Egypt shares to move upwards as government's IPOs programme kicks off

Foreign investor to pump fresh liquidity in blue-chip stocks in short-term, analysts say

Egypt shares are expected to move upwards in the short term boosted by fresh liquidity, which is expected to pour into the market ahead of launching the government's initial public offering (IPO) programme later this month, analysts told Daily News Egypt.
The main benchmark index is likely to touch 16,500 points this week following positive news of blue-chip stocks, analysts added.
All indicators emphasise the market's positive performance in the coming period, expected to shift closer to 16,500 points this week, said market analyst Safwat Abdel Naeem.
He also stressed that the benchmark, the Egyptian Exchange (EGX) 30 index moved upwards over the past trading sessions, backed by the heavyweight of the Commercial International Bank (CIB), which hit EGP 86 and targets EGP 92 and EGP 94.
Settling above 16,000 points will pave the way for the EGX30 index to test 16,300 and 16,550 points, said customer relations manager at Arabeya Online, Michael Mamdouh.
The index is still moving downwards in the medium-term, however, it is likely to stabilise above 16,000 points in the short-term, Mamdouh indicated.
He highlighted that the EGX30 index has averaged at 15,640 and 15,071 points, noting that by breaking this level, it would be a stop-loss point for short-term investors.
The index has resistance at 16,040 and 16,450 points, he said, adding that the index may test 16,300 and 16,550 points if it breaks 16,000 points.
Last week, the market showed mixed performance with most indices moving sideways.
The benchmark index EGX30 declined by 1.2% down to 15,803.17 points.
The EGX30 maintained its trends between the resistance level of 16,000 points and support at 15,745 points, according to Mamdouh, adding, that turnovers below the billion-pound level will not be sufficient to lead the index above 16,000 points, as the market remains in a correction movement, which is coming to an end.
Meanwhile, the small and medium sized enterprise (SMEs) index EGX70 rose by 0.27% to 749.46 points, while the broader index EGX100 levelled up 0.07% to 1937.88 points.
On the other hand, the equal-weighted index EGX50 decreased by 0.9% to 2578.2 points.
The market cap ended the week at EGP 874.67bn, losing around EGP 7bn compared to its level by the end of last week.
In August, the market rallied on the back of a positive sentiment supported by the outlook upgrade by Moody's to Egypt's credit rating.
The benchmark index EGX30 ended a three-month declining streak and rose by 2.75% in August.
The market capital went up by EGP 8.1bn to a total EGP 881.7bn in July.
Meanwhile, the SMEs index EGX70 levelled up to 0.38%, as it ended the month at 747.38 points, and was up 1.27% for the week.
The broader EGX100 gained 0.32% in August, and closed at 1,936.41 points, posting weekly gains of 2.12%.
The equal-weighted index EGX50 added 0.75% by the end of the month, supported by weekly gains of 3.6%.
Meanwhile, Ezz Steel, Egypt's largest steelmaker, reported profits for the first half (H1) of 2018, helped by higher sales.
Consolidated profits amounted to EGP 143.7m in H1 of 2018 (-18), against a loss of EGP 970.2m in the previous-year, the company disclosed in a statement to the EGX.
Sales rose to EGP 25.5bn in the six-month period ending in June, versus EGP 17.5bn in the same period of 2017.
The EGX-listed firm previously posted turning profits for the first quarter (Q1) of this year with EGP 184.27m in net profit, against a loss of EGP 492.8m in Q1 2017.
In other market news, Maridive and Oil Services reported a 55% year-over-year rise in net consolidated profit for the H1-18, recording $17.08m after $11.02m.
Revenues grew to $112.7m during the six-month period ending in June, versus $100.5m in the previous period, the company said in a filing to the EGX.
Standalone profits narrowed to $2m in H1 2018 from $4.2m in H1 2017.
Maridive previously posted a 23.3% y-o-y rise in net consolidated profit for Q1 2018.
Net profits stood at $6.9m in the three-month period ending in March, versus $5.66m in Q1 2017.
Meanwhile, co-founder and member of B Investments Holdings' board of director said that negotiations between Madinet Nasr Housing and Development (MNHD) and the Sixth of October for Development and Investment (SODIC) over a merger or an acquisition deal are still ongoing.
The merger or acquisition transaction is expected to take place by the end of 2018, Alaa Sabaa, chairperson of Beltone Financial, told local newspaper Alborsa.
Notably, B Investments holds a 27% stake in MNHD. Sabaa added that B Investments is considering two acquisitions in the food industry and education sectors prior to the end of this year.
The Egypt-based private equity firm will finance possible transactions with its EGP 600m cash inflow, he indicated.
Sabaa said that B Investments Holdings aims to invest EGP 250m in the food industry, education, energy, and non-banking financial services in 2019.
He also unveiled the company's plans to establish a private university.
Moreover, he said that B Investments used around EGP 200m of its proceeds from the IPO on the EGX last year to raise its investment capital unit, Abtkar Finance Investment.
Meanwhile, Sarwa Capital hoped that its evaluation would reach $300m, before its IPO in the EGX.
The company seeks to fetch around $120m to $125m by selling 40% of its shares, CEO Hazem Moussa told Bloomberg.
Moussa expects the stock price to range between EGP 7 to EGP 8, noting that a number of investment companies seek to acquire stakes of 3% to 5%.
The CEO forecasts the listing to enhance the company's competitiveness and market share.
The IPO is expected to take place during the third or Q4 2018.
Beltone Financial Holding is the sole coordinator, while Matouk Bassiouny is the legal adviser.