Investor confidence in Egypt is likely to be further undermined after Egyptian officials again delayed the reopening of the Egyptian Exchange (EGX – www.egyptse.com) from today (1 March). It was announced late on Monday that trading would not start today at 10:30am but would again be put off until Sunday, 6 March. There have been repeated delays to the reopening.
The exchange is expected to face strong selling pressure when the shortened trading session begins and this could trigger new measures to stop volatility and cause the bourse to halt trading very quickly after it does open. According to reports, trading on stocks will be carried on within a pre-set price range and will be halted for half an hour in there is a 5% change in value, while if a share price moves by 10% the price will be fixed until the end of the trading session. If the EGX 100 index moves by 5% trading will halt for half an hour, if it changes by 10% trading will halt for as long as decreed by the EGX Chairman.
State-run Middle East News Agency (MENA) carried a statement by exchange officials that the market would reopen on 6 March to “allow investors to profit from the government’s support to guarantee stability in the bourse.” Officials have refused some demonstrators’ demands last Sunday to cancel trades made during the 2 days before the EGX closed on 27 January, when share prices plummeted.
Investigations are continuing into business leaders close to former President Hosni Mubarak who were prominent in leading listed companies and also who owned many shares and may be trying to rearrange their finances.
Karim Helal, Managing Director of brokerage CI Capital was quoted by Associated Press saying the delays harm sentiment: “No doubt, it is certainly eroding investor confidence, and we’re losing credibility by the day in international markets. If the decision is to allow the market to absorb losses, it won’t make a difference. It will just make it worse.”
There have been sharp falls in other stock markets across the Middle East and North Africa, as pro-democracy demonstrations have been increasingly widespread and persistent. Escalating violence in Libya is pushing up oil prices, while fears there could be pressure in Saudi Arabia have also added to worries about global oil prices and the economic recovery, damaging sentiment on exchanges worldwide.