CAIRO: Egyptian stocks continued to decline Wednesday after falling LE 3.4 billion ($570 million) on Tuesday, as a result of a sell-off by Egyptian shareholders.
EGX 30 also continues to fall ahead of mass protests planned for Sept. 30, which are against the ruling military council’s decision to prolong emergency law.
The value of EGX 30 on Wednesday closed at 4,094.64 points seeing a 3.58 percent decline, with the year to date change at 42.67 percent; meaning that the stock lost 42.67 percent of its value over the past year.
The value of EGX 70 was at 447.58, with a decline change of 6.86 percent, while EGX 100 was at a value of 694.53, declining 5.67 percent.
The Egyptian exchange also showed 63.35 percent of traders to be Egyptians, 5.24 percent Arab, and 31.42 percent non-Arab traders.
Individual shareholders made up 56.03 percent, while institutions constituted 43.96 percent.
Over 50 percent of shareholders that were selling were individuals, while institutions bought more than they sold. Most of individuals selling, however, since Tuesday were Egyptian.
On the other hand, about 30 percent of institutions were selling, while 50 percent were making net purchases.
“Egyptian shareholders are small shareholders, who are reactive more than they are proactive,” said Alaa Ezz, secretary general of the Federation of Egyptian Chambers. “When you see larger investors, if they see a collapse like that they know that this is the right time to buy.”
“If I’m in institutions with professionals, I can see the light at the end of the tunnel, I know that if I sell now I will lose,” he added.
According to Magda Kandil, executive director of the Egyptian Center for Economic Studies, foreign investors are not as quick to panic because they have more to rely on than local, individual shareholders.
“Clearly confidence has been lost, the latest ruling on some of the licenses and privatization in the country has shaken confidence of local shareholders,” said Kandil.
“Individual shareholders are tuning in more closely, foreigners have already reacted to uncertainty, and they’ve already taken positions to protect themselves,” she said. “Egyptian shareholders, mainly individuals, are thinking that the landscape is changing beyond what they had imagined.”
Kandil argued that since there is communication coming from the current leadership to say that the country is behind privatization, investors are worried.
“Media influence is also a strong factor,” she said.
Several media outlets have been discussing the state’s moves to target privatization as well as recent corruption cases of companies who were involved with family members from the previous regime.
“The delay in elections announced yesterday could also be another factor why people are panicking because the end of this [transition] is not near sight,” Kandil added.
On Tuesday, Egypt’s ruling military council announced they plan to hand over power to a civilian government by beginning of 2013.
As a result of recent developments, shares of major real estate developers have also continued to slump.
SODIC, headed by Magdy Rasekh, Alaa Mubarak’s father in-law, saw a 1.37 percent decline, now priced at LE 12.93. The opening price of the company on Wednesday was LE 13.21, however it saw a decline of 0.18 percent.
Just six months ago, before the effects of the January 25 Revolution that toppled Hosni Mubarak really hit the company, its value was at a high of LE 28.4.
On Wednesday, the price of Palm Hills was at LE 1.27 after opening at 1.24, seeing a decline of 0.08 percent.
A year ago, Egypt’s second largest real estate developer, Palm Hills was selling at a high of LE 6.42. Since the revolution, however, the company has been hit by a series of legal cases accusing the company of buying lands at undervalued prices.
PHD was forced to give back lands to the government in order to avoid land liability charges.
On Tuesday, Arab and foreign investors were making net purchases while Egyptian shareholders were selling-off, according to the Middle East and North Africa Financial Network.
Egypt’s main index, EGX 30, on Tuesday, closed at 4,251 points after declining by 1.2 percent as EGX 70 and EGX 100 fell 3.2 percent and 2.6 percent, respectively.
Moreover, foreign shareholders on Tuesday made up 22.12 percent of trades, while Egyptian traders made up 72.76 percent, and Arab investors made up 5.12 percent.
