The Egyptian stock market drama
*Scroll Down for Updates* Ok, so after this whole thing that happend earlier on today, the people running the stock exchange decided to re-open it at 1:30 (regular session is from 11:30 to 3:30), where the market rebounded slightly, or at least it didn't continue its free fall. So the session ends on a somber note, except that the head of the Stock Exchange "Maged Showky", decided, on his own, to start a special session from 3:30 till 4 pm, where only a select few big Investment funds would get to buy a select few stocks, and everyone else can watch or sell, but aren't able to buy anything themselves. This caused that stock I was mentioning, which is EFG's stock for those who know our stock market, to jump from 33 to 49 EGP by the end of that special session. But it doesn't end there. Maged Shawky gets fired, and the Ministery of Investment announces the cancellation of all the trasnactions that were done in the special session, bringing the price back to 33 EGP. And now there are rumors that Maged was actually fired around 1 pm today for "improper dealings and transactions" and did this as his swan song so to speak. This leaves the name of the his collaborater in his improper dealings left to speculation, but with a strong indicaters pointing towards the Chairman & CEO of EFG-Hermes Yasser El Mallawany, who is a good buddy of Maged and whose company had the most to benefit from this "special session". If this is true, then this will be the biggest scandal of its kind in Egypt, and one that would send the stock market spiraling out of control tommorow. Rabena Youstor! UPDATE: Ehh, how can I explain this? The Ministery of Investment decided late last night to reverse all of its decision, re-instated Maged Shawky, didn't cancel yesterday's "special session" transactions and is pretending as if nothing happend. In other news, the arab stock market lost about 500 Billion dollars yesterday in transactions, and the egyptian small investors demonstrated in front of the Egyptian stock Exchange "demanding their money back". Futile attempts to explain to them that their money isn't actually inside the stock exchange were of no effect, because in their minds that's where "they lost their money, and now they wanted it back". A lot of wailing and shouting ended up happening, but thankfully no one got hurt anywhere except their pockets. And if all of that doesn't just piss you off, the government privatized its cement sector last year and sold it to 2 companies, while enacting measures to prevent the importing of outsdie cement to "protect the local mono..ehh...cement inducstry". This allowed the cement companies to raise their prices 4 times, giving one of them a profit jump from 10 million in 2004 to 271 million in 2005. Talk about a return on your investment.
posted by The Sandmonkey @ 3/14/2006 07:13:00 AM
10 Comments:
So,tomorrow is the time to buy if you want to be rich. Always buy when the stocks reach bottom!!
On the other hand, you're probably right something very fishy is going on, because the Egyptian market seems to be the only market falling like that.
Egypt Stock Market crashed because you are morons. Crashes happen everywhere, it happened in Saudi arabia and Kuwait. it happened before many times in USA. it happened in asia.
why does it have to be fishy in Egypt??? This is normal
It is fishy when a market crashes like the only one. This is due to a loss of faith because somebody is cheating.
Otherwise it follows the economy. And I haven't heard anything about crash or depression in the Egyptian economy. On the contrary, there seems to be fairly good growth figures.
The market crashed because people who were buying stock on margin, on tips from accountants and taxi drivers, panicked when the marked started to drop.
As Sandmonkey is on about here,
http://egyptiansandmonkey.blogspot.com/2006/03/egyptian-stock-market-crashes-hard.html#c114233947866794739
the fishy thing was the markets appreciation, not the revaluation.
Or at least that's my uninformed take on matters.
We should not forget that according to the Economist, the Egyptian Stock Market was the best performing last year with a 125% overall annual return.
Crashes such as these are normal, however given the corruption, bureaucracy and insider trading prevalent in third world stock markets (including Egypt) there might be a specific reason for today's drastic fall.
The Egyptian Stock Market does a good job at actually portraying consumer/buyer/seller behavior more so than other markets in the US and Europe (which are more sophisticated and then to be affected by a variety of factors such as Bernanke's interest rate increases or the price of oil). Thus, it seems that once the market started to drop, people panicked and there were mass requests to sell.
The fact that many of the Egyptian government's members are businessmen also leads me to believe that there are ulterior motives to swaying the market.
Moreover, as aformentioned people react to news - informed, uninformed, educated or uneducated - and a mass reaction will cause markets to appreciate or fall.
The Egyptian Observer.
As far as I can tell, there has been no information on the Egyptian market crash in the western press. I find this fascinating and thank you for telling us about it. I wish your IT guy and all others that have lost their life savings the best...
I really don't know what "poor" means in Egypt but, it can't be pleasant.
Click on the link below ,it is really funny ,even the EC ,they have their differences ,not only us
http://www.lifeinitaly.com/flash/
Egyptian observer.
Good observations. If the market rose 125 % last year then of course there may be a large part of the explanation. A market cannot go on rising that much indefinitely, as the valuation of stocks is a reflection of the growth of the economy and the expected future profits (that will also reflect future growth).
According to the Economist growth in Egypt is quite good, about 5 per cent. If those numbers continue it is stupid to panic-sell. The market will start rising again.
Often the panicselling may be started with rumours of something fishy going on. If cabinet members are involved in trading and they have inside information from the buddies' networks, the market may easily panic when it has overheated.
there were sell-offs across a number of ME markets Tuesday - see front page of Wednesday's Financial Times (www.ft.com) -which blames sentiment lurch post dpw fiasco ...
.. + what a day for the egyptain pm and what sounds like half the cabinet to attend an invest in egypt conference in London ..
http://www.euromoneyconferences.com/events/event.asp?EventID=159
Sell shares in the pyramids sandmonkey, you know that they will buy them (and a fatwah on anyone who says it's........investment scheme ! BW48
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