DUBAI: Egypt’s market had its largest decline in seven months Thursday after former army chief Abdel-Fattah al-Sisi said he would run for president, spurring investors to book profits from a sustained market surge.
Cairo’s main index was up as much as 1.4 percent shortly after opening, but ended 2.7 percent lower, its largest drop since last August.
That slump trimmed 2014 gains to 21.7 percent as many investors, who had long expected Sisi’s announcement, closed positions.
“It was more or less expected that the market should bounce reacting to the Sisi news,” said Mohammad Radwan, director of international sales at Pharos Securities. “When the news was confirmed, profit-taking took place.”
Shares in EFG Hermes tumbled 5 percent after the investment bank reported a net loss of 335 million Egyptian pounds ($48 million) for 2013. This compared with a profit of 211 million a year earlier.
EFG said the loss was due to one-off charges related to acquisitions, changes in the “fair value” of investment property in Dubai and one-off operating expenses.
Egypt’s market will now need a strong catalyst to start another rally such as a bold economic reform program, Radwan said.
“Something that is going to catch investors by surprise,” he added. “It has to be something out of the box.”
Sisi, who also stepped down as head of the military Wednesday, is expected to win the forthcoming election easily as many Egyptians consider him the kind of strong man needed to stabilize a country in crisis.
He also enjoys the backing of most oil-exporting Gulf Arab states, which have given Cairo billion of dollars.
A version of this article appeared in the print edition of The Daily Star on March 28, 2014, on page 5.