Egypt shares are seen by analysts to move sideways in the short term ahead of the imminent Ramadan season which is marked by weak market activities and thin trades, but blue-chips stocks are seen as a boost to prop up market in the mid-term, analysts said.
The Egyptian Exchange (EGX) is likely to maintain the sideways-to-declining trend on this week, analysts told Mubasher.
The EGX is expected to see a sideways trend today until blue-chip stocks resume seeing momentum, head of the capital market committee at the African Economic Council, Ayman Fouda said.
Stocks have faced a slight fall last week, pressured by sell-off, Fouda highlighted.
The EGX30 index has a short-term resistance at 15,262 and 15,320 points, while it has support at 15,100 and 15,050 points, he added.
Moreover, the small- and mid-cap EGX70 index has resistance at 680 and 688 points, while it has support at 669 and 660 points.
For his part, Osama Naguib, head of technical analysis at Arab Finance Securities, said that the EGX30 index is still moving above the main support level of 14,600 points and below main resistance at 15,300 points.
The benchmark may retest 15,300 points if the heavyweight Commercial International Bank (CIB) settled above EGP 71.5, he noted.
He also pointed out that the index could see further gains and move toward 15,800 and 16,000 points if it breaks the main resistance level.
“Seasonal factors like Ramadan and the next day-off are all factors to weigh the market in the short term,” he added.
The EGX last week announced four official holidays in April and May.
Furthermore, the EGX will be closed on Thursday, 25 April, on the occasion of Sinai Liberation Day, according to the EGX’s statement.
The EGX will suspend trades on Sunday and Monday, 28-29 April in celebration of Easter and the spring holiday of Sham El-Nessim, respectively. The EGX will resume trades on Tuesday, 30 April.
The market will be shut on Monday, 1 May, on the occasion of the Labour Day holiday, the statement said, adding that the EGX is to resume trading activity on Thursday, 2 May.
Last week, The EGX indices ended almost flat, with market capitalisation gaining around EGP 1bn.
The benchmark EGX30 index inched up 0.08% to 14,870 points, while the small- and mid-cap EGX70 index declined 0.68% to 658.74 points.
The broader EGX100 index went down 0.55% to 1,682 points and the equally-weighted EGX50 index grew 0.1% to 2,319 points.
Market capitalisation increased to EGP 810.4bn on Thursday from EGP 809.4bn the year before.
The EGX’s trading volume reached 253.32m shares, while the market’s liquidity hit EGP 1.21bn.
Egyptian investors were net sellers with EGP 365.52m, while Arab and foreign investors were net buyers with EGP 369.44m and EGP 3.91m, respectively.
In market news, Pharos Securities has announced that Midfert Egypt for Investment acquired a 1.98% stake in International Agricultural Products in International Agricultural Products (IAP).
Midfert bought 1.67m of IAP’s shares in consideration of EGP 5.67m, according to a company statement released on Wednesday.
The IAP’s net profit went up EGP 4.96m in 2018, compared to EGP 4.48m a year earlier.
Meanwhile, Talaat Moustafa Group Holding (TMGH), GB Capital, and EFG Hermes have signed an agreement to launch a mortgage finance joint venture (JV).
The new company will offer property units at competitive prices tailored for average Egyptian households, TMG Holding’s CEO, Hisham Talat Moustafa stated, according to a company statement released on Wednesday.
We know that several years of high inflation have eroded consumer purchasing power. And as Egyptians, “we also know homeownership remains a cornerstone of a society that sees more than 900,000 couples each year marry and start new lives,” GB Auto’s chairperson, Raouf Ghabbour said.
The new JV’s paid capital will reach EGP 150m and is expected to be increased gradually to EGP 250m.
Talat Moustafa announced that TMG Holding activities would account for 90% of the volume of new JV’s business.
This JV is the natural evolutionary step to help grow the mortgage business in Egypt and expand our non-bank “financial services platform, which today includes leasing, microfinance, fintech-enabled consumer finance and factoring,” EFG Hermes Holding’s group CEO Karim Awad revealed.
The CEO and Managing Director of TMGH, Talat Moustafa, said that the real estate market in Egypt is not witnessing a slowdown currently.
In another context, Oriental Weavers Carpet’s general assembly has approved distributing bonus shares to shareholders to increase the company’s capital.
The general assembly agreed to raise capital via distributing bonus shares at 1-for-2 shares that will be financed from the company’s reserves, according to a filing to the EGX on Thursday.
In March, the household durables firm announced that it was seeking to boost its capital to EGP 665.1m instead of EGP 443.4m.
Oriental Weavers previously reported consolidated profits of EGP 550.23m for the full-year 2018, versus EGP 741.7m a year ago, including minority shareholders’ rights.
Meanwhile, the EGX on Thursday has suspended trading on Rakta Paper Manufacturing’s stock until the firm publishes the decisions of its general assembly meeting held on 17 April.
The suspension becomes effective as of Thursday, 18 April, according to the EGX’s statement.
The company incurred losses worth EGP 57.31m during the period between July 2018 and January 2019.
In earning news, Alexandria Mineral Oils Company (AMOC) reported a 69% year–over-year (y-o-y) drop in profits for the first nine months of fiscal year (FY) 2018/19.
Net profits amounted to EGP 329.3m during the nine-month period ended in March, compared to EGP 1.05bn in the same period a year ago, according to a filing to the EGX.
The state-run oil firm ascribed the drop in its nine-month profits to an increase in the cost of raw materials.
Total sales increased to EGP 11.14bn by the end of March, from EGP 10bn in the same period of the prior year.
Noteworthy, the company posted a 62% y-o-y decline in profits for the first half of the current FY, recoding EGP 278.4m.
In another note, Alexandria Flour Mill Company (AFMC) reported a 35% y-o-y drop in its profits during the first nine months of FY 2018/19, according to a filing to the EGX.
Meanwhile, Net profits reached EGP 23.84m during the nine-month period ended in March, compared to EGP 36.96m in the same period a year earlier.
The board of directors of Ajwa Group for Food Industries-Egypt has decided not to contribute to the capital increase of Orouba Agrifoods Processing Company.
The decision stemmed from a shortage in liquidity, Ajwa said in a EGX statement.
Last week, the EGX has suspended trading on the stocks of Ajwa Group for Food Industries starting from Tuesday’s trading session.
Suspension of trading on the stock of Ajwa Group for Food Industries becomes effective as of 16 April until receiving all decisions of the board of directors, the EGX said.
It is worth noting that Ajwa Group for Food Industries reported a 533.8% y-o-y increase in consolidated net losses to EGP 30.11m in 2018, compared to EGP 4.75m in the prior year.
Meanwhile, Misr Hotels reported an 18.5% y-o-y profit increase during the first nine months of the current FY, pushed up by the occupation of The Nile Ritz-Carlton Hotel.
The company’s profit reached EGP 191.67m from July 2018 to the end of March 2019, compared to EGP 161.73m in the year-ago period, according to a EGX statement.
Revenue increased to EGP 391.14m in the nine-month period ended 31 March versus EGP 359.42m a year earlier.
Misr Hotels’ share in the revenue of The Nile Ritz-Carlton grew to EGP 272m in the first nine months of FY 2018/19
In other company news, Middle Egypt Flour Mills announced that the company’s board has approved the estimated budget for FY 2019/20, according to a statement to the EGX.
The company expects a surplus worth EGP 52.5m in FY 2019/20, down 22.47% from an expected profit of EGP 67.72m this year.
Middle Egypt Mills noted that it eyes revenues of EGP 953.7m in the coming FY, against EGP 1.01bn in FY 2018/19.
The Egyptian firm, which is a subsidiary of the Holding Company for Food Industries, seeks to invest EGP 72m this year.
Meanwhile, Elsewedy Electric Company has announced that the operations in its plants in Sudan were not suspended.
The Egypt-based company’s activities in Sudan accounted for 1.1% of its total profit during the FY ended 31 December, according to a EGX statement.
Following months of demonstrations, the Sudanese army arrested President Omar Al-Bashir, who ruled Africa’s third-largest nation for 30 years.
The army took other extraordinary measures including the announcement of a state of emergency and a nationwide ceasefire, in addition to the suspension of the constitution.
In other company news, the preliminary financial statements of Alexandria Container and Cargo Handling Compant showed a decline of 21.63% in profits during the period from July 2018 to March 2019 when compared to the corresponding period a year earlier.
Earnings shrank to EGP 1.34bn during the nine months ended on 31 March 2019 from EGP 1.71bn a year ago, according to Alexandria Container’s initial income statements to the EGX.
The initial statements of Alexandria Container registered EGP 2.07bn worth of revenues in the nine-month period ended in March this year from EGP 2.18bn in the corresponding period a year earlier.
From July 2018 to January 2019, Alexandria Container posted EGP 1.09bn profits compared to EGP 1.3bn in the same period a year ago.