Drop in leading stocks pushes EGX30 to decline further, though expected to bounce back this week

Rameda IPO disappoints and deepens the wounds of EGX, says Mohamed Kamal

Dealers in the Egyptian Exchange (EGX) expected its benchmark index to target 13,200 points this week after closing at 13,380 points in more than one session last week, while the leading stocks continue to pressure EGX30, including the Commercial International Bank (CIB) and Sidi Kerir Petrochemicals (SIDPEC).
It coincided with the continuing decline of Rameda stocks to close below the offering price, to make the stock one of the most deteriorating stocks in the market for two consecutive sessions, and closed at EGP 4.2 per share, down 5.2%, with a turnover of EGP 11.3m on 2.674m securities through 515 transactions, while SIDPEC and CIB shares declined by 5.8% and 0.2%, respectively, in the same session.
The EGX30 recorded a decrease of 1.94% during the last week sessions, closing at 13,358 points, and the index of small and medium companies EGX70 also decreased by 1.12% to settle at 520 points. The broader EGX100 index fell 1.57% to 1,360 points, and the EGX30 Capped index down 2.4%, closing at 15,784 points.
Director of Research Unit at Tycoon Securities Brokerage, Mahmoud Amin, said the decline witnessed by the market in the past week was due to the withdrawal of market liquidity and Aramco's IPO, pointing out that the market no longer affords capital increases due to the low return on equity compared to the interest on debt.
He added that the market is still holding together with the support of the CIB shares, though it witnessed some exits in the last period.
Amin expected the index to move in the medium term between 13,000 and 15,000 points, predicting the market to rise again.
The total value of trading on the EGX reached EGP 9.9bn during the last week, while the amount of trading amounted to about 884m securities executed through 77,000 transactions, compared to total trading of EGP 7.1bn over 586m securities through 94,000 transactions two weeks ago.
Moreover, Mohamed Kamal, head of corporates department at Al Rowad for Securities Brokerage, said the stock market is still on decline and closed the week at a low level, accompanied by weak trading volumes in the absence of incentives for the market.
He added that the market's main index is moving horizontally between 13,700 and 13,200 points over the past weeks. Furthermore, the Rameda IPO last Wednesday was a disappointment to deepen the market's wounds.
On the other hand, the market capital was EGP 686.6bn during the last week, down 1.23% from the week before last. Shares acquired 53.47% of the total trading value, while bonds have about 46.53% of transactions.
Kamal expected the market to bounce back at the beginning of this week and test its resistance point at 13,500 points and then 13,700 points. He advised investors to trade quickly: buy and sell in a narrow range, and to stay away from marginal buying at the present time.
Meanwhile, the Egyptians accounted for 60.2% of trading on the EGX, while foreigners acquired 35.5% and Arabs 4.3% after excluding deals.
Foreigners recorded a net purchase value of EGP 196.6m during the last week's transactions, while the Arabs recorded a net sale of EGP 48.4m during the same period, after excluding deals.
The Egyptians' transactions represented 66.8% of the trading value of the shares listed since the beginning of the year after excluding deals, while foreigners scored 24.4% and Arabs 8.8%. Foreigners' net sales reached EGP 2.1bn, while Arab's net sales were EGP 1bn on listed shares after excluding deals since the beginning of the year.