News / Middle East

Egyptian Stocks Plunge As Market Reopens

A trader works during Egypt's stock exchange reopening session after a nearly two-month closure, in Cairo, March 23, 2011
A trader works during Egypt's stock exchange reopening session after a nearly two-month closure, in Cairo, March 23, 2011

Multimedia

Egypt's stock market reopened Wednesday nearly two months after the mass protests that toppled former President Hosni Mubarak.  

Shut down after weeks of political unrest, Egypt's stock market reopened Wednesday with armed soldiers standing guard.

Egyptian Finance Minister Samir Radwan rang the bell amid cheers and streaming confetti. But optimism quickly turned to despair.  Just seconds after the market opened, Egyptian shares plunged almost nine percent,  triggering a circuit breaker that suspended trading activity.
Radwan says that's not a big surprise.

"It's normal to expect a dip at the beginning; it's very normal," said Radwan. "But it all depends on the behavior of the dealers in the stock exchange. "

Trading resumed 30 minutes later with a warning to skittish investors.

"I think, what I advise: stick to your papers, don't rush to sell, you may regret it," warned Radwan. "This is the time to buy.  It's a buyer's market."

Weighing on investors is the loss of critical tourist spending and foreign investment in Egypt's economy.
Ongoing investigations against former government officials and businesses, some whose companies are listed on the exchange, also contributed to the decline.  
Still, Mohamed Abdel-Salam, acting chairman of Egypt's Stock exchange sees better days ahead.

"The prices may go down a little bit but it will, I think, from my point of view, it will not increase 10 percent minus," said Abdel-Salam. "But after a while, I think that the prices will increase again and return back to normal prices."

Western analysts say further declines are likely.  Egypt's benchmark index, the EGX 30 has fallen 28 percent since the start of the year.

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