CAIRO, Feb 25 (Reuters) – Egyptian shares fell 3.6 percent on Sunday with many key stocks down the maximum five percent amid investor concern about Turkey’s economic crisis and weakness on other emerging markets.

 

Egypt’s benchmark Hermes Financial Index slumped 252.12 points, or 3.6 percent, to 6,709.88, hitting a new year-low and approaching its lowest level in more than four years. The broader CIBC index fell 1.38 points, or 1.8 percent, to a new year-low of 77.41.

 

“Turkey led foreign investors to squeeze their investments in emerging markets worldwide,” said Amr Zedan, fund manager at Cairo Capital Group.

 

Turkey’s crisis-hit markets braced for more uncertainty at the weekend as central bank governor Gazi Ercel looked set to be the first casualty of last week’s currency collapse, which saw the lira fall 36 percent against the dollar and interbank lending rates spiral to 5,000 percent or more at times.

 

Global concern over telecoms shares, which is a key sector on Egypt’s bourse, and lingering concerns about the Egyptian economy added to the cautious mood, brokers said.

 

“By the time the stock market closed, MobiNil, OT, CIB and OCI were all offered at prices five percent down with no bids,” said Amira Berzi, account executive at Prime Securities.

 

EMERGING MARKETS SHUNNED

Brokers said the effects of the Turkish economic crisis was curtailing investor interest in emerging markets.

 

“When an emerging market crashes, like Turkey, it becomes standard procedure for foreign fund managers to decrease their weighting in the whole of emerging markets,” Berzi said.

 

Amr Zedan, fund manager at Cairo Capital Group, said he believed it was only a temporary setback.

 

“I see that the prices on company fundamentals are very attractive,” he said, adding that he expected the market to recover by next week.

 

In the short-term, however, brokers were braced for further falls. “I expect the market to continue its downtrend in the coming two days,” Ahmed Abul-Hassan, institutional sales trader at ABN AMRO Delta.

 

Volumes on the Cairo bourse were moderate, totalling 42.1 million pounds.

 

Brokers said Egypt’s bourse had responded to steep falls in some Egyptian London-listed shares, or global depository receipts (GDRs), on Friday. The GDR of regional cellular operator Orascom Telecom (OT) fell seven percent and that of Commercial International Bank (CIB) lost five percent.

 

On Sunday, CIB, Egypt’s largest private bank, shed 1.89 pounds, or five percent, to 36.04. The company’s 2000 financial results are due out late on Tuesday. Orascom Telecom was down 1.93 pounds, or five percent, at 36.78 pounds

 

Bassim Arida, head of institutional sales at HC Securities, said investors were also tracking the Nasdaq.

 

“We are taking the lead from the States, especially the Nasdaq index,” he argued. The Nasdaq composite index has fallen around 55 percent from its peak last March. ($1=3.88 Egyptian pounds)