CAIRO: The Egyptian Exchange (EGX) boomed Monday and the benchmark index EGX30 even exceeded last Thursday’s 6-year peak, amid upbeat investor sentiment about the Suez Canal development project and the positive performance of market bellwether CIB stock.
Backed by foreign institutions’ strong purchases, the EGX30 added 1.31 percent to hit 8,918 points, up from 8,802 points Sunday. Last Thursday, the EGX30 recorded the highest daily close since August 2008, at 8,826 points.
The small and mid-cap index EGX70 rose 0.57 percent to reach 627 points, compared to 623 points Sunday, and the broader index EGX100 also increased 0.23 percent to reach 1,106 points.
Market capitalization gained around 4 billion EGP ($559.4 million), registering 502.4 billion EGP and down from 498.4 billion EGP Sunday.
Mohamed Gaballah, the head of trading at Tawfik Securities Brokerage and a capital market expert, said the rise was spurred from positive news about the announcement of the winning consortium for implementing the project of an international industrial and logistics hub in the Suez Canal area.
The Egyptian army and global engineering firm Dar al-Handasah were chosen to implement the project, Reuters reported Sunday. The official winning consortium has yet to be announced by the government or President Abdel Fatah al-Sisi, although he is expected to announce the winner Tuesday.
Gaballah added that several sectors will reap the benefits of such a megaproject, including housing, iron and steel contractors.
“CIB has reached its profit taking area and other sectors such as housing and communication will lead the market in the coming period,” said Gaballah, expecting the benchmark to trade sideways Tuesday due to profit earning from CIB.
Ahmed el-Rawy, head of trading at Arab Finance, attributed the market rally to the significant rise of CIB, enabling the benchmark index to confirm the penetration of a strong resistance level at 8,800 points amid high trade volume compared to Sunday’s session, which ended in red.
“EGX performance was also backed by the rise of some real estate stocks, notably Talaat Moustafa and Heliopolis,” Rawy told The Cairo Post.
“CIB, which represents 26 percent of the EGX30, is moving upward targeting 45 EGP to 47 EGP and this could drive the benchmark toward 9,200 points in the coming period,” said Osama Naguib, head of technical analysis at Arab Finance.
He added that technical indicators on the main index along with the largest shares reveal that they have entered an overbought area to drive selling power before resuming the uptrend.
“Other leading stocks, including Global Telecom, OTMT, and EFG-Hermes, did not cope with the market rally, supporting our prediction of a possible correction,” Naguib said.
Capital market expert Dr. Abdel Rahman Taha, an economics professor, said he expects the market to witness a big leap in the coming period, and the benchmark to target 9,200 points to 9,500 points.
“Stocks of sectors that the government plans to develop in the coming period, such as real estate, construction, agriculture and energy will have the lion’s share of the expected hike,” Taha told The Cairo Post.