Egypt shares to move upwards ahead of year-end bolstered by blue-chips stocks

Daily News Egypt
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Egypt shares are expected to move upwards in the last week of 2018, bolstered by blue-chips stocks, as local and Arab investors build new positions ahead of a near-to-come earning season.

The benchmark EGX30 index is expected to carry on rising and break 13,000 points amid higher trading volume, head of technical analysis at Arab Finance Securities, Osama Naguib said.

Higher trading volume indicates that purchasing power may push up the index above 13,400 points, Naguib pointed out.

He highlighted that the EGX30 index has main resistance at 13,400 points, and is likely to see sell-offs near this level.

As for Ayman Fouda, head of the capital market committee at the African Economic Council, he said that the EGX may maintain the bull run on Tuesday, amid institutional purchases.

The EGX30 has a short-term resistance at 13,350, 13,470, and 13,555 points, while it has support at 13,074 and 12,950 points, Fouda added.

Meanwhile, for the small- and mid-cap EGX70 index, he indicated it has short-term resistance at 682 and 688 points, while it has support at 670 and 664 points.

Analysts also said that the market could experience one of two possible scenarios this week, the fourth week of December, in line with traders’ tendency to monitor the performance of the Commercial International Bank (CIB) and Global Telecom Holding (GTH).

The EGX’s general performance this week will depend on Sunday’s trading session, branch manager at Mubasher Financial Services (MFS), Safwat Abdel Naeem said.

Abdel Naeem stressed the importance of monitoring implemented transactions on the CIB and GTH, especially after the benchmark EGX30 index broke resistance above 13,000 points.

The EGX is expected to experience one of two scenarios during the third week of December, he indicated.

The first scenario is that the CIB may break EGP 74 and record EGP 78 on the back of continued purchasing powers this week, while GTH could surpass EGP 3.7 and target EGP 3.9, he pointed out.

In this case, the EGX30 index would be able to break above 13,300 points and target 13,500 points, he added.

As for the second scenario, he said that buying transactions on the CIB may be weak and the stock could rebound to EGP 70, whilst trading on GTH would stop, and it may fall to EGP 3.2, which will drag down the EGX30 index to 13,000 points.

For his part, Customer Relations Manager at Arabeya Online, Michael Mamdouh Naguib said that the EGX30 index will maintain the bearish trend.

Naguib pointed out that the index has seen rebound near main support level at 12,008 points in an attempt to test declining support levels.

He emphasised that there are no clear technical signals that indicate any change in the EGX’s performance in the medium term.

Last week, the Egyptian Exchange (EGX)saw a positive performance in the week to 20 December, recording its second consecutive weekly gains.

The benchmark index EGX30 rose by 140 points or 1.08%, closing at the level of 13,137.5 points, its highest month-to-date.

Analyst Sameh Gharib said that the rising of the CIB led the recovery of the main index, and it could also support the return of a more positive outlook.

Gharib expects the index to target the resistance level at 16,500 points, with its main support now being the 13,000-point level.

The EGX70 ended the week at 678.21 points, gaining 0.46% after fluctuating throughout the week, with a resistance level remaining at 680 points, which, if it reached next week, it will target 695 points.

The broader index EGX100 increased by 0.48% or 1,690 points to close at 1,698.79 points.

The equal-weighted EGX50 levelled up 0.05% to settle at 2,145.6 points.

The market capital ended the week at EGP 744.9bn, increasing by around EGP 4.7bn.

In company news, Talaat Moustafa Group (TMG) Holding has negated acquiring shares of Palm Hills Development (PHD) Company.

The company negated that it has agreed a share exchange at one for every three shares, according to a filing to the EGX.

TMG’s capital stands at EGP 20.63bn, distributed over 2.06m shares, with a face value of EGP 10 per share.

PHD has a capital of EGP 6.15bn, with a total of 3.07bn shares at a nominal value of EGP 2 each.

Meanwhile, the CIB has established CVentures, the first corporate venture capital firm in Egypt focused on investing in transformational FinTech startup companies, and next-generation financial services platforms.

By establishing CVentures, the CIB is committed towards untapped financial services industry in the country, Egypt’s largest private sector bank said in a statement.

The CIB has marked FinTech as one of the key drivers of financial inclusion in Egyp,t and its future economic growth prospects.

“CVentures will pre-dominantly participate in Series A and Series B investment rounds in Egypt, the Middle East, Africa and other highly regarded cross-border market economies, in addition to considering seed investment rounds across similar markets,” the CIB said.

In other company news, Orascom Development Egypt announced the signing of an agreement with Thomas Cook Group, one of the world’s largest tour operators, to establish a new hotel and upgrade another with EGP 200m in investments.

Both firms will partner up to build a brand new hotel under the name of Casa Cook Hotel over the beach in El Gouna with nearly 100 rooms, Orascom said in a statement to the EGX.

The alliance will also upgrade and develop Arena Inn El Gouna Hotel, located in the Downtown area with 144 rooms, and change its brand name to Cook’s Club House, the Egyptian firm added.

Casa Cook Hotel is set for inauguration in October 2019, while Cook’s Club House will be opened in the next summer, according to the statement.

Orascom Development previously reported a modest increase in consolidated profits for the first nine months of 2018, as compared with the same period last year.

Net profit amounted to EGP 276.06m in the nine-month period ended September, compared to EGP 268.8m a year ago.

Revenues grew to EGP 770.9m in the January- September period, versus EGP 483.4m in the prior-year period.

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