Egypt stocks climb on Morsi's move to end military rule

Egyptian stocks saw solid climbs on Monday as institutional investors appeared to take heart from President Mohamed Morsi's decision to assume legislative powers and retire the country's two top generals. The benchmark EGX30 rose 1.51 per cent to close out the session at 5,046 points. Resurgent buying by Egyptian and other Arab investors sent turnover to a recent high of LE440.8 million ($72.5m). On Sunday afternoon, Morsi announced the termination of mid-June's military council-issued constitutional addendum, handing himself legislative powers until the election of a new parliament and seemingly ending the Egyptian military's political dominance. Morsi also replaced Field Marshall Hussein Tantawi, the military council's head and Egypt's minister of defence, and army chief of staff Sami Enan. "We expected some surprise among investors after the president's new decisions," said Eissa Fathy, head of securities at the Cairo Chamber of Commerce, noting the strong performance of heavyweight stocks. "[Other investors are] not sure whether the decisions are positive or negative. Individual investors were net-sellers today, which indicates they have fears over what will happen in the coming days. Foreign investors, too, are looking at the long-term impact of Morsi's decisions." The constitutional addendum, issued on 17 June amid divisive presidential elections, was widely seen as an attempt by the military to strip Egypt's next leader of key executive powers.   Some analysts said the lack of a strong reaction from the military leadership to Morsi's reversal of the document just six weeks after assuming office suggested it had already given its consent. From Egypt's 30 largest stocks, just one saw losses on Monday, as heavyweights benefited from an apparent surge in interest from Egyptians and other Arabs. Both groups bought around LE11 million more in stocks than they sold. Among the day's winners were Orascom Construction Industries, up 2 per cent, Orascom Telecom, which gained 2.56 per cent, and Commercial International Bank, which rose 1.08 pe cent. Landline monopoly Telecom Egypt did well too, up 1.39 per cent, despite Sunday's protests by employees angered at the appointment of an unpopular manager as the firm's new CEO. From the day's 165 traded stocks, 109 gained in value and 38 declined -- a performance that trimmed the broader EGX70 index by a mild 0.11 per cent. The behaviour of regional investors contrasted with those from further afield; as Egyptian and other Arab institutions moved to snap up stocks, other foreign heavyweights offloaded what they could. "This sounds a note of caution, they are considering the future," said Fathy. He suggested that Egyptian institutions had injected large sums into the market in a self-conscious attempt to boost confidence in the wake of Morsi's bold moves. When it came to the individual investors who have helped the exchange keep spinning in recent troubled months, it was a different story. Egyptians scaled back their presence, leaving it to non-Arab foreigners to bridge the gap, buying LE15.15 million more in stocks than they sold. From ahramonline