By: Heba El-Kordy
Cairo – Mubasher: The Egyptian Exchange (EGX) is expected to maintain its bullish trend this week on the back of the Central Bank of Egypt’s (CBE) decision to cut interest rates and resume its quantitative easing policy.
On Thursday, the CBE’s Monetary Policy Committee (MPC) decided to slash interest rates by 1%.The overnight deposit rate and overnight lending rate have been reduced by 100 basis points (bps) to 15.75% and 16.75%, respectively.
The CBE’s decision is likely to bolster the EGX’s positive performance towards 16,000 points, analysts told Mubasher.
Positive performance
Hesham Hassan, investment manager at Royal Brokerage, said that the CBE’s decision will generally impact Egypt’s economy.
The banks, real estate, and food industries sectors will be positively affected by the interest-rate cut, Hassan stressed.
The benchmark EGX30 index will remain stable above 14,000 points in the short and medium terms as long as it is moving above 13,000 points, he indicated.
The index has main resistance at 15,175 points, he noted, adding that the index was moving between 14,800 and 14,625 points.
16,000 points
For his part, branch manager at Mubasher Financial Services (MFS) Safwat Abdel Naeem said that investors in the EGX may create new purchasing positions that push the main indices up by 5% to 10%.
The EGX30 index may hover around 16,000 points by the end of the week on the back of the CBE’s recent decision after it tests 15,000 points, Abdel Naeem added, noting that the small- and mid-cap EGX70 index is projected to target 738 points.
Market recovery
The CBE’s decision to trim interest rates is a signal of investment development that will begin in the stock market and will reflect the bourse's activity, head of the capital market committee at the African Economic Council told Mubasher.
EGX indices are expected to recover on the back of the interest-rate cut in line with the emergence of new liquidity, Ayman Fouda said.
Technical performance
Branch manager at Osool ESB Securities Brokerage Saeed El Feki said that the EGX was to see resistance at 15,000 and 15,200 points, while its support would be seen at 14,750 points.
El Feki added that the EGX70 index had resistance at 730 and 705 points and was expected to test 730 points in the coming period.
Translated by: Mai Ezz El-Din
