CAIRO: Analysts have quashed concerns that the fatal Jan. 1 attack on a church in Alexandria will hinder the performance of the stock market after an uneventful first day of trading this year.
The Jan. 1 attack killed at least 21 people and left 97 injured after an explosion went off in front of Al-Qeddesine Church as worshippers emerged from a New Year’s Mass.
“Whenever there have been terrorist attacks in Egypt, the stock market has been relatively sanguine in its reaction,” said Angus Blair, head of research at Cairo-based investment bank Beltone Financial.
Blair does not expect any negative impact on the stock market as a result of the attack, which has spurred protests nationwide with accusations ranging from sectarian strife to foreign entities attempting to harm Egypt’s stability.
Tariq Hussein, head of MENA sales trading at Naeem Holdings, concurred, saying, “Generally, attacks like this have had minimal effect on the market.”
Egypt’s main EGX 30 index retreated from Thursday’s seventh-month high as investors sold shares in blue chips on Sunday, Reuters reported. The main index, which had surged through the 7,100-point barrier on Thursday, fell 0.8 percent to 7,082 points.
Hussein said that when investors look to trade in the Egyptian market, political risk is always factored in, adding that the market is constantly discounting this in the stock prices.
Terrorist attacks such as the series of bombings in Taba in 2004, car bombs at a hotel in Sharm El-Sheikh in 2005, bombings in the Red Sea resort of Dahab in 2006 and other sporadic incidents, did not significantly impact the stock market, he explained.
Commenting on the timing of this particular incident as related to the market, Hussein said, “At this time of the year, a lot of people are still on holidays and business is slow resulting in very low trading volumes. On the first day back, activity is usually quite slow, so if there is a drop in trading, we cannot say it is due to the attacks.”
“Events like these do not really shock the market; the biggest market mover will be what happens in the next presidential [election],” he concluded.
A broker at CI Capital said that trade by institutions is usually very weak at the start of the year, which has buffered the effect, if any, of the bombing.
He added that only retail trading was taking place at small volumes and that it did not seem like Egyptian investors were changing their behavior. “There is only some minor selling from Gulf investors but this is just a minor panic,” he said.
As for possible security concerns by tourists, Blair said that apart from a short term fall, “the recovery period in tourist bookings following terrorist attacks has become shorter over time, as terrorist attacks have taken place increasingly elsewhere in the world.”
He added: “We do not expect to see a material, negative impact on tourist bookings as a result of this attack. The long term trend for tourist arrivals in Egypt has continued to show strong growth despite negative events, and the Egyptian pound tends to move independently of tourist arrivals.
“We expect to see some further Egyptian pound weakness anyway, but, for the moment, we do not anticipate any knee jerk reaction in the pound to this news.”
