The stock market witnessed a week of relative stability. EGX 30 started the week resuming the gains it had started before the year end, in spite of poor economic conditions, before selling pressure forced it to retreat to earlier levels later in the week.
The benchmark index, EGX 30, started the week at 5.734 points to reach a two month high of 5.867 points, before falling to 5.755 points at the end of the week.
The index dropped on profit-taking after approaching the 5.900-6.000 points resistance level in Wednesday’s session, losing 112 points, approximately 2%of its value, on Thursday.
The head of the Arab Union for Direct Investment, Hany Tawfik, refused to provide analysis on the market’s performance saying that any analysis would be incomplete and immature since the stock market was isolated from political and economic realities. “The market rose when it should have declined and declined when it should have risen,” said Tawfik who expected foreign investment funds and big investors to stop trading and to leave the market in the hands of speculators and adventurers.
“The stock market is isolated from the political and economic contexts, it’s clear that the indices are trending up since the beginning of the year, while all the economic, political and security indicators are going down.” Concerning who is currently trading in the market, Tawfik said “random money, speculators who personally take the risk”, excluding the possibility that they might be doing this to make the economy look good or for political gain, saying that in the light of negative reports related to the foreign reserves, inflation and bankruptcy, nobody would judge the economy by looking at the stock market.
The financial expert doesn’t advise investors to enter the stock market in these circumstances. “It’s unpredictable,” he said explaining that there should be a stable environment in order to be able to predict the performance of the market based on precise corporate data.
Ehab Saied, director of the Technical Analysis Division of Osool Securities Brokerage, said the biggest event of the week was the continuing depreciation of the pound which holds up the market. He expects that the EGX30 will not breach the 5900-600 points resistance level (which it hasn’t done since January 2011) in the short run, not excluding it could happen in the medium and long term provided that political stability continues.