The Egyptian Exchange (EGX) witnessed some losses at the beginning of last week, affected by geopolitical tensions in the region. However, the market limited its losses by the weekend session. Traders expected the market to see more upside in the short term.
Mohamed Hassan, managing director of Medaf Asset Management, expected the benchmark index EGX30 to continue its rise to 14,000 points in the short term.
He pointed out that the EGX30 reached the main support level at 13,000 points at the beginning of last week’s trading sessions, and then went beyond the support area to close at 13,729 points, with the shares’ value rising as well.
Hassan added that regional stock markets also witnessed a significant decline last week after military escalation between the United States and Iran, and the Libyan crisis in the first half of last week. In addition, oil prices jumped sharply after the escalation, making Brent price reach $71.75 a barrel, but the gains were later reduced to less than $65 a barrel.
Moreover, gold rose above $1,600 an ounce for the first time in 7 years, but it fell again to $1,545 an ounce.
He pointed out that the inflation reading is likely to play an important role in the CBE’s decision on interest rates when the Monetary Policy Committee meets next Thursday, 16 January, after inflation rises to 7.10%.
Mohamed Kamal, head of Corporates Department at Al-Rowad Securities Brokerage, said that last week witnessed major decline in both global and Arab markets, due geopolitical tensions. The EGX was one of the most affected, due to the “margin call” and the closing of open positions. The stock market started to recover due to the decline of regional tensions at the end of last week,.
Kamal believes that the decline of share prices in the current period could be the lowest these shares will reach in this quarter, and the market is expected to return to its path of a corrective rise.
He pointed out that the important resistance areas are at 14,050-14,200 points which should be taken into consideration, and support areas are at 13,000 points
He advised investors to stop losses if the market crossed the support area downward, and to avoid buying by margin.
Ibrahim El Nemr, head of the Technical Analysis Department at Naeem Brokerage, said the last week witnessed a negative reaction from investors and a more violent fall in foreign markets, after which the market began to take a positive curve by reducing the losses it started last week.
Then, the market was able to bounce back to the green zone during the weekend sessions with strong increases. El Nemr expected the EGX30 to surpass the level of 13,700 points during Sunday’s session targeting 14,100 points as a resistance zone, describing it as a “gateway to further rise.” He also predicted the local stock market to test 14,800-15,000 points in the coming weeks.
The EGX30 recorded a decrease of 1.22% the last week, closing at 13,729 points, and the index of small and medium companies EGX70 decreased 2.6% to 522 points.
The broader index EGX100 fell 2.5% to 1,363 points, while the EGX30 cap fell 2.08%, closing at 15,900 points.
Moreover, market capitalisation reached EGP 696bn during the week, down 1.5% from the week before last, which amounted to EGP 706.7bn, and shares acquired 20.8% of the total trading value, while bonds seized about 20.8% of transactions.
The total value of trading on the EGX reached EGP 13.2bn last week, while the total trading volume reached 682m securities executed over 85,000 transactions, compared to a total trading volume of 657m valued at EGP 5.6bn and executed over 61,000 transactions in the week before last.
Egyptians accounted for 65.5% of the value traded in listed stocks after excluding deals during the period, while foreigners had 26.2% and Arabs by 8.3%.
Foreigners and Arabs were net sellers at EGP 5m and EGP 64.1m, respectively, after excluding deals in listed stocks.
Noteworthy, Egyptians have accounted for 66.4% of the value traded in listed stocks after excluding deals since the beginning of the year, while foreigners scored 25.4%, and Arabs recorded 8.2%.
Since the start of the year, foreigners and Arabs have been net sellers at EGP 9.8m and EGP 63m, respectively, after excluding deals.