CAIRO // Egypt's benchmark stock index rallied today, gaining as investors hoped that the detention of former president Hosni Mubarak and his two sons may allay growing frustrations with the pace of reforms and accountability in the country.
The Egyptian Exchange's EGX30 index was up slightly over 1.1 per cent by 12:30pm today in Cairo, recouping some of the 1.4 per cent decline recorded in the previous day's session.
"People are anticipating that there will be less protests and more stability," said Mostafa Abdel-Aziz, a senior broker with Mideast investment bank Beltone Financial's trading arm. "The hope is that this news will satisfy more of the protesters."
Mr Mubarak detention for 15 days, pending inquiries into accusations of corruption, abuse of authority and the killings of protesters during the uprising that ousted him from power was announced early Wednesday by the country's prosecutor general.
Another announcement said that his two sons, Alaa and Gamal, who was a key figure in the National Democratic Party that governed under Mr Mubarak, were also detained pending investigations. The siblings have been transferred to Cairo's notorious Torah prison.
"The reaction was positive," said Mr Abdel-Aziz, referring to the market's view of the news. He said that turnover was "relatively higher" than last week.
Many have grown increasingly frustrated by the pace of investigations into former regime officials and their associates, claiming that the country's new military rulers were shying away from pursuing their former boss and were instead trying to offer up former government ministers as sacrificial lambs and placebos before an irate nation of 80 million.
The protests, coupled with the general sense of unease in the country, a security vacuum amid the absence of the police on the streets and continued unrest political and labour unrest have hammered the economy.
The detention of Mr Mubarak, who had been placed under house arrest in the Red Sea resort of Sharm el-Sheikh, appeared to offer one of the first concrete signals that the ousted president may be held accountable for at least some of the abuses attributed by Egyptians to him and his family. Mr Mubarak was being held in hospital after suffering heart problems yesterday.
The 82-year-old leader and his sons are widely believed by the majority of Egyptians as having abused their positions, allowing NDP supporters and key business leaders to build up massive wealth through sweetheart deals to which they were afforded cuts.
The Egyptian Exchange, which was shuttered for roughly two months since the mass unrest that eventually toppled Mr Mubarak began on January 25, has fared better than many expected since its relaunch late last month. Its year-to-date losses, however, remain at around 26 per cent.
More broadly, however, the Egyptian economy has taken a beating, with the popular protests mushrooming into broad labour unrest that had largely paralysed the manufacturing sector.
Exports were hit hard, while other key sources of foreign revenue such as tourism and foreign investments, are projected to fall far short of expectations. The country's investment chief said last week that projected FDI for the fiscal year was about $4 billion, down slightly more than 40 per cent from earlier forecasts.
Officials have cut their projections for the country's economic growth to between 2.5 per cent to 3 per cent for the current fiscal year ending June 30. Meanwhile, the International Monetary Fund, in a report released earlier this week, projected that Egypt's GDP could grow by about 1 per cent in calendar year 2011.
Associated Press