Egypt's bourse may be over the worst: analysts

Stock benchmark looks set for another week of modest gains despite the threat of further unrest on Friday

Egypt's stock exchange is likely to continue its rally when it reopens on Sunday despite a move towards profit-taking and the prospect of renewed political protests, say analysts.
The benchmark EGX30 index closed last week at 5,249 points -- a significant rebound from the two-year low it reached on 8 May when it bottomed-out at 4,878 points. The stock market has lost around a third of its value since the beginning of 2011.
"The market is now witnessing a struggle between the seller and the buyer. I think that the buyer will be victorious in the end and send the main index to 5,600 points," says Ibrahim Nimar, head of technical analysis at Naeem Brokerage.
The 4,800 point mark is the danger zone according to Saleh Nasser, president of the Egyptian Society of Technical Analysts, who thinks the EGX30 has climbed out of short-term danger.
"The market already went down sharply and now it's moving sideways, gaining and dipping with a little good news and a little bad news," says Nasser, who believes the upper margin in the next week will be between 5,500 and 5,600 points.
"If [the market] declines on Sunday then we will see a rise on Monday," he predicts.
Some market-watchers expect a slowdown before the end of the trading week, in advance of revitalised protests on Friday 27 May aimed at protecting the gains of the January 25 revolution that swept Egypt's former President Hosni Mubarak from power.
"Sunday and Monday will be the height of market sessions next week and trading will recede after for fear of what will happen," says Nader Ibrahim, managing director of Mashreq Capital Portfolio Management.
But barring major unrest, most believe Friday will have a minor effect on a stock market that has become accustomed to short-term shocks since its 23 March reopening.
"The market is factoring in the bad news at the moment and saving stocks from major losses," says Walaa Hazem, financial analyst at HC Securities, who believes the EGX30 will trade within its current range, plus or minus 10 per cent, for the medium term. Given the present political circumstances, he doesn't think news on specific companies has the power to shift the market in any meaningful way.
"For the market to significantly move upwards it needs new political and economic conditions to appear. Any financial news in the current week will only have a marginal effect, and the same goes for protests," says Hazem.
Market stasis could continue for a while, agree other analysts.
"We don't expect any big differences until the third quarter of 2011," says Nasser. "At that point [when elections are planned] we will see big rises or falls."