Business

Egypt stock market halts trading minutes after reopening

An Egyptian family walks past the closed Egyptian stock exchange building
Image caption The exchange in Cairo was expected to fall after being closed for two months.

Egypt's stock exchange tumbled 10% within minutes of reopening after being closed for nearly two months.

But trading was then suspended, in line with regulations designed to halt a financial meltdown.

The market had been expected to fall, as investors reacted to the economic turmoil wrought by the uprising and ousting of President Hosni Mubarak.

Several leading businessmen are under investigation for corrupt practices under the previous regime.

The market had been shut since 27 January and had lost 18% in the two trading days before closure.

The decision to reopen was seemingly forced by the rules of the Morgan Stanley Capital International Index (MSCI), a benchmark which tracks the value of global stockmarkets and is widely used by international investment funds.

If the reopening had been delayed a day longer, Egyptian companies would have been automatically excluded from the MSCI, forcing many foreign investors to sell their stakes at the first opportunity.

The government has taken a number of steps to support the market, including:

  • a shorter trading day for the first week
  • an automatic trading suspension if the market falls by 5% or 10% within the same day
  • a 250m Egyptian pound ($42m, £26m) government fund that can be invested in the market.

The bourse's chairman resigned before the reopening and a temporary replacement chairman has been appointed for the next six months, according to a decree by the country's new prime minister, Essam Sharaf.

Investors are concerned by the damage to tourism and foreign investment caused by the political uncertainty and the violence seen during the transition.

Many big Egyptian companies may also be hit by their links with the old regime and by workers demanding higher wages and permanent contracts.

Strikes have closed many banks during recent weeks.

The reopening had been delayed at least five times because of the continuing turmoil.

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