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Egypt shares resume rally as corrections, profit-taking finally over amid fresh liquidity Market expected to move upwards in mid-term, bolstered by earning season
It seems that the worst is over for Egypt's stock market, which was hit in the few last months by a strong profit-taking streak, as the market indices registered the first weekly gains in almost two and a half months last week amid a strong liquidity. The benchmark index EGX30 registered weekly gains of 3.99% as it closed at the level of 15,806.38 points, while the EGX70 rose 1.85% to 748.07, the EGX100 settled 2.44% higher at 1,942.46 points, and the EGX50 rose 1.83%, ending Thursday's trading session at 2,599.78 points. Market capital increased by around EGP 22bn, reaching EGP 880.3bn. Market analyst Sameh Gharib of Roots Brokerage said that the main index was able to restore its upwards trend supported by strong purchasing powers, after maintaining the support level of 15,500 points; resistance now stands at the 16,000-point level. As for the small and medium-sized enterprise index EGX70, support now moved from 730 points, and the index will now be targeting the levels of 750 points and then 770 points. The Egyptian Stock Exchange (EGX) is dominated by sideways moves with prevailing sell-offs led by foreigners and Arabs, recording EGP 1.02bn and EGP 63.5m, respectively. Pharos expects EGX30 to rebound in the medium term to 17,200 points, then to 17,700 pts, and later on to the all-time high of 18,400 points. Talaat Mostafa Bank is also expected to rise to EGP 16.50, and the cement sector to rally. Meanwhile, the advisory committee of the capital market has finalised the regulations of launching the mechanism of borrowing securities (short-selling) in preparation for forwarding them to the Financial Regulatory Authority (FRA) to be adopted by the end of the third quarter. Sources told Daily News Egypt that the group held a meeting last week in the presence of Public Enterprise Sector Minister Hesham Tawfik. Whereby the sources explained that action items of short-selling were agreed upon. This mechanism allows brokerage firms with margin purchase licences to apply for obtaining short-selling license. Short-selling clients are required to deposit a cash amount equivalent to 50% of the value of borrowed shares as a security for short-selling transactions, the sources added. "The EGX30 is expected to move upwards after confirming its ability to cross the level of 15,500 points. The index is set to target 15,750 points in the few coming sessions on the backdrop of the positive moves of the CIB, Talaat Mostafa, and EFG-Hermes, and to target 16,000 points on the mid-term," said market analyst Ehab El Saeed. Meanwhile, Al-Naeem Holding predicted any prospective EGX30 rally to be obstructed by a 15,640-point resistance level, advising traders to be selective about trades. The EGX70 failed to stay firm above the resistance level of 750 points, suggesting further declines down the road towards 710 points, and then to the support levels of 675 points and 680 points, Al-Naeem added. Meanwhile, the financial indicators of the National Bank of Kuwait – Egypt (NBK) showed a 36.1% year-over-year growth in profits for the first half of 2018, recording EGP 989m, up from EGP 727m. The bank attributed the robust H1 of 2018 profits to EGP 100m increase in net return, coupled with a EGP 319m growth in operating profit, according to a filing to the EGX. Interest revenues rose by 25.8% to EGP 3.3bn in H1 of 2018, versus EGP 2.62m in H1 of 2017. The lender's total deposits in the bank went up by 16.34% to reach EGP 47.53bn in the six-month period ending June, compared to EGP 40.85bn in the same period a year ago, while overall loans grew by 11.7%, registering EGP 39.28bn, up from EGP 35.18bn. The NBK previously reported a 50.8% y-o-y hike in profits for Q1 of 2018, recording EGP 486.89m, up from EGP 329.5m. In other earnings news, the financial indicators of Misr Hotels have shown a 57.6% y-o-y surge in profits for FY 2017/18 due to higher sales. The company logged EGP 149.8m in profits during the July-June period of FY 2017/18, versus EGP 95m a year earlier, Misr Hotels said in a filing to the EGX on Thursday. Revenues increased to EGP 462m in FY 2017/18 from EGP 201.7m in the prior fiscal year. The financial indicators of Misr Hotels previously showed a 28% y-o-y surge in profits for the nine months ending March, recording a net profit of EGP 161.7m, up from EGP 126m. On the other hand, Global Telecom Holding reported a 65.6% y-o-y decline in consolidated profits for H1 of 2018. Net profit stood at $12.5m in the six-month period ending June, versus $36.3m in H1 of 2017, the company said in a filing to the EGX. Revenues narrowed to $1.39bn at the end of June from $1.51bn in the same period a year earlier. Standalone losses retreated to $24.6m in the first three months of this year, against $48.2m in losses in the previous year. At the level of standalone business, Global Telecom has turned to profitability in H1 of 2018, recording profits of $413.1m, against a net loss of $59.4m in H1 of 2017. Global Telecom previously posted a year-on-year leap in consolidated profits for Q1 of 2018. In Q1 of 2018, net profit skyrocketed by 3,083% to $38.2m, versus $1.2m in Q1 of 2017. Revenues narrowed to $699.5m in Q1 of 2018 from $752.4m in the same period a year earlier. Moreover, standalone losses retreated to $24.6m in the three-month period ending March, against $48.2m in losses in the previous year. Meanwhile, Commercial International Bank – Egypt (CIB) posted a 23.4% year-on-year rise in consolidated profits for H1 2018. Net profit amounted to EGP 4.42bn in the six-month period ending June, versus EGP 3.58bn in the previous year, the bank said in a filing to the Egyptian Exchange (EGX). Net profit amounted to EGP 4.42bn in the six-month period ending June, versus EGP 3.58bn a year ago, the bank said in a filing to the Egyptian Exchange (EGX). Standalone profits went up by 22% to reach EGP 4.41bn at the end of June, compared to EGP 3.6bn in H1 2017. CIB previously reported a 15% year-on-year increase in consolidated profits for Q1 2018, recording a net profit of EGP 2.02bn, up from EGP 1.7bn.
