News / Economy

Egypt Share Index Slips Lower Before Army Deadline

Traders work at Egypt's Stock Exchange in Cairo, July 3, 2013. Traders work at Egypt's Stock Exchange in Cairo, July 3, 2013.
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Traders work at Egypt's Stock Exchange in Cairo, July 3, 2013.
Traders work at Egypt's Stock Exchange in Cairo, July 3, 2013.
Reuters
Egyptian shares closed lower on Wednesday as investors fretted over the possibility of further violence in the country, hours before an army deadline to Islamist President Mohamed Morsi to yield to mass protests and share power.

At least 16 people were killed on Wednesday and 200 wounded when gunmen opened fire on supporters of Morsi who were rallying outside Cairo University, state television reported.

Egypt's army commander and Morsi each pledged to die for his cause as the deadline neared.

The central bank ordered banks to close their doors early ahead of the army deadline, due to expire at around 5:00 p.m. [1500 GMT], and busses in Cairo's financial center downtown were whisking bank employees home.

The country's main share index closed 0.3 percent lower.

“When you have blood at Cairo University it is bad news,” said Hisham Metwalli, a trader at Arab Finance Brokerage. “But people hope it will all be over this evening.”

The index had soared 4.9 percent to a three-week high on Tuesday after the armed forces gave the ultimatum.

The prospect of military intervention raised investor hopes that an end was in sight to turmoil that has frightened away investors and tourists and drained the country's finances since Hosni Mubarak was ousted from the presidency in early 2011.

But brokers said that uncertainty and fears of violence were now pushing prices back down.

“Egypt is in crisis. No one can tell what will happen,” said Omar Ascar at Cairo Financial Investment.

Egypt's currency strengthened on the black market, with one dealer in central Cairo offering to sell dollars at 7.55 pounds and buy them at 7.50 pounds, compared to 7.65 and 7.60 on Tuesday.

In the fixed-income market, the cost of insuring Egyptian debt against default was steady on Wednesday at 875 after having surged to record highs of above 900 on Monday, Markit said.

Foreigners were net buyers of shares, but some investors felt it was early to plunge back into the Egyptian market before the political situation was settled.

“We have been very underweight in Egypt for a long time,” said Alex Trotter, Africa fund manager at Fulcrum Capital in London. “When you do not know what's going on, it's best to be more cowardly.”

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