Egypt’s monetary policy stability to boost stock market performance this week

Alyaa Stohy
3 Min Read
Stock market charts are seen during the opening bell at the New York Stock Exchange (NYSE) on February 28, 2020 at Wall Street in New York City. - Losses on Wall Street deepened following a bruising open, as global markets were poised to conclude their worst week since 2008 with another rout. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)

Traders in the Egyptian Exchange (EGX) expected that the Central Bank of Egypt’s (CBE) decision to leave interest rates on hold will support the performance this week.

Also, Moody’s decision to maintain Egypt’s credit rating at “B2” with a stable outlook for the Egyptian economy, will carry a positive impact.

The benchmark index EGX30 decreased by 0.2% at the close of trading last week, at the level of 10723 points, while the EGX70 EWI rose by 18.9% to settle at the level of 2763 points.

Yasser Al-Masry, managing director of the Arab African Securities Brokerage Company, suggested that the EGX30 index will test the level of 11,500 points by the end of this month’s trading, driven by the positive performance of blue-chip shares headed by Commercial International Bank (CIB), El SewedyCables and Ezz Steel.

He explained that building purchasing positions in the shares of the defence sectors, led by Rameda shares, has become necessary and the opportunity must be seized at present with the beginning of a new upward trend for them.

He stressed that the index of small and medium-sized companies will continue its rise this August with the same intensity.

Mohamed Kamal, a member of the board of directors of Elite Financial Consulting, stated that the presence of greater opportunities to rise among the shares of the main index will lead to a significant rise. He added that Moody’s decision will be one of the biggest catalysts for the return of institutions to the market during the coming period.

Furthermore, he believes that despite the relative return of institutions, the EGX70 EWI index will continue to lead the rise and outperform its peers in the EGX.

Kamal advised medium-term dealers to reduce purchasing positions, and short-term traders should adhere to quick trades and take profits with the rise of stocks.

The market recorded trading values ​​of EGP 17.8bn at the end of last week, through the circulation of 2.7 billion shares, byimplementing 312,000 buying and selling operations, compared to the previous week’s trading, which amounted to EGP 17.2bn and the amount of 3.3 billion shares traded, through 303,000.

Foreign transactions recorded a net sale of EGP 85.8m with a 5.4% acquisition rate of buying and selling shares, while Arabs tended to buy, with net transactions amounting to EGP 52.2m and an acquisition rate of 5.6%, after excluding deals.

Shares accounted for 56.3% of EGX trading in July, while the value of bond trading represented about 43.7% of the transactions.

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