Egyptian shares slump after holiday as devaluation bets fade

Egyptian stocks fell the most in nearly three months as the market reopened after a long weekend and investors ruled out another devaluation of the nation’s currency.

The EGX 30 Index tumbled 3.1 percent to 7,531.59, its biggest fall since Feb. 11, as of 2:30 p.m. in Cairo. Ezz Steel fell 6.8 percent after Al Borsa newspaper reported that the government may reverse a decision to cut natural gas prices for iron and steel factories. The exchange was closed on Sunday and Monday for national holidays, as Arab stocks in the six-nation Gulf Cooperation Council extended declines.

Egyptian shares jumped last month to their highest level since August as investors speculated the central bank would further weaken the pound and spur foreign inflows to the market. After the biggest devaluation in 13 years in March, the currency returned to trading at record prices on the black market after no further weakening took place.

“There was a rally on the back of the devaluation which isn’t expected to continue, so there is no short-term catalyst for the market,” said Sherif Shebl, an equities trader at Pharos Holding for Financial Investments in Cairo. The natural gas prices reports encouraged “negative sentiment on contradictory government decisions,” he said.