Egyptian stocks may be boosted by optimism following the downfall of Hosni Mubarak when markets reopen next week, but confidence is unlikely to be fully restored until political stability is achieved.
Mubarak's overthrow may also help the Egyptian pound which had strengthened from a six-year low on Tuesday after the central bank intervention before trading closed on Thursday, a day before protests forced the authoritarian leader from power. Political unrest has twice delayed the stock market's reopening since its last session on January 27. The bourse will now open on Wednesday after having earlier been scheduled to start trading on February 7 and then on Sunday, February 13.
"I think there could initially be some upside to the market, given the post-Mubarak jubilation, but still international investors could very well sell off Egypt and its stock, only because of the unknown," said John Sfakianakis of Banque Saudi Fransi.
"Local investors could well take an opposite view. They could play on the post-Mubarak jubilation and enter the market, and that could initially keep the market going up, probably for the first half of the day." The stock market lost 69 billion Egyptian pounds ($11.7 billion) and its main index 16 percent of its value in the two days it was open after countrywide protests broke out on January 25.
The regulator said last week that when the bourse does reopen it would suspend trade for a half hour if its broad 100-share index declined by 5 percent and for even longer if it fell by 10 percent. It also said trading on the exchange would end an hour earlier than usual.
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