CAIRO: The Egyptian Exchange (EGX) indexes ended on a mixed note Monday and market capitalization shed around 3 billion EGP ($419.49 million) amid selling pressures, mostly from local institutions.
The slide came in response to the Central Bank of Egypt’s (CBE) decision Thursday to raise interest rates. 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, in addition to Gaza violence.
The benchmark index EGX30 fell 1.22 percent to hit 8,471 points, down from 8,575 points Sunday. In turn, the small and mid-cap index EGX70 rose 0.3 percent to reach 612.9 points, while the broader index EGX100 lost 0.01 percent, to reach 1,082 points.
Market capitalization shed around 3 billion EGP, registering 488.8 billion EGP, down from 491.8 billion EGP yesterday. Total trade value surged to 1.5 billion EGP, compared to 893.1 million EGP.
“The EGX30 is likely to slip towards 8,400 points after breaching below the main support level of 8,500 points, in light of the absence of any motivations to lure new investments, and in addition to the government’s war on the stock market,” head of trading at Tawfik Securities Brokerage and capital market expert Mohamed Gaballah told The Cairo Post Monday.
Gaballah’s “war” comment was referring to the Cabinet’s decision to impose a 10 percent tax on stock market profits and dividends, and an interest rate hike Thursday.
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, since it discourages investors from injecting their money in a stock market that is already suffering from low liquidity,” Gaballah said.
Gaballah said the decision was taken to overcome the upcoming inflationary wave due to the Cabinet’s decision to cut fuel subsidies earlier this month.
Meanwhile, the analyst said he expected a rebound after approaching 8,400 points, if the trading volume increased and restored its normal average range between 500 million EGP and 700 million EGP.
“If trade volume fails to edge up, the market will probably resume its downward movement,” added Gaballah.