Market traders expected the Egyptian exchange (EGX) to move sideways this week, while selected stocks move up, as the market awaits the new fuel price hikes. This is despite the government's positive reports which praise economic performance, where the ministry of planning said that Egypt realised the highest growth in 11 years scoring 5.6% in the third quarter (Q3) of the current fiscal year (FY). This is driven by the increase in investment and foreign trade, in addition to the growth of revenues by 19% to EGP 687bn supported by the increase in income tax and other sources. On the global level, the United Stated Federal Reserve (Fed) kept its interest rates unchanged. Naeem Research–a department of Naeem Brokerage–explained that the reported fiscal deficit for the first 10 months of FY 2019 will reflect positively on the stock market performance, as the report is almost in-line with the government's budgeted target. Based on their calculations and taking into account the available year to date (ytd) data, the deficit for FY 2019 should record 8.3% which is aligned with the government's target of 8.4%, as well as the International Monetary Fund (IMF)'s estimate of 8.3%. “We, however, forecast the country's deficit to amount to 8.6% of the GDP for FY 2019 versus 9.7% in FY 2018,” Naeem said. The main positive highlight comes from the revenue side, as the government generated a year-over-year (y-o-y) increase in tax proceeds of EGP 82bn from higher income tax (EGP 38bn) and goods and services taxes (EGP 44bn, including VAT). Naeem Research recommend buying Ezz Steel stock because the last price of the stock was EGP 12, while the target price is EGP 23.3. This is in addition to buying GB Ghabbour Auto, Abu Qir Fertilizers, and Qalaa Holdings, as their target price is EGP 7.98, 33, and 4.16 respectively Naeem also recommend buying in the real estate sector such as Madinet Nasr, Orascom Development, Palm Hills Developments, SODIC, and Talaat Mostafa Group. Mohamed Othman, head of technical analysis at Pharos Securities, said that the recent increase in the market has approached the resistance level at 14,300 points, where the purchasing powers were unable to push the index above this level. He recommended short term traders to make profits near 14,300 points but in case of not retaining purchasing positions, profit protection orders should be placed below the secondary support level at 14,140 points. Othman expected the market to be corrected for the index to reach 13,000 points, noting that purchase positions their shares are higher than liquidity must sell partially, especially margin buyers. The EGX 30 index closed at 14,043.42 points, recording a decline of 0.97%. The EGX 70 index posted a 0.53% loss concluding the period at 602.35 points, while the S&P index declined by 1.06% and concluded the period at 2,147.79 points. The EGX 30 index capped a decline by 1.49% and concluded at 17,233.1 points, while the EGX 100 index declined by 0.64% and concluded the period at 1,536.89 point. Total market capitalisation reached EGP 757bn at end of period, representing a decrease of 0.36% over the last week. The total value traded recorded EGP 6bn, while the total volume traded reached 516m securities executed over 80,000 transactions last week. Regarding the week before that, the total value traded recorded EGP 5.5bn while the total volume traded reached 721m in securities executed over 100,000 transactions. Stocks trading accounted for 52.51% of the total value traded of the main market, while the remaining 47.49% were captured by bonds over the last week. Since the beginning of the year, Egyptians represented 66.5% of the value traded in listed stocks after excluding deals, foreigners accounted for 24.4%, while Arabs had 9.1%. Foreigners were net sellers by EGP 1,510.1m and Arabs were net buyers by EGP 45.8m, after excluding deals in listed stocks during this year since it started.
