EGX 30 Climbs 2.4% In Week Powered By Govt’s Reconciling Steps

By Yomna Yasser On May 11, 2013

In a week, the Egyptian Exchange has managed to post remarkable gains of EGP 5.6 billion as the capital market has hit EGP 364.211 billion at the end of last week, compared to EGP 358.612 billion at the end of a week earlier.

The EGX gains were powered by ending the 11-month disputes between OCI S.A.E. and the Egyptian Tax Authority, the cabinet reshuffle which replaced economic ministers, the announcement of re-launching the same-day trading settlement, and also the president’s remarks on plans of joining his country the BRICS group.

Egypt’s stock exchange benchmark EGX 30 index has climbed by 2.4% in a week, representing an increase of 127.67 points, ending Thursday’s transactions at 5404.29 points compared to 5276.62 points at the end of last week.

EGX30 hit its highest point at the closing session of Thursday at 5404.29 points, where its lowest point reported on Tuesday at 5372.63 points.

Meanwhile, the mid- and small-cap index, the EGX70 surged by 1.1% closing at 456 points during Thursday’s session, compared to 451 points at the end of a week earlier. The price index, EGX100 pushed up by 1.32% concluding by 763 points during Thursday’s session, compared to 753 points at the end of a week earlier.

Through a week, the EGX has recorded a volume of trades hit 210 million securities, compared to 49.5 million securities a week earlier; while the traded value reached EGP 913.5 million, opposed to EGP 874 million a week earlier.

The Egyptian market was booming during last week due to the vital steps adopted by the government in settling with businessmen, such as the Sawiris family who finally returned home and announced their willingness to maintain their investments in the country. Also, the news of finally re-launching the same-day trading mechanisms (T+0) next May 23.

Egypt Welcomes Back The Sawiris Family:

Members of Sawiris family have arrived at Cairo International Airport on Friday coming from France, after a travel ban imposed by the country’s prosecutor-general had been lifted. The travel ban had been lifted after Orascom Construction Industries S.A.E. (OCIC) had reached a settlement agreement with the Egyptian Tax Authority (ETA) to end over 10-month disputes over EGP 14 billion tax claims.

On Sunday, Business tycoon Naguib Sawiris said that his family is still the largest investor in Egypt, denying reports of transferring all investments to outside of the country.

Orascom Construction Industries (OCI ), a subsidiary of OCI N.V., announced on April 30 that it will pay the Egyptian Tax Authority (ETA) ten installments during 2013 – 2017 totaling EGP 7.1 billion less EGP 182 million in existing tax credits to end a dispute over tax claims for the years 2007 to 2010.

Later on the same day, Prosecutor-General Talaat Abdullah ordered ending a travel ban on Nassef and his father Onsi Sawiris.

Same-Day Session Re-launch, Eyes Higher Liquidity:

Egypt’s financial regulator announced on Tuesday that the same-day trading mechanism which is known as T+0 will come into effect as of the trading session of Thursday May 23rd, 2013.

The Egyptian Financial Supervisory Authority (EFSA) has decided to resume the T+0 Settlement mechanism by May 23rd, looking forward to providing more liquidity for the market.

The EFSA stated that this comes in the wake of holding experimental sessions by the Egyptian stock exchange (EGX) and Egypt’s Central Clearing, Depository and Registry house (MCDR) to verify the market’s readiness for the resumption of the same-day trading mechanism.

Under the T+0 mechanism, traders will be allowed to sell any portion of their available stocks and then buy them again at the same session.

Dr. Ashraf El-Sharkawy – the Chairman of the Egyptian Financial Supervisory Authority (EFSA) –noted that the T+0 settlement mechanism will contribute to boosting the volume of trades by 30-40% in the Egyptian Exchange (EGX) which currently incurs severe liquidity shortage.

Mohsen Adel, Vice Chairman of EG-Finance explained that the re-launch of the same-day trading mechanism (T+0) will represent the return of another financial instrument necessary to add more vitality to the market.

Egypt & The BRICS:

Egyptian President Mohammed Morsi expressed desire to join the BRICS group, as a move to boost his country’s economy and establish partnership with Brazil.

On the fringes of his visit to Brazil, Morsi met with members of the Arab community in Brazil, late Thursday. He said the existence of such a community acts as a “cultural bridge” which he considers “valuable” to Arab and Islamic countries.
Morsi noted that Egypt after the revolution is more perceptible to change. Egypt seeks “social justice, stability and development.” Morsi have been on tour to the BRICS countries (Brazil, Russia, India, China and South Africa). The “Big Four”, as it is also known, is a global economic group which has similar stage of newly advanced economic development.