Predicting losses on the stock index when the Egyptian Stock Exchange finally re-opens is difficult, said financial experts on Monday. The experts pointed out that any predictions would be inaccurate, but they feel the controls established by the Financial Supervisory Authority (FSA) and the stock exchange itself will reduce any losses.
Economic expert Hanafi Awad said a decline is expected. However, he added that the exchange will suspend trade if its broad 100-share index declines by 5 percent after it re-opens, only resuming once the exchange's chairman gives permission.
Awad said he expected the EGX100 to fall within the first half hour of the trading session as a result of the selling by investors and stock dealers of companies involved in corruption cases.
"This is normal, and it is expected to continue to decline for two or three trading sessions. Then the market will begin to stabilize according to global indicators, and in particular prices of global depository receipts (GDRs),” he said.
Financial expert Talal Tawfiq agreed with Awad, explaining that the prices of GDRs during the past few days suggests the market will stabilize soon after it re-opens. He pointed to the fact that the price of London Stock Exchange GDRs did not collapse as was expected.
Financial analyst Mohammed Abdel Rahim said a sharp decline is indeed to be expected. He said that the controls put in place by the exchange will reduce the decline, but that from a technical point of view, the decline could continue for several sessions. Abdel Rahim went on to say that the sectors expected to experience an immediate decline after the stock exchange re-opens were tourism, real estate and land development companies.
Translated from the Arabic Edition