CAIRO: The Egyptian Exchange (EGX) soared Tuesday, and the benchmark index EGX30 penetrated the 9,000-point barrier for the first time since 2008 amid upbeat investor sentiment about the launch of the Suez Canal development project.
Getting support from the positive performance of some blue chips—namely EFG-Hermes and Pioneers— the EGX30 edged up 1.04 percent to hit 9,010 points, exceeding Monday’s 6-year high at 8,918 points.
The small and mid-cap index EGX70 rose 0.18 percent to reach 628 points, compared to 627 points Monday, and the broader index EGX100 also increased by 0.81 percent to reach 1,118 points.
Market capitalization gained around 3.8 billion EGP ($531 million), registering 506.2 billion EGP and the highest level since January 2011. Trade volume also witnessed a remarkable improvement registering 1.01 billion EGP, compared to 768.4 million EGP yesterday.
“The EGX witnessed a good rally in the beginning of the session and the benchmark penetrated the first upward target at 9,000 points and closed above it with a slight profit taking,” said Osama Naguib, head of technical analysis at Arab Finance.
Naguib told The Cairo Post that another corrective session should be expected tomorrow, especially for the first part. “A decline to 8,800 points should be accepted as a correction but we expect a new rally before this area. Targets at 9,200 points and 9,300 points are still intact as the benchmark will still be above 8,650 points,” he added.
Dr. Ghada Ibrahim, marketing manager and financial analyst at Capital Securities Brokerage, said the benchmark managed to breach above the 9,000-point barrier backed by positive technical indicators for the medium and long-term uptrend.
The market had already reacted to the announcement of the winning consortium that will implement the project of an international industrial and logistics hub in the Suez Canal area.
“The EGX30, however, will witness a slight decline while approaching its strong resistance level at [9,000-9,200 points] to give investors an opportunity for profit taking before resuming the rally towards its target,” Ibrahim told The Cairo Post.
The market needs this corrective movement, which could amount to 200 points, to allow traders to purchase stocks that still have potential for an upward wave, added Ibrahim.
“The heaviest weight on the gauge, CIB, has reached its overbought area after achieving its target at 44 EGP powered by good financial results during the first half of 2014,” said Ibrahim, adding that other sectors such as housing and communication will lead the market in the coming period.
In turn, Mohamed Gaballah, the head of trading at Tawfik Securities Brokerage and a capital market expert, attributed the rise to the positive news about the Suez Canal project.
Gaballah added that several sectors will reap the benefits of such a megaproject, including housing, iron and steel contractors.