Egyptian shares surged more than 7 percent on Monday for their biggest daily gain in nine years after the Muslim Brotherhood’s Mohamed Mursi was named as the first freely elected president, boosting hopes for a violence-free transition from army rule.
The benchmark index closed up 7.6 percent, its best one-day performance since early 2003 and the fourth-biggest in the index’s 14-year history, after Mursi’s win was announced on Sunday. The news sparked jubilation among Brotherhood supporters.
Traders, however, were cautious, saying the market euphoria could quickly evaporate if the new president cannot form a government with broad political support.
“I wouldn’t judge the market on one day. Let’s wait for the rest of the week. One more speech and the market could drop,” said Osama Mourad, CEO of Arab Finance Brokerage.
The stock market fell 10 percent during the two-stage election on fears the poll could be derailed or marred by violence. But voting, and the announcement of Mursi’s win against Ahmed Shafik, ousted leader Hosni Mubarak’s last prime minister, passed off peacefully.
“The market is celebrating the lack of violence around this result,” said Mourad. “The market was afraid of clashes on the streets.”
Yields on short-dated treasury bills offered in Egypt’s small secondary fixed-income market fell by 5-10 basis points, a currency trader said.
Egyptian credit default swaps were at 705 basis points, down from 722 on Friday, a 3-1/2 year high, according to Markit.
REUTERS
