Egypt Stocks Lose EGP6.8bn in Week on Austerity Concerns, Journalists’ Verdict

In a week filled with investors’ woes over potential austerity measures, Egypt’s stocks incurred losses amounting to 6.8 billion Egyptian pounds.

The main stock index, EGX30 plunged by 3% throughout trading sessions of last week, registering a decline of 246.65 points, ending Thursday’s transactions at 8093.75 points compared to 8340.4 points at the end of a week earlier.

The main gauge index registered its highest point on Sunday closing at 8315.53 points, whereas its lowest point recorded on Wednesday at 8081.75 points.

Last week’s trading sessions ended mostly in red driven by concerns over adopting new austerity measures following Egyptian President Abdel Fattah al-Sisi’s decision to donate half of his salary to Egypt’s economy, and reject the endorsement of the state’s budget for the coming fiscal year, that will start July 1st. Rejecting to adopt the new budget, Sisi said it is because it would raise the country’s total domestic debt to EGP 2 trillion.

Another reason behind the downturn performance is the growing international outrage over the prison sentences handed down in Cairo to three Al-Jazeera journalists.

Furthermore, the market capitalization closed at EGP 473.797 billion last Thursday, compared to EGP 480.62 billion at the end of a week earlier.

Turnovers & Traded Volumes:

Through the week, the trading volume hit around 722.8 million securities, compared to 1.1 billion securities at the end of a week earlier. For the traded value, it reached EGP 6.9 billion against EGP 6.3 billion a week earlier.

Sectors Activity:

Telecommunications sector was the most active sector through last week, recording a volume of trades of 227 million securities worth EGP 369.8 million.

Financial Services excluding Banks sector came second, attaining a volume of trades of 225.8 million securities worth EGP 579.6 million.

Real Estate reported third, with a volume of trades of 83.3 million securities worth EGP 544.8 million.

Travel & Leisure sector was on the fourth position, getting a volume of trades of 53.6 million securities worth EGP 137.3 million.

Personal and Household Products sector came fifth, recording a volume of trades of 37.3 million securities worth EGP 180.4 million.

Industrial Goods and Services and Automobiles reported sixth, having a volume of trades of 31.7 million securities worth EGP 69.5 million.

Construction and Materials was on the seventh position, with a volume of trades of 21.9 million securities worth EGP 140.7 million.

Food and Beverage reported eighth, attaining a volume of trades of 14.7 million securities worth EGP 73.8 billion.

Basic Resources took the ninth position, with a volume of trades of 6.7 million securities worth EGP 98.3 million.

Banks reported tenth, recording a volume of trades 6.2 million securities worth EGP 172.5 million.

Healthcare and Pharmaceuticals sector ranked eleventh, attaining a volume of trades of 5.1 million securities worth EGP 12.2 million.

At the bottom of the list, Chemicals reported twelfth getting a volume of trades of 3.2 million securities worth EGP 46.9 million.

Investors’ Activity:

Local investors led the market activity all through the week with 83.95%, followed by foreign and Arab investors with 4.81% and 11.24%, respectively, after excluding the deals.

Foreign investors were the most active buyers during the week earning the value of EGP 36.92 million, after excluding the deals.

Arab investors were also to buy by value of EGP 1.324 million, after excluding the deals.

Moreover, institutions seized 76.83% of total trading through the week; while individuals attained 23.17%. Institutions were the most active sellers during the week earning the value of EGP 140.85 million, after excluding the deals.

Market Remarks

–         EGX: Beltone-Sawiris bid for 20% in EFG-Hermes Starts

Egypt’s stock exchange (EGX) announced last Monday that the voluntary tender offer by businessmen Naguib Sawiris and Beltone Financial Holding for a 20% stake in EFG-Hermes has started, June 22.

A joint bid made by New Egypt, Beltone Financial Holding and Beltone Capital Holding seek a 20% stake in EFG- The tender offer will run for ten business days till July 3, 2014.

The tender offer will be executed within the five business days at most after the bid expiry.

–         Egypt to Scrap Precautionary Measures on Stock Trading after Eid

Egypt will be cancelling after Islamic Eid Ul-Fitr vacation the precautionary measures at stock market transactions adopted following the outbreak of 2011 uprising.

In a statement last Tuesday, the market regulator, the Egyptian Financial Supervisory Authority (EFSA) and Egyptian Exchange said as part of their periodic review of market conditions, it was decided that the precautionary measures are no longer needed.

Accordingly, the price limits for stocks will be set at 10% during the session, while small and mid-cap stocks on NILEX will be allowed price limits at 5% upwards and downwards. In addition, the pre-opening session will be carried out in accordance with applicable rules and will be allowed the above stated price limits.

In this respect, EGX Chairman Mohamed Omran stated that the stock will be allowed to move 10% upwards and downwards during the pre-opening session and 10% during the official trading, adding that NILEX stocks will be allowed to move 5% during the pre-opening session and the official session.

For his part, EFSA Chairman Sherif Samy said it was decided to cancel the precautionary measures in light of the country’s improved political and economic conditions. Samy also welcomed a proposal to extend trading hours.

–         Egyptian Bourse BOD Recommends Optional Mechanism for Commercial Arbitration

EGX’s Board of Directors (BOD) discussed last Wednesday a recommendation to establish an optional mechanism for commercial arbitration with the purpose of resolving disputes which would enhance the pace of resolving commercial or investment disputes between parties inside the market.

The BOD recommended, in a press release, to put this recommendation to Community discussion between the parties of the market and law firms specializing in commercial arbitration.

Egyptian bourse chairman, Mohamed Omran, declared that such a mechanism would allow the stock exchange to benefit of its staff and their legal expertise in the stock exchange which would enhance the development of the market system and would make this proposed mechanism a quick solution to all disputes within the Egyptian stock market.

–         Egypt’s Regulator Approves EFG-Hermes Optional Tender Offer Extension to July 6

Egypt’s financial regulator declared that it has no objection to extend the period of validity of the tender offer submitted from New Egypt Investment Fund BV and Beltone Financial Holding (BTFH) for EFG Hermes (HRHO).

The EFSA added, in a statement to the stock exchange, that it will extend the validity to the end of July 6 instead of July 3.