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29 February 2024

Egypt stocks suffer 2nd biggest drop of history

By Reuters

Egypt's main index suffered the second-biggest one-day fall in its history on Thursday, as anti-government protests shook the confidence in one of the region's best-performing economies.

The EGX30 index tumbled 10.5 per cent, its biggest drop since Oct 7, 2008 when the benchmark fell 16.5 per cent due to the deepening global economic crisis.

Trading on the exchange was briefly suspended after the index slumped 6.2 per cent. More sellers appeared when the markets reopened, quickly extending its declines. The index tumbled 6.1 per cent on Wednesday.

Several major stocks were suspended again after the reopening, as they breached stock exchange limits.

Activists trying to oust Egyptian President Hosni Mubarak extended their protests into a third day, making a new call for demonstrations on Friday to maintain pressure for change.

"When there's panic, it overrides all fundamentals and technicals," said Hashem Montasser, EFG-Hermes managing director and head of regional asset management.

Montasser said it would be difficult to say how much lower the index would fall.

"This could be a bottomless pit. The reaction we are seeing is very much politically driven and it's difficult to say when this will stop."

Market heavyweights Commercial International Bank and Orascom Construction dropped 10.2 per cent and 10 per cent respectively.

The wider EGX100 index plunged 14 per cent.

Egypt's bourse chief earlier called for investor calm, a newspaper reported.

"The stock market should be the first to get affected by anything that happens and Egypt is under high political and economic risk," said Omar Darwish of CIBC brokerage.

"Everything is down, even real estate which usually doesn't get that affected."

Other regional bourses were seen reacting to the events in Egypt, with all but one index closing lower.

Qatar's index declined 0.8 per cent, weighed down by Industries Qatar that fell 1.2 per cent.

"Regional markets opened flat to sideways but fell as soon as Egypt markets opened," said Montasser.

"Qatar appears to be one of the most affected. Egypt is weighing on investor sentiments."

Abu Dhabi's index closed at a near four-month low, dropping 0.4 per cent to its lowest level since Sept. 26.
Dubai builder Arabtec dropped 1.1 per cent, weighing on the emirate's index, that fell 0.9 per cent.

Thursday’s highlights
The index plunged 10.5 per cent to 5,647 points.
QATAR: The index dropped 0.8 per cent to 8,974 points.
ABU DHABI: The benchmark dropped 0.4 per cent 2,659 points.
DUBAI: The measure fell 0.9 per cent to 1,613 points.
KUWAIT: The index fell 0.5 per cent to 6,944 points.
OMAN: The benchmark eased 0.03 per cent to 6,941 points.
BAHRAIN: The measure rose 0.8 per cent to 1,473 points.