Egypt EGX30 selloff deepens as Yemen war fears hit Gulf markets
Cairo's blue-chip index fell as much as 5% on Sunday before closing 3.56% lower, while Saudi stocks dropped about 3% as fighting in Yemen raised fears of a wider regional war.
The Egypt EGX30 selloff turned into something close to panic on Sunday, Oct. 25, the first trading day of the week in Cairo and Riyadh. Escalating fighting between the Saudi-led coalition and the Houthis in Yemen pushed regional investors to dump stocks, and Egypt's currency kept sliding.
What happened
The EGX30 closed 3.56% lower at about 49,200 points, its weakest close since early April, after trading as low as roughly 48,300 during the session, EnterpriseAM reported. Measured in dollars the drop was 4.45%. The index is still up 17.7% this year, but that compares with 22.1% at Thursday's close. Every member of the index fell, and the intraday slide reached 5%, Reuters data cited by Al Jazeera showed.
Saudi Arabia's main index fell about 3% and Saudi Aramco shares lost 1.1%, Al Jazeera reported, after the coalition said it had intercepted drones and missiles over Riyadh and southern areas. Dubai and Abu Dhabi had already fallen on Friday, when Brent crude touched $116.70, its highest since late April.
Why it matters
"This is panic selling," Randa Hamed, managing director of Okaz Asset Management, told EnterpriseAM, adding that Egypt's retail base now tops 600,000 people, many of whom joined through online onboarding and trading apps. Analyst Hossam El Ghayesh offered a calmer reading: profit-taking after the index peaked near 56,000 in mid-September, investors raising cash for big initial public offerings, and tension around the Red Sea and Bab el-Mandeb. He noted that volumes during the decline have been thin next to the record turnover of the rally, and that retail investors have rushed to free up cash while Banque du Caire's retail offering is still open.
The bigger signal is in the currency and debt markets. Foreign investors were small net buyers of listed Egyptian stocks early last week, but foreign and regional investors were net sellers of $1.13 billion of Treasury bonds and bills from Monday to Wednesday, EnterpriseAM said. The dollar crossed 55 pounds for the first time on Thursday, and on Sunday the central bank quoted 55.75 to buy and 55.89 to sell. The Egypt EGX30 selloff therefore reflects capital leaving the country, not just nervous local traders.
The region's risk premium has been building for weeks, from Houthi strikes on Saudi oil sites to the decision to postpone the FII investment conference to 2027.
What's next
Egypt's parliament is due to vote on Monday, Oct. 26, on supporting the defense of Saudi Arabia if Riyadh asks, after delaying the vote from Oct. 20, Al Jazeera reported. Banque Misr is also set to price the Banque du Caire IPO into this weak market.
A vote for military support could add to the Egypt EGX30 selloff if investors read it as a step toward direct involvement. EnterpriseAM's full market wrap is here.
This article is for information only and is not investment advice.