Market anticipation: Egypt stocks lose LE4.4 bn

Egypt's stock dropped sharply in early trade on Wednesday, with the market losing LE4.4 billion of its overall capitalization in the first half hour, after a night of clashes between supporters and opponents of the president.

Market cap fell to LE328.9 billion, compared with the LE333.1 billion it closed at on Tuesday, hours ahead of a deadline imposed by the army on President Mohamed Morsi to heed the demands of millions of protesters opposing his rule.

In a speech aired in the late hours of Tuesday, Morsi defiantly said there is "no substitute to legitimacy" and that he will defend his legitimacy even with his blood, but again called for national dialogue and reconciliation and reiterated his support for the army.

Violence erupted between pro and anti-Morsi protesters in some areas around the country, leaving 16 dead in Giza.

The market indices were active in Tuesday's trading session as a result of large-scale buying by Egyptian investors, adding LE11.5 billion to its market capitalization.

The main EGX30 index jumped 4.94 percent on Tuesday to close at 4,986.81 points, reacting positively to Monday's statement from the army giving political forces 48 hours to resolve the crisis.

Atef Sherif, chairman of the Egyptian Exchange, said that there is no intention to suspend trading on the stock market or to apply any precautionary measures on trade.

He told the state-owned Al-Ahram newspaper that the market will be open to investors in order to boost confidence in the Egyptian economy, as well as implement tighter controls on the market to protect investors.

During the protests that ousted former President Hosni Mubarak in 2011, the market closed for almost two months after seeing sharp and unprecedented drops in the days following the start of the demonstrations on 25 January. This had a negative impact on investors' perception of the stability and liquidity of the market, which took months to recover.

French newspaper Le Figaro reported that foreign companies, including French investors in Egypt, are "very cautious" about the volatile state of the country.