CAIRO,(AP) – Shares on Egypt’s stock exchange plunged Wednesday as the market reopened after being shut for nearly two months because of the mass protests that toppled former President Hosni Mubarak.
Egypt’s finance minister was on hand as men dumped confetti on the trading floor to mark the resumption of trading. But within seconds of the opening, trading was once again halted as an intense sell-off drove shares below pre-set limits put in place to slow any sharp declines.
The market reopened half an hour later. The benchmark EGX 30 index was trading down 9 percent at 5,137 points by early afternoon, recovering slightly from a drop of nearly 10 percent earlier.
Finance Minister Samir Radwan called on investors not to panic.
“We’re urging people to hold on to their shares and not be hasty. You might regret it” if you sell, he told reporters at the exchange.
The Egyptian Exchange had been closed since Jan. 27 as demonstrations paralyzed the Arab world’s most populous nation.
Wednesday’s reopening came under tight security. Armed military vehicles were posted at the ends of a street leading to the exchange. Soldiers armed with machine guns were posted outside.
Although rapid, the drop did not come as a surprise. Analysts had expected sharp losses as investors pulled their money from the market amid ongoing investigations of former regime officials and some of the country’s top businessmen whose companies are listed on the exchange.
“I was not surprised at all. It’s something to be expected give the market was offline for 7 weeks,” said John Sfakianakis, chief economist for the Riyadh, Saudi Arabia-based Banque Saudi-Fransi, of Wednesday’s plunge. “The situation in Egypt has not created confidence among international and of course local investors.”
Egyptian officials had tried to shore up confidence ahead of Wednesday’s reopening, including the appointment of a new temporary head following the resignation of the bourse’s former chairman.
Several companies announced plans to buy back shares in an apparent effort to try to prop up prices and stem any losses. Topping the list was property developer Amer Group, which planned on buying 101 million of its shares, according to an exchange statement.
Radwan told The Associated Press additional measures may be put in place if needed.
“We’ll do what it takes to have a safe opening,” he said.
Sfakianakis said he believes the selloff was “healthy” because too much selling pressure had been built up due to the market’s prolonged closure.
“Steam has to be released,” he said, adding that further declines are likely in the coming days.