Egypt's stock fell to its lowest level since 2016 on Sunday after a few, but rare, protests on Friday evening, threatening to tarnish the nation’s image as an emerging-market safe haven, following a series of bold economic reforms.
The Egyptian pound continued to rise against the dollar to reach its highest level in three years and recorded 16.23 pounds against the dollar.
The EGX30 retreated 5.3 percent, the most for any single day since 2016, as every member declined, while the wider EGX100 index lost 5.7 percent, its biggest drop since 2012.
Additionally, Commercial International Bank dropped 4.2 percent and Eastern Co was down 5.7 percent.
The broader index EGX100 slumped 5.7 percent, the most since November 2012, with 95 of 100 stocks dropping, causing trading to be suspended due to a 5 percent swing for the first time since 2016.
On Friday, people protested in central Cairo and several other cities, in the first such demonstrations in the country since 2016.
"It is definitely due to the small escalation over the weekend, which is making investors cautious,” said Ashraf Akhnoukh, director at Arqaam Capital in Cairo.
The sellers were mostly locals and Arab investors as foreign investors were not trading on Sunday, he added.
The blue-chip index is still up 7.1 percent year-to date and has risen during the year on the back of foreign buying amid an economic recovery and a recent interest rate cut.
Egyptian shares lost more than $1.90 billion of their market value, and the stock exchange's management stopped trading on more than 100 shares during transactions after falling more than 5 percent.
A number of analysts described the reaction of the market as exaggerated, especially after foreign financial institutions seized the opportunities of Egyptian and Arab sales to make large purchases in the market.
Ibrahim al-Nimr of Naeem Securities Brokerage said that the main index had a clear support at 14,250 points and breaking it may target 13,850 points, but in case of a higher rebound it will target 14,800 points.
Meanwhile, Chairman of 3Way, a securities trading company, Rania Yacoub explained that the situation of the market is an unjustified decline governed by individuals, not institutions.
“If there are any security or political concerns you will find selling from institutions and not individuals.”
Head of research at Pharos Investment Bank, Radwa el-Swaify noted that financial institutions will take advantage of the downturn and build purchasing positions in equities, which is what happens as a result of the closure of the financial positions of individuals investing in the market.