Bloomberg News

Egypt EGX 30 Hits 2-Year Low on Former Regime Trial; TA-25 Rises

September 25, 2011

Sept. 25 (Bloomberg) -- Egypt’s benchmark stock index tumbled to its lowest level in more than two years as testimony by the nation’s military leader at former President Hosni Mubarak’s trial raised concern his case is gaining support.

The EGX 30 dropped 2.4 percent to 4,233.22, the lowest since April 2009, and is down 21 percent this quarter. The Bloomberg GCC 200 Index of Persian Gulf stocks lost 0.9 percent, while Israel’s TA-25 Index gained. Maridive & Oil Services SAE, an Egyptian marine and oil support services company, tumbled 6.9 percent after oil fell below $80 a barrel. Commercial International Bank Egypt SAE, Egypt’s biggest publicly traded lender, lost 3.4 percent to its lowest price since July 2009.

Mohamed Hussein Tantawi, Egypt’s defense minister and head of the ruling military council, testified yesterday at Mubarak’s trial. The former president is charged with corruption and involvement in the killing of protesters amid the popular revolt that led to his ouster. Investors are concerned about further unrest in the Arab country if Mubarak is acquitted. Egyptian stocks also fell on speculation Greece’s debt troubles may cause global financial turmoil, making it more difficult for the Egyptian economy to recover.

“The global picture is not helping, but the testimonies are the main overhang on the market today,” said Wafik Dawood, director of institutional sales at Cairo based Mega Investments Securities. “Investors are worried testimonies in favor of the former regime could cause more public rage.”

Global Growth

Lawyers representing families of protesters who were killed during the demonstrations have demanded a new court, the Associated Press said. The court has barred the media from reporting on the testimonies of five officials in the trial including Tantawi’s.

Global stocks slumped last week, with the MSCI Emerging Markets Index plunging 12 percent, its biggest weekly drop since 2008. The Stoxx 600 tumbled 6.1 percent and oil for November delivery lost 9.2 percent to $79.85 a barrel in New York. Gulf Arab oil exporters, including the United Arab Emirates and Qatar, supply about a fifth of the world’s oil.

U.S. Treasury Secretary Timothy F. Geithner yesterday warned that failure to combat the Greek-led turmoil threatened “cascading default, bank runs and catastrophic risk.” Billionaire investor George Soros said “something needs to be done” to safeguard Europe’s banks because Greece may be unable to avoid default

Maridive lost to $2.04, the lowest since February 2009. “There’s a very strong correlation between the price of oil and the decline in the company’s stock,” said Hamed Hesham, equity analyst at Cairo-based investment bank Beltone Financial Holding.

Statehood

Commercial International, Egypt’s biggest publicly traded lender, tumbled to 23.32 Egyptian pounds.

Israeli stocks rose after the benchmark index sank the most in three weeks as concern of increased violence over the Palestinian bid for statehood receded following statements at the United Nations. The TA-25 Index advanced 2.1 percent in Tel Aviv, trimming the decline this quarter to 13 percent.

Palestinian Authority President Mahmoud Abbas presented his case at the UN for recognition of Palestine as a member state, while Israeli Prime Minister Benjamin Netanyahu called for further talks. Israeli and Palestinian security forces bolstered their presence in the West Bank prior to the meeting on concern the statehood bid would spark violence.

The yield on Israel’s 5 percent Mimshal Shiklit government bonds due January 2020 fell three basis points, or 0.03 percentage point, to 4.54 percent.

Dubai Index Falls

In the Persian Gulf, the DFM General Index slipped 0.9 percent to the lowest since Aug. 9 and Abu Dhabi’s ADX General Index lost 0.8 percent.

“Fear of global financial turmoil if Greece defaults is keeping U.A.E. investors on the sidelines,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. About 70 million shares traded in the emirate, compared with this year’s daily average of 114 million shares, according to data compiled by Bloomberg.

Saudi Arabia’s Tadawul All Share Index decreased 1 percent as it traded for the first time since Sept. 21 after a holiday. Qatar’s QE Index declined 0.5 percent, Oman’s MSM 30 Index slipped 0.7 percent and Kuwait’s gauge fell 1.1 percent. Bahrain’s BB All Share Index tumbled 1.9 percent to the lowest since at least July 2004, when Bloomberg started tracking the index.

--Editors: Claudia Maedler, Laura Zelenko

To contact the reporters on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net; Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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