Egypt delays expected reopening of stock market

CAIRO — Egyptian officials have again delayed the restart of the country's stock exchange, a move that brokers said Tuesday would likely only undercut investor confidence in a market many expect to take a hammering as the country struggles to regain footing after massive protests that ousted its longtime president.

The Egyptian Exchange, shuttered for over a month, was to resume trading on Tuesday. But in an overnight statement, exchange officials said the market would reopen instead on March 6 to "allow investors to profit from the government's support to guarantee stability in the bourse."

The decision reflected the strong undercurrent of unease in the Arab world's most populous nation where the market's benchmark stock index had shed almost 17 percent in two consecutive trading sessions before it closed at the end of the business day on Jan. 27.

"No doubt, it is certainly eroding investor confidence, and we're losing credibility by the day in international markets," said Karim Helal, managing director of brokerage CI Capital. "If the decision is to allow the market to absorb losses, it won't make a difference. It will just make it worse."

The exchange's closure was repeatedly extended as protests in Egypt gained momentum demanding Hosni Mubarak's ouster. Even after he was pushed from power, the suspension continued as massive labor strikes gripped the country and banks closed for a week.

To allay concerns about a panic sell-off, market officials set up safeguards to ensure that the broader EGX100 index would not collapse in one session, including setting up so-called trading circuit-breakers that would halt trading in the case the index shifted by 5 percent and then 10 percent.

The government, already facing a sharp economic blow from the expected downturn in tourism and foreign investment linked to the anti-regime unrest, said it would provide backing for smaller investors and brokerages.

But many remained unconvinced that a crash would be averted. And, as the market geared up for a restart, protests began in front of the exchange.

Analysts and brokers say the decision to delay the restart, however, may also be linked to the investigations of several prominent businessmen with close ties to the Mubarak regime. Many of these businessmen head some of Egypt's largest private sector companies.

Several have had their assets frozen and brokers have been ordered to go through their books and ensure that they can verify the identity of all their clients as many of these businessmen's holdings include significant amounts of shares.