Egypt market reacts negatively

Egypt’s stock market performance fluctuated in the first trading session of the week, with the main EGX 30 index closing down 0.66 percent.

The market reacted to two different sets of news on Sunday, losing LE800 million of total market capitalization to reach LE356 billion.

Positivity from robust company news was outweighed by negative sentiment after more than 70 people were killed in clashes between security forces and supporters of deposed President Mohamed Morsi on Saturday.

The benchmark index reached 5317 points while the EGX 100 fell 0.19 percent to 731 points. 

Egypt’s stock market has recouped much of the losses it incurred in June, and has been on a steady rise this month, gaining around 15 percent in a positive reaction to Morsi’s ouster and the instatement of an interim president and transition government.

While the new cabinet is seen as more liberal leaning and reformist minded, the fear is that it will not have the mandate to implement the reforms necessary to spur recovery in Egypt’s economy.

In a note, economic research company Capital Economics said, “It seems unlikely that the change of government will bring much improvement to the economy, which remains extremely weak.”

Annual GDP growth came in at just 2.1 percent in the first quarter but the widening budget deficit and rising inflation, which reached 9.8 y/y in June, “may cause domestic demand to weaken even further.”