Market Report: Egypt stocks shrug off violence, gain 1 pct on EFG-Hermes deal

Accustomed to political risk, Egyptian investors take heart from scraps of positive news and fuel a modest across-the-board rally

Egypt's stock market shrugged off the weekend's crackdown on protesters in eastern Cairo to chart modest gains on Sunday, with light trade fuelled by news of a landmark deal involving investment bank EFG-Hermes.
The benchmark EGX30 edged up 0.91 per cent to close the session at 4,974 points, the latest in a series of small gains and losses for the exchange's main index.
One soldier died and almost 400 people were wounded during Friday's crackdown on demonstrators outside the Ministry of Defence in the capital's Abbasiya district. It was the second time in a week that protests over the army's handling of Egypt's troubled transition from military to civilian rule have turned violent.
But the effect on Egypt's exchange on Sunday -- a day traditionally light on foreign trade -- was minimal.
"The news about EFG-Hermes and other rumours are what's keeping the market going," said Hisham Halaldeen, Head of Research Sales at Naeem Holding.
"Last week's trading took place after fatal clashes too so now risk has been priced into trading by Egyptian investors. There is no real foreign volume in the market otherwise we might have seen a drop."
Trade totalled a thin LE237.48 million ($39.28m) with just 8 per cent of this figure attributed to foreign investors who sold LE20.9 million more stock that they bought.
From the day's 173 listed stocks, 134 gained in value and 31 declined.
The market opened in positive territory following Friday news that EFG-Hermes, Egypt's major investment bank and one of its highest-cap firms, had sealed an agreement first to form a region-wide investment bank with Qatar's Qinvest.
Trading in EFG-Hermes was frozen as the exchange asked the bank for more information regarding the deal, but the news helped stoke optimism in other high-caps.
The real estate sector out-performed the market, gaining an overall 3 per cent on the backs of heavyweights SODIC -- which gained 7.7 per cent -- the Talaat Moustafa Group, up 4.8 per cent.
Palm Hills Development, which saw the day's largest trade at some LE25 million, rose 5.5 per cent.
Beltone Financial also benefited from the positive news for the financial sector, with stocks gaining a near-maximum of 9.7 per cent by the close of play.
It wasn't all gains; modest drops for shares in Orascom Telecom Holding and NSGB bank stopped the main index from registering a larger climb.
Sunday's news that Egypt's foreign reserves have climbed for the first time in nearly two years led to guarded optimism that the session's gains might continue in the coming week.
The country's central bank announced foreign reserves of $15.21 billion at the end of April 2012, $92 million more than the previous month.
"This could be a sign that the drop has finally bottomed out and we're seeing stabilisation -- this will encourage investors," said Halaldeen.
"If it's organic growth from tourism or other factors then this is good news."