Market Report: Egypt stocks heed the call on telecoms surge

Bourse rallies for a second consecutive session, the benchmark gaining 1.23 per cent as investors target telecoms and a select number of other high-caps

Egypt's Bourse rallied for a second session Tuesday, as resurgent interest in a select number of heavyweight stocks and high turnover suggested investors were regaining confidence after weeks of turmoil.
The benchmark EGX30 climbed 1.23 per cent to 4,464 points, adding to Monday's 1.8 per cent gain – the Bourse's first uptick in a week. But the advance was limited, with the broader EGX70, which tracks lower-cap stocks, dipping 0.37 per cent.
"Investors moved towards the surging high-cap stocks leaving small- and medium-sized stocks behind," said capital markets expert Mostafa Badra, attributing the overall rise to healthy performances for a select number of firms.
Overall performance was more mixed than the day before, with just 62 of the 181 stocks listed on the exchange seeing gains, and sectors equally divided between red and green. Market turnover was LE397.3 million – a significant advance after weeks of depressed trade.
The EGX30's major boost came courtesy of Orascom Telecom (OT), still benefiting from a valuation of $7 billion for its Algerian mobile phone venture. The communications firm led trade with turnover of LE72.95 million and climbed 5.23 per cent.
OT's gains bled over to the rest of the sector which finished up over 4 per cent, the day's biggest gainer.
"The unexpected high valuation of Djezzy has shed a positive light on the telecoms sector as a whole, that's why we saw Telecom Egypt gain while it's unrelated to OT," Badra said.
Controversial mobile provider Mobinil rocketed 7.14 per cent while state-monopoly Telecom Egypt gained a modest 0.75 per cent.
Further support for the main index came from Orascom Construction Industries (OCI), the Bourse's largest listed firm, which saw high turnover after it approved $228.3 million in dividend payouts and scored a $552 million contract for a major sports stadium in Saudi Arabia. Stocks edged up 0.97 per cent by close of play.
Other high-caps were less successful, with previous top-performers like Citadel Capital and the Commercial International Bank taking minor losses as foreign investors – often the bedrock of their support -- gave them a miss.
Non-Egyptian Arabs were the day's keenest traders, buying a net total of LE10.7m in stocks, more than twice that of Egyptians. Foreigners made up 30.5 per cent of the day's trade and were net-sellers to the tune of LE15.49m.
With telecoms and industry seeing the most interest, financial services and banks took a backseat, the former losing 0.55 per cent, driven downwards by losses of nearly 5 per cent for Beltone Financial, and some 1.5 per cent for Citadel Capital.
"The financial sector, namely companies affiliated with the Bourse are going through their tough time due to low market activity," said Badry.
Some analysts took the market's recent resurgence as sign that a full rebound was on the way. Badra, however, begged to differ.
"The key factor to regain trust in the market is to have political stability, which would in turn reflect on the liquidity problem in the Bourse. We are not there yet," he said.