CAIRO: The Egyptian Exchange (EGX) went up collectively this week and market capitalization gained around 5.6 billion EGP ($783.05 million) amid upbeat investor sentiment over Fitch Ratings’ positive remarks on Egypt’s economy and reform measures.
Fitch stated that the “recently announced oil price hikes are an important step to reduce subsidies which will contribute to Egypt’s substantial fiscal deficit—a key rating weakness.”
On June 27, the credit rating agency reaffirmed its B- long-term foreign currency rating for Egypt, noting that “material progress on fiscal consolidation” was one factor that could lead to a positive rating action.
“Tackling subsidies is a key to reduce Egypt’s budget deficit, which we estimate is at 12.1 percent of GDP in 2013/14 [that ended in June 30],” Fitch reported.
The benchmark index EGX30 edged up 2.41 percent to end the week at 8,458 points, up from 8,258 points last week. The small and mid-cap index EGX70 also jumped 1.07 percent to close the week at 606 points, compared with 600 points.
The broader index EGX100 also added 1.93 percent to end at 1,070 points, compared with 1,050 points last week. Market capitalization amounted to 481.9 billion EGP, compared with 473.8 billion EGP last week.
Buoyed by strong purchases from local and foreign institutions, EGX was unhurt by the Cabinet’s decision early this week to raise oil prices in order to reduce the budget deficit, which fueled public anger for fear of higher prices which had already soared ahead of Ramadan.
During the course of the week, total trade value ranged between 448 million EGP to 742 million EGP, with a daily average estimated at 595 million EGP, compared with 426 million EGP during the previous week.
“The EGX30 managed to approach its new resistance level at 8,500 to 8,550 points, powered by the positive performance of some blue chips, topped by the market bellwether CIB stock, followed by the second largest weighting on the gauge, Global Telecom,” said Ehab Saeed, head of technical analysis at Osool Securities Brokerage.
CIB breached above its support level at 35 EGP and resumed its upward trend to penetrate its former resistance level at 37 EGP by ending the week at 37.55 EGP, Saeed told The Cairo Post.
Saeed attributed the rally also to the positive performance of real estate stocks, notably Talaat Moustafa, Madinet Nasr for Housing and Development and Sodic, which reached its highest price level since 2008 and 2011 respectively, according to the analyst.
The analyst said he expects that the benchmark will trade sideways between its new support level ranging between 8,250 points to 8,300 points and a resistance level near 8,550 points to 8,600 points amid the benchmark’s medium-term sideways performance.
Last week, EGX indexes rallied collectively and market capitalization gained around 8.1 billion EGP ($1.13 billion) despite a series of bomb blasts during the first anniversary of the ouster of Islamist former President Mohamed Morsi on July 3.
The benchmark index EGX30 edged up 2.03 percent to end the week at 8,258 points, up from 8,093 points last week.