Gehad Abd El-Ghany - 2015-11-14 17:58:28
Egypt’s stock market incurred weekly heavy losses amounting to 27.1 billion Egyptian pounds (US$3.46 billion) driven by travel ban to Sharm El-Sheikh and the increased interest rates in local banks.
Several banks, including the largest two state-owned ones in Egypt, decided last week to raise interest rates for savings certificates, increasing speculation on the monetary policy. On Sunday, launched savings certificates for Egyptian pounds at an interest rate of 12.5 percent, above the average 10 percent currently offered by banks. The move created speculation for a possible floatation of the pound and a possible interest rate hike by the central bank.
Another factor to the stocks’ fall this week was after a number of European states decided to suspend their passenger flights to the Egyptian resort after the Russian airliner has crashed in Sinai Peninsula on October 31st, while heading to St. Petersburg from Sharm El Sheikh.
Halting passenger flights to Egypt is an action considered to be a ‘severe blow’ to the country’s tourism industry, according to Mohamed Youssef, Adviser to Egyptian Minister of Tourism.
The tourist industry generates more than 11 percent of Egypt's GDP.
On Thursday, the International Monetary Fund (IMF) Communications Department Director Gerry Rice said the crash of the Russian plane over the Sinai Peninsula could have serious repercussions on Egypt’s tourist industry, Thursday.
"It is too early for us to assess fully the impact on the Egyptian economy, but clearly there could be significant effects on tourism," Rice stated in a briefing.
The country's main stock index, EGX30 hit its lowest level since August 2015, it plunged 9.7 percent to close at 6806 points on Thursday, versus 7541 points at the end of a week earlier.
The main gauge index registered its highest point on Sunday closing at 7347.22 points, whereas its lowest point recorded on Wednesday at 6801.9 points. In addition, the mid- and small-cap index, the EGX70 sank in a week by 8 percent closing at 365 points during Thursday's session, compared to 397 points at the end of a week earlier. The price index, EGX100 also dived 7.7 percent finishing at 787 points during Thursday's session, from 853 points at the end of a week earlier. More»