Volatility took over the Egyptian Exchange (EGX) indices due to investors’ fear of changes in the economic scene. This forced fluctuations on the market’s performance amid a state of anticipation of the Central Bank of Egypt’s (CBE) decision regarding interest rates.
Most expectations indicate a significant increase in interest rates, as Morgan Stanley expected an increase in interest rates by at least 2%, and money market traders attributed the fluctuation to the market’s need for positive news.
The EGX indices declined at the close of trading, with EGX30 recording a decline of 0.11% to 15,932 points, with the largest share of the CIB in terms of relative weight in the index declining by 3.37%.
EGX70 decreased by 0.19% to 2,804 points, while the broader EGX100 increased by 0.3% to 4,196 points. EGX30 Capped recorded an increase of 0.67% to 18,972 points.
Mohamed Hassan, managing director of Blom Asset Management, attributed the decline after the strong rebound from the 14,000-point level, to the 16,000-point level again, to profit-taking, and the fact that the 16,000-point level is an important resistance level.
He highlighted investors’ fears and skepticism about the Egyptian economy and their aspirations for CBE’s decision and the interest rate, especially in light of expectations to raise it by about 200 to 300 basis points.
He explained that the main index is still in a state of fluctuation, adding that the market needs positive news for its recovery, or to move the exchange rate up again.
He advised investors to reduce part of the buying positions, activate stop-loss points, and wait for the trend to be confirmed.
The market capital of listed shares reached EGP 1.02trn.
Additionally, the market witnessed trading values of EGP 1.5bn, through the trading of 356.9 million shares, by carrying out 56,500 buying and selling operations. This came after the shares of 193 listed companies were traded, leading to 47 shares rising during the session, and the most rising shares were Sidi Kerir Petrochemical by 7.46%, and the shares of Ezz steel by 7.35%.
The prices of 79 shares declined, and the most declining share was Macro Group Pharmaceuticals-Macro Capital by 5.6% and the share of Construction and Engineering Consulting by 4.55%, while the prices of 67 shares did not change.
Mahmoud Hossam, Director of Local Institutions Trading at Mubasher Trade, said that the coherence of the main index was the reason for bringing balance to the capital market.
He explained that there is selling pressure on the shares of CIB and Hermes, which have the largest relative weight in the index, recording a decrease of 3.92% and 1.7%, respectively, in contrast to the positive performance of shares such as Ezz Steel, ElSewedy Electric, and Sidi Kerir, which recorded an increase of 7.35%, 6.5%, and 7.46% respectively.
He pointed out that the Hermes stock rebounded during the session when it reached an important support level at EGP 15.80 and closed at EGP 16.22. The CIB share has a support area at EGP 48-49, suggesting its consolidation at that area.
He added that the nearest support level for the main index is at 15,700 points, and the next resistance level is at 16,200 points.
He also expected an interest rate increase from 2% to 3% at the CBE meeting next Thursday, with the exchange rate remaining stable in the near term.
The net transactions of Egyptian and Arab investors tended to buy, with net transactions of about EGP 138.2m and EGP 63.3m, accounting for 82.2% and 8.02%, with the exception of foreigners, who tended to sell, with net transactions of about EGP 205.1m, accounting for 9.79%.
Individuals carried out 68.34% of the transactions, heading towards selling, with the exception of Egyptians, who recorded a net purchase of EGP 21.4m, while Arabs and foreigners recorded a net sale of EGP 5.6m and EGP 1.6m, respectively.
Institutions captured 31.65% of the trading, heading towards buying, with the exception of foreign institutions, which recorded a net sale of EGP 199.8m, while local institutions and Arab institutions recorded a net purchase of EGP 116.7m and EGP 68.9m, respectively.