Egypt Stock Market Plunges as Mohamed Mursi Becomes New Pharaoh
The Egyptian stock market (EGX30 index) plunged 9.6% today on renewed unrest in the Arab world's largest country by population. On Thursday, Egyptian President Mohamed Mursi granted himself unlimited power. Since Thursday there has been increasing protests over concerns that Mohamed Mursi is grabbing more power than former dictator, Hosni Mubarak. For readers of this website will be no surprise (you can see our articles Egypt). Additionally, the author of this article predicted Mohamed Mursi would grab more power just several days ago:
— Jacob Wolinsky (@JacobWolinsky) November 20, 2012
Mohamed El-Baradei who had little support in Egypt at the start of the revolution, is now championing himself as a spokesperson for the opposition. In reference to Mohamed Mursi, Mohamed ElBaradei states ' there is no room for dialogue when a dictator imposes the most oppressive, abhorrent measures and then says 'let us split the difference.' The Judges' Club, a body representing judges in Egypt, called for for an urgent meeting, which was interrupted by protestors demanding the downfall of Mohamed Mursi. Egypt's highest judicial authority, the Supreme Judicial Council, called the decree by Mohamed Mursi "unprecedented attack" on the independence of the judiciary branch. Many have accused Mohamed Mursi of becoming the New Pharaoh of Egypt.
Over 300 people were injured on Friday as protests against Mohamed Mursi and the Muslim Brotherhood turned violent. Offices of the Muslim Brotherhood were torched in Suez, Port Said, Alexandria, and the capital city of Cairo. According to the latest reports, Mohamed Mursi is calling for dialogue, and says the powers granted to himself are 'temporary.'
According to EFG Hermes Research, Egypt's stock market is up 35% this year, after today's decline of 9.6%. Market Vectors Egypt Index ETF (NYSE:EGPT) is up close to 50% this year, which does not include today's decline. Market Vectors Egypt Index ETF (NYSE:EGPT) was down 51% in 2011.
Below some more data on the Egyptian economy.
GDP growth slows to 2.6% Y-o-Y in 3Q2012, minister says
Egypt’s economy growth decelerated to 2.6% Y-o-Y in 3Q12 (1QFY2012/13) from 3.3% in 2Q2012, Minister of Planning and International Cooperation Ashraf Al-Arabi announced in a press conference on Saturday. The minister gave only limited details about the headline growth figure, indicating that investment fell 1.6% Y-o-Y to EGP49.3 billion at current prices.
Private sector investments made up 70% of the total in the first quarter of the FY 2012/13, up from 66% a year earlier. According to Al-Arabi, most economic sectors saw a performance boost with manufacturing, construction and tourism growing 2.8%, 5.4% and 0.6%, respectively. Meanwhile, Suez Canal and mining contracted 3.4% and 0.1%, respectively. The out turn comes in lower than expected 3.7% Y-o-Y and show continued deceleration in economic activity on the back of political uncertainty.
Below we look at some of the economic numbers coming out of Egypt.
Fiscal deficit widens to 4.0% of GDP in 4M2012/13
Egypt’s overall fiscal deficit widened to 4% of GDP in 4M2012/13, up from 3.1% of GDP in 4M2011/12, reaching EGP69.9 billion (USD11.4 billion), according to the Ministry of Finance. Revenues rose 13.5% Y-o-Y to EGP72.8 billion (USD12 billion). Expenditures rose 27.8% Y-o-Y 4M2012/13, reaching EGP141.7 billion (USD23.2 billion), with wages taking the lion’s share, worth EGP45.2 billion (USD7.4 billion). Despite the increase in spending, costs of government investment slipped 7.6% Y-o-Y to reach EGP6.2 billion.
Tourist arrivals reach 9.5 million tourist by end of October, Tourism Minister says
The number of tourist arrivals in 2012 has reached 9.5 million tourists by end of October, Al Alam Al Youm reported, quoting Minister of Tourism, Hisham Zazou, as saying. Zazou added that tourist arrivals is expected to reach 11.5 million by year end, although the ministry was targeting levels comparable to those recorded in FY2010 of 14.5 million tourists.
Passenger car sales flattish M-o-M in October, up 11% Y-o-Y; Hyundai maintains market leadership
Egypt passenger car (PC) sales rose 11% Y-o-Y and 2.1% M-o-M in October 2012 to 13,376 units. October sales showed growth higher than both 2011 and 2012 YTD averages. Hyundai held the largest market share in the Egyptian car market at 22%. Year-to-date PC sales increased 5% Y-o-Y to 114,510. HYUNDAI MOTOR CO LTD (PINK:HYMLF), the main revenue contributor for GB Auto (AUTO.CA), maintained its leading market share position at 29.9%. Hyundai’s market share showed a slight Y-o-Y decline from 31.8% on the back of supply issues in 3Q2012 from HYUNDAI MOTOR CO LTD (PINK:HYMLF). Additionally, 400 taxis were sold under the government’s taxi replacement programme during October 2012, all of which were Hyundai Verna models.