Stock market down 3.5% as violence flares

Egyptian stocks saw a steep decline on Monday against the backdrop of violence between the army and supporters of the ousted President Mohamed Morsy outside a military facility where he is believed to be confined.

Stocks lost nearly LE11 billion at the close of Monday's session amid political tensions resulting from the violence that broke out early Monday outside Republican Guard House in eastern Cairo.

The main index, EGX30, which measures the performance of the 30 most active state companies, dropped by 3.55 percent. The small and medium-size stocks index, EGX70, made a larger loss of 5.32 percent. The broader EGX100 meanwhile dropped by 4 percent. The session recorded 24,000 transactions worth LE414.5 million

Ahmed Shehata, a researcher at a securities company, attributed the losses to extensive sales by Arab and foreign traders which targeted leading socks, prompted by the violent developments.

Shehata noted that the upward trend stocks had taken since the 30 June session was helped by the absence of violence on Egypt's streets. The latest bloody twist had pushed investors towards haphazard market exits.

Mohamed Fathalla, a stock market expert, predicted the decline would continue through Tuesday due to prevailing tensions and the authorities failure to contain violent episodes.

He warned that escalation by the Muslim Brotherhood's leadership and calls by some for foreign intervention would cause further bourse losses. Fathalla also stated that the negative effects will be seen on the Egyptian economy in general.

Fathalla said authorities should form a new cabinet immediately to end the state of political uncertainty.

Cabinet negotiations are still ongoing after the Nour Party vowed to withdraw from the military-led roadmap following what it called the "Republican Guard House Massacre" in a statement Monday.

Edited translation from Al-Masry Al-Youm