Egypt suspends trading in 26 stocks because of blatant market manipulation

Discussion in 'Wall St. News' started by ASusilovic, Oct 14, 2009.

  1. Oct. 13 (Bloomberg) -- Egypt’s EGX70 Index fell the most in almost two months after the stock exchange suspended trading on 26 small and medium-sized companies on concern that some share prices may have been manipulated.

    Nile for Matches and Prefabricated Houses Co., a producer of safety matches, and Rubex Plastics, a maker of acrylic bathtubs, tumbled the most in a year. The EGX70 Index, a measure of small and medium-sized companies, fell 2.9 percent, the biggest decline since Aug. 17, to 848.88 at the close in Cairo. The index has surged 76 percent this year, outpacing the country’s benchmark EGX30 Index, which has gained 48 percent.

    The decision “definitely had an impact, mainly on the small caps,” and increased “negative sentiment,” said Ashraf Akhnoukh, a senior equity sales trader at Commercial International Brokerage Co. in Cairo.

    The stock exchange suspended companies including Egypt ContractingMokhtar Ibrahim, Rakta Paper Manufacturing and GMC Group for Industrial Commercial & Financial Investments, from trading because of gains in the stock price that have not been driven by “material events,” according to the exchange’s Web site. The regulator began suspending some of the companies on Oct. 11.


    “We have some cases of speculation and some cases of manipulation,” Maged Shawky, chairman of the exchange, said in a telephone interview from Cairo today. When asked about possible manipulation, he said, “if proven true, we will take measures.” He didn’t elaborate.

    Ziad Bahaa El-Din, head of Egypt’s Financial Supervisory Authority, which regulates financial markets, pledged in July to clampdown on market manipulation and insider trading. Mokhtar Ibrahim, a provider of construction and contracting services, has risen 127 percent since the beginning of the year, while Rakta, a paper maker, has soared almost three-fold.

    “The suspended companies had their share prices increase significantly in a very short period,” said Khaled Seyam, deputy chairman of the Financial Regulatory Authority. “There had to be a bold decision.” The suspensions remain until the companies disclose their “future plans,” conform to listing rules, and appoint an independent financial adviser to determine the shares’ “fair price,” according to the bourse.

    The suspended companies “represent no more than six percent of the volume of trading” and not more than 5 percent of the market value “which is negligible for the main market,” Shawky said.

    Nile for Matches dropped 14 percent, the most since October last year, to 37.08 Egyptian pounds. Rubex Plastics lost 12 percent to 20.38 pounds.

    Egypt’s benchmark EGX30 Index fell 0.2 percent to 6,811.56.

    The following is a list of the companies whose shares have been suspended from trading:

    Alexandria Portland Cement Co.
    Egyptian Real Estate
    Misr Foam Co.
    Kafr El-Zayat Pesticides & Chemicals Co.
    Rakta Paper Manufacturing
    Delta for Printing & Packaging
    Alexandria National Co. for Financial Investment
    National Investment & Reconstruction
    National Real Estate Bank for Development
    Cairo Oils and Soap
    National Housing for Professional Syndicates
    El Arabia for Land Reclamation
    Amoun Pharmaceutical Co.
    GMC Group for Industrial Commercial & Financial Investments
    Arab Aluminum Co.
    Nasr Co. for Civil Works
    Egypt Contracting Mokhtar Ibrahim
    El Kahera El Watania Investment
    The Saudi Egyptian Investment & Finance Co.
    Gezira Hotels & Tourism
    TransOceans Tours
    Pens & Plastic Industries
    Cairo Educational Services SAE
    National Navigation Co.
    Modern Shorouk Co. for Printing & Packages
    Suez Canal Automotive Repair and Maintenance Co.

    Excellent idea for some other markets, too.:cool:
  2. 1) That's a great idea!
    2) Please tell me you're not dabbling in Egypt. Remember, when emerging markets turn into submerging markets, you know what happens next. :cool: