After a partial recovery by Egypt’s stock earlier in the week, the market slid on Wednesday following President Mohamed Morsi’s Tuesday evening speech, in which he emphasised his legitimacy despite mass protests demanding his ouster.
As Wednesday’s trading session started, the benchmark index EGX 30 declined 1.7%, but closed at 4,971.06 points, which the head of the Institutional Sales at the Cairo-based Arabia Online Securities, Ashraf Abdel Aziz, attributed to investors’ concerns about escalating violence following Morsi’s speech.
On Tuesday, in a televised statement, Morsi asserted that he would hold onto his legitimacy, despite a 48-hour ultimatum given by the army for disputing sides to reconcile. He also warned that disrespecting the constitutional legitimacy of his presidency would lead to further bloodshed across the country.
Meanwhile, EGX 70 index, tracking small and medium sized companies increased to 1.44% and the broader EGX100 index inched upwards by 0.96.
“The stock started slightly to rebound part of its losses after a while, when no violence erupted in the streets which reassured investors to some extent,” said Abdel Aziz.
Agreeing with that opinion, Mohamed Abu Basha, an economist at investment bank EFG-Hermes, said that Morsi’s speech pushed stocks down, because it widened the rift between various camps.
“After investor’s optimism yesterday (Tuesday), believing the crisis could finally reach an end, Morsi’s speech raised investors’ concerns, sparking a wave of selling, and at the end of the session stock’s profits wore thin,” he explained.
On Tuesday, the market surged unexpectedly after the Egyptian army promised to provide a roadmap for the country if the president and opposition cannot arrive to a solution, giving Morsi a 48-hour ultimatum.
Head of Arab African International Securities, Yasser El-Masry said: “at the beginning of the session everyone was worried pushing prices of shares down, which attracted investors to buy prominent shares like Commercial International Bank (CIB) and Orascom Telecom (OT), which prompted the rise in transactions, he claimed.
El-Masry emphasised that the situation of market in the coming days will depend on updates in political arena, but in any case most investors believe that even if stocks waver, the decline would not be worse than the previous period.