Egypt stocks drop after Russia, UK suspend flights in aftermath of Sinai plane crash

CAIRO – Egypt’s benchmark stock index plunged 4.4 per cent on Tuesday after steadily declining since Russia suspended flights to Egypt following the Oct. 31 Russian plane crash in the Sinai Peninsula.

U.S. and British officials have cited intelligence reports as indicating that the Russian passenger flight from the Sinai resort town of Sharm el-Sheikh to St. Petersburg was likely downed by a bomb on board. All 224 people onboard were killed in the crash, most of them Russian tourists.

Last Wednesday, the U.K. suspended flights to Sharm el-Sheikh and two days later, Russia went a step further, suspending all flights to Egypt amid airport security concerns — a move that threatened to further devastate the Egyptian tourism industry, already suffering after years of political turmoil.

The concerns.negative international and external causes, said Amr Elalfy, global head of research at Mubasher Financial Services.

“Internally, you have the Russian plane, the impacted tourism, and the countries that have suspended flights to Sharm el-Sheikh,” said Elalfy.

In addition, the arrest on Sunday of Salah Diab, the owner of the independent daily Al-Masry Al-Youm who was detained with his son, and also the detention the same day of leading investigative journalist and human rights advocate Hossam Bahgat, also dampened the mood in the market, said Elalfy.

Bahgat was released on Tuesday.

“All these things are negative political and economic issues that cast their shadows on the general situation,” said Elalfy.

Separately, reserves have been declining over the past few months, leading to a dollar shortage in the country, making operations more difficult for businesses that rely on imports.

Sharm el-Sheikh is a top tourist destination in the country. Egypt’s tourism industry, one of the main sources of foreign income, was yet to fully recover following years of unrest after a January 2011 uprising that toppled former President Hosni Mubarak.