Egyptian stocks jumped on Wednesday on news that the country is close to sign a lending programme with the International Monetary Fund (IMF). Main index, EGX30 climbed 4.97 percent, to 7914.74 points, its biggest daily gain since mid-March. Blue chips favoured by foreign investors outperformed with financial firm EFG Hermes, which could benefit from handling an inflow of foreign investment if the IMF loan stabilises Egypt's struggling balance of payments, rocketing 10.7 percent. Ibrahim al-Nimr, head of technical analysis at Cairo's Naeem Holding, told Reuters that he predicted the index would break above 8,000 points when the signing of the IMF loan became certain. "This may in turn prompt some profit-taking at those levels, but even then we expect certain sectors to continue riding the bull wave, especially banks and real estate." al-Nimr added. The government announced on Tuesday that it was seeking $7 billion annually from the IMF over three years. Prime Minister Sherif Ismail ordered the central bank governor and minister of finance to complete negotiations for the programme with an IMF team that said they would visit Egypt in the next few days. Some fund managers think an IMF deal in August or September - and possibly an interest rate hike at a central bank meeting this Thursday - could create conditions allowing authorities to engineer a controlled devaluation that would bring the Egyptian pound to levels which reignited fund inflows into the country, according to Reuters. But there are many risks, Reuters cited. An initial devaluation in March this year failed to spur fund inflows, and $21 billion over three years would probably not be enough by itself to repair Egypt's balance of payments, especially if Gulf donors decide to cut their aid in response to their own budget pressures. Also, the IMF programme could involve fiscal tightening that would prevent any quick recovery in economic growth. "We believe foreign investors should stay underweight on Egypt until the extent of devaluation is clear," said EFG Hermes. "Cyclical stocks are likely to remain under pressure as domestic demand - already under pressure for the past 18 months - will be squeezed in the first phase of any IMF programme." Other indices; EGX50 EWI index also hiked 2.95 percent, at 1390.51 points; while EGX20 gained 5.37 percent, to 8340.49 points. Mid- and small-cap index EGX70 edged up 0.58 percent, to 363.88 points. Price index, EGX100 also surged 1.40 percent, to 782.58 points. Market Cap Market capitalisation gained 10.1 billion Egyptian pounds ($1.1 billion), to record 413.918 billion pounds during the closing session of Wednesday. Turnovers The main Egyptian equities index climbed 5.0 percent to 7,915 points, its biggest daily gain since mid-March, in the market's The bourse's trading volume reached 374.193 million securities, with turnovers, closing at 1.459 billion pounds - heaviest trade since mid-April, exchanged through 34,527 transactions. Also during the closing session, 177 listed securities have been traded in, 26 declined, 118 advanced; while 30 kept their previous levels. Investors' Activities Local investors were net buyers capturing 82.96 percent of the total market, with a net equity of 34.260 million pounds, excluding the deals. On the contrary, Arab and non-Arab foreign investors remained net buyers controlling 8.09 and 8.95 percent respectively of the total markets, with a net equity of 10.910 million pounds and 23.350 million pounds, respectively, excluding the deals.
