Egyptian stocks plunged on Monday following news of a travel ban imposed on Onsi Sawiris, founder of Orascom Construction Industries (OCI), and company CEO Nassef Sawiris.
The travel ban was imposed following charges of tax evasion related to the sale of an OCI subsidiary to French cement giant Lafarge five years ago.
The benchmark EGX30 index fell by 2.3 percent to 5,375 points on Monday, while the broader-based EGX70 index declined by 3.03 percent.
Some 150 listed stocks suffered losses, led by heavyweight shares OCI and Commercial International Bank (CIB), shares in which tumbled by 2.74 percent and 2.76 percent resectively.
OCI closed at LE252 per share by the end of the day's trade session, while shares in the Dutch-listed OCI NV tumbled by 6.26 percent to $34 on the NYSE's Euronext exchange.
"The travel ban issued by the prosecutor-general is a huge blow to OCI," Issa Fathi, vice president of securities at the Egyptian Chamber of Commerce, told Ahram Online. "And since OCI is Egypt's largest listed company, the move drove the entire market downward."
Finance Minister El-Morsy Hegazy had earlier lodged the complaint with Egypt's prosecution-general, claiming that OCI owed the state some LE14 billion in taxes on profits the company had reaped from the Lafarge deal.
"The whole case just doesn't make sense," said Fathi. "The real problem is that the Egyptian Tax Authority failed to demand that OCI pay tax on the Lafarge sale back in 2007, and this was a political decision."
Total trade volume on Egypt's stock exchange stood at a mere LE472 million on Monday, as analysts predicted further economic volatility.
"The travel ban will spook investors in the already-struggling market," said Ashraf Abdel-Aziz, head of institutional sales at Cairo-based brokerage Arabeya Online. "We therefore expect further losses over the rest of the week."
Foreign investors were net sellers on Monday, offloading a whopping $13 million in shares. Egyptian and Arab investors were net sellers for the day, picking up LE2 million and LE11 million respectively.
Real estate stocks continued to stumble, meanwhile, with market giant Talaat Mostafa Group Holding Company (TMGH) shedding by 2.96 percent for the day and luxury developer Palm Hills falling by 6.61 percent.