DUBAI: Egypt’s market made its largest decline in seven months after former army chief Field Marshal Abdel-Fattah El-Sissi 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 Sissi’s announcement, closed positions.
“It was more or less expected that the market should bounce reacting to the Sissi news,” said Mohamed 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 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, said Pharos Securities’ Radwan.
“Something that is going to catch investors by surprise,” he added. “It has to be something out of the box.”
Sissi, who also stepped down as head of the military on 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 Gulf states, which have provided Cairo with billion of dollars in financial aid.
Local stocks have surged since the army deposed former president Mohamed Mursi of the Muslim Brotherhood last July, with the main index up about 82 percent from a June 2013 low.
Qatar’s bourse was the only significant regional gainer, adding 1.3 percent on the back of blue chips Industries Qatar and Qatar National Bank, which climbed 3 percent and 2.3 percent respectively.
Commercial Bank of Qatar (CBQ) rose 3.8 percent and Mesaieed Petrochemical Holding Co. climbed 0.7 percent.
CBQ signed an agreement on Wednesday to distribute dividend payments for Mesaieed, which listed last month and plans to pay a 35 percent cash dividend for the last four months of 2013.
United Development Company gained 5.6 percent after its shareholders approved a 10 percent cash dividend.
Qatar Islamic Bank, which said this week it was in talks to buy into Turkey’s Bank Asya, was up 2.1 percent.
Most markets in the region were little moved and Bahrain’s bourse fell 1 percent as Ahli United Bank extended its slide after going ex-dividend, losing 3.3 percent.