The Egyptian stock exchange finally reopened on Wednesday this week after having been closed for approximately seven weeks following political upheaval in that country.

Yesterday, as expected, shares fell for the second day, sending the benchmark index to a 23-month low, as international investors sold holdings to free money locked up for almost two months during the bourse’s closure.

The EGX 30 Index retreated 3.7% to 4,950.82 at the close in Cairo, brining the two-day slump to 12%. Bloomberg reports EFG-Hermes Holding SAE, the nation’s biggest investment bank, plunged by the daily limit to the lowest since July 2009. Commercial International Bank SAE slid 9.4%. The broader EGX 100 gained 0.9% after reversing a drop. International investors, including Arabs, were net sellers of EDP164.6 million (US$28 million), with institutional investors responsible for 89% of trading.

Egypt’s economic growth and corporate earnings are set to slow after tourists fled and companies closed following demonstrations that ousted President Hosni Mubarak last month.

In other developments, the head of Egypt’s stock market Mohamed Abdel Salam announced that the exchange has suspended the trading of 46 companies after they failed to meet disclosure requirements. Ezz Steel, the country’s largest publicly traded steel maker, resorts developer Amer Group Holding and Delta Sugar were those suspended, the stock exchange said in separate statements. The reason given for the suspension was that the companies didn’t disclose whether they have assets or shareholders under investigation.

In a televised press conference on state television Abdel Salam said: “The market has been closed for almost 60 days, so we required all companies to tell us how they’ve been affected and if they have shareholders under investigation.” He added that “investors have the right to know the status of their companies”. Trading of at least nine companies resumed after they made the required announcements, including National Societe Generale Bank SAE. Trades in 16 companies, including Ezz Steel, that took place before their shares were suspended will be cancelled, the bourse said.

With the exchange closed today and tomorrow for the weekend, we expect the market to continue to fall when it reopens on Sunday, a function of investors trying to exit positions after the long lock up period, as well as the circuit breakers that the Egyptian Financial Supervisory Authority has out in place to limit how much the market can fall on a daily basis and of course the negative impact of the protests on economic activity. No doubt there will arise some buying opportunities in the turmoil, but the market still has some way to fall yet.

Article produced by the Imara Africa Securities team. Imara is an investment banking and asset management group renowned for its knowledge of African markets.