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EGX expects good performance as CIB deposit certificates climb on LSE - Daily News Egypt

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EGX expects good performance as CIB deposit certificates climb on LSE

Slight selling pressure is projected at beginning of Sunday session


Stock market traders project that the Egyptian Exchange (EGX) will be exposed to some minor selling pressures on Commercial International Bank (CIB) shares at the beginning of trading on Sunday.

They expect that this may cast a shadow over the performance of the rest of the shares, particularly as the CIB has the largest relative weight on the EGX.

The performance in general will shift quickly to “positive”, against the background of the strong performance recorded by the bank’s certificates of deposit on the London Stock Exchange (LSE) at the end of the last week’s trading.

There is expected to be some positive offsets caused by the appointment of a new chairperson to the CIB. This has created a state of calm and confidence among investors, especially after the Central Bank of Egypt’s (CBE) assurance that it supports the bank and its Board of Directors.

The CIB’s deposit certificates on the LSE were able to compensate for a large part of the losses accrued during last Thursday’s session. This occurred after the certificate rose 14% by the end of Friday’s trading session, and stabilised at $4.

The certificate had begun trading on Friday on a violent decline of nearly 41% that pushed it towards the $2.05 level, ending transactions on Thursday with a decline of about 17%.

Shawkat Al-Maraghi, Head of the Brokerage Sector at Prime Financial Holding, ruled out any negative repercussions on CIB’s financial performance and its deposits due to the resignation of CIB Chairperson and Managing Director Hisham Ezz Al-Arab.

The reaction to the sudden events that the bank witnessed last Thursday will be slightly reflected on its stock performance during the beginning of Sunday’s trading session. It is expected that the bank’s stocks will be exposed to minor selling pressures that will be easily absorbed by the end of the session.

Al-Maraghi added that foreign sales will also be limited, as the vast majority of foreigners have already exited during the past periods, and as a result, the pressure of selling on CIB shares will not be significant.

This is particularly as those sales are expected to be met with strong purchases on the stock, by portfolios and local funds that want to seize the opportunity of the current decline in stock prices.

Al-Maraghi believes that the expected purchases from local portfolios and funds may also be able to pull the stock market out of the accidental levels under its control for a long time, and breach the 11,500 points resistance level.

Last week, the benchmark index EGX30 closed at 10,987.43 points, recording a decline of 2.96%, whilst the EGX70 EWI posted an 8.22% loss, concluding the period at 1,820.69 points. The S&P index declined by 6.32% and concluded the period at 1,590.6 points.

Topics: CIB EGX LSE

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https://dailyfeed.dailynewsegypt.com/2020/10/24/egx-expects-good-performance-as-cib-deposit-certificates-climb-on-lse/
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