An emergency halt in trading at the Egyptian Stock Exchange yesterday was invoked due to a sharp decline of more than five percent in the total value of the market. The temporary, half-hour stoppage gave investors the opportunity to regroup and stem the tide of losses. While both foreign and Egyptian investors purchased somewhat heavily after the disruption – to seize the opportunity of low costs – the measure employed by the exchange failed to stop broader losses. Investors must hold on to shares, even though world markets appear to be collapsing, said Rania Nassar, head of research in the Economic Group. The management of the Egyptian exchange requires thoughtful and cautious oversight now, said Nasser, explaining that foreign and Arab investors are recouping losses in larger markets by abandoning the Egyptian exchange – what they consider a secondary market. The precipitous decline in the Egyptian exchange is directly as a result of its close association to European and U.S. markets, said Sameh Ghraib, a technical analyst. Standard & Poors, after analyzing the recent political wrangling over the U.S. debt ceiling, downgraded the U.S. credit rating from AAA to AA+, a first for the economically muscular nation. A market run unlike anything since the 2008 credit crisis ensued as global markets shed massive chunks of value. Prior to the downgrade, U.S. bonds were considered the safest investment in the world. The continued panic on Wall Street today, coupled with the U.S. political firestorm over the downgrade and the debt ceiling debacle, pummeled markets worldwide, and is expected to similarly trouble the Egyptian exchange, said Mohsen Adel, a financial analyst. The decline in today's session was excessive, given that global markets did not sink as sharply, said Adel, adding that domestic factors likely contributed to the abnormally deep drop in the exchange today. Adel pointed to the lack of liquidity in the market as a factor, something the Egyptian exchange has yet to address. The market capitalization of the exchange dropped on Tuesday to 8 billion EGP (U.S. $1.3 billion) in the early session, and trading volume did not exceed 30 million EGP (U.S. $5.03 million). The stock market must consider opening an investment fund for financial authorities to check and balance both the rhythm and the fluctuations of the exchange in the short- and long-term, said Adel. The exchange, as a result, lost 15.1 billion EGP (U.S. $2.5 billion) of market capitalization during trading on Tuesday, as foreign institutions and investors participated in a massive sell-off. The losses were compounded by aggressive market speculation in light of the tumbling U.S. economy. Despite the pledge by the Group of Twenty to take urgent action to support global economic growth, global losses in markets expanded Tuesday. Market capitalization of shares of listed companies logged 347.6 billion EGP (U.S. $58.3 billion). Yesterday, such shares logged 362.7 billion EGP (U.S. $60.8 billion), resulting in 17 billion EGP (U.S. $2.9 billion) in losses in the last two sessions. The heavy losses in the Egyptian exchange are as a result of the U.S. market falling to its lowest point in three years, said Adel. Arabci here ,
