Money market experts are not optimistic as they are not seeing any up and coming developments in the market this week with the continuous decline of the dollar against the Egyptian pound, increasing fears of Egypt turning to subsidy cuts, as well the impending global trade war.
The outlook for the Egyptian Exchange (EGX) indicates a transaction volume recovery while indexes continue with a poor performance.
The buying transactions are focused only on selected shares that have seen positive news, such as Edita, which announced a United States dollar denominated loan with the International Finance Corporation, Cairo Development & Investment contracting and QNB ALAHLI for EGP 100m.
This is part of a financing facility worth EGP 250-300m to continue the establishment of Badr University as per the company’s expansion plan.
Mohamed Othman, senior technical analyst at Pharos Holding for Financial Investments, explained that he expects the EGX30 to suffer more selling pressure given its inability to reach the predefined resistance level at 14,165 points, which would pave the way for further decline.
He added that the next support levels are at 13,600 points followed by 13,377 points. However, Othman noted that so long as trading is higher than the support based on 13,377 (previous bottom), the chance of recording further bounce attempts remains valid.
Othman advised not to open new positions until the purchasing forces appear clearly, and that if the index recorded any bounce, it should be dealt with as a movement in the short term and as a good opportunity to reduce purchasing centres and close centres of margin buying.
Head of Research at Faisal Securities Brokerage, Mohamed Abdel Hakim, said that the market may witness a better trading volume compared to the levels witnessed during the month of Ramadan.
However, the absence of incentives and positive news makes the expected trend still down, so he recommended a selective long-term buy in strong stocks whose companies reported positive news and robust growth opportunities.
EGX ended first trading session after Eid El-Fitr holiday on Sunday in green, with EGP 5.8bn billion to market capitalisation, amid Egyptian and Arab purchases.
The benchmark EGX 30 rose 0.90%, or 123.86 points, to close at 13,911.66 points, while EGX 50 increased 1.62%, or 33.34 points, to reach 2,096 points.
On the other hand, small and mid-cap index EGX 70 inched up 0.64%, or 3.85 points, to close at 601.2 points, and the broader index EGX 100 witnessed an increase of 0.73%, or 11.13 point, to record 1,532.54 points.
Market capitalisation gained EGP 5.86bn, recording EGP 750.98bn, up from EGP 745.12bn in the last session before Eid El-Fitr holiday on Monday.
Egyptian and Arab investor were net buyers with EGP 10.24m, and EGP 6.1m respectively, while foreign investors were net sellers at EGP 16.34m.