Egypt’s shares are expected by analysts to move sideways after the Central Bank of Egypt (CBE) left interest rates on hold, halting its easing cycle. Meanwhile, foreigners continued to book gains for the third consecutive week.
The main indices of the Egyptian Exchange (EGX) are projected to resume testing near resistance levels following the correction trend and sell-offs that the market has witnessed, said the head of the capital market committee at the African Economic Council, Ayman Fouda.
The benchmark EGX30 index is likely to move in an upward direction in the long term, see a sideways trend in the medium term, and move downwardly in the short term, Fouda highlighted.
The index has a short-term resistance at 17,000 and 17,300 points, while it has support at 16,850 and 16,600 points, he added.
Moreover, the small to mid-cap EGX70 index could see a short-term downward trend as it has resistance at 855 and 860 points and support at 840 and 836 points, he noted.
Fouda recommended that investors not sell randomly and carefully monitor stocks to collect earnings of each stock separately in order to build new purchasing positions. He advised quick traders to trade on active stocks, in line with buying on margin.
“Interest rates decision will also likely weigh on the market performance in the short term,” he added.
The CBE’s Monetary Policy Committee (MPC) kept overnight deposit and lending rates unchanged at 16.75% and 17.75% respectively, the CBE announced in a statement last week.
The rate of the CBE’s main operation and the discount rate were left unchanged at 17.25%.
“The MPC’s decision to keep the CBE’s key policy rates unchanged is consistent with achieving the targeted disinflation path,” the statement read.
“The increase in international oil prices gained momentum in April and May 2018, leading to the materialisation of an upside risk to the domestic inflation outlook,” the statement added.
The benchmark EGX30 index is likely to remain stable above 16,900 points as it has resistance at 17,500 points, capital market expert Michael Mamdouh Naguib said.
The index may test support at 16,445 points if it falls below main support of 16,914 points, he pointed out.
The heavyweight Commercial International Bank (CIB) has support at EGP 86 and it may positively rebound to test EGP 92.5, Naguib indicated.
EGX 30 falls for the third week in a row
The EGX declined by the end of the week, pressured by a sell-off streak from foreign investors.
The main index EGX30 went down 1.62% as it closed at 16,877.66 points, ending its third consecutive week of losses.
Traded volumes for the benchmark index stocks amounted to 921m shares, with a total turnover of EGP 4.3bn.
Market capital lost EGP 13.6bn and ended the week at EGP 948.39bn.
Meanwhile, the small and medium enterprise index EGX70 slipped 0.15% to the level of 852.25 points, while the broader EGX100 decreased by 0.65% and reached 2,181.45 points.
The equal-weighted index EGX50 fell 1.1% and ended the week at 2,899 points.
Foreign investors were net sellers with EGP 439.9m, while Egyptian and Arab investors were net buyers at EGP 51.3m and EGP 388.6m respectively.
Local investors dominated 70.4% of the weekly trade, while Arabs and foreigners accounted for 18.5% and 11.1%.
Orascom Construction Limited (OC) was among the best performers last week.
The company announced Thursday that its wholly-owned subsidiary Weitz Company was named by the Canadian rail technology leader Bombardier Transportation as the design-build contractor for Stage 2 of the PHX Sky Train’s development.
The deal includes the extension to the train guideway and maintenance facility at Phoenix Sky Harbour International Airport in Arizona, OC added in a statement.
The second stage covers a 2.5-mile extension to the airport’s rental car centre, the establishment of two new stations, and an expansion of the system’s maintenance facility to accommodate the train maintenance, OC said.
Bombardier and Weitz had already executed Stage 1 and 1A of the PHX Sky Train, including a 3.3-mile section of the multi-station double-track train, as well as a maintenance facility, the company indicated.
The design work of Stage 2 started last April and is set to end in February 2019, in line with commencing construction work scheduled to complete in 2022.
In April, OC was listed on the EGX and Nasdaq Dubai, and it announced the completion of Natgasoline, the largest methanol production facility in the US.
The facility, located in Beaumont, Texas, has a production capacity of up to 1.75m metric tonnes per annum.
A subsidiary of OC completed the construction of the largest residential complex for students in the US last August.
OC Ltd had previously posted a net profit of $85.1m for the full-year 2017, versus $53m in profits in the year prior.
In other market news, Cleopatra Hospital Co posted a 97% year-over-year surge in consolidated profits for the first quarter of 2018, recording a net profit of EGP 57.19m from EGP 29m.
Revenues grew to EGP 347.15m in the three-month period ended last March from EGP 262.05m in Q1 2017, the company said in a filing to the EGX.
Meanwhile, standalone profits climbed to EGP 41.11m in Q1 2018, versus EGP 15.3m in the prior-year period.
Cleopatra Hospital had achieved a total consolidated profit of EGP 118.3m in 2017, compared to EGP 89.4m a year earlier.