Egypt sinks to 12-month low

Egypt’s blue-chip stock index plunged 3.6 per cent yesterday to its lowest level in 12 months, dragged down by weakness in emerging markets and margin calls among local investors, while banking shares boosted Saudi Arabia. Twenty-nine of 30 stocks in the Egyptian index fell. It has fallen 15pc since the end of August, leaving it down 9.4pc yearto-date. The broader EGX100 index fared better on Monday, losing only 1.9pc.

Egypt’s market far underperformed the MSCI index of emerging market stocks, which was down nearly 1pc. Among big blue-chip losers were tobacco firm Eastern Co, down 4.9pc. Exchange data showed Monday’s selling was heavily concentrated among local investors, who were hit by margin calls. Non-Arab foreign investors were net buyers by a considerable margin, the data showed. “It is a mixture of both emerging market weakness and margin trading, and the closure of some margin trades,” said Radwa El-Swaify, head of research at Pharos Holding said.

Turmoil in emerging markets has fuelled concern about possible capital outflows from Egypt and depreciation of the pound currency. But many foreign fund managers say they remain longterm positive on the market because of an improving underlying economy. Khaled Abdel Majeed, managing partner at London-based asset manager MENA Capital, said Monday’s drop was due to a combination of profit-taking and emerging market weakness, but he was confident the slide would not continue.