CAIRO: The Egyptian Exchange (EGX) indexes rallied Wednesday, and market capitalization gained 5 billion EGP ($700 million), backed by global indexes provider MSCI’s decision not to downgrade the Egyptian indexes from its emerging market index.
The benchmark index EGX30 rose 1.65 percent to reach 8,708 points, up from Tuesday’s close at 8,567 points. The small and mid-cap index EGX70 edged up 1.05 percent to hit 608 points and the broader index EGX100 added 1.14 percent to reach 1,068 points.
MSCI announced late Tuesday that it is no longer considering launching a public consultation on a potential exclusion of the MSCI Egypt Index from the MSCI Emerging Markets Index.
In its Annual Market Classification Review for 2014, MSCI stated that its decision followed a substantial increase in the country’s foreign currency reserves since the beginning of the year. Also on Wednesday, market capitalization gained around 5 billion EGP, registering 493.7 billion EGP, up from 488.7 billion EGP Tuesday. Turnover soared to 1.7 billion EGP, compared to a total of 780 million EGP yesterday.
Walid Helal, technical analyst at El Mokattam Securities Brokerage and a member of The Egyptian Society of Technical Analysts (ESTA) said the market showed a great performance after the benchmark rebounded from the resistance level of 8,500 points boosted by the MSCI move triggering strong purchases.
“Such purchasing power led the index to shoot above its previous peak at 8,622 points. By penetrating 8,700 points amid high volume and a great performance from blue chips, topped by market bellwether CIB and real estate stocks, the EGX30 affirmed its short-term upward movement,” Helal told The Cairo Post.
The analyst said the EGX30 is likely to continue its hike towards 8,800 once more and he advised traders to prepare to capitalize on the coming upward trend.
Helal further noted that light stocks are likely to benefit from the uptrend, citing the great performance of the EGX70 index that breached above its resistance level at 600 points.
The EGX indexes ended Tuesday trading on a slight decline and market capitalization lost around 1.1 billion EGP, hurt by profit taking after the market rally over the inauguration of President Abdel Fatah al-Sisi for four sessions in a row.
The benchmark dropped 0.31 percent to reach 8,567 points, the EGX70 fell 0.3 percent to hit 602 points and the EGX100 fell 0.06 percent to reach 1,056 points.