Egypt stocks slump as investors fret over possible Saudi defense role

Egypt's benchmark EGX30 index fell 2.63% on Sunday, wiping out 1,377 points, as investors weighed the risk that the country could be drawn into a conflict with Yemen's Houthis in defense of Saudi Arabia.

President Abdel-Fattah El-Sisi said Saturday that Egypt is ready to take any step to protect Saudi Arabia, under the guidance of King Salman and Crown Prince Mohammed bin Salman. He called on parliament to convene an emergency session to authorize military action should Riyadh request it. The remarks came as clashes between Saudi Arabia and the Houthis in Yemen escalated.

Some foreign, Arab and local institutional investors cut exposure on Sunday in anticipation of possible military escalation, said Hossam El-Ghayesh, a capital markets analyst, in comments to Al Manassa. Foreign investors were net sellers of more than 5.5 billion Egyptian pounds ($103 million) of shares.

El-Ghayesh said the selling pressure is likely to be temporary and that the market may rebound as soon as Monday or Tuesday, with the EGX30 nearing technical support at 49,600 points. A bounce is more likely if regional concerns ease and investor sentiment stabilizes, he said.

The gauge had risen 2.24% earlier this month, ending a nine-session losing streak that erased gains in the second half of September.