CAIRO, (AP) – Egypt’s stock market pared early gains on Monday, retreating sharply from a market-opening rally linked to bargain hunters snapping up shares that had been heavily sold off over the past couple of sessions.
The broader EGX100 index had surged 5 percent within the first 15 minutes of trading, triggering a 30 minute suspension of trading for the fourth consecutive session. The benchmark EGX30 index climbed roughly 7.2 percent before trading was halted. It slumped, however, with the resumption of trading and was up just 0.84 percent by 12:15 p.m. Cairo time, according to the Egyptian Exchange’s Web site.
“There’s a cooling as people re-evaluate their holdings, especially those who were buying aggressively,” said Ahmed Hanafi, head of research at Gothour Trading.
The retreat from the earlier gains was a marked shift from Sunday’s rally, the first since the market restarted after halting operations on Jan. 27 as protests that eventually ousted former President Hosni Mubarak gathered momentum.
Traders said foreign investors have been particularly active. Khaled Naga, a broker with Mega Investments said foreigners were the main drivers behind the early gains on Monday and that institutions appeared to be shifting away from their earlier focus on dumping stocks.
Hanafi, meanwhile, said the heavy presence of foreign buyers was surprising, considering that they had not been this active before the start of the Jan. 25 revolution.
“There’s a lack of transparency,” he said, arguing that it was not entirely clear which of the institutions were buying. “We need some clarity on this.”
The exchange’s restart since then was delayed several times as officials set up mechanisms to safeguard the market, such as “circuit-breakers” if the EGX100 hits 5 percent and 10 percent, and looked to make sure that officials and businessmen under investigation for alleged corruption were not able to liquidate their holdings.
The links behind these individuals and some of the country’s biggest blue chip companies sharply eroded buying sentiment in the first couple of days, prompting many to dump shares even as the companies scrambled to distance themselves from the investigations.
Commercial International Bank, the country’s biggest lender, was down over 2 percent to 31.30 pounds after an earlier spike of 9.97 percent. Orascom Telecom, which had climbed 9.91 percent early in the trading session, was up just 0.47 percent to 4.26 pounds. Telecom Egypt slipped to a 2 percent gain after having hit its 10 percent upper limit earlier in the day. Its shares were at 16.32 pounds.
Still firmly in the red was Ezz Steel, the company whose chairman, Ahmed Ezz, is among the most high profile businessmen and former party officials facing criminal charges. Ezz’s shares were at their 10 percent limit down early in the day, at 11.62 pounds.
Egyptian retail investors had yet to step back in heavily in the market, an absence traders said was attributed in no small part to the heavy losses they had sustained in two consecutive sessions before the market closed on Jan. 27. The benchmark index had shed over 16 percent in those two sessions.
Hanafi said the Egyptian buyers who were stepping into the market were playing around with portfolios of between 50,000 pounds to 150,000 pounds ($8,400 to 25,200) — a far cry from the multimillion pound investments that had been pumped into the market before the uprising.
“The Egyptians already lost heavily,” he said. “There’s no fresh money they can use to buy.”
The benchmark index had closed around 5 percent higher on Sunday, moving part way to reversing earlier losses accrued over the two trading days last week.
Traders had expected a measure of volatility in the market, arguing that a clearer picture would likely not emerge before midweek when investors who were looking to free up capital eased back and more aggressive buyers stepped in.