Market Report: Egypt stocks edge further up as Morsi mulls govt

Main index gains a mild 0.35 per cent as local investors continue to take heart from the peaceful, free election of the country's new president

Egypt's major stocks extended their gains on Wednesday, continuing to ride the wave of optimism prompted by the election of Mohamed Morsi as the country's first post-Mubarak president.
The benchmark EGX30 edged up a mild 0.35 per cent to close at 4,628 points, in its fourth consecutive session of gains. The index's rise was more modest than during the previous three days, when it rocketed over 11 per cent on hopes for a smooth transition from military rule.
Closed door talks are now underway to forge a working relationship between Morsi and Egypt's military, which wants to keep its national security remit and protect business interests, and agree the composition of his government.
"It's positive that the military and Mursi have sat down to try to work out a roadmap," Teymour El-Derini of Naeem Brokerage told Reuters.
"They've clearly agreed on something. There's going to be a power struggle for decades, but there has always has been a power struggle."
Morsi's victory had pushed the index up 7.6 per cent on Monday, its fourth-biggest gain since it was created in 1998. It climbed a further 2.9 per cent on Tuesday.
From the 178 stocks traded on Wednesday, 58 gained in value and 107 declined. It was a mixed performance reflected in the broader EGX70, which slipped 0.55 per cent.
Total trading volume was a relatively healthy LE397.6 million ($65.6m), with Egyptians once again being the major buyers.
Domestic investors bought LE8.5 million more in stocks than they sold; foreigners continued to sell, offloading a net LE24.5 million.
Seeing the heaviest trade was Orascom Media & Technology with interest possibly fuelled by an annoucement from its chief executive that it might consider buying telecom assets in Libya, Syria and Yemen. Stocks in the telecoms heavyweight closed the day up 0.22 per cent.
Real estate company Palm Hills Development was among the biggest gainers, rising 3.9 per cent, but other property developers declined. Shares in the Talaat Moustafa Group dipped 0.47 per cent.
"Real estate is seen as a hedge against currency and inflation risk," says Derini.
Analysts interviewed by Reuters on Wednesday suggested that shares are likely to hold onto their gains in the coming week, but investors will be watching to see if Mursi can form a government able to tackle Egypt's daunting economic problems.
Investors will be looking to see what kind of government he appoints, particularly the finance minister, and for signs that the new government might move quickly to seal a long-delayed financing package with the International Monetary Fund (IMF).
"If nothing changes over the weekend, you'll probably see more profit taking, Mike Millar, head of research at Naeem Brokerage, told Reuters.
"But on the other hand, if there are some announcements on some of the senior cabinet positions of people who are well liked by the market, the rally might actually extend for a few more days into next week."
The stock market and banks will be closed on Sunday, the first day of the new financial year.