EGX 30 Opens Below 5711 Pts; EGX 70 Solely Up
The Egyptian Exchange has opened Thursday’s session incurring losses of EGP 758 million driven by foreign sellers amid the shareholders’ approval of the sale of the blue chip Orascom Construction Industries’ 100% stake.
The capital market has amounted to EGP 386.172 billion, according to data compiled by Amwal Al Ghad at 11:23 a.m. Cairo time (09:23 GMT) during Thursday’s opening session.
The EGX indices opened in red except for the mid- and small-cap index, the EGX70.
Egypt’s benchmark index EGX 30 opened Thursday on a red note under the approval of 100% sale of the stake of one of its biggest listed company in the market Orascom Construction Industries – OCI (OCIC.CA) to the Dutch Unit OCI N.V.
EGX30 fell by 0.36% to 5711.76 p; while EGX20 dropped by 0.35% to 6659.73 p.
Meanwhile, the mid- and small-cap index, the EGX70 inched up by 0.01% to 487.7 p. Price index EGX100 dipped by 0.13% to 821.49 p.
This was after trading in 107 listed securities; 51 declined, 28 advanced; while 28 keeping their previous levels.
During Thursday’s opening session, the trading volume has reached 15.953 million securities worth EGP 35.110 million, exchanged 2.756 thousand transactions.
During the opening session, Arabs and the non-Arab foreigners were net sellers seizing 9.62% and 13.45% respectively, of the total markets, with a net equity of EGP 3.331 million and EGP 1.858 thousand excluding the deals.
Meanwhile, Egyptians were net buyers seizing 76.93% of the total markets, with a net equity of EGP 5.169 million excluding the deals.
BLUE CHIPS
In the short term, OCI NV’s offer could actually support prices of other stocks in Cairo, some analysts believe. That is because local investors, deprived of the opportunity to put money into Orascom Construction, may turn to other members of the handful of large, liquid blue chips, such as Commercial International Bank, Orascom Telecom and Telecom Egypt.
Anticipation of this may have helped to support the blue chips’ prices over the past several weeks. Telecom Egypt, for example, is up 4 percent since the end of last year, despite a string of negative economic news since then, including a sharp drop in Egypt’s currency reserves.
In the longer term, however, money seeking exposure to Egypt may simply go into OCI NV’s U.S. dollar-denominated shares in Amsterdam, rather than taking a currency risk and investing in the Egyptian stock market. That could have a chilling effect on the market.
The loss of Orascom Construction’s capitalization could also hurt foreign fund flows into the Egyptian market by reducing its weight in the Morgan Stanley Capital International (MSCI) indexes used by many international fund managers.
Other Egyptian stocks that analysts believe might be delisted eventually are National Societe Generale Bank, Orascom Telecom and EFG-Hermes, which have been targets of acquisitions by foreign firms looking to pick up cheap Egyptian assets.
“Egypt could be dropped from the MSCI index if we don’t see some rapid IPOs” to boost its capitalization, said Mohabeldeen Agena, head of technical analysis at Cairo’s Beltone Financial.
But until the economy strengthens considerably, there seems little prospect of initial public offers to create new blue chips. Real estate developer Amer Group Holding was the last IPO in Egypt, raising 1.15 billion Egyptian pounds with an offer in November 2010.
“Unfortunately, there are no IPOs coming up. One part of the market’s interest will vanish” with Orascom Construction, said Henin at The National Investor.
