Anticipation prevails across money market; all await decision on interest rates

Fatma Salah
4 Min Read

Anticipation prevails across the money market, as all await the Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) to convene on Thursday and set the country’s interest rates.

Many are also awaiting the appointment of a new governor of the CBE after Tarek Amer resigned from the post on Wednesday.

The Commercial International Bank’s (CIB) share, which has the largest relative weight in the EGX30, recorded a rise of 3.23% and closed at EGP 38.7 per share.

By the end of Wednesday’s trading, the Egyptian Exchange’s (EGX) indices witnessed a collective rise, with the main EGX30 index rising by 2.18% to trade at 10,058 points.

Mostafa Al-Kurdi — Group Head of Arab African Securities — said that the market is awaiting the CBE’s decision regarding interest rates, adding that the performance of the EGX70 is better than the EGX30 currently due to the high rates of liquidity.

Moreover, he said the EGX30 began a corrective movement to the level of 9,759 points and is expected to rebound to 10,200 points, while the EGX70 is targeting 2,200 points.

Meanwhile, investment banks have conflicting opinions about their expectations for the MPC’s decision, with some believing that the CBE will maintain the interest rates at their current levels ahead of a calm wave of price increases and relative stability in exchange rates, while analysts expect the possibility of raising interest rates by 200 basis points under pressure from the US Federal Reserve, which is expected to raise its interest at its next meeting in September.

For her part, Mona Mostafa — Director of Trading at Arabia Online Securities Brokerage — said that Wednesday’s session reflected the weakness in the momentum indicators for EGX30 since the previous Wednesday’s session against the trend of liquidity towards the EGX70 index companies throughout the past sessions, adding that there is a growing desire to speculate on small and medium companies’ stocks.

Furthermore, the recent collective decline of indices coincided with one session remaining before the CBE’s decision on interest rates, which prompted the market to make a profit.

She advised long-term investors to seize the current opportunities in the leading stocks — given that they are in a period of consolidation — stressing the necessity of sticking to the currently open positions in stocks, buying dips, and selling with every upward rebound.

The EGX recorded EGP 1.8bn in 61,966 transactions over 192 companies, with foreign investors tending to sell, recording a net worth of EGP 180.5m under pressure from institutions that achieved a net sale of EGP 181.946m, compared to the EGP 1.362m in net purchases from individuals.

Meanwhile, Egyptian investors’ transactions were mainly purchases, recording a net worth of EGP 155.952m with the support of institutions that recorded net purchases of EGP 157.011m, compared to EGP 1.058m in net sales from individuals.

Finally, Arab investors’ transactions recorded a net purchase of EGP 24.631m, EGP 24.178m of which were by individuals and EGP 453,567 were by institutions.

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