Decline in global markets, strength of USD placing pressure on EGX

Daily News Egypt
4 Min Read

The Egyptian Exchange’s (EGX) indices declined in Wednesday’s trading session amid profit-taking operations, coinciding with a decline in the financial markets that await the US Federal Reserve’s upcoming evaluation of its interest rates.

On Tuesday, Minneapolis Federal Reserve Chairperson Neel Kashkari reiterated the central bank’s commitment to controlling inflation by tightening monetary policy.

The European Stoxx 600 index fell by 0.28% to 430 points, the British FTSE 100 fell by 0.46% to 7,453 points, the German DAX index fell by 0.41% to 13,138 points, and the French CAC fell by 0.45% to 6,332 points.

In a related context, the Gulf’s financial markets also fell as the indices of the Kuwait Stock Exchange and Abu Dhabi Stock Exchange declined by 0.75% and 0.2%, respectively.

This comes in parallel with the rise in the USD’s value against the EGP. The USD value was EGP 19.12 for buying and EGP 19.18 for selling on Wednesday, compared to Tuesday’s EGP 19.10 and EGP 19.16.

Egypt’s main index, the EGX30, decreased by 0.32% to 10,105 points, while the EGX70 index of small and medium enterprises fell by 1.13% to 2,163 points, and the broader EGX100 index decreased by 0.90% to settle at 3,102 points.

Mohamed Hassan — Managing Director of Asset Management at Blom Egypt — said that the market is holding the highest level of 10,000 points despite the profit-taking operations that Wednesday’s session witnessed. He also pointed out that transactions that exceed EGP 1bn with stability are positive indicators.

He added that the main index will witness a downward correction movement during the next few sessions but will rebound again, targeting 10,600 points, which is the most important resistance level for the index.

He also pointed out that the EGX70 index is moving in a horizontal direction, targeting a correction of 2,100 points due to profit-taking operations and to rebound again to the most important resistance level of 2,300 points.

He advised investors to take advantage of the dips to buy — especially in the leading stocks — and to stay away from buying margins until the main level of 10,600 points is confirmed and the EGX70’s level exceeds 2,300 points to confirm the bullish trend in the medium term.

Wednesday’s total trading value amounted to EGP 1.32bn through 53,500 transactions on 194 shares.

Mostafa Al-Kurdi — Head of Group at the Arab African Company for Securities — said that the market witnessed natural profit-taking operations after the rise witnessed in past sessions, expecting that the corrective movement of the EGX30 index will continue until the level of 9,950 points during the remaining sessions of this month.

He also said that it is likely that the main index would target the 10,300-point level, which is an important resistance level.

Moreover, he pointed out that the shares of the EGX70 have high liquidity, however, profit-taking operations during Wednesday’s session led to a slight decline, pointing out the continuation of the corrective movement until the level of 2,100-2,150 points.

Finally, Al-Kurdi advised investors to keep 50% of the portfolio in a liquid state until the end of profit-taking and to stay away from marginal buying for the time being due to the correction.

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