CAIRO: With Egypt's stock market closed since Jan. 27, some are relying on the performance of global depository receipts (GDR) as indicators of sentiment towards the country's market. Four GDRs that are present in the London market are Orascom Telecom, Orascom Construction, EFG-Hermes and Commercial International Bank; and all saw increases recently, but have dealt with an overall drop in prices over the past weeks since an uprising that toppled former president Hosni Mubarak. Orascom Construction's share price is currently at $36.78, up 1.46 percent, while its counterpart Orascom Telecom, the region's largest mobile network operator, sits with a current share price of $3.24, an increase of 1.63 percent. As far as yearly return, Orascom Telecom is down 39.740 percent and Orascom Construction sitting minus 16.47 percent. CIB, Egypt's largest publicly traded lender, sits with its share price at $5.16 currently, up 3.20 percent, but with a -12.056 percent year return. At the beginning of this month, CIB dropped 15 percent to its lowest level since July 2010. EFG-Hermes is currently standing with a share price of $7.95 with an increase of 3.92 percent, but down 20.548 on the company's year return. The ups and downs of GDRs are reflective of the local market and the performance is an indication of the instability and uncertainty still present in the economy. At the dismay of many, including brokers and investors alike, the stock market is running the risk of being excluded from the MSCI's Emerging Markets Index. If Egypt's market does not re-open in four days by March 24, consultations with investors will begin to discuss future steps, including de-listing. While no immediate or automatic exclusion will take place on the deadline date, serious discussion on the future of the EGX will ensue. According to a statement by Beltone Financial, a Cairo based investment firm, even if the stock exchange opens and resumes trading, enough liquidity must be demonstrated as well as an absence of trading impediments to remain on the index. Throughout the past weeks, multiple statements have been issued stating that the market will open with no avail, but Prime Minister Essam Sharaf has stated that the announcement of the reopening will be announced this week. Calls for investment once the market opens have been circulated by many, including from the Egyptian government. A statement was issued March 17 by the cabinet asking for Egyptians everywhere as well as “Arab brothers” to invest either through the direct buying of securities from brokerage firms or through mutual funds with local commercial banks. The continued closure has been said by some as detrimental to investments as well as the reputation of what has been seen as one of the most transparent stock markets in the region. The market last around $12 billion during the last two sessions, after which trading was suspended. It was kept closed when the banks were suddenly closed due to workers' strikes after Mubarak stepped down. Since then the reason for its closure has been quite vague, ranging from fears of economic repercussions, to protests by smaller retail investors, to cabinet reshuffles. Moody's has downgraded Egypt's foreign and local currency government bond ratings to Ba3 from Ba2 with a negative outlook, given the current political uncertainty. This followed S&P's affirmation of Egypt's BB long-term foreign currency rating on improved prospects for political transition, CI Capital reported. The benchmark EGX 30 fell some 21 percent since the start of January and the onset of a wave of contagious Middle East unrest, until it closed on Jan. 27, CI Capital said in a report. It concluded that stocks to watch out for when the “market finally re-opens, and as buying opportunities arise” include the defensive nature of the mills sector, the international exposure of Maridive Oil and Service as well as Telecom Egypt. In CI Capital's assessment, the “EGX 30 is likely to fall to within a range of around 4582-3989 [points] upon its reopening. This equates to a 19-29 percent reduction from its current level of 5646. “An alternative method — using the GDR movements since Jan. 27 —suggests a 23 percent fall in the first two sessions. Trading volumes too are likely to be low due to restrictions imposed by the Egyptian Financial Supervisory Authority (EFSA). –Additional reporting by Amira Salah-Ahmed
