By: Heba El-Kordy
Cairo – Mubasher: After a year of the liberation of the Egyptian Pound’s exchange rate, the Egyptian Exchange (EGX) rose to record its highest levels, as the floatation of the Pound maintain its positive effect on the Egyptian market.
Since the floatation of the Pound, the main index (EGX) grew 68% with a turnover of EGP 250.5 billion ,while the EGX’s trading volume increased by EGP 363 billion to EGP 780 billion from EGP 417 billion.
The EGX will continue its positive results and will reach very high levels until the first quarter of 2018 under the influence of the Egyptian Pound floatation, analysts told Mubasher.
Flotation’s incomplete effect
One year after the Egyptian Pound’s exchange rate liberation, the EGX did not reach the required level, capital market expert Toni Kamal told Mubasher.
The real effect of the pound flotation should support the EGX to go up to levels ranged between 16,000 points and 17,000 points, Kamal added, noting that the EGX may grow up to 15% in the coming two months.
Usually, the EGX sees active trading in the last two months of the year, and it is expected that it will see a strong buying trend of the blue chips, especially EFG Hermes, Talaat Moustafa Group Holding, and Global Telecom, Kamal commented.
As for the Commercial International Bank (CIB), Kamal said that the fluctuation of its stock was confusing and seemed intentional for the sake of attracting investors.
the EGX is expected to attract more investors in the coming period after the gradual reduction of interest rates, the analyst added.
Historical Increases
The EGX saw increases ranged between 80% to 90% since the Pound flotation, said Ahmed Ayyad, technical analyst at Mubasher.
EGX30 and EGX70 will sustain more historical increases, Ayyad added, noting that EG30 is targeting levels ranged between 14,700 points and 15,000 points, while EGX70 aims to break above 820-point peak and level up.
All the EGX’s sectors benefited from the Pound flotation, except for those depend on importing such as GB Auto, which incurred a considerable loss due to the liberation of the Egyptian Pound’s exchange rate, Ayyad continued.
Also, the companies rely on crediting were the most-affected party by both Pound floatation and interest rates rising decisions, the analyst concluded.
Banks are the main beneficiary of the flotation
The banks sector topped the sectors benefited from the liberation of the Egyptian Pound’s exchange rate, followed by the real estate and financial services sectors, Remon Nabil, technical analyst, told Mubasher.
These three sectors are expected to maintain their positive results, Nabil added, noting that the real estate sector will lead the EGX’s sectors by the first quarter of 2018.
As for the benchmark EGX30, it reached its highest level ever in October on the back of the Pound floatation, soaring 72%, Nabil commented.
The analysts noted that the main index may target 13,200 points and 14,500 points until the end of 2017, and that it will keep growing in the long-term.
EGX70 is still increasing, especially after the completion of the correction between 750 points and 815 points, which is expected to be completed by the first quarter of 2018, Nabil explained.
The EGX70 may then target levels range between 900 points and 950 points by the first six months of 2018, he concluded.
EGX70 surged 129% with a turnover of EGP 60 billion since the flotation of the Egyptian Pound.
Foreign investors and Pound flotation
Foreign investors are still representing the main hope of the EGX since the liberation of the Pound’s exchange rate, as they are the main beneficiary of the devaluation of the Pound, Hisham Hassan, head of technical analysis at Acumen for Securities, told Mubasher.
Arabs’ investments were quite low in comparison with those carried out by foreigners, Hassan added.
The main index EGX30 is testing 14,000-point resistance, and by breaking above which, it can target 14,400 points and 15,000 points with support from flotation and the anticipated government’s offerings, the analyst commented.
Hassan further noted that the EGX is about to enter a new period of offerings and more foreign investments.
Translated by: Muhammad Abdul-Wakeel
