Bloomberg News

Egypt Shares Slump Most Since March on Post-Vote Unrest

May 27, 2012

Traders sit at their desks beneath a screen displaying financial data inside the Egyptian stock exchange in Cairo. Photographer: Shawn Baldwin/Bloomberg

Traders sit at their desks beneath a screen displaying financial data inside the Egyptian stock exchange in Cairo. Photographer: Shawn Baldwin/Bloomberg

Egyptian stocks tumbled the most in two months after unofficial presidential election results showed the two most-divisive candidates are headed for a runoff next month. Persian Gulf shares retreated.

Talaat Moustafa Group Holding (TMGH), the biggest publicly traded property developer by market value, plunged 7 percent. Orascom Telecom Holding SAE (ORTE) fell the most since April 8. The benchmark EGX 30 Index (EGX30) dropped 3.5 percent, the biggest decline since March 25, to 4,798.14 at the 2:30 p.m. close in Cairo. The measure has decreased 3 percent this month. Kuwait’s gauge declined the most since September and the Bloomberg GCC 200 Index slipped 0.1 percent.

Egypt’s first presidential election after last year’s ouster of Hosni Mubarak gave the lead to Muslim Brotherhood candidate Mohamed Mursi and Mubarak’s last Prime Minister Ahmed Shafik, according to unofficial tallies. The closeness of the result, with only about 1 percentage point between the two top candidates, reflected the divisions that persist.

“We’re really back to square one: the Muslim Brotherhood versus the old regime,” said Teymour El-Derini, head of Middle East sales at Cairo-based Naeem Brokerage. “Investors fear the chaos that might happen until the runoff. People are starting to realize not much has changed, and it may be the cause of more unrest in the future.”

The official result is due to be announced this week after appeals are heard. In the likely event that no candidate secured more than 50 percent of the vote, a second round will be held on June 16 and 17.

Kuwait’s Drop

Talaat Moustafa dropped to 4.11 Egyptian pounds. Orascom Telecom (OTLD) slumped 5.9 percent to 3.2 pounds. An Algerian court is due to resume today hearing Orascom’s appeal of a $1.3 billion fine against its local unit because of foreign exchange violations.

Commercial International Bank Egypt SAE (COMI), the country’s biggest publicly traded lender, slid as much as 6.3 percent to 24.53 pounds, before trimming losses to 25.12 pounds after the central bank lowered the local-currency reserve requirement for the second time this year to 10 percent.

The Kuwait SE Price Index retreated 1 percent, the most since Sept. 25, to 6,277.21 after the finance minister resigned, raising investor concern that renewed political wrangling will hurt economic growth. The index fell for all but five days this month as Europe’s debt crisis pushed oil prices 13 percent lower.

Market Turbulence

Mustafa al-Shimali submited his resignation May 24 after an 11-hour questioning by opposition lawmakers who alleged financial irregularities in institutions under his authority. That day, an arbitration panel ordered the fourth-biggest OPEC producer to pay Dow Chemical Co. (DOW:US) a $2.16 billion fine after canceling a 2008 agreement to buy Dow’s plastics business.

“For sure Al-Shimali’s resignation added to the turbulence in the market,” said Fouad Darwish, head of Middle East and North Africa brokerage at Kuwait-based Global Investment House. “Kuwait, more than other Gulf states, is very receptive to its political environment.”

Repeated standoffs between the government and opposition lawmakers have stymied public spending plans to boost the non- oil economy, which grew less than Oman, Saudi Arabia and Qatar last year, according to International Monetary Fund data.

Agility Public Warehousing Co. (AGLTY), a Kuwaiti storage and logistics provider, fell for a second day, declining 1.2 percent to 400 fils.

Dubai’s DFM General Index (DFMGI) increased less than 0.1 percent and Abu Dhabi’s ADX General Index retreated 0.2 percent. Oman’s MSM30 Index lost 0.5 percent. Saudi Arabia’s Tadawul All Share Index fell 0.4 percent and Bahrain’s measure dropped 0.2 percent. Israel’s market was closed for a holiday.

To contact the reporters on this story: Alaa Shahine in Dubai at asalha@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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