Egyptian shares are expected to keep their rally alive after the Central Bank of Egypt (CBE) made another cut to interest rates at its Monetary Policy Committee (MPC) meeting.
The bank cut its key interest rates by 100 basis points for the second meeting in a row on Thursday as inflation continued to ease.
It cut its overnight deposit rate to 16.75 percent from 17.75 percent and its overnight lending rate to 17.75 from 18.75 percent.
“The central bank’s decision to cut interest rates by 100 basis points is in line with market expectations; an anticipated move should serve as the main boost to the stock market in the mid-term,” said analyst Sameh Gharib of the Roots Stock Brokerage House.
The EGX30 is now targeting the resistance level at the level of 17,100 points, followed by 17,500 points, while the support levels are now at 16,750 and 16,400 points, Gharib noted.
Meanwhile, analyst Ayman Fouda said that the benchmark EGX30 index has resistance at 16,400 and 16,500 points and has support at 16,200 and 16,000 points.
The EGX70 index has a short-term resistance at 909 and 918 points, while it has support at 885 and 878 points, he added.
Fouda recommended investors hold onto their stocks, in line with performing quick trades between support and resistance levels to protect earnings and keep a percentage of liquidity in investment portfolios to add new purchasing positions near support levels.
Meanwhile, the Egyptian Exchange (EGX) made new leaps during the first quarter (Q1) of 2018.
The EGX30 gained 16.19%, or 2,431.01 points, and ended Q1 at 17,450.15 points, with traded volumes reaching 15.5bn shares with a total turnover of EGP 63.47bn.
The market capital rose by EGP 149.2bn to EGP 974.17bn.
The small and medium enterprise index EGX70 added 5.23% to close the quarter at 870.97 points, while the broader EGX100 went up by 13.52% to 2,238 points.
The equal-weighted index EGX50 increased by 16.26% and settled at 2,986 points.
The EGX reached new all-time high during March, recording its seventh consecutive month of growth.
The main index was supported by a number of economic catalysts, including the announcements regarding the government’s initial public offerings (IPOs) for a number of publicly-owned companies, as well as the listing of B Investments, the presidential election, and finally the awaited CBE decision to cut interest rates by 1%.
Foreign investments also supported the market’s performance with a record EGP 4.49bn of net purchases.
Best monthly gain since flotation
In March, the benchmark index EGX30 gained 12.78%, or 1,977.46 points, the biggest monthly gain since November 2016 when the CBE decided to float the local currency and free the exchange rate of the Egyptian pound, and ended the month at 17,450.15 points.
The market capital rose by EGP 81.8bn to EGP 974.17bn.
The small- and medium-sized enterprise index EGX70 rose 1.19% to 870.97 points.
The broader index EGX100 went up by 6.2% to 2,238 points.
Meanwhile, the equal-weighted index EGX50 added 8.78%, settling at 2,986 points.
The market should expect higher liquidity being pumped in the upcoming two sessions after the new listing, said the head of the research department at El Marwa for Securities and Brokerage, Mohamed El-Naggar.
The EGX30 is now targeting resistance levels at 17,280, then 18,500, in case of maintaining the support at 17,000 points.
The EGX saw positive performance during the week that also witnessed the presidential election.
The fourth and last week of March saw the main index reach yet another all-time high, exceeding the level of 17,450 points.
The benchmark index EGX30 gained 2.26%, or 385.57 points, during the week, settling near 17,450.15 points.
Traded volumes amounted to 2.8m shares with a total turnover of EGP 7.8bn.
The market capital ended the week at EGP 974.17bn, adding EGP 10.5bn.
The small and mediuma enterprise index EGX70 declined by 0.83% to 870.97 points.
The broader index EGX100 decreased by 0.59% to 2,238 points.
Meanwhile, the equal-weighted index EGX50 added 2.3% and settled at 2,943 points.
On another note, Talaat Moustafa Group Holding’s (TMGH) ordinary general meeting (OGM) has approved a cash dividend distribution of EGP 350.8m, with a per-share dividend of EGP 0.17, to shareholders for 2017.
The OGM has also approved the annual financial statements and the board of directors’ report for the year ending December 2017.
Earlier this month, the Egypt-based property developer posted a 67% year-over-year surge in profits for the full year 2017, registering EGP 1.38bn from EGP 828.9m a year earlier.
TMGH’s capital amounts to EGP 20.6bn distributed over 2.06bn shares at a par value of EGP 10 per share.
Meanwhile, Arabian Food Industries Co’s (Domty) board of directors has proposed retaining 2017 profits, except for employees’ shares.
The board has decided to hold the company’s ordinary general meeting on 19 April 2018.
The firm also posted a 140% year-over-year hike in consolidated profits during 2017, as net profit stood at EGP 61.52m from EGP 25.5m.
The dairy products company’s sales doubled to EGP 2.25bn in the year ending December 2017, up from EGP 1.7bn a year earlier.
Moreover, the Egyptian food industries firm posted EGP 49.9m in standalone profits in 2017, versus EGP 23.16m in 2016.
Domty had previously reported EGP 30.6m in sales for the three months ending December 2017.