Middle-east Arab News Opinion | Asharq Al-awsat

Egypt shares jump nearly 7 percent after Mursi named president | ASHARQ AL-AWSAT English Archive 2005 -2017
Select Page

CAIRO (Reuters) – Egyptian shares surged nearly 7 percent on Monday after the Muslim Brotherhood’s Mohamed Mursi was named as the country’s first freely elected president, boosting hopes for a violence-free transition from army rule.

The benchmark index was up 6.8 percent by 6:20 a.m. EDT – and share trading was suspended briefly after the broader EGX 100 rose 5 percent, its daily limit – after Mursi’s win was announced on Sunday. The news sparked a night of jubilation among Brotherhood supporters massed in Cairo’s Tahrir Square.

Traders, however, were cautious, saying the market euphoria could quickly evaporate if the new president cannot form a government with broad political support.

“I wouldn’t judge the market on one day. Let’s wait for the rest of the week. One more speech and the market could drop,” said Osama Mourad, CEO of Arab Finance Brokerage.

The market fell 10 percent over the course of the election on fears it could be derailed or marred by violence. But voting, and the announcement of Mursi’s win against Ahmed Shafik, ousted leader Hosni Mubarak’s last prime minister, passed off peacefully.

“The market is celebrating the lack of violence around this result,” said Mourad. “The market was afraid of clashes on the streets.”

Yields on short-dated treasury bills offered in Egypt’s small secondary fixed-income market fell by 5-10 basis points, a currency trader said.

Egyptian credit default swaps were at 705 basis points, down from 722 on Friday, a 3-1/2 year high, according to Markit.

Treasury yields have touched their highest in at least 15 years at recent auctions on worries that months of political paralysis could continue beyond the election, making it harder to revive a moribund economy and lure back foreign investors.

The military generals ruling Egypt since the overthrow of Mubarak have promised to hand power to an elected civilian but many Egyptians believe they want to protect their own interests beyond the democratic transition.

Those suspicions seemed confirmed when the military, acting on a court ruling, disbanded the Brotherhood-led parliament on the eve of the June 16-17 election run-off then assumed legislative power and took more control over the drafting of a new constitution.

The army’s acknowledgement of Mursi’s close win over Shafik shows it is willing to concede at least some power to its long-standing adversary the Brotherhood, but traders say the market gains will only hold if Mursi’s government is able to garner broad political support.

“It is very much dependent on the next steps the president takes, what the government will look like and how he will deal with the military council,” said a currency trader in Cairo.