CAIRO: The Egyptian Exchange (EGX) indexes lost ground this week and market capitalization shed around 7 billion EGP following President Abdel Fatah al-Sisi remarks about adopting some austerity procedures to fill the budget deficit.
The market was also harmed by the growing regional concerns over the Iraqi crisis.
The benchmark index EGX30 plunged 2.96 percent to end the week at 8,093 points, down from 8,340 points last week. The small and mid-cap index EGX70 also fell 1.04 percent to close the week at 583 points, compared with 589 points.
The broader index EGX100 dropped 1.29 percent to end at 1,023 points, compared to 1,037 points last week. Market capitalization lost 7.1 billion EGP to hit 473.8 billion EGP.
In his speech at the Military Academy during a graduation party Tuesday, the new president hinted to some austerity measures to reduce the budget deficit for 2014/15 FY, in order to control the soaring public debt.
Sisi added that he refused to ratify the state budget for 2014/15 FY, set to come into effect on July 1, and gave it back to the government following the swearing-in last week to review the deficit which amounted to 288 billion EGP ($40.4 billion) which worth 12 percent of the Gross Domestic Product (GDP.)
“EGX showed negative performance during this week as selling pressures continued for a second week in a row or the second half of June where institutions always tend to finalize the annual financial results with real profits and big liquidity,” Walid Helal, a technical analyst at El-Mokattam Securities Brokerage and a member of the Egyptian Society of Technical Analysts (ESTA.)
Most blue ships are expected to rebound after reaching stop-loss levels, headed by the market bellwether CIB which reached a strong support level at 35 EGP, followed by Global Telecom which fell to 5 EGP and Sodic at 30 EGP, Helal detailed.
Most stock ended in the red during this week, but for Thursday’s session which ended in pale green, added Helal, expecting the market to trade sideways with a downward tendency on Sunday.
Meanwhile, the analyst said he expects that EGX could reverse its trend starting July as selling pressing will face away and the market will resume its rally, especially the benchmark which approached strong support level at 8,000 points.
Last week, EGX sharply slipped and market capitalization incurred more than 15 billion EGP ($2.1 billion) loss following the swearing-in of the new Cabinet. The benchmark index plunged 4.64 percent to end the week at 8,340 points, down from 8,746 points.