Egypt's main index suffered the second-biggest one-day fall in its history on Thursday, as anti-government protests shook the confidence in one of the region's best-performing economies. The EGX30 index tumbled 10.5 percent, its biggest drop since October 7, 2008 when the benchmark fell 16.5 percent due to the deepening global economic crisis.
Trading on the exchange was briefly suspended after the index slumped 6.2 percent. More sellers appeared when the markets reopened, quickly extending its declines. The index tumbled 6.1 percent on Wednesday. Several major stocks were suspended again after the reopening, as they breached stock exchange limits.
Activists trying to oust Egyptian President Hosni Mubarak extended their protests into a third day, making a new call for demonstrations on Friday to maintain pressure for change. "When there's panic, it overrides all fundamentals and technicals," said Hashem Montasser, EFG-Hermes managing director and head of regional asset management.
Montasser said it would be difficult to say how much lower the index would fall. "This could be a bottomless pit. The reaction we are seeing is very much politically driven and it's difficult to say when this will stop." Market heavyweights Commercial International Bank and Orascom Construction dropped 10.2 percent and 10 percent respectively. The wider EGX100 index plunged 14 percent.
Egypt's bourse chief earlier called for investor calm, a newspaper reported. "The stock market should be the first to get affected by anything that happens and Egypt is under high political and economic risk," said Omar Darwish of CIBC brokerage. "Everything is down, even real estate which usually doesn't get that affected."
Other regional bourses were seen reacting to the events in Egypt, with all but one index closing lower. Qatar's index declined 0.8 percent, weighed down by Industries Qatar that fell 1.2 percent. "Regional markets opened flat to sideways but fell as soon as Egypt markets opened," said Montasser. "Qatar appears to be one of the most affected. Egypt is weighing on investor sentiments." Abu Dhabi's index closed at a near four-month low, dropping 0.4 percent to its lowest level since September 26. Dubai builder Arabtec dropped 1.1 percent, weighing on the emirate's index, that fell 0.9 percent.
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