Geopolitical dynamics influence stock market projections

Daily News Egypt
4 Min Read

As the Egyptian Exchange (EGX) prepares for a shortened trading week post-holidays, it faces geopolitical upheavals that are likely to cast a shadow over its performance in the upcoming sessions.

Last week, the benchmark index EGX30 saw a marginal decline of about 0.01%, closing at 28,504 points. In contrast, the EGX70 EWI experienced a rise of 0.94%, reaching 6,541 points.

The EGX30 Capped index witnessed an uptick of roughly 0.29% to 34,945 points, while the comprehensive EGX100 EWI increased by 0.89% to 9,311 points. The S&P index also noted a modest gain of 0.16%, ending at 5,716 points.

Hossam Eid, the Chairperson of Cairo National for Investment and Securities, posited that the EGX30 might challenge a significant resistance level at 29,000 points, and potentially 30,000 points, should it maintain stability above the pivotal support mark at 28,000 points.

He added that the recent international and regional geopolitical developments could sway the Egyptian stock market’s trajectory shortly, with a potential dip in the index by around 1,000 points. Nonetheless, a rebound is on the horizon, bolstered by the strategic moves of Egyptian and Arab financial entities as they inaugurate their financial hubs in sync with the disclosure of quarterly financial statements by the majority of listed firms, signalling robust corporate activity.

Investors are encouraged to concentrate on flagship stocks known for their lucrative returns and consistent profit escalation, steering clear of volatile and swiftly traded equities to minimize risk and to comply with designated stop-loss thresholds.

The Egyptian stock market concluded last week with a trading volume valued at approximately EGP 5.3bn, encompassing 1.3 billion shares across 189,000 transactions. This contrasts with the prior week’s trading figures, which stood at EGP 13.9bn for about 2.8 billion securities in 434,000 transactions. The market cap of listed companies appreciated by 1.16%, amounting to EGP 1.93trn.

Mohamed Fareej, the Head of Technical Analysis at El Suk Securities Trading, anticipates the primary index to test a crucial resistance point at 28,900 points, with a potential ascent to 29,500 points if the buying momentum offsets the selling pressures triggered by the latest regional incidents.

A downturn is anticipated in Monday’s session, a repercussion of the recent Middle Eastern events, leading to selling activities and withdrawals, thereby probing the index’s essential support territory at 27,900 points, followed by 27,600 points.

Investors are advised to exercise discernment, eschew margin trading, and pare down positions at stop-loss intervals ranging from 26,400 to 26,300 points.

Egyptians constituted 49.6% of the total trading activity in listed stocks, while foreign and Arab investors accounted for 5.6% and 4.8%, respectively, post-deal exclusions. Foreign traders registered net sales of EGP 72.7m, whereas Arab participants recorded net sales of EGP 111.7m.

Since the year’s commencement, Egyptian dealings have represented 88.4% of the trading value in listed stocks, deal exclusions considered, with foreigners and Arabs contributing 5.2% and 6.4%, respectively. Foreign entities have realized net acquisitions amounting to roughly EGP 2.8bn, while Arab traders have exhibited net disposals totalling approximately EGP 1.67bn in listed stocks, deals excluded.

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