Egypt stocks advance to fresh 8-year high on FX weakness, China loan

Egypt’s stock market advanced on Monday as the Egyptian pound depreciated against the U.S. dollar, prompting more buying by foreign funds.

Main index, EGX 30 jumped 3.11 percent, to 11752.46 points, reaching a new eight-year high record.

The Egyptian pound was being bought for 19 pounds per dollar against around 18.8 earlier in the day on the back of higher demand for the greenback amid a shortage at banks, bankers told Reuters in the time of bourse trading in Egypt.

Foreign investors were net buyers of Egyptian stocks by a modest margin. Overall, many investors consider currency weakness a positive for the stock market in the short term because it makes prices more attractive for foreign investors, and may drive local funds into stocks as a hedge against inflation.

“The dollar rate is keeping up the appetite” for stocks among foreign funds, Wafik Dawood, portfolio manager at Compass Capital, told Reuters.

Also boosting sentiment was news that Banque Misr had signed a memorandum of understanding with Industrial and Commercial Bank of China for a $500 million loan aimed at increasing dollar liquidity and financing joint Egyptian-Chinese projects.

Allen Sandeep, director of research at Cairo’s Naeem Brokerage, said the International Monetary Fund’s three-year, $12 billion bailout programme for Egypt, finalised in early November, was continuing to buoy the stock market.

“Historically, any time an emerging market won an IMF bailout, stock markets soared – one case study could be India’s bailout in 1991, because structural change on both the monetary and fiscal level will eventually be prosperous for the economy.” Sandeep told Reuters.

Other indices; EGX50 EWI index added 2.30 percent, to 1879.27 points; EGX20 edged up 3.40 percent, to 11679.37 points.

Mid- and small-cap index EGX70 rose 0.95 percent, to 458.79 points. Price index, EGX100 also climbed 1.27 percent, to 1082.8 points.

Market Cap

Market capitalisation posted gains worth 10.6 billion Egyptian pounds (around $554.3 million), to record 586.430 billion pounds during the closing session of Monday.

Turnovers soar again

The bourse’s trading volume reached 739.673 million securities, with turnovers, closing at 3.102 billion pounds, exchanged through 46,857 transactions.

Also during the closing session, 182 listed securities have been traded in, 40 declined, 122 advanced; while 19 kept their previous levels.

Investors’ Activities

Non-Arab foreign investors were net buyers capturing 9.6 percent of the total market, with a net equity of 78.829 million pounds, excluding the deals.

On the contrary, local and Arab investors remained net sellers controlling 82.91 and 7.5 percent respectively of the total markets, with a net equity of 52.480 million pounds and 26.348 million pounds, respectively, excluding the deals.