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Egypt stock market loses 3bn in 1 day
(MENAFN- Arab News) CAIRO: Egypt's stock market shares plunged by 22 billion Egyptian pounds (just over $3 billion) in Sunday trading as low oil prices dragged down regional economies.
The benchmark EGX30 index closed 5.23 percent down with 170 stocks declining and just five showing gains.
Stock broker Yasser Rashad said there was an immediate dip at the start of Sunday's session over fears that share prices would continue to drop for the rest of the week.
Wael Ziada head of research at regional investment giant EFG Hermes said the drop is a knock-on effect caused by the steep decline in oil prices. The markets in Egypt and Gulf Arab countries "are correlated in terms of their performance because the investor base intersects."
Oil prices have shed nearly half their value since late June including a 4 percent tumble Friday that left benchmark US oil prices at $57.81 a barrel their lowest level since May 2009 when the US was still in recession. Egypt is a net importer of oil products therefore "we should benefit from the decline in oil prices" Ziada said.
However Egypt relies heavily on aid from Gulf countries to keep its economy afloat.
A Bank of America Merrill Lynch Global Research report published last week said that "although GCC support may be somewhat less forthcoming at current oil prices enough is likely to be provided to muddle through for now."
Last month an International Monetary Fund official said that Egypt's economy had begun to recover after nearly four years of political turmoil. The EGX30 index has shown overall gains of 28.49 percent so far this year.
The government aims to attract investment by hosting a three-day international economic conference in March. It recently partially lifted fuel subsidies and is pursuing revenue-enhancing measures aimed at deficit reduction.
The benchmark EGX30 index closed 5.23 percent down with 170 stocks declining and just five showing gains.
Stock broker Yasser Rashad said there was an immediate dip at the start of Sunday's session over fears that share prices would continue to drop for the rest of the week.
Wael Ziada head of research at regional investment giant EFG Hermes said the drop is a knock-on effect caused by the steep decline in oil prices. The markets in Egypt and Gulf Arab countries "are correlated in terms of their performance because the investor base intersects."
Oil prices have shed nearly half their value since late June including a 4 percent tumble Friday that left benchmark US oil prices at $57.81 a barrel their lowest level since May 2009 when the US was still in recession. Egypt is a net importer of oil products therefore "we should benefit from the decline in oil prices" Ziada said.
However Egypt relies heavily on aid from Gulf countries to keep its economy afloat.
A Bank of America Merrill Lynch Global Research report published last week said that "although GCC support may be somewhat less forthcoming at current oil prices enough is likely to be provided to muddle through for now."
Last month an International Monetary Fund official said that Egypt's economy had begun to recover after nearly four years of political turmoil. The EGX30 index has shown overall gains of 28.49 percent so far this year.
The government aims to attract investment by hosting a three-day international economic conference in March. It recently partially lifted fuel subsidies and is pursuing revenue-enhancing measures aimed at deficit reduction.
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