Despite massive falls as Egypt re-opened its Stock Market on Wednesday, Orascom Telecom, the country’s leading telecommunications company, surged nearly 10 percent to 3.87 Egyptian pounds in trading on Thursday. Analysts say this is a sign that the telecom industry will be able to recover from the turmoil in the country much quicker than other industries.
“It is obvious that after today’s trading and Orascom’s massive jump that this sector is going to be easier to overcome the troubled economic situation facing Egypt,” said Munir Tarek, a securities analyst for the Egyptian Stock Exchange.
He believes that the telecom industry is vital to the continued success of reform and investors understand that without a solid industry “the country could hit even harder times, so they are ensuring this doesn’t happen.”
The benchmark tumbled to a 23-month low on Thursday as investors sold off their stocks.
Stocks of Commercial International Bank SAE, the nation’s biggest lender, lost 10 percent. Orascom Construction Industries, Egypt’s largest publicly traded builder and partner of the telecom outlet, reversed an earlier loss, advancing 2.8 percent.
Egypt’s economic growth and corporate earnings are set to slow after tourists fled and companies closed following demonstrations that ousted President Hosni Mubarak last month. Share prices may decline further before international investors start looking for buying opportunities, according to Pictet Asset Management Ltd. Trading was suspended for 30 minutes after the broader EGX 100 Index declined 5.5 percent today.
“The reason for further declines is that international investors, especially funds that are not dedicated to Egypt, will want out at any cost and definitely before the quarter end,” Oliver Bell, London-based senior investment manager who helps oversee about $10 billion of emerging market assets at Pictet, said in an e-mailed response to questions to Bloomberg news agency.
By Jonathan Terry
