Bloomberg News

Egypt Stocks Drop to 2-Month Low as Dispute Threatens IMF Loan

April 09, 2012

Egypt’s benchmark stock index, the world’s best performer in the first quarter, fell to the lowest in two months on concern a political dispute may threaten a loan from the International Monetary Fund.

The benchmark EGX 30 Index (EGX30) fell 2.7 percent to 4,593.52, the lowest level since Feb. 7, at the 2:30 p.m. close in Cairo. That brings the drop in April to 8.5 percent, making the gauge the worst globally among measures tracked by Bloomberg this month. The index surged 39 percent in the first three months of the year. Orascom Construction Industries (OCIC), the country’s biggest publicly traded builder, lost the most in more than two weeks.

The first presidential election following the ouster of Hosni Mubarak last year drew 23 candidates, including Omar Suleiman, a leading figure in the former leader’s regime. A public dispute between the interim-government and parliament threatens to derail loan talks with the IMF. The Muslim Brotherhood’s political arm, the biggest voting bloc in the legislature, has threatened to veto the $3.2 billion deal.

“The political front is creating a lot of chaos,” said Teymour El-Derini, head of Middle East and North Africa sales at Naeem Brokerage in Cairo. “The IMF deal is taking forever, and now it might not even happen. So why would anyone want to buy Egyptian equities at the moment?”

The value of shares traded fell to about 303 million Egyptian pounds ($50 million) today after climbing to 837 million pounds on Feb. 14, the highest level in almost eight months.

Orascom Construction retreated 2.8 percent, the most since March 25, to 247 pounds. EFG-Hermes Holding SAE (HRHO), the investment bank which reported an 81-percent plunge in 2011 profit, slumped 3.3 percent to 12.21 pounds, the lowest level in two months.

The market “will continue to see the weakness it has been facing with lower volumes till something changes,” said El- Derini.

To contact the reporter on this story: 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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