Coronavirus fears dominate EGX performance

Alyaa Stohy
5 Min Read
A general view of the Egyptian Exchange (EGX) in Cairo August 18, 2013. Egypt's stock market fell sharply on Sunday as it resumed trading after hundreds of people were killed in a crackdown by the army-backed government on supporters of the Muslim Brotherhood. Banks and the stock market reopened for the first time since Wednesday's carnage, with shares rapidly falling 2.5 percent. REUTERS/Louafi Larbi (EGYPT - Tags: POLITICS CIVIL UNREST BUSINESS)

Although American stocks rose by almost 9% last Friday, the pandemic novel Coronavirus development have dominated the performance of the Egyptian Exchange. With the fear of COVID-19 spreading in Egypt, there has been much pessimistic expectation concerning the continued losses of the stock market.

On the positive side, EGX30 Index witnessed a notable rise during Tuesday’s session, gaining (+1.97%) and closed at the session’s high of 11,199 points associated with above average volumes.

Mohamed Osman, Head of Technical Analysis department at Pharos Holding, said the support level at 11,000 points managed to stand against the recent aggressive sell off. The latter level represents the minimum downward target of the broken sideways range, which has been in place over a year. Thus, a potential upward correction might be seen even temporarily.

 He added “the majority of the trading stocks have reached major support levels, where prices became relatively less attractive for sellers (the dominant party), which could pave the way for buyers (the weaker party) to reappear. In this regard, as long as we keep trading above the level of 10,900 then the likelihood of witnessing a rebound remains intact.”

 “However, we keep adopting a conservative viewpoint, that any rebound should be perceived as a short-term corrective move, until the buying power proves otherwise” Osman continued.

Accordingly, the current levels are not at ideal levels for investors to sell at, and they should wait for any rebound to reduce marginal exposures at relatively better levels.

The firstThe resistance level to watch lies at 11,400, followed by 11,850 points. In case the market fails to resume its rebounding attempts, the next support level will stand at 10,500 followed by 10,000 points.

With stock prices falling in a way that attracts investment, some large companies have moved to buy treasury stocks to support the stock price and seize opportunities for its low price and then achieve good capital gains once the market recovers and conditions improve.

Egyptian Kuwaiti Holding purchased 135,000 treasury shares onon 9 March trading session. Palm Hills Development Co buys 3.64m treasury shares during the same trading session. Also, GB Auto purchased an additional 1.572m treasury shares, while Arabia Investments Holding bought250,000 treasury stocks..

EGX 30 index closed at 11,194.12 points, recording a decline of 9.34%. EGX70 EWI index posted 6.54% loss concluding the period at 1,096.22 points, while S&P index declined by 8.82% and concluded the period at 1,609.2 points.

EGX 30 index capped declined by 9.51% and concluded at 12,789.84 points, while EGX 100 index declined by 7.42% and concluded the period at 1,172.81 points.

Total market capitalisation reached EGP 599.8bn at the end of the period, representing a decrease of 6.94% over the last week.

The total value traded recorded EGP 13.0bn, while the total volume traded reached 990m securities executed over 95,000 transactions last week. Two weeks ago, the total value traded recorded EGP 15.6bn, while the total volume traded reached 1.03m securities executed over 113,000 transactions.

Stocks trading accounted for 21.07% of the total value traded onthe main market, while the remaining 78.93% were captured by bonds over the week.

Egyptians represented 64.7% of the value traded in listed stocks after excluding deals during the period. Foreigners accounted for 25.3%, while Arabs captured 10.0%.

Foreigners were net sellers, with a net of EGP 148.7m, and Arabs were net sellers, with a net of EGP 25.5m, after excluding deals in listed stocks.

Since the beginning of the year, Egyptians represented 63.8% of the value traded in listed stocks after excluding deals, foreigners accounted for 25.7%, while Arabs captured 10.4%. Foreigners were net sellers by EGP 274.1m, and Arabs were net sellers by EGP 866.7m, after excluding deals in listed stocks since the beginning of the year..

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