The Egyptian Exchange (EGX) saw further decline on Monday by 7.31%, to settle at 10,983 points, affected by a wide downward trend in Arab and international stock markets, after the global panic caused by the Coronavirus (COVID-19) outbreak, approaching the levels before the pound floatation in 2016.
Brent crude futures fell 31% to $31.02 a barrel, and WTI crude fell 27% to $30 a barrel in the first few minutes of Monday’s session, after the Saudi decision to reduce sale prices and increase oil production.
Adel El Waly, managing director and chief investment officer at Al Ahly for Financial Investment Management, said the global economic crisis, which has even affected oil prices, was the reason behind the EGX’s large decline.
He added that the market now fears the crisis will spread to different economic sectors.
Ibrahim El Nemr, head of technical analysis at Naeem Securities Brokerage, said the EGX is not isolated from the global stock markets, which are also experiencing major declines due to COVID-19 fears.
It’s necessary for investors to follow the market conditions closely as such crises cannot be predicted.
Pharos Holding’s Brokerage Manager Ahmed Abu Taleb said the unstable situation in stock markets and the increasing deaths from COVID-19 might cause huge a deflation in the global economy, which would definitely affect the Egyptian market.
He ruled out that the margin call was the reason behind the fall of share prices, noting that selling pressure was significant on shares with relatively greater weight. He advised dealers to watch for a global improvement in conditions and signs that the situation is under control.
Moreover, Shawkat El Maraghy, Managing Director of Prime Securities, said that the reactions of EGX dealers were exaggerated. He added that now is the time for long-term investments, whether by buying or collecting shares of financial efficiency whose prices have decreased due to unjustified selling pressure.
He advised dealers to wait and not follow the selling wave, which may be inaccurate.
Mohamed Asran, Managing Director of Arzan Brokerage Company, warned against dealing with marginal purchases, pointing out that during the times of epidemics and major events, such risks should be completely avoided.
Asran advised dealers to maintain the largest part of liquidity in investment portfolios until conditions stabilise.
On Monday, the blue-chip index EGX30 dropped 7.31%, or 865.91 points, to close at 10,983.48 points. The EGX70 EWI index for small and medium shares declined by 5.04% to close at 1,083.4 points, and EGX50 index fell by 5.95%, settling at 1,535.7 points.
The EGX30 capped index fell 7.3% to close at 12,615.1 points, while the broader EGX100 index fell 5.71%, stabilising at 1,167.2 points.
EGX management decided in the first hour of Monday’s session to halt trading for half an hour because its indicators exceeded the maximum allowed retracement rate of 5% during the session, for the broader EGX100 index.
EGX management suspended trading on the shares of 99 companies for 10 minutes, after they exceeded the 5% decline.
The market recorded a trading value of EGP 822.74m, in the trading of 256.74m shares, through 23,900 transactions on shares of 169 listed companies, of which only five shares rose, and the prices of 141 securities fell. The share prices of the other 23 companies have not changed, causing market capitalisation to reach EGP 594.07bn, losing about EGP 33bn in the session.
Net dealings of Egyptians alone went towards buying with a value of EGP 93.4m, accounting for 58.38% of transactions. On the other hand, net transactions of Arabs and foreigners went towards selling, recording EGP 11.22m and EGP 82.2m, accounting for 7.99% and 33.63% of transactions, respectively.
Individuals executed 45.95% of transactions, with a tendency towards selling, with the exception of Egyptian individuals who recorded a net purchase of EGP 58m. Institutions seized 54.05% of transactions, with a tendency towards purchasing, with the exception of foreign institutions that recorded a net sale of EGP 80.65m. Egyptian and Arab institutions recorded net purchase value of EGP 35.33m and EGP 7.99m, respectively