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EGX performance reacts oddly to political instability

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The Egyptian Stock market index maintained its downward trend after a weekend of massive agitation.

The Egyptian Stock Exchange (EGX) kept its downward trend after a weekend of agitation.

The market’s benchmark index EGX 30 closed last week at 5739 points, on Sunday the index dropped again by 0.28 per cent, ending the session at 5723 points.

This performance was expected as a result of the public discontent over the court’s acquittal of the alleged perpetrators to the massacre known as the “Battle of the Camel” during events that followed the uprising of 25 January.

Arabeya Online’s chief technical analyst, Ahmed Khaled, said that the drop is not necessarily connected to the protests, “if the performance was related the events, we would have witnessed a fall during Sunday’s entire session. However, the day started with a slight dip and started moving upwards pushed by the housing and construction sector, namely Madinet Nasr Housing (MNHD), and the Heliopolis Housing (HELI). The majority of stocks traded moderately.

The lift was followed by selling pressures explained by the inability of the stocks to go break resistance levels, which led to the index closing below the 5750 points’ limit” said Khaled.

The stock market has an overall resistance level at 5750 points, when the index reaches that level the brokers begin automatically to sell, bearing in mind that the upward trend has reached its limit and hence the prices will begin to fall.

Khaled added he expects the market will witness a slight increase tomorrow supported by the foreign investors’ transactions that may push certain stocks upwards like the Commercial International Bank (CIB). In the medium term, the index is forecast to move sideways; “transactions volume are not sufficient to break the resistance levels, unless some managerial news materialise.”

Among such news is the finalisation of the acquisition deal of EFG Hermes, the progress in the National Societe Generale Bank (NSGB) deal, and the resumption of negotiations with the International Monetary Fund (IMF), which is expected to take place at the end of this month.

The most important point, according to Khaled, is index remaining above the medium term support level at 5400 points. Otherwise, “it will be a negative indicator.”

Among the 179 companies listed in the EGX42 which achieved gains on Sunday, 120 suffered losses, while 17 remained unchanged; among the top gainers was the Egyptian Financial Group- Hermes Holding Company, rising by 0.60 per cent, the National Societe General Bank (NSGB), by 1.04 per cent and and Telecom Egypt by 0.66 per cent. The major stocks that witnessed a drop during yesterday’s session were Orascom Construction Industries (OCI), dropping by 1.09 per cent and Palm Hills Developments (PHDC), dipping by 0.38 per cent


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