Text size:

  • Small
  • Normal
  • Large
Egyptian share prices plunged yesterday in the first session since the president Mohammed Morsi sparked a crisis by expanding his powers. Asmaa Waguih / Reuters
Egyptian share prices plunged yesterday in the first session since the president Mohammed Morsi sparked a crisis by expanding his powers. Asmaa Waguih / Reuters

Cairo stocks plunge on 'Black Sunday'

Almost US$4 billion was wiped from the value of Egyptian shares as markets reacted to the expansion of powers by the president Mohammed Morsi.

Almost US$4 billion (Dh14.69bn) was wiped from the value of Egyptian shares as markets reacted for the first time to the expansion of powers by the president Mohammed Morsi on a dire trading day quickly dubbed "Black Sunday".

The stock market suffered its sharpest intraday drop since last year's revolution, after clashes broke out in Cairo's Tahrir Square overnight.

Judges have called for a strike in protest against the decrees, which were announced on Thursday, that put the president's powers beyond judicial review.

With tension rising in the country yesterday, the EGX30 Index sank 6 per cent upon opening, resulting in a half-hour trading suspension.

The halt did little to calm brokers' nerves when trading resumed, however, with the market measure closing down 9.5 per cent at 4,917.73, its lowest level in four months.

In a nod to Wall Street's 1987 Black Monday crash, yesterday was immediately dubbed Black Sunday by Egyptians using the social networking site Twitter.

"We're not the same Egypt. Investors know that Morsi's decisions will not be accepted and that there will be clashes on the street," Osama Mourad of Arab Financial Brokerage told Reuters.

Orascom Construction Industries, Commercial International Bank and Orascom Telecom Holding led markets lower, with not a single stock rising.

Egypt's borrowing costs rose to the highest level in six weeks at an auction of treasury bills by the central bank. The government raised 3.5 billion Egyptian pounds (Dh2.09bn) through the sale of nine-month bills with an average yield of 13.19 per cent.

Violence returned to Tahrir Square, the focal point of the revolution that overthrew Hosni Mubarak from the presidency in February last year, as protesters clashed with security forces on Saturday night.

Opposition groups have called for 1 million people to march tomorrow against Mr Morsi's assumption of increased powers.

Underscoring the fragile situation, bomb blasts hit two security bases in the Sinai peninsula on Saturday, Reuters reported. The blasts injured three people.

Last week, Egyptian investors breathed a sigh of relief after the country's government said it had reached a $4.8bn standby agreement with the IMF, after more than a year of talks.

Egypt's generals had previously turned down a $3bn rescue package in June last year. Since then, the country's foreign reserves had dwindled steadily.

The announcement of a ceasefire agreement between Israel and Hamas, ending the seven-day conflict in Gaza, also helped to drive a substantial relief rally last week.

But Mr Morsi's move could exacerbate existing divisions among Egypt's fractious political factions, said Alia Moubayed, the regional director of research at Barclays Bank.

"The expansion of presidential powers may be perceived of investors as deepening the political divides which may threaten social peace and undermine economic stability and therefore raise Egypt's risk premium," she said.

"There is also perception that such a step aggravates the confrontation between the executive and the judiciary, undermining the latter's independence and threatening legislative stability." It is unclear whether Mr Morsi will reverse his position, Ms Moubayed added.

"The lack of clear exit strategy or national dialogue to address the grievances of various political factions does not bode well for a quick resolution of to the current political deadlock, but ultimately Egyptians are bound to find a way to resolve their differences to move forward with their transition."

Adding to the gloom on regional markets, the Saudi Tadawul All-Share Index fell 2.1 per cent to 6,524.15, a 10-month low for the Arabian Gulf's biggest market.



Back to the top

More articles

Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 A sign points the way to an outdoor market popular with German visitors on the Polish side of the German-Polish border. Sean Gallup / Getty Images

In pictures: A decade since the European Union went east

May 1 will mark 10 years since the European Union expanded east, taking in countries like Poland, the Czech Republic and the Baltic states as new members. And though the border region between Germany and Poland is flourishing with trade and cultural exchange, the open border has also brought a sharp rise in crime.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National