Market Report: Egypt stocks surge on aid news

US and Saudi pledges combine with attractive prices for big-cap firms to fuel the bourse's largest gain in over a month

Powered by news of US debt relief and a $4 billion Saudi aid plan, Egypt's bourse fulfilled analyst predictions to make its strongest gains in a month when the market reopened on Sunday.
The EGX30 stock benchmark climbed 2.98 per cent to 5,406 points in a day of aggressive buying which saw practically all sectors finish in the green. It was the first day of trading since the US and Saudi Arabia pledged support for the Egyptian economy.
"The market's reacting positively to all the news of foreign aid being poured into the country," said Mohamed Radwan, head of equities at Pharos Securities, noting that financial stocks are likely to benefit from the extra funds.
US President Barack Obama said in a speech on Thursday he would relieve Egypt of up to $1 bn in debt and guarantee another $1bn in borrowing to finance infrastructure and job creation. On Saturday, Egypt's military chief announced Saudi Arabia had promised US$4 bn dollars in aid in the form of long-term loans and grants.
Reaction to the news was muted in Egypt, reflecting concerns about conditional aid. But the effect on the stock market was less equivocal.
Of 183 listed stocks, 138 gained and 40 declined with in equity trades worth a total of LE572.6 million -- unusually high for a Sunday, when foreign markets are closed and non-Arab investors limited.
Basic resources led the charge, finishing 5.1 per cent up, fuelled by gains for heavy-cap Ezz Steel -- whose founder Ahmed Ezz today faced questioning from Egypt's Illicit Gains Authority.
Growth of 6 per cent for the country's largest steel producer -- and similar gains for other troubled firms -- suggested buyers were attracted by "cheap deals", says Walaa Hazem, financial analyst at HC Securities.
Palm Hills Development, rocked by investigations into illicit land deals, also continued its rebound, up 6.19 per cent. With turnover of LE27.9m, it was the fourth most active listed company, a notch below luxury resort developer the AMER Group, itself gaining 6.67 per cent.
Tourism and leisure, a major loser in the post-revolution landscape, made a surprising show too, finishing up 4.14 per cent, despite swallowing the day's biggest losses when Guezira Hotels and Tourism lost 7.82 per cent
Healthcare and pharmaceuticals was the only sector to post a modest loss.
Domestic investors, who represented 78.3 per cent of the market, reversed their recent strategy to close as net sellers, recording a net flow of LE19m, while diminised foreign trading of 12.8 per cent resulted in LE14.5m of net-sales. Arabs were the only net-buyers.