CAIRO: Egypt's stock exchange delayed its reopening until Sunday to refine ways to support thousands of small investors caught out by collapsing share prices during the country's political unrest. The market, closed for a month, was due to reopen on Tuesday. But exchange officials and the regulator had been unable to agree with brokerage firms how money from a compensation fund would be distributed, a bourse official said on Tuesday. Investors shouted angrily at the exchange's chairman at a press conference on Monday, demanding trading remain suspended and accusing him of turning a blind to what they said was market manipulation in the last two days of trade in January. They said share prices were certain to plummet once trading resumed, putting their investments in further peril. "If you open tomorrow [Tuesday] it will be a slaughterhouse," screamed one investor. Egypt's new military rulers have been treading a fine line as they seek to avoid provoking popular resentment while getting the country's economy up and running again. The protests that toppled president Hosni Mubarak and subsequent worker stoppages have left much of the economy in a shambles, scaring away tourists and investors and putting pressure on the country's currency. The government has postponed the exchange's reopening several times in recent weeks, and investment bankers have warned that delays were damaging Egypt's international reputation. "We all made the argument this week that they should open them sooner than later," said Karim Helal, Group CEO of Cairo-based CI Capital Holding. "Over $400 billion of investments have now been locked in for over a month." Government fund The bourse official said the government had put a fund in place to help small investors who had bought shares on margin or on credit and were in risk of going underwater, but details on how funds would be distributed were still being thrashed out. Officials were unable to agree during talks with brokerage companies that ran late into Monday evening on controls to guarantee the funds actually reached small investors, said the official, who asked not to be named. Under exchange rules, market investors could borrow money on margin through brokerage firms by using the shares they held as collateral. The loans were limited to 50 percent of the market value of the shares on the day the loans were signed and could be used only to buy the 30 stocks in the benchmark index. But many brokerage firms also extended credit to investors illegally at much higher multiples, the official said. Many of these small investors were already underwater after the benchmark index plunged more than 17 percent on the two days the market was open during protests in late January, and analysts expect further declines once it reopens. The bourse has said it will suspend trade for a half hour if the index declines by 3 percent and for the remainder of the session if it falls by 6 percent. It will also suspend trade for half an hour if the broader 100-share index declines by 5 percent and for the whole session if it falls by 10 percent. The government was looking for ways to help both the margin and credit investors through a LE 250 million ($42 million) fund it recently created. The government may add more money to the fund if necessary, the exchange official said. The number of small investors who were involved is fewer than 10,000, the official said. Small investors are defined as those who had shares worth up to LE 150,000 as of Jan. 27. Many investors have been holding daily demonstrations outside the stock exchange building in central Cairo to demand government support. MSCI said on Friday Egypt would risk being excluded from its emerging markets index if the market did not reopen before MSCI reviewed its status in four weeks. –Additional reporting by Shaimaa Fayed
