Egypt's bourse fell on Monday as local investors booked the previous session's gains after the main opposition coalition rejected Islamist President Mohamed Morsi's plan for a constitutional referendum. Opponents accused Morsi of plunging Egypt deeper into crisis when he refused to postpone the vote on a constitution shaped by Islamists.
Morsi scrapped on Saturday a decree giving himself wide powers, spurring a relief rally on the bourse, driven by foreign buyers. Egyptian investors however remain uncertain about the country's political and economic outlook. Cairo's benchmark index fell 1.5 percent to 4,976 points, in volatile trade. The market is trapped within a range of 5,100 and 4,700 since Morsi's decree on November 22 which gave him the sweeping powers.
"The market is trying to bottom near these levels. I am bullish on the medium-term, and I see that a break above 5,100 will be the first signal that the correction probably ended," said Saleh Nasser, chief technical strategist at Cairo's Pharos Holding. Losers outnumbered gainers 22 to eight on the 30-stock index. Palm Hills Development and Orascom Telecom fell 1 and 1.1 percent respectively.
Egyptian investors were net sellers against foreign buyers, according to bourse data. Meanwhile, most Gulf markets also slipped on Monday. In Saudi Arabia, the bourse retreated from Sunday's three-week high with investors reducing positions across sectors. Bellwether Saudi Basic Industries Corp fell 0.6 percent, dairy giant Almarai Co shed 1.9 percent and Etihad Etisalat (Mobily) lost 0.7 percent.
The kingdom's index closed 0.6 percent lower, trimming 2012 gains to 5.1 percent. "There's been a good uptrend so far in the past few sessions however, today there is some correction. There is mixed news from Western economies and Japan, which is officially in recession again," said Abdullah Alawi, assistant general manager and head of research at Aljazira Capital. "People are concerned about the impact on oil prices, which is the main driver."
The euro swooped towards a two-week low and shares and Italian bonds fell on Monday, after Italian Prime Minister Mario Monti's decision to resign early triggered fears of a fresh bout of euro zone uncertainty. But Brent crude oil rose $108 a barrel. Elsewhere, UAE markets closed mixed amid thin volumes in the absence of a catalyst. Abu Dhabi's benchmark slipped 0.2 percent, easing away from Sunday's three-week high. Large-caps weighed on the index with National Bank of Abu Dhabi slipping 1 percent and Abu Dhabi National Energy declining 0.8 percent.
In company news, Dana Gas, the first UAE group to default on an Islamic bond, is offering bondholders $70 million in cash and an average 8 percent coupon on the remaining $850 million of debt in a move to buy time to fix its finances. Meanwhile, the UAE government announced new royalty, or tax, rates for telecom operators Etisalat and du Dubai's bourse ended little changed, up 0.05 percent, trapped in a 50-point trading range for the last five weeks.
"There's a complete absence of regional catalysts and a lot of investors haven't put much money on the table because of tension in Egypt, which is a casino on a near-term basis depending on the day-to-day political situation," said Amer Khan, fund manager, Shuaa Asset Management. Emirates NBD extended declines, losing 0.7 percent after Moody's downgraded the bank's long-term rating by one notch.
Shares in Emaar Properties dipped 0.5 percent despite the developer announcing its first project in a planned multi-billion dollar flagship development on Sunday. Emaar has gained 46.3 percent year-to-date, helped by an improving real estate market in the emirate. Elsewhere, Qatar's benchmark slipped 0.2 percent, also trading sideways.
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