Market's reopening date still unclear

Fresh concerns about Egypt's banking sector have created uncertainty about when the country's exchange will re-open

Uncertainty surrounds the reopening of the Egyptian stock exchange next week as fresh concerns on the state of the banking sector resurfaced.

Khaled Seyam, the chairman of the benchmark EGX 30 Index, said yesterday the index would reopen only after the country's banks were functioning properly, Al Arabiya television reported.

Banks are scheduled to reopen on Sunday, with the Egyptian exchange slated to reopen on Tuesday, after a heavy fall that forced it to shut down for nearly three weeks.

The Egyptian exchange fell 16 per cent over a two-day period at the onset of widespread protests against the now dissolved 30-year rule of Hosni Mubarak.

Banks have been closed since Monday because of anti-corruption protests and strikes by workers. Mr Seyam also said the exchange would not cancel investor transactions on January 27 that led to a 10.5 per cent drop because it was "illegal", Al Arabiya reported. It was the biggest fall on the EGX 30 in more than two years.

Bloomberg News reported this week the exchange would consider the cancellation of transactions on the final day of trading in response to anger from investors over stock losses and a closed exchange.

Individual equity holders, who accounted for 48 per cent of all trading on the Egyptian exchange last year, called on the suspension of trading of 13 companies associated with Mr Mubarak's regime at a meeting in Cairo with the bourse vice chairman Mohamed Farid Saleh yesterday. It follows Egypt's liberal take on trade cancellation, which brokers said was not uncommon. Mostafa Abdel-Aziz, a broker with the Cairo-based investment bank Beltone Financial, said the cancellation of trades on individual stocks happened "all the time" when undisclosed information found its way into the market.

Options were still being considered at the exchange and with the country's markets regulator, he said. "They're still considering it but it is being discussed by many other parties, it's not just the exchange's decision."

EFG-Hermes Holding reduced its recommendation on six Egyptian companies yesterday, including Ezz Steel, on concern that earnings may be hurt by the political changes.

Ezz, whose shares tumbled 19 per cent to 15.93 Egyptian pounds in the week ending January 27, was lowered to "sell" at EFG with a 12-month price estimate of 13.90 pounds and Cairo-based Egyptian Resorts Company, a developer, was cut to "sell" with a price estimate of 1.40 pounds. The economy remains in a difficult position, and since the onset of the unrest, the country's economy has lost US310 million (Dh1.13 billion) a day, said Mohammed Seddiek, the head of research at Prime Securities in Egypt.

"This could double if the protests continue," he said.