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Bourse suffers amid broader selloff streak in emerging markets EGX30 records its worst monthly losses in almost 2.5 years, likely to end correction this week
Egypt's shares extended their fall for the fifth week in a row amid a broader selloff streak in most emerging markets, sending shivers among investors who tended to book gains from a sustained market rally. Analysts expect the corrective downside trends that dominated the Egyptian Exchange (EGX) during the past five weeks will come to a close, prompting the EGX30 index to go up, hovering around 17,000 and 17,500 points. Whenever, it reaches 16,600 and 16,500, key support levels, the EGX30 is set to put an end to the bear market, they added. “Negative moves, notably the declining purchasing power, still have the upper hand over the EGX30, fomenting a short-term weak outlook,” said head of technical analysis division at Premiere Securities, Miada Ameen. The EGX30 is expected to retreat near the key support level of 16,500 points, stay there, and create a bottom around that level on the backdrop of reaching selloff absorption, bolstering a rebounding move towards 17,000 points to 17,500 points, she added. The Egyptian Exchange (EGX) witnessed a negative performance in May, amidst a strong correction wave that followed the main index surging to new all-time highs in previous months. The benchmark index EGX30 ended an eight-month rising streak and ended May in losses, dropping 10.28%, its highest weekly decline since January 2016, closing at 16,414.53 points, losing a staggering 1,881.04 points. Traded values reached EGP 18.7bn, with volumes amounting to 3.6bn shares. The market cap went down by EGP 75.8bn to EGP 930.39bn, compared with EGP 1.006tn at the end of April. The small and medium enterprise index EGX70 fell 3.94%, and ended May at the level of 842.66 points, while the broader index EGX100 plunged 7.31% to 2,138.24 points. Similarly, the equal-weighted EGX50 index decreased by 8.32% to 2,819.74 points. Egyptian and Arab investors were net sellers at EGP 3.5bn and EGP 202m respectively, while foreign investors were net buyers at EGP 3.7bn. EGX30 fell for fifth week in a row The EGX30 declined for the fifth consecutive week and lost 1.32%, or 219.44 points, as it ended at 16,414.53 points, with volumes reaching 740.4m, and turnovers amounting to EGP 5.3bn. Commercial International Bank (CIB), the stock with the heaviest weight in the benchmark index, went down 1.12% to EGP 84.24 per share. The small and medium enterprise index EGX70 fell 1.82% to 842.66 points, while the broader index EGX100 decreased by 1.88% to 2,138 points. The market capital settled near the level of EGP 930.39bn, losing EGP 18.18bn in a week. The equal-weighted index EGX50 dropped 2.65%, and closed at the level of 2,819 points, by the end of the week. Foreign investors were inclined towards buying, with net purchases of EGP 1.3bn, while Egyptian and Arab investors were net sellers at EGP 1bn and EGP 313m respectively. Meanwhile, the Egyptian government is set to go ahead with a plan for the public offering of several state-owned companies immediately after the Eid Al-Fitr holiday, as a 4% stake of the Eastern Company for tobacco is slated to debut the drive, according chairperson of the Chemical Industries Holding Co, Emad El-Deen Mostafa. On the same vein, Minister of Public Sector Affairs Khalid Badawi said that up to EGP 2.5bn in revenues is expected for the capital increase of the Eastern Company. The membership committee at the EGX approved listing the Egyptian Gulf Bank (EG Bank) as a main trader on the stock market in accordance with the committee's rules. Pharos Research had previously set its fair value (FV) for EG Bank's stock at $1.10, implying an equal weight recommendation. The financial indicators of the bank showed a 7% year-over-year increase in consolidated profits for the first quarter of 2018, recording EGP 146.3m from EGP 136.9m. EG Bank's capital amounts to $342.8m distributed over 342.8m shares at a par value of $1 per share. On another note, Talaat Moustafa Group (TMG) will commence the development of its New Administrative Capital project after Eid Al-Fitr, CEO Hisham Talaat Moustafa said on Monday. The Egypt-listed real estate developer acquired around 500 feddans in the New Administrative Capital at a total value of EGP 4.4bn, Moustafa added on the sidelines of a press conference last week. TMG is currently studying the new project with the Egyptian government and is set to reveal it within the coming five to six months, according to the business tycoon. The company's total investments in the New Administrative Capital are estimated at EGP 35bn, the CEO noted. The Egyptian property giant has denied suspending negotiations with the Saudi Housing Ministry over a housing project in the kingdom. In other market news, Pioneers Holding Company for Financial Investment reported a 16.6% year-over-year increase in consolidated profits for the first quarter of 2018. Net profit stood at EGP 371.6m in the three-month period ended March, up from EGP 318.8m in the prior-year period, the company said in a filing to the EGX. Revenues narrowed to EGP 1.8bn in Q1 2018 from EGP 2.06bn in the corresponding period last year, while operating costs shrank to EGP 1.16bn in the first three months of this year from EGP 1.5bn in the year-prior period. Meanwhile, standalone profits plunged to EGP 5.7m in Q1 2018 compared to EGP 73.8m in the first three months of 2017. Pioneers Holding had generated around EGP 1.14bn in net profit for the full-year ended December 2017, versus EGP 1.08bn in 2016.
