DUBAI: Egypt’s bourse snapped a three-session losing streak yesterday after authorities arrested Muslim Brotherhood leader Mohamed Badie, raising hopes among some investors that the government would succeed in dampening down unrest.
In the view of many foreign investors, Badie’s arrest may do nothing to resolve Egypt’s long-term political tensions; it may simply make a negotiated settlement and an eventual transition back to civilian rule more difficult. For those reasons, the stock market may not be starting any extended rally.
But many local investors approved of last month’s ouster of the Brotherhood’s President Mohammed Mursi, believing it would clear the way for better management of the economy. They have been encouraged by the government’s action against top Brotherhood leaders.
Egyptian investors were net buyers of stocks yesterday while foreigners remained net sellers, bourse data showed.
Cairo’s main stock index climbed 1.1 percent, ending three days of declines in which it tumbled 5.6 percent as hundreds of people died during the crackdown on the Brotherhood.
“The main catalyst was the crackdown on the MB and the arrest of their leader,” said Islam Batrawy, Deputy Director of institutional sales trading at Naeem Brokerage in Egypt. But he added: “Investors are waiting for the country’s security situation to normalise after the recent tensions.”
Blue chips Commercial International Bank and Orascom Telecom advanced 1.1 and 1.2 percent respectively. Second-quarter earnings quality at some companies “has been good and is helping people take positions again”, Batrawy said.
In the United Arab Emirates, Dubai’s index eased 0.06 percent; it is up 64.2 percent year-to-date but has been trading narrowly since it hit a 57-month closing high on August 6.
Monthly trading volumes in Dubai have been declining since a May peak, even as the market touched new multi-year highs. This may be at least partly due to Ramadan and summer holidays, but could be a negative technical signal.
“The market is making new highs but the momentum is not confirming — the trend is weak,” said Firas Al Zghaibi, financial markets strategist at brokerage MENA Corp.
Reuters
