Stock market restrictions to ease after Ramadan

Egypt plans to overturn several restrictions on stock market trade that were initially implemented as precautionary measures during the unrest that followed the overthrow of Hosni Mubarak in 2011.

According to a statement released June 24 by the Egyptian Stock Exchange and the Egyptian Financial Supervisory Authority, after reviewing market conditions, there is “no need for the continuation of the precautionary measures previously applied to the stock exchange.” 

After the Eid al-Fitr holiday, regulators will allow brokers to make transactions in 30-minute pre-market trading sessions, before the stock exchange formally opens.

The sessions, which have been halted since March 2011, allow investors to respond to company and political news that happens outside of official trading hours, and help traders to gauge the market outlook before the exchange opens.

According to the press release, stocks will be limited to a 10 percent fluctuation during pre-market sessions, with the exception of small and medium enterprises traded on the Nile Index, which will see sales suspended if the share prices fluctuate by more than five percent.

Most stocks will also be allowed to fluctuate by an additional 10 percent during regular trading hours, up from the five percent currently allowed. The Nile Index will remain limited to five percent.

Since the 2011 Revolution, the stock market has been suspended several times when political events have spooked traders. Most recently, trading on the EGX100 was temporarily suspended on June 1, when news of a planned capital gains tax prompted a selling frenzy.

Easing the restrictions indicates confidence in future political stability, though the current limits are still far below the 40 percent price fluctuation allowed before the 2011 revolution.

EFSA Chairman Sherif Samy also noted that he welcomes a proposal by the EGX to extend trading hours beyond the current four-hour sessions. However, during Ramadan, the exchange will be running on shorter hours, with ordinary trading sessions held from 10 am until 1.30 pm.