CAIRO: The Egyptian Exchange (EGX) indexes lost ground Sunday, hurt by a Thursday decision from the Central Bank of Egypt (CBE) to raise interest rates, and selling pressures from local institutions and Arab and foreign retail investors.
The market was also hurt by news of an attack in Wadi Gedid governorate that killed 22 border guards in a shootout at a security checkpoint Saturday afternoon.
The benchmark index EGX30 fell 0.72 percent to hit 8,575 points, lower than the 8,637 points from Thursday. The small and mid-cap index EGX70 decreased 0.66 percent to reach 611 points, and the broader index EGX100 also lost 0.67 percent, to reach 1,082 points.
Market capitalization shed around 2.4 billion EGP ($181.8 million), registering 491.8 billion EGP, down from 494.2 billion EGP Thursday. Total trade value amounted to 893.1 million EGP.
“The market slide followed the negative news of the interest rate hike and the ‘terrorist attack’ on the Wadi Gedid checkpoint,” El-Mokattam Securities Brokerage technical analyst Walid Helal told The Cairo Post Sunday.
Meanwhile, the market maintained its short-term uptrend despite today’s limited negative performance, Helal added. He said any slight decline will be an opportunity for motivated buyers, as long as the benchmark remains above 8,550 points, and he expected a rebound Monday.
Mohamed Gaballah, head of trading at Tawfik Securities Brokerage and a capital market expert, told The Cairo Post that the 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 the CBE decision to raise interest rates.
The 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 basis points to 9.75 percent, according to the CBE’s official website.
“The CBE’s decision will temporarily reflect negatively on the stock market, as such a step discourages investors from injecting their money in a 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 the Cabinet’s decision to cut fuel subsidies earlier this month.
Last week, EGX indexes surged collectively and market capitalization gained around 6.7 billion EGP amid an investor buying spree, namely on leading shares.