Stocks continue falling on Egypt’s market

The stock market's downward trend continued on Sunday, despite the air of positivity officials tried to induce with last week's opening of the Suez Canal bypass. The benchmark EGX30 index slid 1.27 percent in today's trading session, reaching 8,011 points.

Overall, the market incurred LE5.5 billion in losses, after a selloff from mainly Egyptian and Arab institutions and funds, according to the official Middle East News Agency. Meanwhile, foreign institutions were net buyers.

Stocks in the financial services and real estate sector recorded the biggest losses, according to market data on the Egyptian Exchange website. Two individual stocks that saw the sharpest decline were Egyptian Transport and United Arab Shipping. Other stocks in the shipping and transport sector also declined sharply, reaching the maximum level allowed for stocks to drop.

While the last week of July saw mostly increases, the EGX30 index reversed this trend as August got underway.

At the end of July, the EGX30 stood at 8,191 points but reached 8,158 points by August 2, and fell again the following day to 8,087 points. After a slight increase on August 4, it was once again in the red just a day before the canal opening, closing at 8,114 points.

The broader EGX70 index has been following the same trend. After climbing in the last week of July to 459 points, it has since fallen to reach 446 points on Sunday, with a decrease of 2.08 percent.

Wael Ziada, head of research at investment bank EFG-Hermes, said the fluctuations are seasonal and follow a normal trend.

“I think this is just an extension of the previous trends that the market witnessed, taking into consideration that the market went through some of its best periods last year, and also given the performance of some of the stocks," he asserted.

"Summer months in general are always the weakest, especially since there has been no news related to the stock market recently," Ziada added.

He pointed to economic developments in China, saying they cannot be ignored and have taken their toll on Egypt's market performance. 

According to media reports, July has been the worst month for the Chinese stock market in nearly six years, as the producer price index dropped 5.4 percent, reaching its lowest level since 2009.

After a glowingly positive performance in 2014, the past six months have seen the market draw out a steadily downward drop, with the EGX30 losing 10 percent year-to-date.