By Tarek Al-Issawi and Mahmoud Kassem - Oct. 7 (Bloomberg)
Egypt's main stock index, open for the first time after a week-long holiday, had its biggest drop since the index was created in 1998 as global markets plunged on the deepening credit crisis.
Orascom Construction Industries, the largest publicly traded builder in Egypt, tumbled the most on record, according to data compiled by Bloomberg. Orascom Telecom Holding SAE slumped to its lowest since 2005.
``There's a lot of pent up selling because during the time the market was closed the global markets were very volatile,'' said Simon Kitchen, an economist at EFG-Hermes Holding SAE, the biggest publicly traded investment bank in Egypt. ``There's plenty of irrational selling as well.''
Egypt's benchmark CASE 30 Index tumbled 16 percent to 5,894.87 at 2:22 p.m. local time, according to the bourse's Web site. The measure is heading for its biggest drop since its inception and recorded the largest fluctuation among national markets included in global benchmarks.
Emerging market stocks yesterday fell the most in at least two decades and exchanges in Brazil and Russia were forced to halt trading as the global banking crisis escalated in Europe and oil fell below $90 a barrel. The MSCI Emerging Markets Index slumped 9.5 percent, the biggest intraday loss since 1987 when Bloomberg records began. The MSCI World Index has dropped 9.2 percent this month.
In Cairo, stocks that fell more than 10 percent were suspended for half an hour. Security has been increased around the stock exchange building in downtown Cairo as a precautionary measure against possible protests, an Interior Ministry spokesman said on condition of anonymity. Egypt's CASE 30 has declined 44 percent this year amid record inflation in the Arab world's most populous country. Inflation accelerated to an annual 23.6 percent in August, the fastest pace since 1992.
Orascom Construction fell the most since March 1999, losing 66.23 Egyptian pounds, or 21 percent, to 250.25 pounds. Orascom Telecom, the biggest mobile-phone company in the Middle East, retreated to its lowest since February 2005, losing 3.8 pounds, or 9.4 percent, to 36.35 pounds.
``The slowdown in European growth will impact Egyptian exports and services such as tourism,'' said EFG-Hermes' Kitchen. ``Tourism and flows of foreign investment will also weaken.''
EFG-Hermes forecasts the Egyptian economy will expand 5.7 percent in the fiscal year that ends June 2009 from 7.2 percent the previous year, Kitchen said.
The country's economy has been boosted by international investment since a new Cabinet was appointed in 2004 that made doing business in Egypt easier by undertaking such measures as cutting taxes and custom tariffs.
Egypt's market was closed from Sept. 30 for the Eid al-Fitr holiday and Armed Forces Day. Eid al-Fitr is the three-day celebration that follows Ramadan, the month when Muslims fast from sunrise to sunset.