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Dec 14, 2:25 PM EST

Egypt stock market loses $3B amid oil plunge


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CAIRO (AP) -- Egypt's stock market shares plunged by 22 billion Egyptian pounds (just over $3 billion) in Sunday trading as low oil prices dragged down regional economies.

The benchmark EGX30 index closed 5.23 percent down, with 170 stocks declining and just five showing gains.

Stock broker Yasser Rashad said there was an immediate dip at the start of Sunday's session over fears that share prices would continue to drop for the rest of the week.

Wael Ziada, head of research at regional investment giant EFG Hermes, said the drop is a knock-on effect caused by the steep decline in oil prices. The markets in Egypt and Gulf Arab countries "are correlated in terms of their performance because the investor base intersects."

Oil prices have shed nearly half their value since late June, including a 4 percent tumble Friday that left benchmark U.S. oil prices at $57.81 a barrel, their lowest level since May 2009, when the U.S. was still in recession.

Egypt is a net importer of oil products, therefore "we should benefit from the decline in oil prices," Ziada said.

However, Egypt relies heavily on aid from Gulf countries to keep its economy afloat. Any net benefit for Egypt from the decline in oil prices hinges on the willingness of the nation's main Gulf benefactors - Saudi Arabia, the United Arab Emirates and Kuwait - to continue to help Egypt despite their declining oil revenues. The three have pledged to continue to help Egypt's ailing economy.

The three oil-rich nations have pumped billions of dollars into Egypt's emptying coffers since the overthrow last year of Islamist President Mohammed Morsi. The three view Morsi's Muslim Brotherhood, an Islamist group, as a threat to their security.

A Bank of America Merrill Lynch Global Research report published last week said that "although GCC support may be somewhat less forthcoming at current oil prices, enough is likely to be provided to muddle through for now."

Besides Saudi Arabia, Kuwait and the Emirates, the Gulf Cooperation Council also includes Bahrain, Qatar and Oman.

In the Gulf region, markets continued to decline on Sunday.

Dubai's stock index dropped 7.6 percent by closing Sunday, the first day of trading for the week. Qatar lost nearly 5.9 percent at closing. Meanwhile, Saudi Arabia and Abu Dhabi's indexes fell more than 3 percent each. Investors are concerned that the drop in the price of oil, which is the backbone of Gulf economies, could lead to less government spending and reduced economic growth.

The Dubai stock exchange has lost 65 billion dirhams, or roughly $17.7 billion, in market value over the past week due to the plummeting crude prices, according to the United Arab Emirates-based The National newspaper.

Last month, an International Monetary Fund official said that Egypt's economy had begun to recover after nearly four years of political turmoil. The EGX30 index has shown overall gains of 28.49 percent so far this year.

The government aims to attract investment by hosting a three-day international economic conference in March. It recently partially lifted fuel subsidies and is pursuing revenue-enhancing measures aimed at deficit reduction.

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Associated Press writer Aya Batrawy contributed to this report from Dubai, United Arab Emirates.

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