by Marwa Yahia
CAIRO, June 6 (Xinhua) -- As Egyptian stock exchange lost more than 1 billion U.S. dollars with the main EGX30 index dropping 2.6 percent to 5,083 points on Wednesday, analysts said investors' fears of Egypt's instability and a political crisis between Cairo and Ethiopia over Renaissance Dam is to blame for the stock market slump.
The EGX30 index continued its downward trend Thursday, shedding 0.21 percent to 5,061 points, while foreign investors, who represent around 39 percent of the market, tending to sell the negatively impacted trading.
Experts said the tensions between Egypt and Ethiopia sparked by the dam that is planned to be built on the Blue Nile and will affect the Egyptian share of water, as well as the expected massive anti-government protests called upon by Rebel campaign on June 30 have been the main reason behind the falling stock market.
"The performance indicated the market sentiment of uncertainty about the political developments," Mohsen Adel, a financial expert and also the chairman of the Egyptian Association for Financial and Investment Studies, told Xinhua.
The selling pressure from dealers due to the speculation policy and the absence of investments incentives have lead to the rush selling, Adel explained.
Fakhry el-Fiqy, an economics professor at Cairo University, blamed the stock market's situation on the current government, which he said "failed to handle the economic issue in a proper way. "
"Egyptian economy is under great pressure, with big budget deficit, high inflation rate, high unemployment rate and low credit ranking," Fiqy pointed out, adding "stock market is just a mirror reflecting the bad economic situation."
He echoed Adel by saying "worries over massive demonstrations expected on June 30, and failure to deal with the Nile issue added to the reasons behind stock market plunge."
"Why the government doesn't give priority to the economic issue and why it is reluctant to finish the economic reform program required by the International Monetary Fund (IMF)?" Fiqy wondered.
"Reaching an agreement with the IMF to get a 4.8 billion dollars loan will definitely send an encouraging message to the Egyptian economy, and will also positively affect stock market," said Fiqy, who is also a former Assistant Executive Director for the IMF.
Despite Egypt's efforts to push for reconciliation with businessmen of the Mubarak's era to lure more investments, the results weren't that aspired, he added.
Egypt is currently suffering from an ailing economy after two years of political chaos and unrest after its upheaval that ousted the former President Hosni Mubarak.
In an attempt to overcome its economic crisis, Egypt is working on getting the rescue loan of 4.8 billion dollars from the IMF to boost its economy plagued by budget deficit and declining foreign currency reserves.
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