Egypt’s stock
market fell sharply early on Monday, sliding below major technical support, as
leading property firm Emaar Misr sank after listing on Sunday. The Saudi market
also dropped because of lower oil prices and the turmoil in Greece.
The Egyptian
stock index tumbled 2.3 percent in the opening minutes to 8,026 points, below a
band of strong technical support between 8,125 and 8,261 points, the December
and May lows.
Any clean break
of this support — at least two daily closes — would be very bearish,
triggering a triangle pointing down into the 6,800-point area in the longer
term.
The market has
been hit by a string of concerns over the past month, including foreign
exchange and energy shortages, bloody clashes with militants in the Sinai, and
the central bank’s decision to let the Egyptian pound resume depreciating
gradually.
Also hurting
sentiment this week was the disappointing debut of Emaar Misr, the Egyptian arm
of Dubai’s Emaar Properties .
After a heavily
oversubscribed initial public offer at 3.80 Egyptian pounds, the stock came
under heavy selling when it listed on Sunday; its volume weighted average price
was 3.94 pounds and its last trade was
3.75 pounds.
On Monday the
stock plunged 8.9 percent in early trade to 3.59 pounds, indicating gloomy
investors were willing to bail out at levels even below the IPO price. Before
the IPO, analysts put fair value for the stock at around 4.70 pounds.
Another big
real estate developer, Palm Hills Development , tumbled 6.3 percent.
Meanwhile the
Saudi stock index fell 0.5 percent as miner Ma’aden dropped 1.2 percent. Some
blue chips held up well, however, with petrochemical producer Saudi Basic
Industries edging up 0.04 percent.
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