Egypt stocks likely to extend gains with second tranche of IMF loan, foreigners' purchases

EGX 30 rises 3.5%, or 452 pts, in a week to an all-time high level of 13,822.59

Egypt stocks are expected to extend gains this week after the government secured the second tranche of IMF loan, with foreign investors likely to inject fresh cash in the country's cheap shares.
The International Monetary Fund (IMF) said Thursday that it had approved the second tranche of funds for Egypt after reviewing the country's economic reform programme.
The latest installment, totaling $1.25bn, will bring the total amount of disbursements to about $4bn, or a third of the three-year extended fund facility.
EGX 30, the main benchmark, closed on an up note at 13,822.59 points, ticking up 3.39%, or 452.7 points, with foreign purchases offsetting a sell-off streak carried out by local investors after the Central Bank of Egypt's (CBE) surprise move raising interest rates again by 2%.
Stock market analysts surveyed by Daily News Egypt expected Egypt's shares to extend its gains in the short term, as the government was able to secure the second tranche of the IMF loan, which could be a good stimulus to spur growth.
Two-Cairo based traders expected foreign investors to capitalise on the situation and hunt stocks for cheap prices.
"Foreign investors' purchases propped up the market last week, and their support is likely to offset any sell-off streak from local investors who could prefer to leave the market and turn to banking assets," said Sameh Gharib, head of technical research at Roots Stock Brokerage House.
The CBE's Monetary Policy Committee (MPC) on Thursday, 7 July, announced raising interest rates by 2%, or 200 basis points (bps), and the hike involved increasing the overnight deposit interest rate and overnight lending to 18.75% and 19.75%, respectively, according to a statement citing high inflation rates.
Trading volume last week on the EGX main index stood at 1.68bn shares at a value of EGP 3.6bn.
Market capitalisation closed at EGP 713.85bn, increasing EGP 12.13bn in a week and registering its highest level since August 2008.
The EGX70 leveled up 1.73% to 685.5 points, and the EGX100 gained 1.58%, reaching 1,570.96 points.
The equal-weighted EGX50 index increased 1.41% to reach 2,124.2 points, with a trading volume of 1.8m shares generating EGP 4bn in a week.
The Commercial International Bank – Egypt (CIB) surged 6.75%, or EGP 5.47, reaching EGP 86.5.
On a weekly basis, net purchases of foreign investors reached EGP 37.7m, while Arab investors' net purchases stood at EGP 91.53m. Egyptian investors' sales amounted to EGP 129.3 million.
"The index is expected to test the level of 14,000 pts during the session of this week," Gharib expected.
VanEck Vectors Egypt Index, a foreign fund with investments of $57m in the Egypt stock market, has chosen CIB, Global Telecom, and Hermes Holding as the top three allocations.