Egypt stock market is expected by analysts to move sideways as turmoil in emerging markets is sending shiver among investors after the Central Bank of Turkey raised the interest rates to 24% in a bid to bolster its currency.
The last few months have seen a massive sell-off in Egypt stock market assets thanks to investor fears over a wider emerging markets shakeup.
“The market could move sideways in the few coming sessions awaiting any signs that turmoil hitting emerging market will finally come to an end,” said, analyst Sameh Gharib of Roots Brokerage.
The Egyptian Exchange (EGX) saw a negative performance in the second week of September, which had only four trading sessions as Tuesday market marks the beginning of the New Islamic year holiday.
The benchmark index EGX 30 declined by 3.12% or 494.5 points and closed at the level of 15,308.62 points.
Concerns regarding a drop in the currencies of emerging markets and selling pressures drove the index down after falling to surpass resistance at 16,000 points, Gharib added.
The main index continues to move horizontally between 15,000 and 16,000 points, maintaining support at 15,250 and 15,000.
The small and medium sized enterprises index EGX 70 ended the week at the level of 742.74 points, losing 0.89%.
EGX 70 will continue to target the resistance level at 755 points, after moving horizontally between 730 and 755 points.
The broader index EGX 100 fell 1.9% to 1,900.13 points, while the equal weighted index EGX 50 dropped 4.9% and ended the week at 2,450.74 points.
Market capital decreased by EGP 25bn to EGP 849.6bn, compared to its level by the end of last week at EGP 874.67bn.
A recent report issued by Shuaa Capital said that the EGX 30 index support and resistance levels are 15,070 and 16,022, respectively. For the EGX 30 index to reach those levels, the top five stocks will all have to either decline by 5.1% or increase by 6.5%, respectively, all else the same.
“We note that the EGX 30 index is only 15.9% below its all-time high, so it is not yet in a bear market mode which we define as a 20% drop off the prior peak (i.e. the 14,730 level). Meanwhile, if each of the EGX 30 constituents hit its price target, the EGX 30 would be worth 20,621,” the report added.
Foreign investors were net sellers last week with EGP 44.5m, while Egyptian and Arab investors were net buyers with EGP 24.9m and EGP 19.5m.
Meanwhile, the extraordinary general meeting (EGM) of Obour Land for Food Industries had agreed to raise the company’s issued capital to EGP 400m from EGP 200m by distributing bonus shares.
The EGM has approved a capital increase of EGP 200m distributed over 200m shares at a par value of EGP 1 per share through distributing 1-for-1 basis bonus shares, the company added in a filing to the EGX.
Obour Land last reported a 19.1% y-o-y increase in consolidated profits for the first half (H1) of 2018.
Net amounted to EGP 114.37m in the six-month period ended June, up from EGP 95.99m in the year-ago period, the company said in a filing to the EGX.
In other market news, Arafa for Investment and Consultancies (AIVC) reported a 35.8% y-o-y rise in consolidated profits for H1 2018.
Net profit amounted to EGP 3.26m in the six-month period ended June, versus EGP 2.4m in the same period a year earlier, the company said in a statement to the EGX.
Revenues grew to EGP 117.96m at the end of June, versus EGP 114.37m in H1 2017.
As for the standalone business, the company has turned profitable in H1 2018 with EGP 3.48m, against a net loss of EGP 531,900 in the year-ago period.
Arafa previously posted a net profit of EGP 1.88m in the three-month ended April, versus EGP 2.6m in the corresponding period of 2017.
Meanwhile, Cairo Investment and Real Estate Development has set an indicative price ranging between EGP 5.45 and EGP 6.3 per share to its stake offered for sale on the EGX.
The value of shares ranges between EGP 3bn and EGP 3.45bn prior to the initial public offering (IPO), the company said in a statement on Monday.
The company is expected to unveil the final price of the IPO on 22 September as it will be set in accordance with the book building system, the statement added.
Subscription in the IPO is likely to take place starting from 10 September until 25 September, the company indicated.
Trading on Cairo Investment’s stock is set to commence as of 1 October, the company said.
The Financial Regulatory Authority (FRA) approved to publish the offering bulletin for Cairo Investment to sell a 37.84% stake of the company’s capital.
In August, Cairo investment announced it was intending to float a 37.84% stake, or up to 207.2m shares, on the EGX.
In other market news, Egypt Kuwait Holding (EKH), listed on Boursa Kuwait and the EGX, announced that its subsidiary, National Electric Technology Co, has started building an additional power plant at Borg El Arab with around EGP 550m in investments.
The project aims to boost power capacity of National Electric’s plant to 115 MW from 75 MW, EKH added in a filing to the EGX.
The company is expected to complete these expansions in the first quarter of 2020, according to the filing.
In the same vein, the company noted that this project will be implemented after the completion of the first phase of a power plant at Borg El Arab with around EGP 460m in investments.
EKH last said that one of its subsidiaries would build a factory for pressed wood production with EGP 2bn in investments.
The factory will be established over two phases; the first at cost of EGP 1.1bn ($61.4m), whereas the second will be constructed with EGP 900m ($50.2m) in investments.
The project will be set up in the Upper Egypt governorate of Beni Suef, and construction is set for completion to begin the trial operation with a capacity of up to 150,000 cubic metres in H1 2020.
