Election worries hammer Egypt stocks; Gulf mixed

Egypt’s benchmark slumped to a 19-week low yesterday as further protests ahead of this month’s presidential run-off spurred nervous investors to sell. The index dropped 2.3% to its lowest close since January 26. Orascom Telecom fell 4.3%, Orascom Construction lost 2.2% and Commercial International Bank dipped 1.8%. Crowds gathered in Cairo’s Tahrir Square to protest for a fourth day against verdicts in the trial of ousted President Hosni Mubarak, which activists say showed his old guard remain in charge. The presidential run-off, scheduled for June 16-17, pits Mubarak’s last prime minister against the Muslim Brotherhood’s candidate. With the choice polarising and dividing Egyptians - many of whom voted for centralist candidates - victory for either contender could spell further instability. “The market is just reflecting the political situation and the economic worries,” said Osama Mourad of Arab Finance Brokerage. “We are moving towards the anticipated transfer of power from the military council to a civilian president and this should be met with optimism in the ideal scenario. But there is so much mistrust that the worries overshadow the optimism.” Gulf Arab markets again took direction from global bourses, with a positive Asian session spurring gains on some bourses before renewed jitters in Europe returned to hurt Saudi Arabia. “It’s a case of follow the leader,” said Julian Bruce, EFG-Hermes’ director of institutional equity sales. “If Europe weakens later, the US comes off a bit and oil goes down again, we’ll give it all back again tomorrow.” Saudi Arabia’s index slipped 0.5%, having been up 0.4% intraday, to snap a two-day rally that followed Saturday’s four-month low. Trading was subdued, with only one session in the past four months - May 27 - seeing fewer shares change hands. Earlier-closing Gulf markets fared better, with Abu Dhabi snapping an eight-day losing streak as it climbed 0.5% to ease away from Tuesday’s four-month low. Aldar Properties and Sorouh Real Estate were the main supports, rising 3.9 and 4.2% respectively after accounting for more than half of all shares traded. The pair is in merger talks. “There was a late rally on Aldar and Sorouh, likely on merger speculation,” Bruce said. “However, this is probably getting ahead of one’s self as the advisers have only just been appointed and they won’t have had chance to kick the tyres yet.” In Dubai, the bourse rose 0.9%, while Kuwait and Oman made gains for a first session in four. Kuwait’s Agility, which on Monday said it had bought a 62% stake in United Projects for Aviation Services Co and would table an offer for the remaining shares, jumped 5.5%. UPAC rose 6.6% to 0.405 dinars ($1.44), its highest close in 15 months. Agility has offered 0.320 dinars per share for the outstanding 38%. In Oman, the index rose 0.8%. HSBC Bank Oman climbed 2.1% - a five-week high - and Bank Muscat gained 2%. Elsewhere in the Gulf, Kuwait’s measure climbed 0.6% to 6,130 points, while the Bahrain measure slipped 0.3% to 1,131 points.