foreigners, said Ahmed Helal, a broker at CI Capital. By his estimate, foreigners sold off LE 450 million on Wednesday. But not everyone was a loser. Shares of CIB, Egypt s biggest commercial bank, were up nearly 20 percent to LE 37.49 by the end of trading, recovering from a 40 percent plunge on Tuesday. The banking sector led the rebound today, Radwan said. Orascom Construction Industries, Egypt s largest listed builder, fell as low as LE 204 ($37.05) a share before crawling back to last trade at LE 242, a 4.43 percent drop compared to Tuesday s session. Investment bank EFG-Hermes fell 6.2 percent to last trade at LE 28.69. As tickers showed more and more red, some analysts hurried to soothe investors nerves. "It should be noted that, unlike many other economies, Egypt's banking system is under-leveraged and that as a society, Egypt's personal sector has a very low exposure to debt, investment bank Beltone Financial wrote in a statement yesterday. "We re-emphasize that Egypt is in a better place than a number of other economies to weather the short-term turmoil. Given Egypt's high growth rates, cash-fueled economy and liquidity, the sell-off on Tuesday was "not justified, Angus Blair, head of research at Beltone, told Daily News Egypt after trading closed on Tuesday. "It's Dubai that's in trouble, not here, he said. Late yesterday, Minister of Trade and Industry Rachid Mohamed Rachid joined the chorus. [Egyptian] companies are still performing very well; their valuations are still strong; their revenues are good and so on, he said in a press statement. The drop we are seeing has nothing to do with the actual performance of the companies but it has to do with the fear of investors. When the CASE closed for a weeklong holiday encompassing Eid El-Fitr and Armed Forces Day, some analysts predicted the break would help Egypt weather broader financial chaos by allowing time for bailout measures in developed markets to halt foreign investors retreat from emerging exchanges. But even the $700 billion rescue package passed by US Congress failed to end the financial upheaval many headlines now call the worst since the Great Depression. Within a few hours of trading on Tuesday, it became clear Egypt s young exchange would not be spared a bruising. Radwan cautioned that US and European markets are still in flux and that the CASE is not likely to recover until they are stable. If losses continue here, there is a chance the state could intervene by investing in the exchange through public banks, he said. For now, brokers are urging investors not to panic. Hold, Helal said. Hold and partially buy some stocks, he said. A few securities shed nearly half their value in one day of trading, he noted. This is a good opportunity to buy.
