The Egyptian stock exchange maintained its stability last week, with results analysts said reflect investor confidence in the exchange.
They predicted that the political talks held at Al-Azhar, among other events, will lead to gains in next week's trading.
"EGX 30, the main index, dropped only 1.4% at the end of trading last week, and that is a very normal percentage drop that any market could experience under normal conditions," said Mustafa Fakher, chairman of the board of directors at the Giza Financial Brokerage Company.
Trading ended Thursday (January 31st), with a gain of around 2.8 billion pounds ($417 million) in market capitalisation compared to Wednesday, the Egypt Independent reported.
While investors leaned slightly towards selling this week, Fakher said, "the expected exodus out of the market in reaction to the political crises was not large, in fact it was small, reflecting investor confidence in the Egyptian capital market and its ability to withstand crises."
Fakher said the periodic review of the exchange for 2012 was announced this week, and it included several changes: six companies were removed from the main index, EGX 30, and six were added; 14 companies were removed from EGX 70 and at least five added, and nine companies were removed from EGX 100.
Dr. Mahmoud Sultan, economics professor at Cairo University, told Al-Shorfa the exchange's performance "indicates that, despite the tension in the street, it concluded trading on the last day of the week on a high".
This high coincided with the meeting held at Al-Azhar that brought together rival political forces, which agreed on the need to stop the violence in the street and to reach a peaceful solution that suits all parties, he said.
Egypt's Central Bank also approved the bid of Qatar National Bank (QNB) to acquire a majority stake in the National Societe Generale Bank (NSGB) in Egypt, and investors are now moving to snap up profits, according to Sultan.
"In this move, observers and analysts see significant support for banking sector stocks and an injection of more liquidity in the Egyptian market, which explains the general stability of bank stocks in the stock market," he said.
On Wednesday, Fitch Ratings cut Egypt's sovereign credit rating a notch, from B-plus to B.
Financial analyst Sami Abdel Nour, an economics professor at Ain Shams University, said the downgrade "has had an inconsequential and negligible impact [on the stock market]. The indicator absorbed the downgrade and resumed its rise in the last days of the week".
In addition, the agreement the Egypt stock exchange signed with an international stock exchange in January has inspired great confidence in the Egyptian financial market among capital investors, he said.
"The exchange and it stocks will get a respite once the dark political cloud is lifted," Abdel Nour said, and if political calm continues, "the main index is expected to rise".