Egypt bourse may face sell-off after month closure

Investors are bracing for a big sell-off when Egypt's stock exchange opens on Tuesday after a month-long shutdown caused by the mass uprising that toppled the country's president.

But the reopening could be cut short if share prices do plunge as this will trigger a trading suspension.

It could be the shortest session on record tomorrow, said an analyst based outside the country.

The bourse, which will open at 10:30 a.m. (0830 GMT) on Tuesday, will suspend trade for a half hour if the benchmark index declines by 3 percent and for the remainder of the session if it falls by 6 percent.

It will also suspend trade for a half hour if the broader 100-share index declines by 5 percent and the whole session if it falls by 10 percent.

The government has postponed the exchange's reopening several times in the last few weeks because of continuing unrest.

The protests and a series of subsequent worker stoppages have left much of the economy in shambles, scaring away tourists and investors and putting pressure on the country's currency.

The market hasn't priced in a month of Egypt news, and there is greater risk-aversion regionally and globally than there was a month ago, said Simon Kitchen, Egypt strategist for Cairo-based investment bank EFG-Hermes.

The benchmark index tumbled on the two days the market was open after the protests erupted in late January, losing 6.1 percent on January 26 and another 10.5 percent on January 27, and analysts said they expect even more declines.

Akram Annous, MENA strategist at Al Mal Capital, said negative sentiment might be nearing a peak, but few investors would be stepping in to take risks.

Unrest is festering in the region and since Egypt closed there has been Libya, Bahrain and now Oman, while the spectre of Saudi is causing anxiety for everybody, he said.

Analysts are also concerned about the performance of several of the exchange's most prominent companies after their top executives were indicted on corruption charges, and they fear other companies might be affected as prosecutors pursue businessmen who were close to the former government.

Still, some analysts say there could be buying opportunities.

We see the Egyptian economy shrinking by 2.5 percent in 2011. Taking that into account, the earnings impact is going to be 10-15 percent, said Daniel Broby, chief investment officer at London-based asset manager, Silk Invest.

The stock market has fallen more than that already and on that basis, it's looking cheap prior to the unrest period.

Kitchen said the preferred companies were those with strong exposure outside Egypt.

There was also a preference for two companies, Sidi Kerir Petrochemicals and AMOC, that are government-controlled, have high dividend yields and have a relatively small work force, he said.