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UPDATE 5-Egypt trading suspended as shares plunge after protests

Sun 22nd September, 2019 10:50am
(Adds foreign minister's comment on protests)
    CAIRO, Sept 22 (Reuters) - Trading on Egypt's stock exchange
was suspended on Sunday after the EGX 100  .EGX100  dropped by
5%, a fall that analysts linked to protests which broke out in
Cairo and other cities over the weekend.
    It was the first suspension for such a sharp move in prices
since 2016, when Egypt embarked on a three-year economic reform
programme backed by the International Monetary Fund, devaluing
its currency and undertaking austerity measures.
    "It is definitely due to the small escalation over the
weekend, which is making investors cautious," said Ashraf
Akhnoukh, director at Arqaam Capital in Cairo.
    He said sellers were mostly locals and Arab investors.
    When share trading was suspended shortly after 1030 GMT,
Orascom Investment  OIH.CA  had fallen by 9.89%, Ezz Steel
 ESRS.CA  sank by 9.91% and Pioneers  PIOH.CA  had dropped
9.65%.
    Orascom Construction  OC.DI  fell by 8.04% and Palm Hills
 PHDC.CA  lost 9.63%.
    Before the latest sell-off, Egyptian stocks had rallied this
year on the back of economic growth and a recent interest rate
cut. The benchmark index  .EGX30 , which shed 5.3% by close on
Sunday, was up 11.6% this year at the end of trading on
Thursday. It is now up 5.7% in the year to date.
    Yields on Egyptian treasury bills also slumped at an auction
on Sunday, with the average yield on 91-day bills declining to
15.627% from 16.221% a week earlier, and on 266-day bills to
15.052% from 16.484% two weeks earlier.
    Yields have fallen since the central bank cut overnight
interest rates by 150 basis points on Aug. 22.  urn:newsml:reuters.com:*:nL5N25I5M7  
    On Friday, hundreds of people demonstrated in central Cairo
and several other Egyptian cities against President Abdel Fattah
al-Sisi, responding to an online call for protests against
government corruption, witnesses said.  urn:newsml:reuters.com:*:nL5N26B5JF
    Small protests also took place in the city of Suez late on
Saturday. On Sunday Al Arbaeen square, where riot police had
fired tear gas at protesters, was closed to traffic, witnesses
said.
    Foreign Minister Sameh Shoukry, speaking on the MBC Masr
channel from New York where he and Sisi are attending the U.N.
General Assembly, said the protests lacked popular support.
    "Any positions that affect the internal situation are to be
rejected and I imagine that they will go down the drain because
these calls do not receive any kind of response in the domestic
arena," Shoukry said.
    Egypt's economic reform programme has won praise from
economists and helped reduce the current account and budget
deficits. In 2016 the stock exchange was suspended for a 5% rise
as investor confidence returned at the start of the reform
programme.
    But austerity measures including the introduction of a
value-added tax and higher energy prices have increased pressure
on Egyptians, many of whom live in poverty.
    Political protests have become rare due to a broad crackdown
on dissent under Sisi, whose popularity has been dented by the
austerity measures.
    Sisi's supporters say the crackdown was needed to stabilise
Egypt after the 2011 uprising that toppled former President
Hosni Mubarak. 
    Analysts said that although inflation has fallen recently,
weak market sentiment may have contributed to Sunday's sudden
drop in share prices.   
    "People are a bit unsure whether this is something small and
will pass or will snowball. I don't think anything will happen.
But (it) will change sentiment for sure," said an Egypt-based
banker, who declined to be named because they were not
authorised to speak to the media.   

 (Reporting by Ehab Farouk, Nadine Awadalla, Saeed Azhar, Hadeel
Al Sayegh, Patrick Werr and Yousef Saba;
Writing by Lena Masri and Aidan Lewis;
Editing Dale Hudson, James Drummond and David Evans)
 ((Lena.Masri@thomsonreuters.com; +447736465101))

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