SCZONE showcases investment opportunities to eight Japanese companies    Egypt urges Israel to accept Gaza deal amid intensifying fighting    Egypt, ADIB explore strategic partnership in digital healthcare, investment    SCZONE, Tokyo Metropolitan Government sign MoU on green hydrogen cooperation    Al-Sisi, Macron reaffirm strategic partnership, coordinate on Gaza crisis    Egypt welcomes international efforts for peace in Ukraine    Contact Reports Strong 1H-2025 on Financing, Insurance Gains    Egypt, India's BDR Group in talks to establish biologics, cancer drug facility    AUC graduates first cohort of film industry business certificate    Egypt to tighten waste rules, cut rice straw fees to curb pollution    Indian tourist arrivals to Egypt jump 18.8% in H1-2025: ministry data    Egyptian pound down vs. US dollar at Monday's close – CBE    Egypt's FM, Palestinian PM visit Rafah crossing to review Gaza aid    Egypt prepares unified stance ahead of COP30 in Brazil    Egypt recovers collection of ancient artefacts from Netherlands    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    Egypt, Namibia explore closer pharmaceutical cooperation    Fitch Ratings: ASEAN Islamic finance set to surpass $1t by 2026-end    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Egyptian, Ugandan Presidents open business forum to boost trade    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt to inaugurate Grand Egyptian Museum on 1 November    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Stock market panic resumes
Published in Daily News Egypt on 19 - 04 - 2006

CAIRO: The stock market continued its downward trend yesterday after an apparent lull on Monday. The CASE 30 index, which tracks the top 30 stocks on the Cairo and Alexandria Stock Exchanges, dropped by 2.59 percent, closing at 6,345.56 points on Tuesday.
The index has been on the decline for five consecutive days of trading starting last Thursday, when it dropped by 2.5 percent. The panic starts with big investors, and when smaller investors follow they create this trend, says Mahmoud Soheim, head of research at Naeem Holdings.
Soheim believes that the initial selling last week was related to regional political conditions, specifically with regard to Iran s nuclear situation. Nevertheless, he adds that this latest correction was necessary despite the dramatic decline that occurred in the middle of March.
This had to happen, says Soheim, because there were some stocks that were extremely overpriced. They were not standing on solid ground.
The trend continued with greater intensity when trading resumed after the weekend and the CASE 30 index fell by 5.4 percent on Sunday.
Nashwa Saleh, head of research at HC Brokerage, believes that Saturday s sectarian violence in Alexandria exacerbated investors concerns of political uncertainty and contributed to bearish sentiments.
Share prices seemed to stabilize in initial trading on Monday, but a flurry of selling erupted in the last hour of the session. Retail investors accounted for some 83 percent of trading on that day, according to a report from EFG-Hermes.
Retail investors generally trade more frequently than institutional investors, explains Saleh, and they don t necessarily base their decisions on fundamentals. So as the proportion of retail investors increases, this in turn increases the market s volatility. This resulted in an overall decline that was very slight on Monday followed by yesterday s resumption of panic selling, and prices of some shares have reached a point that some analysts believe will make them attractive buys.
At least we ve got some fundamentally strong companies, says Soheim. Even if the decline continues, prices will drop to a certain limit beyond which investors will return to the market.
The market is also supported by positive macroeconomic fundamentals such as lower taxes and the stabilization of the Egyptian pound. Everything on the macroeconomic front is still looking good, says Saleh. There are no extra positive surprises. I believe that everything on the macroeconomic front is more or less already factored into the stock market.
Nevertheless, ongoing political concerns have resulted in a cautious market. Further positive surprises on the macroeconomic front may push up the market, says Saleh. However, any negative event on the political front would do the opposite of course.
Soheim adds that investors will likely be encouraged soon by the release of first quarter earnings, which are due to be announced in May and June. Once the first quarter results are published I think faith will come again and things will be in the right position, she adds.
The volatility is also a natural part of the stock market s cycle. I m not worried, says Soheim. On the contrary, you cannot have a market that is going up forever nor one that is going down forever. It will reach a point where investors find it attractive again to get in, and they will get in.
Investors should be wary at any rate of excessive concentration in their portfolios.
Folk wisdom is filled with all sorts of advice that we usually ignore, says Saleh. Don t put all your eggs in one basket is the simplest way of conveying the same message as proven empirically by many formulas and years of study.
Retail investors also need to seek appropriate methods of investing that may not include direct participation in the stock market.
People cannot put all their savings in the stock market, explains Saleh, because with high returns there is always high risk and it is not supposed to be gambling. For small investors, therefore, mutual funds are the best way to get market exposure.


Clic here to read the story from its source.