Egypt, Turkey delay stock market connectivity plan

The implementation of a plan to connect the Egyptian stock exchange with Turkey’s has been delayed due to a lack of “market readiness,” according to a statement by the EGX on Thursday.

“Both exchanges have duly embarked on the connectivity project and recently finalized its technical components. Market readiness, however, is a pending issue since brokers from each end need to commit resources through bilateral agreements,” the statement read.

The statement came as Egypt’s main EGX 30 index ended the week’s last session up 0.65 percent after an initial drop in early morning trade.

The benchmark index reached 5,425 points on Thursday, its third day in the green after sliding for a number of days due to violent street clashes that left hundreds dead.

In its Middle East report on August 20, the UK-based consultancy firm Capital Economics had said, “In the very near-term … disruptions to industry and the tourism sector mean that [Egypt’s] economy, which had already slowed over the first half of this year, will have weakened even further.”

In late June 2012, EGX and Borsa Istanbul signed a memorandum of understanding to develop a framework for a partnership between the two markets.

During his year in office, deposed President Mohamed Morsi cultivated warm political and economic ties with Turkey and Qatar, both of which have spoken out sharply against the military’s forcing him out of office in July after mass protests demanded his resignation.

In their place, Saudi Arabia, Kuwait, and the United Arab Emirates haven stepped in to fill Egypt’s gaping funding crisis with pledges of US$12 billion in financial support.

While the stock market statement shied away from giving a clear indication as to whether the stall in the plan to connect the two markets was spurred by political tension, all signs point to this being the case.

“Given the latest development in the political landscape, there will be a delay in the project implementation timetable. Both exchanges will remain in touch to assess the status on a regular fashion,” the statement added.