Egypt shares to resume rally as investors expected to capitalise on cheap valuations

EGX30 to move between 16,000 points, 16,500 points in a heavy trade amid fresh liquidity

Egypt shares are expected to resume their rally in the short-term as foreign investors are expected to capitalise on cheap valuations for mid and small caps after a sell-off streak to book gains from a sustained market rally.
The Egyptian Exchange (EGX) is likely to perform positively this week amid heavy liquidity, analysts said.
"The EGX was able to hold above 16,000 points despite a streak of profit-taking," said Michael Mamdouh Naguib, customer relations manager at Arabeya Online.
"The benchmark EGX30 index has changed its direction to move upwardly in the short-term as it broke resistance at 16,335 points last week, ending correction movement temporarily," Naguib added.
The benchmark EGX30 index is expected to target 17,050 points after breaking 16,571 points, he forecasted.
The index has support at 16,180, 16,000, and 15,781 points, he highlighted, adding that it has resistance at 16,386, 16,450, and 16,571 points.
On the other hand, the small- and mid-cap EGX70 index is still moving downward, Naguib noted, pointing out that the index may rebound in the few coming sessions.
He indicated that the EGX70 has support at 790 points and resistance at 820 points.
Meanwhile, Ayman Fouda, head of the capital markets committee at the African Economic Council, forecasted an extended sideways-to-declining performance for this week's sessions.
The EGX30 index will have short-term resistance at 16,570 and 16,750 points, while support would be seen at 16,250 and 16,100 points, he expected.
"The EGX30 is set to move between 15,900 points and 16,450 points and the EGX70 between 790 points and 812 points,” said Mohamed El-Asaar, head of technical analysis at Aman Securities.
For his part, Safwat Abdel Naeem, branch manager at Mubasher Financial Services (MFS), said that the EGX30 saw a positive rebound last Thursday by breaking 16,100 points.
The index is likely to end the correction wave by breaking the level of 17,500 points this week, Abdel Naeem stressed.
The EGX30 may see a sideways trend between 16,500 and 16,000 points, during the second half of this year, if it fails to close the week in green territory, he noted.
On the other hand, the small- and mid-cap index EGX70, the most affected index by the correction phase, rebounded to 811 points at last week's close after hitting 792 points for the first time since November 2017, he highlighted.
Saeed El-Feki, CEO of Osool ESB Securities Brokerage, expected the EGX to continue its positive performance this week on the back of purchasing powers.
El-Feki said that the EGX30 is targeting 16,500 and 16,800 points amid new catalysts.
Porto Group stock is expected to move between 25 piasters and 28 piasters as compared with 26 piasters last Thursday, Qalaa Holding between EGP 3.35 and EGP 3.65, and Pioneers holdings between EGP 8.30 and EGP 9.40.
AMOC stock is expected to move between EGP 11.25 and EGP 12 as compared with EGP 11.7 earlier, Egyptian Steel between EGP 6.25 and EGP 6.75, as compared with EGP 6.47 earlier, Egypt Telecom between EGP 13.85 and EGP 14.70, as compared with EGP 14.11 earlier, and Palm Hills between EGP 4.10 and EGP 4.55, as compared with EGP 4.29 earlier, analysts expected.
"Sideways moves and dipping volumes are expected to dominate July and August's trades on the back of summer holidays,” Pharos Investment Bank said.
EGX30 rallies 8.5% in six months
The EGX30 ended the six-month period from January to June with 8.85% gains, with traded volumes totalling 28.28bn shares, and values reaching EGP 119.6bn.
The EGX70 gave up earlier gains and declined by 2.78% in the first half (H1) of 2018, while the EGX100 made gains of 4.58%, with the EGX50 rising by 6.5%.
In June, the EGX saw a negative performance. The benchmark index EGX30 lost 1.45% last month, registering monthly losses for the second month in a row after a record-breaking performance in prior months since the beginning of 2018.
The EGX30 went down by 238.18 points and closed at the level of 16,176.41 points, with traded volumes reaching 2.2bn shares and traded values amounting to EGP 11.17bn.
The market capital hit EGP 910.8bn by the end of the month, losing EGP 19.5bn compared to its level by the end of May.
The small- and medium-sized enterprises index EGX70 lost 5.45% and reached the level of 796.75 points, while the broader EGX100 lost 4.85% and closed at the level of 2,034 points.
The equally weighted index EGX50 dropped 3.74% to settle at the level of 2,714 points.
Notably, the market sectors and indices had a mixed performance during H1 2018.
Meanwhile, the EGX's general indices declined in the first week of July.
The benchmark index EGX30 went down 1.37% to 16,125 points, while the EGX70 and EGX100 shed 0.55% to 800.23 points and 1.35% to 2,035 points, respectively.
The equally weighted index EGX50 also decreased by 0.6% to 2,719 points.
Over the week, market capitalisation lost EGP 12.3bn, recording EGP 898.5bn, compared to EGP 910.8bn a week earlier.
The benchmark has gone down on the back of selling pressure, Sameh Gharib, head of technical research at Roots Stock Brokerage House, said in a research note.
If the index kept its position above 16,140 points, it will target levels as high as 16,570 points, Gharib added.
No relationship with Abraaj Group
Fifteen companies listed on the EGX have denied their ties with the ailing private equity firm Abraaj Group last week.
Orascom Development Egypt, Egyptian Resorts, North Africa for Real Estate Investment, Paints and Chemical Industries Company (Pachin), and Canal Shipping Agencies have denied their connection with the Dubai-based group, the companies stated in filings to the EGX on Thursday.
Moreover, Egyptian Arabian Themar Securities Brokerage, Samad Misr (Egyfert), Egyptian Real Estate, International Company for Investment and Development, and Egyptians for Investment and Urban Development were also among the companies that have no ties with crisis-hit Abraaj, once one of the developing world's influential investors.
The companies also included First Investment and Real Estate Development, Egyptian Media Production City Company, Egyptian Transport and Commercial Services Company (Egytrans), South Cairo and Giza Flour Mills and Bakeries, and Glaxo Smith Kline.
On Tuesday, the UAE's public prosecution office issued warrants against Abraaj's founder, Arif Naqvi, and one of his partners for issuing to a $48m cheque without sufficient funds, according to documents reviewed by Wall Street Journal.
Abraaj's crisis started when a group of investors said that the group misused their money in a $1bn healthcare fund.
On Wednesday, around 70 companies denied any connections with the Abraaj Group.