EGX back to green after 7-day slide

The Egyptian Stock Exchange (EGX) advanced slightly on Monday, following a dramatic seven-day slide.

The benchmark EGX 30 index rose by 3.14 percent on Monday to close at 5,941.2 points. Despite Monday’s uptick, just weeks into 2016 the index is already down by more than 15 percent year-to-date.

Last week’s performance was the worst since the 2011 revolution, with the benchmark EGX 30 index falling from 6,782 at opening Sunday to 5,858 at the close of the market on Thursday.

Domestically, a few factors account for last week’s swift decline. The World Bank adjusted Egypt’s growth projections from 4.2 percent to 3.8 percent, stating that “the contraction in foreign currency inflows that would accompany a shrinking tourism industry would not only negatively impact growth, but would exacerbate the existing foreign currency shortage.”  

Further, a monthly survey found that business activity in Egypt declined in December for the third straight month. Finally, the January 8 attack on tourists at a Hurghada hotel further depressed prospects for Egypt’s already suffering tourism sector.

The EGX has also fallen victim to a global selling frenzy. Plummeting oil prices, weak United States economic data and concerns over growth in China led to exchange losses around the world. Regional markets in Saudi Arabia and the United Arab Emirates also slid on news of sanctions on Iran being lifted and the subsequent fear that oil prices will soon drop even lower.

Severe losses last week were enough to prompt the EGX to urge listed companies to release 2015 financial statements early to ease what it described as “unexplained panic” that is “not based on sound economic bases.” Exchange chairman Mohamed Omran stated that the EGX was not attempting to interfere in the market, but to promote greater transparency and disclosure.

In an EGX statement, Omran urged investors to “learn to control their emotions and not to be affected by panic cases.”

After continuing to plunge in early hours of trading on Sunday, the market finally began to level off, with the EGX 30 closing the day down by a relatively modest 1.7 percent.