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Egypt Paper Plunges On Latest Stock Market Reopening Delay, 266 Day Bond Hits 12.47% Following Partial Auction Failure

Tyler Durden's picture





 

Remember when Egypt said that March 6 is the latest, guaranteed stock market reopen, or else? Well, the day has come and gone, and no Egypt stock market (all those who have been buying the EGPT ETF are forgiven for feeling like total idiots right about now). What however is trading are Egyptian bonds, which have plunged as a result of the ongoing total and complete chaos in the revolutionary country, which is now seeing a second wave of reactionary violence as fighting escalates between the police and protesters in Alexandria. As BusinessWeek reports: "Egypt’s borrowing costs are rising to the highest in more than two years
and stocks listed overseas are tumbling as the Cairo exchange’s
five-week shutdown and new rules on shareholder disclosure keep
investors away. The Ministry of Finance sold 3 billion pounds ($509 million) of bonds
yesterday, 1.5 billion pounds less than planned, as yields on 266-day
notes climbed 31 basis points from the last auction to 12.47 percent
,
data compiled by Bloomberg show. Global depositary receipts of
Commercial International Bank Egypt SAE sank 15 percent in London last
week to the lowest level since July. Orascom Telecom Holding SAE traded
5.2 percent below its Jan. 27 close, when the Egyptian Exchange shut
down." Our advice: don't expect Egypt to reopen any time soon, and certainly not before the situation in Libya is under control, which won't be for a long time. In the meantime the flight to safety trade (read gold, silver and crude) is raging overnight. And if and when it reopens, look for nothing less than freefall: "The EGX30 may drop another 10 percent when it eventually reopens, said
Slim Feriani, London-based chief executive officer of Advance Emerging
Capital Ltd., which manages $750 million in frontier and developing
nation stocks including Egyptian shares."

From BusinessWeek:

Egypt’s bourse delayed indefinitely the reopening planned for yesterday citing the resignation of Prime Minister Ahmed Shafik in a March 3 statement. Regulators said last week they may require investment funds to disclose their shareholders as part of a probe of officials linked to ousted president Hosni Mubarak. The new rules and the bourse’s closure are deterring foreign funds and may spur selling when trade resumes, according to F&C Asset Management Plc and ING Investment Management.

“The fact that Egypt’s market is not open today is a very big negative, especially as we do not have an idea of when it may reopen,” Ahmed Talhaoui, the Abu Dhabi-based head of investment at Royal Capital PJSC, which is 44 percent-owned by United Gulf Bank BSC, an investment bank in Bahrain, said in an interview yesterday.

Egypt risks becoming “a pariah of an investment destination,” said Jeff Chowdhry, the London-based head of emerging-market equities at F&C, which oversees about $163 billion worldwide. “If they value foreign investment in their stock market, they should get that market open immediately and take off any restrictions in terms of having too cumbersome administrative requirements.”

The bourse extended its suspension on Feb. 14 because of worker protests disrupting bank operations, exchange spokesman Hisham Turk said at the time. The exchange said on Feb. 22 it would have to put off opening in order to implement rules to limit daily share price moves. It postponed a planned reopening on Feb. 28 after investors facing losses criticized exchange chairman Khaled Seyam at a news conference, calling for an extension of the closure.

The Egyptian Financial Regulatory Authority, the bourse’s regulator and the main clearing house, said on its website on March 2 that it may require brokerages and fund managers to disclose the owners of financial assets traded in the country as part of a probe of officials linked to Mubarak.

“It’s difficult for people like us as international investors to do much in these markets, no matter how much they fall in the next few days or weeks,” Feriani said in a phone interview. The outlook for Egypt’s economy and companies is too uncertain to make investment decisions, he said.

Adding insult to injury, if the EGX30 remains halted for more than 40 days, it will be moved to the symbolic equivalent of the pink sheets:

If the market is closed for 40 days or more, MSCI Inc. may begin investor talks to determine whether to remove Egypt from the MSCI Emerging Markets Index, Frank Nielsen, the company’s executive director for equity and applied research, said in a telephone interview from New York on March 1. Argentina removed from the index in 2009, when it was reclassified as a frontier market, according to MSCI’s website.

We are sure the Fadi Al Said speaks for all momentum lemmings who put their money into EGPT when he said..

“On Egypt I’m really disappointed on the way it’s been handled,” said
Fadi Al Said, a Dubai-based senior investment manager at ING Investment
Management, which oversees about $518 billion worldwide. His ING L
Invest Middle East & North Africa fund has beaten 88 percent of
peers in the past year, according to data compiled by Bloomberg. “I hope
that the market will open up soon and let’s get over with this
cleanout, because this will create massive opportunities,” he said.

Look for the escalating MENA panic to shift much more aggressively to Saudi Arabia, which despite the government's plunge protection efforts, is next in line for "delisting", and ultimately to Europe.

 


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Sun, 03/06/2011 - 23:33 | Link to Comment bob_dabolina
bob_dabolina's picture

uh oh

Mon, 03/07/2011 - 01:20 | Link to Comment Money Squid
Money Squid's picture

Mental note - do not revolt until replacement goverment is formed and ready to take over.

P.S. Be sure tohave finacial recovery team as part of the replacement government.

Mon, 03/07/2011 - 03:10 | Link to Comment StychoKiller
StychoKiller's picture

Bob Dylan's tune "Everything's Broken" springs to mind!

Who in their right minds would buy Egyptian bonds right now?  Only Qaddahfi's Life Insurance policies are a poorer investment.

Sun, 03/06/2011 - 23:45 | Link to Comment eigenvalue
eigenvalue's picture

Where is Egypt's Plunge Protection Team?

Sun, 03/06/2011 - 23:51 | Link to Comment Canucklehead
Canucklehead's picture

They're in hiding with the Badger Senators...

Mon, 03/07/2011 - 00:16 | Link to Comment Michael
Michael's picture

Egypt's Suez Canal Authority said on Thursday it was leaving its transit fees unchanged until the end of 2011.

Hmm. Guess those plans will need to change. I wonder how high those fees can go?

Mon, 03/07/2011 - 03:11 | Link to Comment StychoKiller
StychoKiller's picture

Hmm, did you notice you NEVER see them at the same time in the same place?! :>D

Sun, 03/06/2011 - 23:41 | Link to Comment Everyman
Everyman's picture

That's gonna leave a mark!

Sun, 03/06/2011 - 23:43 | Link to Comment Yen Cross
Yen Cross's picture

Damn. I was going to plant papyrus. I wanted to short redwood/cyprus. Cotton got me caught up during the CMI ethenol contracts. The VIX is contrasting the XLF. Smoke that JUDITH.

Sun, 03/06/2011 - 23:44 | Link to Comment High Plains Drifter
High Plains Drifter's picture

12.47 %

Hey that sounds like  what the coupon interest on our bonds should be.

Sun, 03/06/2011 - 23:55 | Link to Comment monopoly
monopoly's picture

And, this is just the beginning. Long way to go.

Sun, 03/06/2011 - 23:58 | Link to Comment Oxygen
Oxygen's picture

Who will bail out Egypt ?!

if oil goes up it's should be good for some Countries, like Libia, Soudite Arabie, Egypt maybe !? no ?...

 

 

Mon, 03/07/2011 - 00:10 | Link to Comment Misean
Misean's picture

They should stop borrowing money and demand gold and silver on the barrel head for Suez transit.

Mon, 03/07/2011 - 00:43 | Link to Comment b_thunder
b_thunder's picture

Will  Goldman's "Next 11" become "next 10", 9, 8 and so on, or does Jim O'neill have enough imagination to quickly find a replacement? 

 

Mon, 03/07/2011 - 01:51 | Link to Comment Yen Cross
Yen Cross's picture

Highly unlikely. His bets are of negative (integers).

Mon, 03/07/2011 - 00:44 | Link to Comment Yardfarmer
Yardfarmer's picture

the inflationary fires in the "emerging" economies already super charged by rising oil prices will act as a short term accelerant to economic activity in oil exporting nations, while importers with large oil dependencies will contract further. the momentum assures arrested growth in the West and Euroland and continuing expansion in Russia and China, their African client states and Iran. oil is money and gold is the exchange. the US is beggared in both.  

Mon, 03/07/2011 - 01:04 | Link to Comment JW n FL
JW n FL's picture

Why doesnt Egypt just buy its own Bonds?

Lying is Good... Honesty is Bad...

Up is down and Down is Up...

take note of how the Super Power America Lies!!!!

Let the lies flow thru you to the TV so that the sheep maybe quelled into a semi catatonic, idiotic, day dreaming state of ingnorant bliss.. the people of Egypt will Love you for it! just like the Sheepeople of America Love the Government for it!

 

Maybe we could lend them The Ber-Nake to show them how its done for a week or so? any objections?

Mon, 03/07/2011 - 01:07 | Link to Comment JW n FL
JW n FL's picture

of course this faint of honesty from Egypt's markets.. would allow for the hope that the Lying Fucking Scumbag Bankers Grip there has loosened for the moment?

Mon, 03/07/2011 - 01:46 | Link to Comment djrichard
djrichard's picture

Looks like that's what they were doing:

http://en.wikipedia.org/wiki/Economy_of_Egypt#Public_finances

Treasury bonds and notes issued to the Central Bank of Egypt constitute the bulk of the government domestic debt

Instead of increasing their debt to their central bank, maybe they should consider getting off a central-bank-debt-based currency and printing their own currency instead.

Doesn't look like they're running a trade deficit; and exporting oil will give them all the foreign exchange currency they'll need.

Mon, 03/07/2011 - 01:09 | Link to Comment Lionhead
Lionhead's picture

Don't worry folks, Templeton's man Mark Mobius will be on Bloomberg shortly to tell you that Egypt is a great buying opportunity.  No doubt he "sees" great promise there once the crisis is "contained."  He's probably out scouring the countryside for great companies you can own once the stock exchange opens.

Mon, 03/07/2011 - 01:22 | Link to Comment tom a taxpayer
tom a taxpayer's picture

Falafels-R-Us may be one of those great companies. I hear they plan to open a chain of Falafel stands along the Suez Canal. What could more pleasant than eating a falafel and watching the ships sail by?

Mon, 03/07/2011 - 03:14 | Link to Comment StychoKiller
StychoKiller's picture

Two words:  Real Estate!  Resort hotels all along the Mediterranean coast line, time shares in the great pyramids -- it's all good!

Mon, 03/07/2011 - 01:54 | Link to Comment Yen Cross
Yen Cross's picture

Lets light this thread! oil and antiquities

Mon, 03/07/2011 - 03:13 | Link to Comment rich_wicks
rich_wicks's picture

Dear Egypt.

Default.

You have plenty of oil.  It's not like nobody is going to buy it if you refuse to pay your bills, and it's not as if you don't have wealth.

Mon, 03/07/2011 - 04:56 | Link to Comment Hexus
Hexus's picture

At least they get to enjoy a few weeks of sweet freedom before the inevitable wave of starvation sets in. Surely democracy is worth more then bread? Hillary Clinton and Leon Panetta said so.

Assange be with you!

Mon, 03/07/2011 - 08:53 | Link to Comment Dan The Man
Dan The Man's picture

--

egypt has no wealth or oil anymore...except maybe a country full of builders...who aren't building right now.

 

also...they have to be closed for 40 days or more before being removed from the index?  jeeze louise.  4 days maybe.  

Mon, 03/07/2011 - 19:48 | Link to Comment Buck Johnson
Buck Johnson's picture

Saudi Arabi is definitely going to feel the hit from this.

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lsjcma's picture

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