Egypt plans to resume stock trading after an almost two-month halt as recovering global markets and rules aimed at limiting declines provide support amid concern that weeks of protests may have hurt the economy.
Egyptian shares tumbled in New York and London yesterday, with the Market Vectors Egypt Index ETF (EGPT), a U.S.-listed fund that holds Egyptian stocks, retreating 5.7 percent and London-listed global depositary receipts of Orascom Construction Industries, the country’s biggest publicly traded builder, down 4.5 percent. The exchange won’t allow daily share moves to exceed 10 percent.
Analysts downgraded 10 of the 30 companies on the benchmark EGX 30 Index since the end of January and the government forecast economic growth will slow following the riots that led to the fall of former President Hosni Mubarak’s regime. Stocks may be bolstered by a rally in global markets that has continued amid unrest in the Middle East and Japan’s worst earthquake on record. Investors have also been encouraged by constitutional changes in Egypt to allow presidential elections by year-end.
“While there have been positive developments on the political side, the protests in Egypt did take a toll on the economy,” said Yong Wei Lee, who helps oversee about $1.2 billion as a senior fund manager at Emirates NBD Asset Management in Dubai. “It’s too early to consider bargain hunting. The Egyptian market will remain volatile for a while
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