CAIRO: The Egyptian Exchange (EGX) indexes plummeted this week and market capitalization shed around 37.9 billion EGP ($5.3 billion) amid intensive selling pressures triggered from the collective dip of global markets due to mounting concerns about growth.
The gloomy economic forecast came largely in response to the IMF downgrading its global growth forecast last week for both 2014 and 2015.
The fund expected world economic growth to hit 3.3 percent in 2014, down 0.1 percent from its July forecast. While in 2015, it predicted 3.8 percent growth, down 0.2 percent from earlier expectations.
During the course of the week, the benchmark index EGX30 plunged 10 percent, to close the week at 8,593 points, compared to 9,552 points last week. The index hit an 11-month low.
The small and mid-cap index EGX70 slipped 12.2 percent to end the week at 572.2 points and the broader index EGX100 also shut 11.2 percent lower at 1,050 points.
“The benchmark index eventually failed to sustain above any of its support levels during the week, losing around 10 percent to end near its lowest price since July,” Osool Securities Brokerage head of technical analysis Ehab Saeed told The Cairo Post.
Saeed attributed the slump to the investors’ panic from the negative outlook for the global growth, as well as “disappointing” U.S. data which aroused fears about the world’s biggest economy ability to recover from the global financial crisis.
The Egyptian market recorded the biggest weekly slide due to pressures on all sectors, topped by the market bellwether CIB, EFG-Hermes, Ezz Steel and Global Telecom, Saeed added.
“The heavyweight CIB dropped from 48.4 EGP toward 44.01EGP by the end of Thursday’s session,” Saeed said. He added that the real estate stocks led by Heliopolis and Madinet Nasr also fell sharply.
Saeed further noted that the EGX70 showed a greater and “random” decline as the heavyweight stock plunged 25 to 30 percent in five successive sessions only.
“Total trade value and volume notably increased this week, ranging between 490 million EGP to 900 million EGP with a 695 million EGP daily average, compared to 557 million EGP the week before,” Saeed said.
“The high volume marking the market plunge is an indicator that the bears are dominating the market,” he added.
According to the analyst, the EGX30 will focus on its second support at 8,500 points after failing to stay above 8,800 points.
“The main index is expected to ride an upward correction targeting 9,000 points to 9,100 points, if it manages to stop its loss at 8,500 points,” Saeed predicted.