Egypt's Stock Market Volatility Amid Currency Weakness and Regional Tensions

Egypt's benchmark stock index, the EGX30, closed 1.66% lower at 48,416.94 points on Monday, recovering from earlier losses that saw it drop below 48,000 points during the session. The index shed 817.41 points from Sunday’s close, trading between 47,938.25 and 49,656.82 points. Despite the decline, the EGX30 retained a year-to-date gain of 15.75%, though it had lost about 5.2% since Thursday’s close. The EGX70 index, which tracks small- and mid-cap stocks, reversed earlier losses to close 0.23% higher at 15,317.12 points, bringing its year-to-date gain to 16.70%. The broader EGX100 index narrowed its losses to close 0.24% lower at 21,014.87 points, retaining a year-to-date gain of 20.60%.

Monday’s session followed a sharp selloff on Sunday, when the EGX30 fell 3.56%, the EGX70 plunged 11.07%, and the EGX100 dropped 8.88%. Trading was suspended for 30 minutes Sunday after the EGX100’s intraday losses reached 10%.

The market volatility coincided with the Egyptian pound weakening to a record low of EGP 56 against the US dollar on Monday. The currency had already breached EGP 55 per dollar at major Egyptian banks on October 22. The market declines came amid heightened regional tensions, as Egypt’s parliament voted Monday to authorize President Abdel Fattah El-Sisi to take necessary defensive measures in support of Saudi Arabia against attacks by Yemen’s Houthis, if requested.