Market Report: Egypt stocks up 1 pct on central bank deposits move

Banking and financial stocks chart solid gains after decision to cut reserve requirements and amid rumours of an interest rate cut

Egypt's bourse broadened its gains on Wednesday despite diminished overall trade as financial stocks rallied after the central bank cut its reserve requirement on local currency deposits.
The EGX30 benchmark edged up 1.07 per cent to close the day at 5,134 points, its second consecutive session of gains after losing ground earlier in the week. Stocks in banks and financial firms saw the sharpest upturn.
"There was positive news from the central bank that will improve liquidity in local banking circles and in the market," Hisham Halaldeen of Naeem Brokerage told Reuters, explaining the upturn.
"This is good for bank earnings but nevertheless we are still waiting for significant institutional interest to return to the market," he added.
Egypt's central bank said on Tuesday the requirement would be lowered to 12 per cent from 14 per cent, a move that could help profitability of the country's banks.The banking sector climbed an overall 2.5 per cent while financial services gained 2.14 per cent.
Commercial International Bank, Egypt's biggest private bank by assets, jumped 2.99 per cent and investment bank EFG-Hermes rose 3.47 per cent. They were the day's third and fifth most-traded stocks respectively.
Stocks were further bolstered by predictions the central bank might drop the country's interest rate after a semi-annual board meeting due for Thursday, according to Eissa Fathy, president of the securities division at Cairo's Chamber of Commerce.
Turnover was a relatively low LE366.168 million, around half the average of recent weeks, with just over 24,400 individual trades. But some attributed the dip to less hard-edged concerns than usual.
"It's possible the occasion of Mother's Day and the resultant family visits meant there was less trade," Fathy told Ahram Online.
From the day's 174 listed stocks, 118 gained in value, 43 declined and the rest remained the same. The broader EGX70 index edged up 0.81 per cent.
Banking and financial sectors set the tone but their performance was mirrored by other major companies.The Middle East's largest private equity firm, Citadel Capital, saw its stocks gain 2.47 per cent amid news of fresh investments in South Sudan. Citadel will cultivate up to 40,000 acres of farmland in the new nation to sell staple foods such as maize, a company official said on Tuesday.
Orascom Telecom (OT), now owned by Russian giant Vimpelcom, was also bolstered by some long-awaited news, as Algeria's government said it had reached a valuation on its Djezzy mobile phone unit which it plans to nationalise bia buying a majority stake. OT closed the day up a marginal 0.73 per cent.
Property developer Talaa Moustafa Group charted its latest in a series of gains, up 1.4 per cent, but sector-mate Palm Hills did less well. Stocks stumbled after the company denied reports it was to pay shareholders dividends, although they returned to their starting value by the close of play.
One notable exception to the day's gains was Egypt's largest listed firm, Orascom Construction Industries (OCI), which saw its shares slip 0.22 per cent.Analysts attibuted this to "hit and run" profit-taking by individual investors who made up the vast majority of trade by Egyptians and other Arabs.
Foreign investors made up around 16 per cent of the day's trade, but were almost entirely represented by institutions. They net-sold a total of LE54.35 million of stock.
"[The central bank announcement] was good for bank earnings but nevertheless we are still waiting for significant institutional interest to return to the market," Halaldeen said.