Arab Today, arab today egypt stocks plunge 42 to hit 5mth low
Last Updated : GMT 08:07:24
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Egypt stocks plunge 4.2% to hit 5mth low

Arab Today, arab today

Arab Today, arab today Egypt stocks plunge 4.2% to hit 5mth low

Cairo - Arabstoday

Egypt’s benchmark sank to a five-month low yesterday as the country descends further into political confusion while Gulf markets were mixed in lacklustre trade. Cairo’s index lost 4.2%, its lowest close since January 24. Egypt’s passage from revolution to democracy remains in limbo after the Muslim Brotherhood claimed victory in a presidential election, while the generals who took over from Hosni Mubarak decreed it was they who would keep power for now. The Brotherhood’s claim has been disputed by its rival. Washington, long the Egyptian military’s financial sponsor, issued a sharp rebuke to the generals, with the Pentagon saying it was “deeply concerned” and urging the army to hand over “full power” to civilians - but it made no mention of US action if it did not. “Everyone is completely worried about the election. It looks like the Muslim Brotherhood candidate is going to win,” said Amr Reda of Pharos Securities. “Plus we have other problems, with the military council, the parliament and the constitution.” “We are also hearing that the Muslim Brotherhood is going to go out to protest,” he said. The index has lost 17.8% since May 24, when it became clear that two of the country’s most divisive politicians had won in the first round in the presidential election. Elsewhere, Saudi Arabia’s market recovered intra-day declines and the index closed 0.1% higher, trimming its June losses to 2.2%. Trading volumes have dipped as investors adopt a cautious approach amid negative global cues. The main TASI benchmark is up 6.2% year-to-date, having lost much of the early-year gains which took the index to a three-and-a-half year high in April. The market performance is exacerbated by lower volumes typical of the summer lull. King Abdullah appointed his defence minister, Prince Salman, as heir apparent on Monday, opting for stability and a continuation of cautious reforms. The announcement had little impact on the market. Analysts had already said they expected Salman to continue the gradual social and economic reforms adopted by King Abdullah as well as Saudi Arabia’s moderate oil pricing policy. In the UAE, markets edged to a higher close but trading volumes in Dubai slumped to their lowest since May 27 as risk appetite dampened. Dubai’s index finished 0.4% higher, up for a third session in five. Abu Dhabi’s benchmark rose 0.3%, extending year-to-date gains to 2.7%. Caution on a global front ahead of two debt auctions in Spain and worries over the dragged-out eurozone debt crisis are spilling over to hit Gulf investor sentiment. “I would say increase cash and buy selectively, while preparing to increase risk at the first signs of improvement,” said a Dubai-based fund manager who asked not to be identified. UAE and Qatar’s markets are under review for an MSCI upgrade to emerging market status, with results expected tomorrow. Investors are sceptical a reclassification will occur, but the UAE’s chances are higher than Qatar’s, judging by MSCI criteria, analysts said. “Hopes of a price recovery are hinged upon earnings, and the way the UAE economy is moving, it looks like earnings will continue to improve in 2012,” said Sleiman Aboulhosn, assistant fund manager at Al Masah Capital. “The MSCI upgrade is definitely a potential catalyst, but I don’t see it happening any time soon.” In Kuwait, the benchmark gave back earlier gains and ended 0.06% lower, edging back towards Thursday’s four-month low. Market sentiment was volatile after the country’s ruler suspended the parliament on Monday, the latest twist in an escalating row between cabinet and lawmakers which threatens to draw in senior ministers and stall economic growth in the major oil producer. Elsewhere in the Gulf, Oman’s index slipped 0.2% to 5,700 points, while Bahrain’s measure eased 0.1% to 1,129 points.

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