CAIRO: The Egyptian Exchange (EGX) is strongly expected to witness a big leap after the Eid al-Fitr holiday, and the benchmark index EGX30 could breach above 8,800 points, capital market experts told The Cairo Post Tuesday.
The EGX announced Thursday that it will officially be closed from July 28-30 on the occasion of Eid al-Fitr. Trading is scheduled to resume Thursday, July 31.
Capital market expert Abdel Rahman Taha predicted that the stock market will probably show a positive performance in the coming period, citing positive economic news and people’s satisfaction with recently adopted economic measures.
“The EGX performance has featured the negative effect of the Cabinet’s decision to mull a 10 percent tax on stock market profits and dividends, and the Central Bank of Egypt’s (CBE) decision to raise the interest rate. This gives positive indicators for a short and medium-term rally,” Taha told The Cairo Post.
Taha added that the upcoming donor conference—along with the launch of a national project expected to provide jobs for young people—will revive the faltering economy, and consequently boost the stock market.
“Such incentives could drive the benchmark index EGX30 to penetrate the 9,000-point barrier, targeting 10,500 points, while the consequences of cutting the subsidies along with the oil price hike have been watered down,” he said.
Mohamed Gaballah, head of trading at Tawfik Securities Brokerage and a capital market expert, said he expects the benchmark to penetrate a strong resistance level of 8,800 points after trading resumes Thursday, if liquidity is high and trading volume shoots above 700 million EGP ($97.9 million).
“If trade volume fails to edge up, the market will probably resume its retest of the 8,600-point level, but the EGX30 is highly expected to penetrate 8,800 points,” added Gaballah, citing the EGX’s decision on July 21 to cancel some precautionary measures that were adopted after the 2011 January 25 Revolution, as trading rates returned to normal levels.
Under the new decision, the market will return to a price discovery session starting Aug. 7, 2014. Price limits for the main market will be 10 percent and the NILEX will be 5 percent.
Market bellwether CIB will face a strong resistance level at 41.7 EGP, and is likely to trade sideways in the coming period, while Telecom Egypt and Tallat Moustafa will help lead the market rally, Gaballah said.