x Abu Dhabi, UAEMonday 24 July 2017

Investors sell Orascom before bourse reopens

Markets showing concern about Egypt bourse reopening.

International investors are selling Egyptian securities in advance of the country's bourse reopening on Sunday.

London-traded shares of Orascom Construction Industries sank to their lowest since January 31 and Egyptian bonds fell on concern political unrest in the north African country would not improve before the exchange opened.

The global depositary receipts (GDRs) of Egypt's largest publicly traded builder tumbled 6.5 per cent to US$36 in early trading in London. The shares have slumped 15 per cent in the past three days after climbing early in the week. The London-traded equities are trading at a discount of 7 per cent to local shares.

"There is fear that the local market in general will tumble" when it opens as political unrest in the country continues, said Muhammad el Ebrashi, an analyst at Commercial International Brokerage in Cairo. "Shares are falling as investors want to close the gap between the GDRs and the local shares."

GDRs are falling and bond yields are rising.

Ahmed Aboul Gheit, Egypt's foreign minister, said this week it would take four months to change the country's constitution. The comments came after the Obama administration criticised the government for not sufficiently addressing the demands of protesters, who seek to end the 30-year rule of Hosni Mubarak, the president.

The yield on Egypt's 5.75 per cent dollar bond maturing in April 2020 gained 6 basis points to 6.65 per cent yesterday, the highest since January 31, according to Bloomberg composite prices.

The cost of insuring the nation's sovereign debt dropped less than 1 basis point to 354, from yesterday's close in London, according to CMA prices. The Egyptian pound was little changed at 5.8798 per US dollar.

Egypt cancelled its 4.5 billion pound bond sale for this month and decided instead to raise the money in treasury bills.

Egypt's stock exchange will cut the trading hours by one to three hours and suspend the so-called daily discovery session when it resumes operations.

* with Bloomberg