Egypt shares to extend bearish action towards end 2018 amid turmoil in global markets

EGX30 lost 7% in a week; market cap fell to its lowest level since currency floatation

Egypt's shares are expected to move downwards in the few coming weeks amid a wider sell-off streak in global markets, with a trade war in the offing again sending shivers across stock markets from the US to Asia.
However, the market is expected to see a slight rebound this week, with blue-chip stocks likely to uphold up the market, analysts said.
The benchmark EGX30 index is likely to see short-term resistance at 12,600 then at 12,770, Head of the Capital Market Committee at the African Economic Council, Ayman Fouda, said, noting that if the index remains stable above these levels it would enable the index to retest the levels of 12,951.
The index will see support at 12,525 and 12,430 points, the analyst added.
As for the small and medium-sized stocks index, the EGX 70, Fouda expects it to see resistance at 669 and 677 points, whereas support will be at 658 and 650 points.
Meanwhile, head of technical analysis at Arab Finance, Osama Naguib, noted that the EGX30 has reached new support between 12,500 and 12,600, forecasting that this would prompt the index to regain 12,900 and 13,000 points, an area which Naguib described as an incentive for new sales and price pressures.
Over the past two weeks, the Egyptian Exchange (EGX) has suffered sharp declines pressured by banking stocks, particularly The CIB, which plunged by 13% over a two-week period.
The CIB's fall as a result of tax amendments to returns from bonds and treasury bills (T-Bills), however, the bank said Wednesday that these amendments would not impact its results for 2018, as they will not be imposed retroactively.
Last week, the EGX saw a negative performance in the first week of December, with market capitalisation falling to its lowest level since the floatation of the local currency.
The benchmark index EGX30 dropped 6.9% or 931 points to close at the level of 12,387 points, its lowest since April 2017.
The small and equal medium sized enterprise index EGX70 declined by 3% to 661.03 points, while the broader index EGX100 lost 3.4% and settled at 1,647 points.
Market cap plummeted to its lowest level since September 2017 to EGP 712.8bn, compared with EGP 750.7bn last week.
The EGX has been witnessing pressure from the recent tax reforms and changes in debt instruments return levels, as well as a negative performance by the CIB and bank stocks.
In market news, Celopatra Hospital Co denied news circulating that it has acquired El Katib Hospital at EGP 350m.
The final value of the acquisition will be disclosed ahead of executing the deal, along with getting the approval of the health ministry, the healthcare firm said in a filing to the EGX.
Celopatra Hospital's ordinary general meeting (OGM) nodded to the fair value report presented by the independent financial advisor of El Katib Hospital, which set it at EGP 266m.
Cleopatra Hospital previously reported a consolidated profit of EGP 224.9m the first nine months of 2018 (9M18), from EGP 84.6m in the prior-year period.
Standalone profits jumped to EGP 147.2m from January to September, versus EGP 62.9m in the same period a year earlier.
Meanwhile, the Financial Regulatory Authority (FRA) announced that it has approved Global Telecom Holding's (GTH) proposal concerning raising its capital.
The company will increase its issued capital to EGP 13.9bn instead of EGP 2.7bn, according to a filing to the EGX.
The increase will be allocated to repay interest obligations in dollars on the existing company's bonds.
Moreover, it will pay the dues of the main shareholder, in addition to financing future capital reserves, the statement said.
On 2 December, GTH's board has approved an EGP 11.18bn increase in issued capital through raising subscriptions for existing shareholders.
In related news, Palm Hills Development Co has raised EGP 991m from the second phase of the capital hike subscription.
The second phase was oversubscribed by 3.3 times through 148.4m shares at a value of EGP 301m, the property developer said in a statement to the EGX.
The first phase was oversubscribed by 3.3 times at a value of EGP 977m, excluding the issuance fees of EGP 14m, according to the statement.
Palm hills previously said that the capital increase subscription was oversubscribed by 80.71% during its first phase at a total value of EGP 1.26bn.
In other market news, Eastern Co announced that the recent hike in customs dollar exchange rate introduced by the Central Bank of Egypt (CBE) does not apply to its products.
The decision will not affect its products produced inside the company's factories in Egypt, therefore the prices will remain the same, according to a filing to the EGX.
Last week, the ministry of finance stated that the customs dollar exchange rate on unfinished imported products will be kept at EGP 16, including tobacco.
The ministry decided to raise the customs exchange rate for non-essential goods and link it to the rate set by the CBE this month.
Meanwhile, purchases of non-Arab foreign investors in the EGX amounted to around EGP 7.04bn in the 11M18.
Total sales of Arab investors in the Egyptian bourse stood at around EGP 223.4m since the beginning of the year, data by the EGX showed.
In November, the EGX's chairperson said that foreign buying of the local market is stable since the liberalisation of the exchange rate between EGP 19 and EGP 20.
Month-over-month, foreign investors dominated about 19.16% of the market's trading in November, while Arab and Egyptian investors controlled 16.51% and 64.33%, respectively.
Turnover in the EGX reached nearly EGP 28.4bn last month, while trading volume amounted to 5.2bn shares exchanged through 551,000 transactions.
The benchmark EGX30 index edged up 0.5% to 13,320 points last November.