(26 Nov 2015) LEAD IN:
Egypt's EGX 30 rose on Thursday, suggesting the market may be starting to recover following the recent Russian plane incident in the Sinai desert.
But experts warn the rise wont make profit for investors, only compensate some of their recent losses.
EGX 30, the benchmark index in the Egyptian stock market, rose on Thursday morning, climbing from an opening price of 6,391, reaching 6436 points, a rise of 0.71 percent (as of 11:40 GMT).
Nagla Farrag, a dealer with the Egyptian stock exchange, explains that although there is an apparent rise, this is not a win, but the beginning of recovering the losses suffered in the last period in the market.
"Today in the last session of the week, we see a rise across the indexes since the beginning of the session. This rise is supported by buying from Egypt and Arab individual investors, while the foreign institutions are selling today, the trading volume is average, the benchmark index EGX 30, and we are in the middle of the session, less than one percent. But this isn't a rise that will create profits for the investors, this is making up their losses, after we dropped about 1,300 points in the span of 10 sessions, a rise of 300 points doesn't compensate investors."
Egypt has been affected by many internal and external events recently, which have had a direct effect on the market.
Egyptians in nearly half the country, including the capital Cairo, voted in the second stage of parliamentary elections on Sunday and Monday. The outcome will produce the country's first parliament since a chamber dominated by Islamists was dissolved by a court ruling in 2012.
Farrag explains that there has been no major effect on the markets following the elections so far:
"In the last phase, we saw that in the first round of the parliamentary elections, the effect wasn't noticeable, just that the elections took place without any security issues. Then there was a rise in the markets, in the second round, we didn't see any change in the markets, whether a rise or a fall, this shows that it has no affect at the time. If the markets are rising in a session they continue to rise, and if they are falling then they continue to fall."
Tens of thousands of troops and policemen were deployed to safeguard the two-day vote, which began on Sunday.
This reflected the growing security concerns, less than a month after a suspected explosive device brought down a Russian airliner over Egypt's Sinai Peninsula. All 224 people on board died. The extremist Islamic State group's local affiliate claimed responsibility for the October 31 attack.
This led to an overhaul of security at Egyptian airports and delivered a crushing blow to the country's vital tourism sector.
Hannan Ramses, also a dealer at the Egyptian stock exchange, explains the effect of such an incident on the markets:
"Every terrorist attack claims some of the markets indexes, because it is known that capital is a coward. So any investor and especially foreign investors back out of the Egyptian markets, and this is what translated into their wave of selling in the last period, even when the benchmark index reached 6,300 points, they continued to sell, and we expected the index to fall even more, but supported by Egyptian and Arab investors, the index began to regain its strength once again," she says.
Hannan says she believes that the blow to tourism will not last, because the threat of terrorism is not restricted to the region.
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