The performance of the Egyptian Exchange (EGX) took an upturn last week after reaching a satisfactory formula for the stamp tax law on EGX transactions. This supported the performance, pushing the main index up by 1,000 points, with a slowdown expected as it reaches 13,000 points.
During the last week, the greenback gained ground again against the national currency, climbing from EGP 15.7 to EGP 17.6 at Egyptian banks, which encouraged foreigners to re-invest in shares. This development is expected to continue in the coming period as the demand for the dollar grows in order to cover imports for Ramadan.
EGX transactions increased on Thursday, supported by purchases of Arabs and foreigners.
Ramy Oraby, an economist at Pharos Holding for Financial Investments, said that expectations for raising US interest does not constitute pressure for foreign investors dealing on the EGX, as the Federal Reserve Bank previously stated that it intends to raise the interest rate three times in 2017.
He added that the Egyptian market represents an opportunity for foreign investors after the start of the economic reform programme, which will lead to further foreign investments in Egypt in the coming period.
Oraby said that a further rise of the dollar’s value is likely in the coming period, due to the high demand on imports for Ramadan commodities.
He added that there was a rebound in transactions last week in light of the low cost and high margin for movement, but the application of the stamp tax on EGX transactions does not stimulate growth.
Pioneer Holdings’ head of brokerage Amer Abdel Kader said that the market marked strong rises in transactions last week.
He expects the main index performance to slow down as it reaches 13,000 points but will not move down as all news on performance is positive. He added that the government shares are moving positively.
Last week, Ezz Steel shares revived on the back of news about reducing the price of gas supplied to factories at the end of the year. The share rose by 4% to EGP 19.2. Ezz Steel shares declined previously last week after Ahmed Ezz was sentenced to jail.
Abdel Kader said that EGX transaction volumes increased thanks to RIMCO EGT acquiring the stakes of Abd El-Moneim Rashed El-Rashed in 13 Egyptian companies in a deal estimated at EGP 6.1bn.
The Commercial International Bank’s (CIB) shares increased in value last week by 3.57% to reach EGP 76.51. This drove the main index EGX30 up by 4.4%—equivalent to 542.7 points—settling at 12,853.27 points.
The total size of transactions in the EGX30 amounted to EGP 4.9bn, distributed over 1.06bn shares. The market capital rose by EGP 32.8bn last week, closing at EGP 635.9bn.
Meanwhile, the EGX70 appreciated by 8.73% to rise by 41.6 points and close at 518.6 points. The EGX50 also went up—by 7.21% and closing at 1,234.9 points.
Purchases were dominated by foreigners’ transactions throughout last week—netting EGP 220m—while Egyptians and Arabs sold shares worth EGP 93.7m and EGP 127.3m respectively.
Egyptian investors accounted for 40% of total transactions last week, while foreigners and Arabs accounted for 9.7% and 49.3%.
Most institutions moved to buy—netting EGP 6.3bn—while individuals usually sold. Individuals accounted for 58.8% of transactions last week, against 41.2% for institutions.