Egypt bourse reopens and plunges

24 March 2011

Stock exchange opens in time to remain in MSCI Emerging Markets Index

Egypt’s stock exchange reopened on 23 March after nearly two months sparking a dramatic fall in share prices.

The EGX 30 Index fell 8.9 per cent, the lowest level since April 2009, by the 1.30 pm close. Trading suspended for 30 minutes after the EGX100 index fell by 7 per cent. The EGX Index had dropped 9 per cent by the end of trading.

The stock exchange has been closed since the exit of former President Hosni Mubarak. Had the exchange stayed closed a further two days, it could have led to its removal from the MSCI Emerging Markets Index.

Egypt’s decision to suspend trading for such a prolonged period had sparked intense criticism. “The market being closed in a big mistake. We missed a couple of opportunities to reopen. Compare this to Japan where they didn’t drop a single session,” says one Cairo-based economist.

By not opening the stock market, “we made investors hate us”, says the economist. A source close to the government agrees. “People are saying that Egypt does not respect its investors. And it stays closed – for whose sake? For the sake of a couple of investors who want only to win and never to lose?” says the source.

A Cairo-based banker offers an explanation for the continuation of the suspension. “There are lots of ongoing corruption investigations,” he says. “sNobody wants to be seen as responsible for taking action anymore.”

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