Egyptian Stock Exchange may be dropped from Morgan Stanley Index

Trading on the Egyptian Stock Exchange has been suspended since January. [Mohamed Abd al-Ghani/Reuters]

Trading on the Egyptian Stock Exchange has been suspended since January. [Mohamed Abd al-Ghani/Reuters]

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The Egyptian stock exchange is still shaking off the dust from the January 25 revolution, and stock trading has been on hold since January 27th.

Trading is expected to return before the end of the month, but the exchange faces the prospect of removal from the influential Morgan Stanley Capital International Emerging Markets Index.

Morgan Stanley set March 28th as the date when the Egyptian stock exchange will be removed from the international stock market records if the no-trade time limit, set at 40 consecutive sessions, is reached.

The Morgan Stanley Index is one of the most respected indexes as it provides guidance and a standard of comparison in emerging markets to aid investors. Global funds use it to determine whether they should invest in emerging markets.

"Failure to re-open the stock exchange will increase not only direct financial losses in the bourse, but it will also impact several sectors. The issue has affected Egypt's financial and economic reputation and the confidence of Arab and foreign investors who were beginning to feel optimistic after the departure of Hosni Mubarak," said Sami Abdel Nour, a financial analyst for a Cairo brokerage firm and a professor of economics at Ain Shams University.

He told Al-Shorfa that an international ranking for any stock market in the world is important because "it is the basic indicator that attracts or discourages investors". He said if the stock exchange is de-listed from the index, several large funds might leave Egypt.

Sayyed Abdel Ghani, a professor of economics at Ain Shams, was hopeful that stock trading would resume next Wednesday or Thursday (March 23rd or 24th) which would allow for trading for one or two days before it closes again Friday.

Abdel Ghani said there is close co-operation between three authorities – the General Authority for Financial Control, the bourse and the Egypt Clearing House – to decide on a date for the re-opening of the stock market and reduce anticipated losses when stock trading returns.

When asked whether some businessmen might manipulate the stock market in order to weaken it, Abdel Ghani, said, "This is possible, and many big names might do this. The only way to avoid this would be to provide evidence to the public prosecution to stop them from trading their stocks."

Abdel Ghani said some precautionary measures were taken against more than 150 Egyptian and Arab traders who were suspected of having connections with the former regime through financial and economic agreements. Punitive measures included freezing their funds and preventing them from travelling outside Egypt.

To compensate for possible losses Abdel Ghani said officials will seek help from the Egyptian Investor Protection Fund, a special fund that was created from insurance on stock market deals over five years and holds more than 830 million Egyptian pounds. The EIPF will help reduce losses during the first days of renewed trading, which he estimates will be 1 billion pounds.

"The initial shock will not last for more than two days, and the market and the investors will be able to absorb the shock of the return of trading," he said.

Mohammed Fathi, a financial company manager, said, "The future looks promising after the demands of the bourse employees to form a union were met. That was prohibited by the former regime."

He warned against the continuation of the closure of the stock exchange, saying this will reflect not only on financial dealings, but also on investments in general which "constitutes a direct risk to the economy, in addition to damage caused to a large segment of Egyptians who are involved in the stock exchange."

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    سلام محمد

    2011-3-28

    The Egyptian economy needs a lot of work to be developed and to recover, especially after the Revolution of Change witnessed by the country, which toppled the regime of Hosni Mubarak. And I think that the Egyptian economy needs elections to be held as soon as possible, in order to find a government able to manage economic affairs with great wisdom, in order to improve the Egyptian economy and to develop it again. I think that the Egyptian economy will gradually recover and improve. However, this development will require more time and greater efforts to put together the correct and suitable policies, in order to revive the economy through stabilizing the Egyptian Stock Exchange and the exchange rate of the Egyptian pound against other foreign currencies. Thus, despite all these requirements, I think that the Egyptian economy will witness a significant improvement that will benefit Egyptians and will improve their living conditions gradually.

  • علي الخاتم

    2011-3-27

    We certainly hope for the best in the next phase after the change and the great success of the Egyptian people in their demonstrations, which overthrew the Pharaoh of injustice, corruption, bribery and destruction of the country and the citizens. We need to look ahead and join hands together to develop our beloved country, to help the poor and the needy and to improve the economic situation. The new government should take notice of the issue of the economy, and it has to increase investment and attract investors by facilitating all things and removing obstacles, as well as preventing bribery and nepotism in order to create a strong and fair economy. So I think that the economy should be improved, because it is the real base of the development of the country. But we should not think that improving the economy can be achieved overnight. This is not realistic, because the country needs time to get over the effects of the past and to form a government that represents the country in international conferences and can be present officially, to be able to sign agreements and investments. Without such a government, we will not be able to improve the economy. It is important now to form a government, after holding elections in the country, to be able to do its work.

  • محمد المساعيد

    2011-3-27

    I expect that things in Egypt are going as desired by the Egyptian people, and now we are on the verge of building a new, modern state based on freedom, fairness and democracy. If we keep these gains of the revolution, things will certainly change and the Egyptian economy will recover, because Egypt is one of the largest countries in the Arab world and it has a strong relationship with all the Arab and Western countries. Many investors like to invest in our country, because there are many areas of opportunity as well as openness and a workforce available in abundance. There is also accumulated experience and other things that make us believe and assert that the economy in Egypt will change very quickly, along with the changes in other areas. The new government will be elected by the people to first take care of raising the standard of living, which has been very low due to the policies practiced by Hosni Mubarak and his retinue. We know the extent of corruption which this regime has left behind, that devastated the country's economy and created large differences among the classes of people.

  • شاكر سلطان

    2011-3-27

    After the efforts of the Egyptian people achieved victory and brought about political reform in the country, through the strenuous efforts made by the people during the demonstrations and sit-ins, which lasted more than fifteen days, and the success of the revolution of the people, and now that the Egyptian army has received power in Egypt and the affairs are stabilized, it has become necessary to prepare for general elections in the country as soon as possible, to bring Egypt out of the recession experienced at the present time and the formation of a national government through democratic and free elections to fill the constitutional vacuum and to prevent predators and opportunists of the revolution. There should be a process of construction and reconstruction, as well as economic development, that have been stalled since the outbreak of the events in Egypt, which had a significant impact on the economy of Egypt at home and abroad. I believe that the Egyptian people will be able to overcome this ordeal peacefully and promote the economy to a better position than it was in before. They enjoy high motivation and a patriotic spirit and love for their country, and this gives them the strength and determination to continue to work day and night to restore Egypt to advancement and excellence in the world, as it was in the past.

  • سليم نصير

    2011-3-27

    The people of Egypt today are in dire need of awareness of and attention to the schemes of the delinquents who exploit positions and fish in troubled waters. They are haters of the freedom and democracy sought by the oppressed people who have suffered from injustice and oppression. There are always certain types of people who exploit others' efforts and sacrifices. So the Egyptian people should pay attention to this group and face the difficult circumstances with courage and absolute faith that God is the Helper, and that in every hardship there is a way out. One of the most important factors that led to the success of the revolution in Egypt is the cooperation of the Egyptians and their love for each other, as well as their love for their country, Egypt. In order to reflect this love, it should be turned into real work and perseverance to build and reconstruct the country's economy, to restore its position among the countries of the region and the world. This brilliance and advancement of the Egyptian economy cannot be restored except through the sacrifice of the people and their cooperation in the economic reconstruction, depending on God's words, "And We desired to show favor unto those who were oppressed in the earth, and to make them examples and to make them the inheritors.” So the people of Egypt should prove to the world that they are like mountains that are not budged by wind and storms, as they have the strong determination of cohesion for the development of the economy as quickly as possible and working to change the way of life for the better in all areas. They need to eradicate corruption and laziness and begin to prepare for the new Egypt, owned by its people, who are able to forge a bright future and forget the past; and, as the Earth cannot be stable without the mountains, communities cannot rise without good people who are keen on the comfort of other people and the application of justice.

  • عبدالله الريس

    2011-3-27

    After the successful revolution of the young people of Egypt against the dictatorship that caused pain and trouble for the people over thirty years, it has become necessary for the people of Egypt to maintain and promote the country through popular cohesion with those in charge of the country to achieve the dream of reform and change and the advancement of the economy for the better in the country. Everyone should do his/her best to reveal wrongdoing in all aspects of service to eliminate corruption, deviation and foot-dragging in all state institutions throughout Egypt by self-sacrifice to raise Egypt's position in the international arena, to where it was before. The Egyptian masses should seek the advancement of the country for the best, so that all the Arab and Egyptian people can live free and independent of the domination and slavery practiced by authoritarian regimes with a tendency to dictatorship over people everywhere. Egypt should remain at the forefront of prosperous countries in the region. The Egyptians should preserve the revolution that reflects the fruit of the efforts of all honest people of Egypt, as a symbol of loyalty and respect for the blood of the martyrs that was shed on its pure soil. They must make every effort to hold the election process in order to form a national government of the people, in order to adopt the process of development and keep pace with the development plans and programs to improve the Egyptian economy for the better. They need to seize every opportunity and employ it in order to rebuild the economy, which suffered a downturn during the events that took place in the days of the public demonstrations for change. They must redouble their efforts for the economic reconstruction of Egypt, according to modern methods and through the coming together of all people, in order to overcome the ordeal experienced by the country. In the coming period, all energies should be motivated to continue working to promote the reality of the economy and overall development in the country as soon as possible.

  • mudther

    2011-3-26

    As far as I am concerned, the Egyptian economy will witness a considerable improvement, especially since the revolution in Egypt was mainly due to the bad economic situation in the country. Therefore, I think that the new government, the protesters and their representatives know that the economy will be one of the first steps that will be granted priority in improving the country’s situation and that of the poor citizens. Certainly, people will play an important role in improving the economic situation. In fact, people’s opinions will be considered, since the era of marginalization and negligence of citizens and specialists’ opinions is over, and this paves the way for a new era, where everyone will take part in making the decisions for the benefit of the country. However, if we take advantage of experienced people, especially since we have many of them, and if we hold conferences every time in order to hear the youth’s opinions and support the thoughts and projects of the skilled and ambitious youth, such projects may become a high source of income for the state. If we increase productivity very much, deny personal interests and ensure a high level of control, we will restore discipline to the Egyptian market, ban the monopoly in producing goods, and stabilize prices. Thank God, all the Egyptian youth are aware of these issues. If the latter are implemented, the Egyptian economy will become a strong international economy in the first move made by the people to make economic reforms, so that it will be an example for the whole world and for poor countries.

  • احمد محمود

    2011-3-21

    What is your opinion regarding taking only 10 pounds from all government employees and pensioners for one month as a popular contribution in order to support the stock exchange? We can secure about 200 million pounds, because we have about 20 million employees and pensioners. I think this is a good sum, if it is not more than this number.