Brokers' frustration as Egyptian exchange remains closed

Resumption of trading on the Egyptian stock exchange is delayed again, as the government orders trading bans on figures linked to the Mubarak regime.

Egypt's stock exchange said yesterday it would delay its reopening for a week as angry traders called for the stock market to resume operations sooner rather than later.

The exchange, which was closed on January 27 following a precipitous fall in market value as civil unrest broke out, will now remain closed until Sunday. The exchange had been expected to reopen today.

Resumption of trading was postponed "in order to allow investors to profit from the backing of the government to guarantee the bourse's stability", the country's state-owned news agency reported yesterday.

A statement posted to the Egyptian Exchange (EGX) said Dr Ahmed Shafik, the Egyptian prime minister, had "asserted the importance of resuming trading on EGX, as this would threaten the exchange's reputation, credibility and its ability to attract investors and companies on the long term".

The country's attorney general has issued a list of investors who are now forbidden to trade, as Egypt tries to trace the deposed Hosni Mubarak regime's financial holdings. However, a head of steam is growing among Egypt's investors eager to resume trading, with many businessmen complaining openly about the latest postponement.

Naguib Sawiris, the chief executive of Orascom Telecom Holding, told Bloomberg News the exchange's continuing closure was "unwarranted".

"There is a fear because of small investors who have been demonstrating in front of the Cairo stock exchange in masses and they put the fear into the management of the stock exchange," he said.

Fund managers and brokers said many investors were being prevented from withdrawing their money from funds to ensure the country's stock markets avoided heavy losses.

The EGX 30 Index fell 10.5 per cent at the onset of the country's civil unrest and is expected to fall further when trading does resume.

Egyptian stocks listed overseas have suffered greater losses. Shares of EFG-Hermes listed in London have fallen 26.3 per cent since the political upheaval erupted, while Orascom Telecom Holding's shares have declined 16.8 per cent.

Mostafa Abdel Aziz, a broker at Beltone Financial in Cairo, said he and a group of other brokers would protest against the exchange's prolonged closure, in opposition to those "who are afraid of the market reopening and losing a few bucks".

"At the end of the day, the economy of this country is at stake. We are annoyed at the immature demonstrators pressuring the government and the exchange," he said.

Other investors said a large backlog of investments, currently being investigated for evidence of assets owned by the Mubarak regime, could account for the delay.

"It's not really best practice to keep stock exchanges closed, but they've had a pretty tumultuous time," said Daniel Broby, the chief investment officer of Silk Invest, an investment manager in emerging markets based in London.