Egypt's benchmark stock index dropped the most in three weeks and dollar bonds fell after President Mohammed Morsi reinstated parliament, reversing the military's decision. The EGX 30 index slumped 4.2 per cent, the most since June 19, to 4,698.52 at the close in Cairo. The gauge had fallen as much as 5.5 per cent before Parliament Speaker Saad el-Katatni called the legislature to convene tomorrow. The nation's 5.75 per cent dollar bonds due April 2020 fell for the first time in seven days, sending the yield four basis points, or 0.04 percentage point, higher to 6.24 per cent in Cairo yesterday. Morsi's decree, which also called for a fresh parliamentary vote within 60 days after the approval of a new constitution in a public referendum, came after the military last month dissolved the assembly and assumed legislative authority. The military's move followed a decision by the high court that the law that governed voting for the Islamist-controlled chamber was unconstitutional. Until his election last month, Morsi was the chairman of the Freedom and Justice Party, the political arm of the Muslim Brotherhood. “The drop is a little stronger than we expected," said Teymour el-Derini, a Cairo-based Director of the Middle East and North Africa sales trading at Naeem Brokerage. “Parliament may be reinstated but it will be powerless. This is round one between the Brotherhood and the military, and it will likely continue to have a negative effect on the market." The Supreme Council of the Armed Forces, which took over executive powers from the ousted Hosni Mubarak until Morsi's election, convened an emergency meeting last night to discuss Morsi's decree, the official Middle East News Agency reported. Members of parliament were allowed into the legislature's building on Monday, the agency said separately. Real-estate developer Talaat Moustafa Group Holding, plunged 9.3 per cent, the most since March last year, to LE3.99. Commercial International Bank, the country's biggest publicly traded lender, fell 5.1 per cent to LE27.55. The Egyptian pound, subject to managed float, weakened 0.1 per cent to 6.0614 a dollar, extending its losses since the start of last year's uprising to about 4 percent. One-year non- deliverable forwards were unchanged at 7.45 a dollar, indicating investors expect the pound to plunge 19 per cent within 12 months.
