Egypt shares likely to retreat as investors book gains ahead of year-end

Elsayed Solyman
7 Min Read

The Egyptian Exchange (EGX)’s rally is expected to pause as investors are set to book gains ahead of the year’s end.

The market has kept the rally alive for three weeks, hitting an all-time high by the end of November.

“I think the market could start a downward trend, with most investors likely to book gains ahead of year-end,” said Sameh Gharib, head of technical analysis at Roots Stock Brokerage House.

He noted that the EGX30 is trying to remain stable and rebound higher than its support level at 14,200 points.

“If the EGX30 succeeded in that, it will reach a secondary resistance level at 14,500 points and after that will test 14,726 points,” he pointed out.

Gharib forecasted that the EGX70 will try to remain above 760 points, and if that occurs, it will be pushed to a resistance level at 790 points, and then resistance level at 805 points.

The benchmark EGX30 index may test 14,800 points as it has significant resistance at 14,600 points, economist and market expert Safaa Fares said.

“The EGX30 index is targetting support at 14,100 points as it has support at 14,380 points,” Fares added, pointing out that “purchasing power by Egyptian and foreign institutions would push the index to break resistance,” she said in a research note.

The EGX70 index has resistance at 788 and 800 points, while it has support at 774 and 767 points, she highlighted.

Moreover, market analyst Ayman Fouda said that the EGX30 index has maintained correction last week, pressured by local selling for the third consecutive week.

The EGX30 index may retest the levels of 14,400 and 14,222 points if it broke support below 14,538 points, while resistance will remain stable at 14,652 and 14,726 points, he explained.

The EGX70 index has resistance at 805 and 795 points, while it has support at 773 and 765 points, he added.

The analyst recommended quick traders to trade on active stocks, along with buying on margin.

EGX 30 lost 287.49 points in a week

The EGX ended the week on 7 December in the red zone amid a sell-off streak from local investors.

Benchmark index EGX30 dropped 1.97%, or 287.49 points, to 14,294.73 points.

The EGX saw trading of 924.7 million shares, with a liquidity of EGP 3.7bn.

The EGX70 index tumbled 3.51%, reaching 767.55 points, registering its sharpest declines in seven weeks, while the EGX100 index slipped 2.23% to 1,810.81 points.

The equal-weighted EGX50 index decreased 1.46%, reaching 2,486.29 points.

Market capitalisation dropped by EGP 25.4bn on a weekly basis, closing at EGP 788.7bn, compared to EGP 814.1bn the week before.

The Commercial International Bank’s (CIB)’s stock shed 3.48%, to EGP 72.72, after 6.9 million shares were exchanged, generating EGP 515.8m.

Egyptian traders were net sellers with EGP 304.4m, while foreign and Arab traders were net purchasers with EGP 184.7m and EGP 119.7m, respectively.

The EGX saw profit-taking during the current week after it reached 14,600 points, Osool ESB Branch Manager Saeed Alfeky said.

It’s ordinary for EGX’s benchmark index to see profit taking after it hit a very high, to reach an important support level at 14,360 points, thus forming buying powers in these zones, and continuing to rise, Alfeky added.

“After US President Donald Trump announced Jerusalem as Israel’s capital, this led to an increase in profit taking and the main index broke its support level at 14,360,” the Osool branch manager stated.

Alfeky forecasted that EGX30 will come near its support level again, noting that if the index remained above that level, it will lead to an end of profit taking, to rise, aiming at 14,800 points.

“If the index broke this level, it will aim 14,100 points, and after that 14,000 points.”

Ibnsina Pharma…the new comer

Ibnsina Pharma’s initial public offering (IPO) has been 18.34 times oversubscribed, as the company set to start trading its shares next week.

Order volumes amounted to EGP 741.42 million shares against the total offered shares in the IPO of 40.4 million shares.

The Egyptian Exchange extended last week the period for registering IPO orders for Ibnsina Pharma in the secondary market for an hour.

Last month, the EGX approved the preliminary listing of Ibnsina Pharma’s shares.

The company’s capital amounts to EGP 168m, distributed across 672 million shares at EGP 0.25 per share.

The company aims at raising its sales by 30% in 2017, managing director Mahmoud Abdel Gawad said at a press conference last week.

The pharmaceuticals company targets achieving sales of EGP 9.6bn in 2017, against EGP 7.36bn in 2016, Abdel Gawad highlighted.

The Egyptian company plans to boost its capital by adding EGP 280m of a total EGP 1.56bn from its initial public offering (IPO), he added.

Ibnsina seeks boosting its annual profits to EGP 190m this year, against profits of EGP 101.7m last year.

The CEO noted that the company aims at raising its market capitalisation to 20% by next year, from 19% in the current year.

The company plans to invest about EGP 700m to increase distribution and operation centres to 74, from 55, over the coming five years, Abdel Gawad said.

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