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| Traders work at the Egyptian stock exchange building in central Cairo yesterday. Cairo’s index surged 7.6%, its largest single-day rise since February 2003, after Morsi’s win was announced on Sunday, which boosted hopes for a violence-free transition from army rule. The rally is also the fourth biggest gain in the index’s 14-year history |
Egyptian shares made their largest one-day gain in more than nine years after the Muslim Brotherhood’s Mohamed Morsi was named as the country’s first freely elected president, while most Gulf markets slipped amid weak global cues.
Cairo’s index surged 7.6%, its largest single-day rise since February 2003, after Morsi’s win was announced on Sunday, which boosted hopes for a violence-free transition from army rule.
Yesterday’s rally is also the fourth biggest gain in the index’s 14-year history.
Traders, however, were cautious, saying the market euphoria could quickly evaporate if the new president cannot form a government with broad political support.
“I wouldn’t judge the market on one day. Let’s wait for the rest of the week. One more speech and the market could drop,” said Osama Mourad, CEO of Arab Finance Brokerage.
The market fell 10% over the course of the election on fears it could be derailed or marred by violence. But voting and the announcement of Morsi’s win against Ahmed Shafik, ousted leader Hosni Mubarak’s last prime minister, passed off peacefully.
“The market is celebrating the lack of violence around this result,” said Mourad. “The market was afraid of clashes on the streets.”
Treasury yields have touched their highest in at least 15 years at recent auctions on worries that months of political paralysis could continue beyond the election, making it harder to revive a moribund economy and lure back foreign investors.
Meanwhile, in Saudi Arabia, the index fell 0.9% in its third straight loss as weak global markets and declines in oil prices weighed on sentiment.
It trimmed year-to-date gains to 4.1%, losing most of the 23.8% surge during January and early April.
“The news internationally continues to be bad and there are demand concerns from Western and emerging markets, which are causing investor fear,” said Muhammad Faisal Potrik, research analyst at Riyad Capital.
Equities hit a one-week low and Spanish borrowing costs rose yesterday as investors worried that policymakers at a European summit this week would make little progress in solving the debt crisis that is hurting world economic growth.
Analysts expect lower petrochemical prices for the quarter to weigh on upcoming earnings of related stocks, but impact will be mitigated by lower feedstock prices available for Saudi companies.
Petrochemical stocks fell with bellwether Saudi Basic Industries Corp and Saudi Kayan Petrochemical down 1.1 and 1% respectively.
Newly-listed Alinma Tokio Marine dropped 8.4% on the second day of trading after its share price jumped to as much as 100 riyals on Sunday, compared to a 10 riyals initial public offer price.
Elsewhere, UAE bourses ended mixed as volumes in Abu Dhabi slumped to a one-week low.
Dubai’s index slipped 0.3%, moving within a range of 80 for the past six weeks. Abu Dhabi’s index ticked up 0.3%.
“Gulf markets have been inflicted with the summer lull - there’s a clear lack of direction despite some improvements in Greece’s debt situation,” said Sleiman Aboulhosn, assistant fund manager at Al Masah Capital.
Leaders of the three parties in Greece’s government will go to Brussels to try to win concessions from European partners over a bailout package as soon as Prime Minister Antonis Samaras recovers from eye surgery, one of them said yesterday.
In Kuwait, the index fell 0.7%, slumping to a fresh five-month low ahead of news the government had resigned.
The government submitted its resignation to the country’s ruler yesterday, a government source said, deepening a political crisis in the major oil exporter and US ally.
Last week a constitutional court ruling dissolved the 50-member parliament and reinstated the previous assembly.
Elsewhere in the Gulf, Oman’s index gained 0.1% to 5,662 points, while Bahrain’s measure ticked up 0.04% to 1,125 points.