Sideways trend dominated the last week's trading sessions in the Egyptian Exchange (EGX), and traders expected this trend to continue this week amid positive expectations for the EGX in 2020. This positive outlook is supported by the easing monetary policy adopted by the Central Bank of Egypt (CBE) and the government's IPO programme that would attract new liquidity to the market. The benchmark index EGX30 closed at a 0.11% increase during last week's sessions recording 13,899 points, while the index of small and medium companies EGX70 rose 0.11% to settle at 536 points. The broader EGX100 index also up by 0.52% to 1,399 points, while the EGX30 Capped rose by 0.07%, closing at 16,238 points. Mohamed Hassan, head of asset management at MEDAF, expected a sideways-to-declining trend to dominate the trading sessions this week due to low liquidity in the market. He pointed out that the stock market moved sideways in the past week, experiencing a decrease in the first sessions of 2020 to close at 13,899 points. In general, the market is still moving sideways in the short term. The main resistance level is 14,000 points, and when the indexes break through it, the trend will switch to upward in the short term. Hassan mentioned that current conditions in the market support the continuation of easing monetary policy and further reduction of interest rates this year by up to 300 points benefiting from global easing policies, inflation rates moving within the CBE's targets, and the stability of exchange rates. He also has positive expectations for the performance of the EGX during 2020, supported by the new government and private IPOs. Meanwhile, the market capital reached EGP 706.7bn last week, up 0.88% from the week before, amounting to EGP 700.5bn. Shares acquired 39.18% of the total trading value, while bonds seized about 60.82% of transactions. Ahmed Abd Elnaby, deputy head of research department at Shuaa Securities, said that despite the diverse performance of the EGX over the past year, the Egyptian stock market were the third-best market compared to their peers in the MENA region in 2019. He added that the EGX30 index, which is denominated in US dollar, saw 19% hike due to its good performance during most of the past year. He said that Egypt is still one of the cheapest stock markets, with EGX30 trading 32% discount compared to the MSCI index for emerging markets. Abd Elnaby set the multiplier for future profitability of the Egyptian market at 10.6x, and emerging markets at 10.6x. He explained that all sectors of the EGX ended in the red zone, with the exception of banking, tourism, entertainment, personal products, household products, personal products, food, and beverage. He noted that the chemicals and communications sectors were the lowest performers in 2019. As for the core resources sector, the increase in the supply in the domestic market overshadowed the performance of cement producers, with no incentives for export sales, has resulted in a significant decline. Incentives for export sales make up a large of the core resources sector and is a major driver of exports. The total value of trading on the EGX reached EGP 5.6bn during the week on about 657m securities executed through 61,000 transactions, compared to the total trading value of EGP 6bn on 948m shares executed through 66,000 transactions in the previous week. Arabiya Online Research predicted that the index will move sideways in the long-term, medium-term and short-term, identifying support points at 13,370 and 13,170 points, and resistance points at 14,150 and 14,395 points. Egyptians accounted for 75.3% of transactions on the EGX, while foreigners had 17.2%, and Arabs implemented 7.4%, after excluding deals. Foreigners recorded a net purchase of EGP 13.5m during the past week's transactions, while Arabs recorded a net sale of EGP 24.2m during the same period, after excluding deals. It advised investors to trade in bullish shares in the short term between support points and daily and weekly resistance and support levels for stocks, with the need to adhere to stop loss in the event of breaking support levels. The Egyptians' transactions represented 66.8% of the trading value of shares listed since the beginning of the year after excluding deals. Foreigners scored 24.5% and Arabs recorded 8.7%. Foreigners recorded net sales of EGP 1.68bn, while Arabs recorded a net sale of EGP 1.082bn on listed shares after excluding deals since the beginning of the year.
