Recommendations for selective purchasing of stocks as EGX30 moves sideways

Mohamed Ahmed
3 Min Read
The Egyptian stock market indices continued to drop for the fourth consecutive day, reportedly affected by the Greek economic crisis, the drop in China’s capital market and domestic fears of militant attacks. (DNE File / Mohamed Omar)

Technical analysts predicted the EGX30 would move sideways this week at around 11,200-11,500 points.

Analysts advised investors to focus on selecting stocks more than the move of the index, in light of the presence of good opportunities that do not form the biggest relative weight on the EGX30.

They ruled out that foreign investor transactions on the Egyptian Exchange (EGX) would be impacted by the US Federal Reserve Board’s decision to raise interest rates by 0.25%, as foreigners are willing to continue benefiting from the flotation of the Egyptian pound.

The EGX30 index moved up last week by 0.25% to close at 11,326 points, while NILEX rose by 0.52%, closing at 452 points.

Trading amounted to about EGP 6.6bn across 134,000 transactions on 1.519 million securities.

The head of the technical analysis department at the National Bank of Kuwait for investment in North Africa and the Middle East, Mohamed Al-Aasar, expected EGX30 to move vertically at around 11,200 to 11,500 points this week.

He explained that the narrow scope is attributed to the movement of the Commercial International Bank’s (CIB) shares between EGP 65.7 and EGP 69, as well as Hermes at around EGP 19-20.

He pointed out that this situation results in investors being more focused on the selection of certain stocks, such as Ezz Steel, which is expected to increase from EGP 14 to EGP 15.

Moreover, he said that Orascom Telecom Media and Technology Holding (OTMT) is expected to move up from EGP 0.76 to EGP 0.87, while Oriental Weavers target a level of EGP 17.

He explained that NILEX is doing better, with the aim of increasing to 460-475 points.

Global head of research at Mubasher Financial Services Amr Elalfy said that foreign investor trading on the EGX will not be impacted by the US Federal Reserve’s decision to raise interest rates last week.

He explained that there was a prior forecast for investors that the interest will go up and some investors exited emerging markets, which reduces the likelihood of foreigners transferring their investments in EGX to elsewhere, noting that many foreigners have been buying since the flotation decision in early November.

Foreign investors recorded net purchases worth EGP 360.75m throughout trading last week, despite the St. Peter and St. Paul Church bombing incident.

In addition, Arab investors registered a purchasing size of EGP 55.7m.


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