Egypt 182-day T-bill avg yield rises after protests

Egypt 182-day T-bill avg yield rises after protests

By | 2011-01-27T06:37:00-04:00 January 27th, 2011|News|0 Comments

Egypt's bourse plummets on protest fears

The average yield on Egyptian 182-day treasury bills rose about 400 basis on Thursday, a higher rise than usual that indicates some investors may be holding back from buying government securities amid protests.

The amount of T-bill offered was fully covered, with the average yield rising to 10.62 percent from 10.222 percent at last week’s auction, the central bank said .

The higher yield could indicate the central bank is having to pay more to attract buyers.

Trading has been temporarily suspended on Egypt’s stock exchange after the benchmark index fell over 6 percent for a second consecutive day fears mounted over anti-government protests in the country.

The benchmark EGX30 index dropped 6.25 percent within 15 minutes of the market’s open Thursday. The index had dropped over 6.1 percent on Wednesday, the second day of protests in which demonstrators called for President Hosni Mubarak’s ouster.

Traders said investors had hoped the crisis would end by Wednesday but fresh clashes that day and expectations of a mass demonstration on Friday have largely undercut hopes for a quick solution to the turmoil.

"This is a new thing. We don’t know what happens in these situations," says Osama Mourad of Arab Finance Brokerage.

Investment bank EFG-Hermes , which has offices in nine Arab countries, plummets 12.7 percent. Investors fear unrest could spread throughout the region.

"It has regional exposure, and the whole region is on fire," Mourad says.

Blue-chip Ezz Steel tumbles 11.9 percent, Mobinil 10.4 percent and Commercial International Bank 4.7 percent.

Analysts say they are concerned the political chaos could cause foreign investors to flee the market.

"People are talking about liquidating positions," says Raza Agha, an economist with the Royal Bank of Scotland. "They’re getting unnerved. I think the crucial test is today and tomorrow if these things persist, and obviously how the government responds."