CAIRO: The Egyptian Exchange (EGX) indexes fell amid selling pressures from Arab and foreign traders during Sunday’s early and mid-session trading, triggered by Gaza tensions and a Thursday decision from the Central Bank of Egypt (CBE) to raise interest rate.
CBE’s Monetary Policy Committee (MPC) decided to raise the overnight deposit rate, overnight lending rate and the rate of the CBE’s main operation by 100 basis points each to 9.25 percent, 10.25 percent and 9.75 percent respectively.
The discount rate was also raised by 100 bps to 9.75 percent, according to the CBE’s official website.
The benchmark index EGX30 fell 0.24 percent to hit at 8,616 points, lower than 8,637 points Thursday. The small and mid-cap index EGX70 decreased 0.34 to reach 613 points, while the broader index EGX100 lost 0.32 percent, to reach 1,086 points.
Market capitalization shed around 1.3 billion EGP ($181.8 million), registering billion 492.9 EGP, down from 494.2 billion EG Thursday. Total trade value amounted to 194.3 million EGP.
The market was also harmed by a “terrorist” attack where at least 21 border guards were killed by assailants in a “heavy weapons” attack on a security checkpoint Saturday afternoon.
Mohamed Gaballah, head of trading at Tawfik Securities Brokerage and capital market expert, told The Cairo Post that EGX was expected to open this week’s trading with a decline toward its support level of 8,500 points. Gaballah attributed the slide to Gaza tensions as well as CBE’s decision to raise interest rates.
“CBE’s decision will temporarily reflect negatively on the stock market, as such a step discourages investors from injecting their money in the stock market that is already suffering from low liquidity,” Gaballah said.
He explained that the decision was taken to overcome the upcoming inflationary wave due to Cabinet’s decision to cut fuel subsidies early this month.
Last week, EGX indexes surged collectively and market capitalization gained around 6.7 billion EGP ($936.9 million) amid an investor buying spree, namely on leading shares.