Egypt’s shares halted their rally last week as investors started to book gains from a sustained market rally, with the main benchmark index hovering around an all-time high, but the market is expected by analysts to resume a rally amid new catalysts, including the earnings season.
The Egyptian Exchange (EGX) lost more than 460 points, equivalent to 2.54%, last week.
The benchmark EGX30 index is hovering around 18,500 points due to the upward trend seen by blue-chip stocks recently, mainly the heavyweight Commercial International Bank (CIB), according to Saeed El-Feki, branch manager of Osool ESB Securities Brokerage.
Blue chips are projected to see another wave of profit-taking, he added, pointing out that some liquidity will be added to blue-chips stocks.
The EGX30 index has support at 18,000 points, El-Feki indicated, projecting that the index would not break this level even during the anticipated profit-taking.
The EGX is likely to extend its bull run in the medium- and long-term, he noted.
For his part, capital market expert Michael Mamdouh Naguib said the EGX30 may test 18,500 points as a new level during this week’s session, noting that this level requires a higher trade volume.
CIB will rebound from EGP 92 to maintain the upward trend during May, he highlighted.
The index has support at 18,080 and 18,000 points, he said, pointing out that the index would not see profit-taking before hitting resistance at 18,500 points.
The EGX’s indices grew during April, as the benchmark index EGX30 recorded its eighth successive monthly increase amid high demand from foreign investors.
Over the month, EGX30 added 845.42 points, or 4.84%, to close at 18,295.57 points, with 6.9bn shares traded and a turnover of EGP 26.3bn.
CIB’s share price surged 5.44% to EGP 93.85.
Market capitalisation reached EGP 1.006tn in April versus EGP 974.17bn a month earlier.
The EGX70 for small- and medium-sized enterprises gained 0.71% to 877.19 points, while the EGX100 soared 3.06% to 2,306 points. The equally-weighted index EGX50 went up 3.42% to 3,088 points.
Egyptians were mostly sellers, with total sales of EGP 3.7bn, while foreigners and Arabs were mostly buyers, with total purchases of EGP 3.48bn and EGP 295.5m respectively.
The benchmark index will grow in the medium- and short-run, pushed up by the positive indicators of the national economy and the government’s planned initial public offerings (IPOs) programme, Rania Yacoub, chairperson of 3Way Finance, said in a research note.
The real estate, petrochemicals, and telecommunications sectors are expected to attract more liquidity in the coming period, Yacoub added.
Hesham Hassan of Acumen noted that it is normal that the market witnesses a correction movement after its historic gains.
Mohamed El-Naggar, head of research at El Marwa for Securities and Brokerage, expected the main index to return next week to targeting the 19,000-point level.
Weekly losses amid profit-taking streak
The benchmark EGX30 index retreated 1.87%, shedding 340.3 points to close the week’s final session at 17,832 points.
Meanwhile, the EGX70 index lost 0.83% to 878.68 points, while the EGX100 index decreased 1.18% to 2,293 points, and the equal-weighted EGX50 index was down 1.44% to 3,025 points.
Market capitalisation dropped by EGP 11.89bn and closed at EGP 991.9bn on Thursday.
Turnover amounted to EGP 1.36bn after 230.28m shares changed hands through 31,800 transactions.
Foreign investors were sellers, netting EGP 93.6m, while Egyptians and Arabs were buyers, netting EGP 47.3m and EGP 46.3m, respectively.
CIB’s stock, the market’s heaviest-weighted stock, dropped 1.48% to EGP 93.25, following a turnover of EGP 107.6m.
The majority of the EGX’s leading shares ended last week in the red, led by Qalaa Holding, which dropped 5.24%, followed by Egyptian Resorts Co and Emaar Misr which fell 5.15% and 4.45% respectively.
Last week, Madinet Nasr Housing Development reported a decline in its net profits on the back of lower revenues in the first three months of 2018.
The Egyptian developer logged EGP 313.5m in profits between January and March, down 23% year-over-year from EGP 407.1m.
Madinet Nasr Housing’s revenues retreated to EGP 610.8m in Q1 2018 from EGP 747.9m in the same period of 2017, according to a bourse filing.
Madinet Nasr Housing posted a 21% rise in consolidated profits to EGP 933.05m for the full year 2017 from EGP 768.9m in 2016, while its revenues had increased to EGP 2.4bn from EGP 2bn in 2016.
Meanwhile, Palm Hills Developments (PHD) announced the successful closure of its latest securitised bond issue with Sarwa Capital.
The closed bonds are part of an EGP 346m receivables portfolio of 232 delivered units in PHD’s projects, namely Palm Hills Katameya Extension, Palm Parks, and Hacienda White 2.
After applying a discount rate of 14.83% and deducting various transaction-related fees and commissions, Palm Hills will receive net proceeds of EGP 261m.
The Egyptian-listed developer plans to use the bond proceeds in pre-paying its existing debt, a statement showed Thursday.
The discount rate is calculated based on the average return of the bond’s three tranches.
PHD CEO Tarek Rahman described the bond closure as a “milestone” that was in line with his company’s plans to “deleverage its balance sheet via monetisation of receivables programme of up to circa EGP 2.5bn over two to three years.”
The receivables programme commenced in early 2017, he added.
Meanwhile, Sarwa Promoting & Underwriting’s managing director, Ayman El Sawy, stated that he was pleased with the closing of the second securitisation bonds for PHD, noting that the bonds “maintain the same high credit rating on the back of the strength and quality of the issue structure.”
On another note, the leading Egyptian investment company Qalaa Holdings said it will receive EGP 162m from the sale of its stake in Bonyan for Trade and Development.
The company’s unit MENA Home Furnishings Malls Ltd has signed an agreement to sell its shares in Bonyan for Sky Realty, a subsidiary of Compass Investment Holding, Qalaa Holdings said in a filing to the EGX.
The deal will be closed after implementing some requirements and regulatory conditions, according to the filing. It is worth noting that Qalaa Holdings holds around a 60% stake in Bonyan indirectly.
Bonyan is the owner of Designopolis Mall located on Alexandria Desert Road. Qalaa Holdings’ capital stands at EGP 2bn distributed over 1.4bn shares.