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Egyptian Exchange Ends Mechanism of Temporary Suspension at EGX100

Egyptian Exchange Ends Mechanism of Temporary Suspension at EGX100

Tuesday, 24 March, 2020 - 12:30
Traders work at the Egyptian stock exchange in Cairo, Egypt (File Photo: Reuters)
Cairo- Asharq Al-Awsat

Egypt’s Financial Supervision Authority agreed to end the mechanism of temporary suspension at the level of EGX 100 index for the market as a whole, based on the proposal of the Board of Directors of the Egyptian Stock Exchange (EGX).

Earlier, the Federation of International Exchanges issued a report on the markets that suspend trades in cases of extreme fluctuations in reference indicators. It showed a number of markets that suspend trades for a specific period in cases of index decline, and do not apply it when it increases.

The current rules of the Egypt’s stock exchange, trading is suspended for 30 minutes after the EGX100 index rises or drops by 5 percent.

EGX board of directors decided to continue trading in cases of market rise and put on hold the mechanism of temporary suspension in cases of a price drop at the index’s level.

The Financial Supervisory Authority had approved the stock proposal to authorize brokerage firms to receive customer orders through e-mail or text messages using mobile applications.

EGX’s indices witnessed a surge on Monday after the Central Bank of Egypt (CBE) announced it would inject $1.27 billion to support the stock exchange performance, following President Abdul Fattah el-Sisi’s directives.

EGX 30 was upped by 3.04 percent after it recorded at the beginning of the session a 3.7 percent increase, and EGX 100 increased by 4.9 percent.

Meanwhile, Reuters quoted six bankers as saying that Egypt’s central bank has told commercial banks to cut interest on dollar deposits to 1 percent above the London Interbank Offered Rate (Libor) instead of 1.5 percent above Libor, starting from Monday.

A banker, who asked not to be named, said that the aim of the measure is to control the exchange market and reduce the expected dollarization operations after cutting the interest rates.

Egypt’s central bank dropped its main interest rate by 300 basis points at an unscheduled meeting last week, saying it was making a “preemptive” move to support the economy in the face of the coronavirus outbreak.

The Bank of Egypt and the National Bank of Egypt (NBE) have issued 15 percent-return saving certificates on the first day of their issuance.

A banker at NBE, Egypt’s largest bank, said that the bank reduced the return deposits on dollar savings certificates to 1.25 percent from 3 percent for three years prepaid certificates, and to 1.35 percent from 3.75 percent for five-year certificates, and to 1.5 percent for the new 3-year gold certificate.

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