CAIRO: Selling by foreigners pushed Egypt’s benchmark index lower after Prime Minister Kamal El-Ganzoury called for austerity to cope with an economic situation he described as "worse than anyone imagined."
El-Ganzoury, whose government was sworn in last week, told a news conference on Sunday he was looking at LE 20 billion in spending cuts to rein in the burgeoning budget deficit.
"When foreigners hear these statements and compare it to the political scene and the absence of stability, they are afraid to take positions," said Fady Azeem El-Dawla of Naeem Brokerage.
The market fell 2.1 percent to 3,882 points.
Blue-chips led losses, with investment bank Pioneers Holding falling 7.3 percent, Commercial International Bank (CIB) 4.7 percent and Property developer Talaat Moustafa 4.7 percent.
Traders said most of the selling was by foreign investors.
"If the government begins listing the numbers that reflect how bad the economic situation is, we expect a wave of strong falls," Azeem El-Dawla said.
Economists say Egypt is fast heading towards a currency crisis if it does not swiftly stabilize an economy battered by the uprising that ousted Mubarak and subsequent political turmoil, which prompted investors and tourists to flee.
Foreign currency reserves have plunged to about $20 billion in November from $36 billion at the end of 2010.
