CAIRO - Driven by foreign selling, Egyptian stocks fell on Wednesday, ending a four-day losing streak as investors were gripped by panic on a loud explosion, traders said. Tension in the Red Sea port of Suez also boosted the bearish sentiment, they added.
The Ministry of Interior said that a sonic boom from an overflying aircraft was the cause of the explosion. Arabs and non-Arabs made net sell-offs worth LE2.2 million and LE3.2 million respectively, according to Bourse data. Locals made net purchses worth LE5.4 million ($900,000 million). The country's benchmark index EGX 30 shed 2.17 per cent to 5,320.51 points. The broader indexes EGX 70 and EGX 100 fell by 2.95 and 2.52 per cent to 612.11 and 950.29 points respectively. Volume exceeded LE469 million, according to Bourse data. Egypt's heavyweight Commercial International Bank (CIB) plunged by 2.14 per cent to LE29.33 per share. EFG-Hermes, the country's biggest investment bank by market value, lost 0.54 per cent to LE20.41 per share. Orascom Construction Industries slipped by 1.86 per cent to LE269.23 per share. Orascom Telecom, the largest Arab mobile operator by subscribers, shed 2.16 per cent LE4.08 per share. Mobinil fell by 1.01 per cent to LE123.68 per share. Telecom Egypt added 0.73 per cent, closing at LE16.47 per share. Talaat Moustafa, the country's biggest listed builder, slid by 4.73 per cent to LE4.83 per share. Globally, the downgrading of freshly bailed-out Portugal's credit rating to "junk" shocked financial markets and cast new doubt on European efforts to rescue distressed euro zone states without debt restructuring, Reuters reported. The cost of insuring all weaker euro zone countries' debt against default rose and Portuguese two-term bond yields spiked by a whole percentage point on Moody's decision, announced late Tuesday, to cut Portugal by four notches. The euro and European shares fell on the news, ending a seven-day stocks rally, and Portugal had to pay more to sell three-month T-bills. The thumbs-down, coming so soon after a new center-right Lisbon government announced austerity plans going beyond those demanded by international lenders, again called into question the EU strategy for dealing with the eurozone sovereign debt crisis. Moody's said Portugal may need a second round of rescue funds before it can return to capital markets, just as European governments and banks are haggling over a second 120 billion euro bailout for Greece, which has a much higher debt ratio. "The key worry of the market is that the events that we've been seeing with Greece are being repeated with Portugal," said WestLB rate strategist Michael Leister. Ireland, the other eurozone country to have received a bailout, said Tuesday it may have to make additional spending cuts next year to meet deficit reduction targets in its 85 billion euro bailout plan due to an economic slowdown.
