Egypt's shares hit by profit-taking streak, record worst weekly losses in 2 years

Market expected to extend downward trajectory awaiting fresh stimulus

A profit-taking streak took its toll on the Egyptian stock market for the second week in a row, with the market expected to extend its bearish performance awaiting fresh stimulus in the short term.
The benchmark EGX30 index has been facing correction since last week, capital market expert Michael Mamdouh Naguib said.
The Egyptian Exchange (EGX) is expected to maintain the downward trend, Naguib forecasted, pointing out that the index has support at 17,000 points.
The EGX30 may test 16,700 and 16,500 points if it falls below main support, he added, recommending investors to keep liquidity and monitor stocks carefully until the currently volatile trend ends.
For his part, Ayman Fouda, head of the capital market committee at the African Economic Council, said that the EGX will continue seeing a negative performance in the short term.
The Egyptian bourse is likely to see new purchasing powers that push stocks and indices to main resistance levels, he highlighted.
The EGX30 index is still moving in a downward direction and has a short-term resistance at 17,886 and 17,950 points, he indicated, adding that, by breaking above this level, the index may retest 18,000 points. He also said that the index has support at 17,330 and 17,200 points.
Meanwhile, the small- and medium-caps EGX70 index has resistance at 878 and 885 points, while it has support at 855 and 840 points, Fouda added.
EGX 30 loses 3.8% in a week
The EGX was also hit last week by the rising regional geopolitical risks after the president of the United States decided to withdraw from the Iran nuclear deal.
The benchmark index EGX30 shed 3.8%, or 677.72 points, recording its biggest weekly decline since July 2016 and closing at the level of 17,155.14.
Traded values reached EGP 4.5bn, with volumes amounting to 1.04bn shares.
The market capital decreased by EGP 29.8bn and ended the week at the level of EGP 991.9bn.
Commercial International Bank (CIB), the stock with the biggest weight on the main index, declined by 5.69% to EGP 87.78 per share.
Meanwhile, the small and medium enterprise index EGX70 went down 2.86% to 853.5 points, while the broader index EGX100 fell 4.24% to 2,192 points.
The equal-weighted EGX50 decreased by 2.16% to 2,960 points, with turnovers totalling EGP 3.9bn.
Arab investors were net buyers with a net EGP 482.9m, while Egyptian and foreign investors were net sellers at EGP 297.2m and EGP 185.6m respectively.
Market analyst Mamdouh Naguib said that the main index continued with the correction movement below the 18,000 point level, with support being at the level of 17,000 points, after breaking the levels of 17,570 and 17,400 points respectively.
In other market news, the standalone financial indicators of the Egyptian Transport and Commercial Services Co (Egytrans) have shown a 21.5% year-over-year decline in profits for the first quarter (Q1) of 2018.
Net profit narrowed to EGP 18.9m in the three-month period ending last March, from EGP 24.1m in the previous year, the company said in a filing to the EGX.
Sales retreated to EGP 50.22m in Q1 2018, versus sales of EGP 90.2m in Q1 2017.
The company had previously posted a 69% year-over-year hike in standalone profits for 2017, recording EGP 72.6m from EGP 42.9m in 2016.
Egytrans' capital amounts to EGP 156.06m distributed over 31.2m shares at a par value of EGP 5 per share.
Meanwhile, the board of Telecom Egypt (TE) approved obtaining long-term facilities worth $900m.
The board also approved a five-year syndicated loan worth $500m to be arranged by Mashreq Bank and First Abu Dhabi Bank (FAB), the company highlighted in a filing to the EGX.
The board also endorsed a 12-month short-term renewable credit facility provided by FAB and the African Export-Import Bank (Afreximbank) worth $200m, TE added.
In the same vein, the board gave a nod to a $200m four-year vendor finance agreement with a grace period of 24 months, Egypt's landline monopoly said.
These facilities aim to convert short-term overdrafts in US dollars to long-term loans in order to pay off dues while generating cash flows in accordance with the company's plan for the future business.
The credit facilities will also provide flexibility to finance capital and to invest in the fourth generation (4G) of cellular network technology with a low interest rate, the company indicated.
TE announced it approved a subsidiary's acquisition of MENA Submarine Cable at a total value of EGP 1.6bn, which will be financed through a shareholder loan from TE.
On another note, Orascom Construction Ltd said that it completed power-to-grid for the four combined-cycle modules with a capacity of 4,800 MW each at the Borollos power plant.
Accordingly, the company has marked a great achievement for one of the largest gas-fired combined-cycle power plants in the world, Orascom Construction said in a filing to the EGX.
The Borollos power plant is the first among the three mega power plants in Egypt to generate electricity at a capacity of 4,800 MW.
The company, listed on the NASDAQ Dubai and the EGX, is currently establishing power plants in Egypt with a total capacity of 11,250 MW, according to the filing.
The leading construction and engineering company is also building the New Administrative Capital power plant, which is one of the other three mega power projects in the Arab nation, in cooperation with Germany-based Siemens.
The company had previously posted a net profit of $85.1m for 2017, versus $53m the year before.
The board had proposed the distribution of $30m in cash dividends to shareholders for 2017.
Orascom Construction's capital amounts to EGP 116.7m distributed over 116.7m shared at a par value of EGP 1 per share.