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EGX awaits catalysts to break out of its sideways range, record 14,100 points Current share prices offer ideal opportunity for long-term investor, says Naeem Brokerage
The Egyptian Exchange (EGX) is waiting for more catalysts to break out of its sideways range between 13,500 and 14,100 points, which has been stable for a while. Even solving the Global Telecom crisis was unable to push the EGX indices up. Mohamed Al-Asar, managing director of Aman Securities, said that the trading sessions next week will be calm, likely to drop to 13,570 points, explaining that the market lacks incentives that would increase the trading volume from its current level, which he considered low. He noted that positive news and lower interest rates can be good incentives for EGX, in addition to companies making strong profits which promote direct investment in the Egyptian market. Furthermore, Al-Asar pointed out that foreign investments in treasury bills (T-Bills), which rose to $19.2bn in mid-June, negatively impacted the EGX, advising investors to move away from margin trading currently. Managing Director of Naeem Brokerage, Tarek Abaza, explained that the upcoming holidays may have a negative impact on the market that already suffers low trading volumes. Abaza stressed that current stock prices are an opportunity for long-term investors, as we may not see such low prices again in the future with the expected positive wave and the improvement of the market situation driven by the new offerings and the government IPO programme. Abaza expects the trading volumes will move between 13,500 and 14,100 points if the current market situation did not change. EGX30 index closed at 13,670.27 points, recording a decline of 1.04%. EGX70 index posted 2.12% loss concluding the week at 531.97 points, while S&P index declined by 1.55% and concluded the week at 2,112.03 points. EGX30 index capped declined by 1.03% and concluded at 16,795.33 points, while EGX100 index declined by 1.94% and concluded the period at 1,376.08 points. Total market capitalisation reached EGP 729.9bn, representing a decrease of 1.12% over the last week. The total trading value recorded EGP 10.6bn, while the total trading volume reached 719m securities executed over 75,000 transactions last week. For the week before last, the total value traded recorded EGP 10.7bn, while the total volume traded reached 1,438m securities executed over 82,000 transactions. Stocks trading accounted for 24.15% of the total value traded of the main market, while the remaining 75.85% were by bonds over the week. Egyptians represented 63.3% of the value traded in listed stocks after excluding deals during the period. Foreigners accounted for 28.8%, while Arabs scored 7.9%. Foreigners and Arabs were net sellers at EGP 6.8m and EGP 133.7m, respectively, after excluding deals in listed stocks.
