CAIRO: Egypt’s stock exchange will reopen for trading on March 23, headed by Mohamed Abdel Salam, who will continue on as chairman of Misr for Central Clearing, Depository and Registry (MCDR).
Abdel Salam replaces former bourse chairman Khaled Serry Siam, whose resignation from this post was initially rejected by authorities for days, a source who spoke on condition of anonymity told Daily News Egypt.
According to a report on Egynews.net, Prime Minister Essam Sharaf tasked Abdel Salam with overseeing the stock exchange effective Sunday and for the next six months.
Karim Helal, Group CEO of CI Capital Holding, said Abdel Salam is a good choice to oversee the stock exchange for the coming period due to his knowledge of the market, its players as well as his technical background.
Abdel Salam was not available for comment until press time.
Cabinet spokesman Magdy Rady told state news agency MENA that the decision to reopen the market came after a set of measures were put in place to ensure “safe and smooth” trading.
Helal’s first reaction upon hearing the news was, “Finally.”
“Clearly there will be a big drop, from 10-20 percent due to the pent up selling pressure…but I honestly don’t think it will collapse,” Helal said.
Angus Blair, head of research at Cairo-based investment bank Beltone Financial, told Daily News Egypt he is “glad” that the market is finally reopening.
Asked if the firm had a strategy to deal with the first day of trading, Blair said, “We have to wait and see the reaction,” pointing to a set of strict measures put in place by officials to mitigate an anticipated drop.
Speaking to DNE in late February, Blair had stressed the need for the market to reopen as soon as possible, citing a loss in investor confidence the longer it is kept closed.
“It is the most open, transparent and best known market in the region…no matter what happens, it must open,” he said at the time.
Egypt’s stock market last traded on Jan. 27 after falling 16 percent and losing around $12 billion in two days of trading, the second biggest drop in its history.
Analysts have been expecting the market to reach fresh lows when trading resumes, but still have called for it to reopen swiftly in order to arrive at a new sense of normalcy from which to rebuild.
Sharaf called on Egyptians to contribute to supporting the stock market after its reopening.
Immediately after ousted president Hosni Mubarak stepped down, the market was expected to reopen to a certain level of optimism. However, it was kept closed after the sudden closure of banks due to workers’ strikes.
Since then the reason for its closure has been vague, ranging from fears of economic repercussions, to protests by smaller retail investors, to cabinet reshuffles.
MSCI has warned Egypt it risked exclusion from its emerging markets index if the exchange it did not reopen by March 24.
The benchmark EGX 30 fell some 21 percent since the start of January and the onset of a wave of contagious Middle East unrest, until it closed on Jan. 27, CI Capital said in a report.
In CI Capital’s assessment, the “EGX 30 is likely to fall to within a range of around 4582-3989 [points] upon its reopening. This equates to a 19-29 percent reduction from its current level of 5646.”
“An alternative method — using the GDR movements since Jan. 27 —suggests a 23 percent fall in the first two sessions.”
For investors, continued regional unrest in Libya, Yemen and Bahrain “casts a shadow of doubt on the MENA region, which will add to more selling pressure,” Helal said.
