 |
Al-Ahram Weekly 20 - 26 April 2000 Issue No. 478 
|
||
Published in Cairo by AL-AHRAM established in 1875 |
| ||
|
Al-Ahram Weekly 20 - 26 April 2000 Issue No. 478
|
||
| Published in Cairo by AL-AHRAM established in 1875 |
| ||
Egypt Region International Economy Opinion Culture Heritage Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters The great escape
By Sherine Abdel-Razek
While international markets, most notably the New York and London stock exchanges, took a nose-dive last Friday, losses in the Egyptian market which were registered until the middle of this trading week averaged two to four per cent daily. This, according to David Shelby, an analyst at EFG Hermes, should not be cause for alarm or panic.
True, PAMI index, Prime Securities' 28 share index dropped by 6.1 per cent but the decline was due more to a gradual market drop explained by the liquidity crunch and unstable interbank rates.
The biggest loser on "Black Friday" was MobiNil, which lost six per cent of its price on Sunday. However, the loss was nothing new to the company whose star has been on the wane for quite some time, due to the growing appeal of its strongest challenger for market leadership, Media Production City, and its lower than expected 2000-first quarter net profits. Shelby said MobiNil's losses may be attributed to the fact that it is one of the IT shares which shouldered the highest losses worldwide. However, it remains only lightly exposed, and was only marginally affected.
This relative resilience of the Egyptian market is due to the fact that the correlation between the Egyptian and international markets is too weak to have a negative impact, according to Amr El-Alfy, head of research in Prime Securities. El-Alfy said a psychological factor might have played a partial role in the setback. "Investors in the Egyptian market may be feeling insecure due to the sharp declines in the international market which they believed to be immune from such shocks due to its maturity."
As for more long-term effects, market experts believe it is too early to predict how the market or investors will react to the international crash, since they have not liquidated their holdings so far. El-Alfy said that global markets have been simply sidelined, and so they might either consolidate their positions in IT shares in international markets, or they might neglect such shares altogether, deeming them highly risky.
