Egypt stocks fall 2 % on gloomy Ganzouri speech

Egypt's major stocks saw their second consecutive session of losses Monday as gloomy predictions about the economy and controversial statements from Islamists put the brakes on trade. The benchmark EGX30 dropped 2.06 per cent to close Monday at 3.882.17 points, deepening the previous day's slim 0.16 per cent loss. Both foreign investors and locals reined in their buying, although overall turnover exceed Sunday's meagre total to reach LE214.38 million. "Fears over the global economy are driving investors to sell -- prices are falling on the Egyptian exchange and in London too," said Mostafa Barda, a Cairo-based capital markets expert. In a televised speech on Sunday afternoon, Egypt's prime minister Kamel El-Ganzouri said the economic situation was "worse than anyone imagined" and austerity was needed to rein in the country's burgeoning budget deficit. Such statements had an obvious effect on investor confidence, claims Badra. Sentiment was further undermined by a statement by a representative of the Islamic Labour Party at a press conference this week. The party official claimed stock trades were a form of gambling and gains a kind of 'interest', a concept not allowed in Islamic banking. "One Islamist claimed Bourse profits count as a kind of interest or gambling and that the whole exchange should be closed," said Badra, explaining this also impacted trade. Foreigners were significant net-sellers, offloading LE37 million; Egyptians were net-buyers to the tune of LE32.3 million. From the day's 174 listed stocks, just 12 gained value while 159 declined. Broader indices followed the benchmark downward, with the EGX70 and EGX100 falling 2.5 and 2 per cent respectively. Every share on the EGX30 closed in the red, with losses ranging between slight and heavy. Commercial International Bank led the high-cap plunge, losing 4.4 per cent followed by investment bank EFG-Hermes which dropped 4 per cent. The highest-capped stock saw smaller losses; Orascom Construction Industries and Telecom Egypt fell 0.8 per cent apiece. OCI escaped the worst effects of the market sell-off, cushioned by a positive response to the announcement it had won a contract for a hydroelectric project worth LE600 million in Upper Egypt. Real estate stocks, which have taken a battering in the aftermath of January's revolution, saw further losses, with Palm Hills and TMG dropping 4 and 3 per cent respectively.