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Egypt shares await fresh stimulus to resume rally amid lack of catalysts - Daily News Egypt

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Egypt shares await fresh stimulus to resume rally amid lack of catalysts

Main benchmark extended downward trajectory last week on sell-off streak

Egypt shares are seen by analysts to extend their sideways move, awaiting fresh catalysts to resume rally, as investors are tracking any signs from the Central Bank of Egypt (CBE) regarding resuming its easing cycle when its Monetary Policy Committee (MPC) meets later this month.

“We could see the market move sideways in the few coming sessions, as investors are waiting the CBE’s decision about interest rates. They could also hunt for the cheap prices and build new positions in blue-chips stock,” said Sameh Gharib, head of technical analysis at Roots Stock Brokerage House.

He added that the index is currently targeting 15,300 points in the mid-term, while its long-term target stands at 15,800 points.

Meanwhile, Ayman Fouda, head of the capital market committee at the African Economic Council, expected the market to move sideways in the few coming sessions until the end of February awaiting fresh stimulus, including earnings season for the listed companies.

The benchmark index EGX30 will see short-term resistance at 15,200 then at 15,300, whereas support is expected at 15,100, the analyst said in a research note.

Meanwhile, the small and medium enterprises’ EGX70 index will see short-term resistance at 773 and 777, whereas support will be seen at 765 and 758 points, he added.

The analyst advised investors and traders to closely watch stocks and to consider quick trades between support and resistance levels for stocks seeing a jittery sideways performance.

Saeed Al Feky, branch manager at Osool Securities, expected the Egyptian bourse to see profit-taking in the few coming sessions.

The benchmark index will likely test 15,200 point this week, Al Feky said, confirming that if the main benchmark index holds above this level, profit-taking will come to an end along with the impact of the geopolitical tensions, while the index will resume its rise and head for 15,500 points.

Meanwhile, market analyst Tony Kamal said in a research note that the benchmark index will move sideways after the profit taking streak.

The performance of blue chips is tracking the main benchmark index’s movement, the analyst added. 

The lack of market-boosting catalysts and the absence of new segments of investors have also attributed to the bearish trend, he explained.

He projected the sideways-to-declining trend to carry on over the coming period until new catalysts boost the market.

For his part, Michael Mamdouh Naguib, customer relations manager at Arabeya Online, said that the EGX30 index has support at 15,300 and 15,000 points, while it has resistance at 15,780, 16,000, and 16,100 points.

On the other hand, the small- and mid-cap EGX70 index is nearing correction at 750 points, Naguib added, pointing out that the index closed last week at 752 points in an attempt to rebound after performing negatively over the past months.

EGX30 shed 1.4% in a week amid weak liquidity

The Egyptian Exchange declined by the end of the fourth week of July, which had only four trading sessions, as Monday commemorated the 23 July Revolution national holiday.

The benchmark index EGX30 lost 1.4% this week, as it closed at 15,199.29 points, as selling pressures continue.

Meanwhile, the small- and medium-sized enterprise index EGX70 dropped 2.4% and ended the week at the level of 734.46 points, while the broader index EGX100 declined by 1.6% to close at 1,896.13 points.

The equal-weighted index EGX50 lost 3.15% and settled at 2,553.06 points.

Analysts think this week’s institutions investors are set to cut their weighting in their respective portfolios for fear of sustaining larger losses.

“I predict Qalaa stock to move in the range of EGP 3.80 and EGP 3.18 in the short term, and to EGP 2.90 and EGP 2.88 should the above-mentioned levels be crossed,” said Mona Mostafa, trading manager at Arabia Online Securities Company.

Qalaa’s stock is in a freefall since July 10 when the Financial Supervisory Authority (FSA) decided to halt trades on the stock that was preferred by institutions and mutual funds. The stock jumped by 187%, prompting the FSA to request a study over its fair value so as to determine the reason behind the hikes.

The main support level for the main index now is 15,050 points, according to market analyst Said El-Fekky.

El-Fekky believes that the anticipation of the central bank decision regarding interest rates led to caution among investors, who will soon seek new positions, which will help the main index target resistance levels near 15,300.

Meanwhile, Samcrete Egypt – Engineers & Contractors is set to delist from the Egyptian Stock Exchange late this year upon fulfilling a number of requirements, but is set to go public again upon compliance with listing requirements.

Samcrete Egypt – Engineers & Contractors was divided into the four entities of Samcrete Engineers and Contractors, Samcrete Building Systems, Samcrete Real Estate Development, and Aldo Heights for Tourist Projects.

The FSA passed a number of modifications as regards registering and cancelling securities, such as increasing shares of the companies to 25% of total stocks or to 0.04% of free-floating capital without going below a minimum of 10% of total capital.

In other market news, the Ministry of Finance (MOF) is looking to generate almost EGP 8bn to EGP 10bn in revenues through listing state-run firms on the Egyptian Exchange (EGX) in fiscal year 2018/2019, the deputy finance minister said.

In March, the MOF stated that it plans to offer up to 23 state-owned companies on the Egyptian bourse at a total value of EGP 80bn as part of the first phase of the government IPOs programme.

These companies include Engineering for the Petroleum and Process Industries (ENPPI), Egyptian Drilling Company, Middle East Oil Refining (MIDOR), Assiut Oil Refining Company (ASORC), and Alexandria Mineral Oils Company (AMOC).

The government IPO programme aims to raise the EGX’s market capital, as well as boosting daily trading volume, according to a statement.

Meanwhile, the financial indicators of Orange Egypt for Telecommunication showed a 77% year-over-year drop in consolidated losses during the first half of 2018, helped by sales growth.

The telecom firm has suffered losses of EGP 252.5m in the six-month period ending June, versus EGP 1.1bn in the prior year, according to a filing to the EGX last week.

Sales increased to EPG 6.6bn in H1 2018, compared to sales of EGP 6.12bn in the corresponding period of 2017.

At the level of standalone business, losses retreated 74% y-o-y to EGP 264.2m, from EGP 1.012bn in H1 2017.

Orange Egypt previously reported EGP 15.9m in consolidated profits in the three months ending March, against losses of EGP 300.6m in the prior year.

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