Political tension drags down Egypt’s markets

Published July 28th, 2011 - 08:16 GMT
On Wednesday, Egypt’s bourse benchmark index closed 0.7 percent lower on mounting political tension
On Wednesday, Egypt’s bourse benchmark index closed 0.7 percent lower on mounting political tension

Egypt’s bourse fell for a seventh session on mounting political tension Wednesday ahead of former President Hosni Mubarak’s trial, and most Gulf markets fell amid global uncertainty. The latest in a series of mass protests in Egypt has been scheduled for Friday, adding to the ongoing tension in the country.

“We are still waiting for next Friday’s protest, and no one knows how it will turn out,” said investment and capital market analyst Nader Khedr.

The benchmark index closed 0.7 percent lower.

Ezz Steel dropped 3 percent, down for a second day after the exchange on Tuesday briefly suspended trading in its shares until the Egypt’s top steel producer submits its consolidated results for 2010 and the first quarter of 2011.

Cairo-based private equity firm Citadel Capital tumbled 3.9 percent after talks with Abraaj Capital ended without the Dubai-based firm agreeing to buy a stake in its Egyptian rival.

Investors across the Gulf reduced positions ahead of the Islamic fasting month of Ramadan amid an uncertain global scenario.

Gold soared to a record high for the sixth time in two weeks Wednesday and the dollar slumped to another record low against the Swiss franc as investors sought safety from a possible U.S. debt default. Equities were weaker globally, particularly in Europe and Japan.

“Unfortunately, we’re approaching Ramadan in times of uncertainty in international markets,” said Marwan Shurrab, vice-president and chief trader at Gulfmena Investments.

In Abu Dhabi, telecoms operator Etisalat dragged Abu Dhabi’s benchmark to an eight-week low.

Etisalat fell 3.3 percent after paying out dividend.

Banks saw profit-taking from Tuesday’s gains. First Gulf Bank slipped 0.6 percent, Abu Dhabi Commercial Bank shed 0.7 percent and Union National Bank declined 0.3 percent.

The index dropped 1.2 percent to its lowest close since May 31.

“We will see bluechips drifting down despite strong Q2 numbers generally. Real estate stocks are lagging behind, which is one of the main drivers of UAE markets. This will cause a lag in positioning from institutional which will negatively affect our markets,” Shurrab added.

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