Egypt shares seen moving sideways as market lack to fresh stimulus

Government approval on first steps of its IPO programme expected to serve as a catalyst

Egypt shares are expected to move sideways this week, which will have only four sessions as the market will be off on Monday, while the government approval on the very first steps of its IPO programme are seen by analysts to help as a catalyst to lure in investment in the mid-term.
Prime Minister Moustafa Madbouly and acting housing minister, met last week with the governor of the Central Bank of Egypt (CBE) Tarek Amer, and the ministers of finance, social solidarity, petroleum, transportation, public sector, and other officials to discuss the public offerings of five government-owned companies, namely, Alexandria Mineral Oils, Eastern Company, Alexandria Container and Cargo Handling, Abu Qir Fertilizers and Chemicals, and Heliopolis For Housing and Development.
The meeting discussed the offerings percentages, and the next phases of the programme, according to an official statement issued by the Council of Ministers on Tuesday.
Madbouly stressed that the agreement comes in line with the president's commands to go through with the IPOs, assuring the importance of sticking to the time schedule for the programme, to support governance, and vitalize the Egyptian Exchange (EGX) and its market value, to attract more foreign investments and diversify public income sources.
Last week, the EGX touched its lowest level in five months, amidst a strong sell-off streak from foreign investors.
The benchmark EGX30 index lost 239 points, or 1.52%, to close at 15,416 points, touching its lowest level since 22 February.
The main index has broken the main support level at 15,500 points, market expert Mohamed Sharaawy of Pioneers Holding said, stressing that this week session will determine giving up this support level, with support lying at 15,100 – 14,500, and 13,900 points.
He added that if the benchmark restores the 15,500-point level, it will target resistance at 16,050 points.
The small and medium enterprise index EGX70 fell 1.06% to 754.17 points, while the broader EGX100 index declined by 1.273% to 1,927 points.
Meanwhile, the equal-weighted EGX50 index levelled down 0.83% to 2,636 points.
Traded volume reached 120.4m shares exchanged at a turnover of EGP 791.8m through around 20,600 transactions.
Meanwhile, The market is expected to continue the downward trend until Qalaa Holdings' stock rise again, after recording its lowest level of liquidity in 10 years on last week sessions, analysts said.
The EGX is likely to carry on the bearish trend on Monday, market expert Issmat Yassin said.
The benchmark EGX30 index may target 16,000 and 16,100 points if it breaks sub-resistance at 15,900 points, Yassin highlighted, adding that the index has support at 15,780 points.
Meanwhile, the small- and mid-cap EGX70 index could retest resistance at 775 and 785 points, while it has support at 760 and 755 points, she indicated.
For his part, customer relations manager at Arabeya Online Michael Mamdouh Naguib said that the EGX anticipates trading on Qalaa Holdings' stock after it hit its lowest in 10 years yesterday.
Thin liquidity in the local market was mainly driven by foreign investors' concerns over the Financial Regulatory Authority's (FRA) decisions regarding setting the stock's fair value (FV) at EGP 7.5, Naguib noted.
He stressed that the EGX will move upwardly if Qalaa's stock advances, but it will carry on the bearish trend if the stock extends losses over the coming sessions.
The EGX30 index has a short-term support at 15,781 and 15,500 points and has resistance at 16,100 points.
Meanwhile, the ordinary general meeting (OGM) of Arab Dairy Products Co (Panda) has agreed to raise the company's issued capital to EGP 160m from EGP 60m.
The OGM has approved to boost capital by EGP 100m, to be distributed over 100m shares at a par value of EGP 1 through subscriptions by old shareholders, the cheese-maker firm said in a filing to the EGX on Wednesday.
Moreover, the OGM has assigned the chairman to set the duration of the subscription.
In May, the EGX-listed firm's board had agreed to increase issued and paid-up capital to EGP 160m from EGP 60m.
Arab Dairy previously reported a 51% year-on-year fall in consolidated profits for the first quarter of 2018, recording EGP 853,020 from EGP 1.7m.
In other market news, Prime Securities has announced that Moon Capital Partners Master and Moon Capital Partners Master Fund have increased their stakes in Global Telecom Holding (GTH) to 5.01% from 4.99%.
Moon Capital Partners has bought 632,000 shares, while Moon Capital Partners Master Fund acquired 168,000 shares in consideration of a collective amount of EGP 3.2m, according to a bourse statement.
Earlier in July, GTH revealed that it hired KAMCO Investment Company and Fincorp Investment Holding as independent certified financial advisors by the Financial Regulatory Authority (FRA) to issue reports related to the purchase offer presented by VEON.
Meanwhile, the investments of the UAE-based Emaar Properties in Egypt is nearing EGP 50bn now, founder and CEO Mohamed Alabbar said.
The real estate developer seeks to double these investments to EGP 100bn in the next five years, Al Borsa reported, citing Alabbar as saying.
He noted that Egypt currently comes in the third spot after the UAE and India in terms of the volume of Emaar's portfolio, forecasting the North African nation to take over the second rank in the coming few years amid the great available investment opportunities it has.
Emaar plans to raise the number of the number of hotels at Marassi project to six, including nearly 3,000 rooms by 2021, with around EGP 6bn in investments, he highlighted.
The CEO stressed that the Emirati property developer aims to invest in the North Coast and Marsa Matroh, where beaches are more exotic than the beaches of southern Europe.
On the other hand, he expected the company's negotiations with the New Administrative Capital, regarding the 1,500-acre land it seeks to obtain for setting up a residential, administrative, and recreational project, to be closed in two months.