CAIRO: Egypt's broad EGX 100 index closed up 0.86 percent, gaining 813 points on the second day of trading since Jan. 27. The EGX 30 index fell 3.73 percent, opening at 5142.71 points and closing at 4,951. Both indices fell by around 8.9 percent on March 23, the first trading day since an almost two-month closure. Upon opening Thursday, the EGX 100 fell 5.5 percent, triggering a circuit breaker that suspended trade for half an hour. The market rallied once trading resumed. Non-Arab investors sold LE 188 million more than they purchased while Arab and Egyptian investors were net buyers, at around LE 19 million and LE 169 million, respectively. Thursday's top gainers included North Cairo Mills, Upper Egypt Flour Mills, Alexandria Pharmaceuticals, Sinai Cement and Torah Cement while the top losers included Misr Duty Free Shops, National Societe Generale Bank (NSGB), Six of October Development and Investment (SODIC), Eastern Tobacco and GB Auto. A total of 108 companies ended in the green while 58 saw declines and five remained unchanged. The best performing sectors on the market were led by telecoms, up 6.29 percent, followed by chemicals at 6.05 percent and construction materials at 1.05 percent. Banks performed among the worst with the sector down 9.31 percent, followed by basic resources down 8.90 percent, healthcare and pharmaceuticals minus 8.86 percent and real estate dropped 8.01 percent. Mike Millar, head of research at Naeem Brokerage, said that the market's return to normality was progressing faster than expected. “While first and second day declines have been expected, the return of buying interest in some stock was encouraging,” he told Daily News Egypt. He added that by Monday or Tuesday, the EGX could return to more orderly trading. Ezz Steel shares resumed trading early Thursday after the stock was suspended on Wednesday until its ownership and financial position were clarified. The stock ended down 9.98 percent at LE 14.34. The company was among 46 that were suspended from trading by the exchange for failing to meet financial disclosure requirements. Stocks of these companies resume trading once requirements are met. Acting Exchange Chairman Mohamed Abdel Salam announced in a conference early Thursday that the trading has been witnessing a coordinated effort by the government, brokerage firms and individual investors to support the market. Abdel-Salam announced that Prime Minister Essam Sharaf has upped by 30 percent the amount allocated by the government to the Egyptian Investor Protection Fund, which offers interest-free loans to brokerage companies. The Ministry of Finance will raise its contribution to the fund to LE 200 million from LE 150 million, which will go to supporting shareholders and investors who have been negatively affected by the decline in stock prices. This is to reduce brokerage firms' forced sales of shares bought on margin by small investors. Officials are also calling on Egyptians living abroad to donate to the national economy via two accounts at the Central Bank and to buy into investment funds run by Egyptian banks, or invest in projects that serve the economy. “Egypt's economy is now placed in a vicious cycle and external injection into its economy is highly needed. In order to boost the Egyptian economy and strengthen its currency, the government (Central Bank and Ministry of Finance) will have to step in as the private sector (both foreign and domestic) has taken a hit,” Cairo-based investment bank Beltone Financial said in an emailed statement. Beltone warned however that “a bigger role for the government that extends in duration and that is not targeted toward boosting growth and only submits to populist demands, will take us back to the problems of the 80s and the 90s when the government was big and inefficient, and the IMF and the World Bank had to step in with structural adjustment packages. “In addition, the government does not have the fiscal space that would allow it to intervene for a long time, given that its revenue and foreign exchange sources were affected negatively by the continuation of the political unrest and production halts.” It is time for Egyptians living in the country and abroad to “start boosting the economy by resuming private consumption patterns and increasing remittances,” Beltone said. Abdel Salam argued that the situation can also be viewed as an opportunity as well as a matter of responsibility. If investors choose wisely regarding where to invest their money, as the prices in the stock market are quite low, these investments would be profitable in the long run. Millar pointed out that segments of the market where investors will look to return first are telecoms, FMCG, oil and gas, petrochemicals and a number of currently high yielding dividend plays. “While the Egyptian economy faces headwinds in the near term, the longer term macro dynamics of Egypt remain attractive,” he concluded. Individuals wanting to contribute to support the market can take advantage of this, as well as support the economy, through the “Egypt, The Future” fund. Earlier Wednesday Abdel Salam said the fund would except investments starting from LE 10 with more than 22 companies offering to manage the fund reflecting their confidence in the strength of the Egyptian stock exchange and its ability to recover. Abel Salam said that trading in Wednesday's session witnessed a rise in bond trading, exceeding LE 4 billion, which shows a positive and unprecedented development. He added that the market must be analyzed according to the performance of government or corporate bonds and debt instruments as well as stocks. Responded to concerns regarding increased foreign acquisitions of Egyptian companies' stocks, Abdel Salam said that free floats cannot exceed 40 percent of a company's capital. Moreover, investors cannot acquire more than 10 percent of a company's capital except through certain legal channels requiring full financial disclosure. Amr Hamzawi was there for the opening bell on Thursday, stressing the importance of Egyptians supporting the economy and the stock exchange by investing through brokerage firms, adding that it is a national duty as the stock market is a mirror of the overall economy. The Egyptian pound traded as weak as 5.9605 to the dollar on Thursday, a six-year low, Reuters reported. Bankers expect the currency to come under pressure in the coming days as foreign investors sell shares on the Egyptian stock exchange. Index provider MSCI said on Thursday it would consult with investors on the function and accessibility of the Egyptian stock exchange now that the market had reopened. MSCI had warned Egypt that it could be moved from its emerging markets index if the exchange did not reopen. Last week it said the country could still be removed from the index if trading was frequently interrupted or restricted by price floors. –Additional reporting by Amira Salah-Ahmed and Reuters.
