CAIRO: The Egyptian Exchange (EGX) plunged for a second consecutive week and the benchmark touched a nine-week bottom, hammered by airstrikes launched by a Saudi-led alliance against Yemen’s Houthi rebels.
Egypt’s market rode a violent downward movement over the past two weeks, shrugging off positive incentives from the Egypt Economic Development Conference held in Sharm al-Sheikh March 13-15, which resulted in anticipated investments of $72.5 billion, according to Prime Minister Ibrahim Mahlab.
The benchmark slipped 4.9 percent during the course of the week to close at 9,052 points, compared to 9,518 a week earlier. Also, the small and mid-cap index EGX70 plunged 7.16 percent to hit 502 points, and the broader index EGX100 dropped 6.45 percent as well, recording 1,028 points.
Equities shed nearly 20.4 billion EGP ($2.67 billion) in five sessions, with market capitalization sinking to 499.9 billion EGP at the close of Thursday’s session, compared to 520.3 billion EGP a week earlier.
“The benchmark failed to hold steady above its former support near 9,500 points and breached below the next support of 9,250 points, approaching the lowest level in almost nine weeks before closing at 9,052 points,” Osool Securities Brokerage technical analysis head Ehab Saeed told The Cairo Post.
Despite the “unpredicted success” of the economic conference, the EGX neglected all positive drivers, losing roughly 45 billion EGP in less than 10 sessions, said the analyst. However, the market did not see any negative factors in the early sessions this week, he added.
Gulf countries, namely Saudi Arabia, the UAE, Kuwait and Oman, promised a total of $12.5 billion, in investments as well as deposits in the central bank.
The escalated tension in Yemen in late this week and Egypt’s backing the Saudi-led Arab military airstrikes targeting Yemen’s Houthi militants, weighed on Gulf markets along with the EGX which saw a sharp slip on Wednesday and Thursday.
Saeed pointed out that the extended slip was initially triggered from traders’ anger over government’s insistence on imposing the capital gains tax on stock market profits and dividends approved in July. The market is still anticipating the issue of the executive bylaw of this tax.
The EGX30 will focus on the next support level near (9,000 -9,050 points), predicted the analyst. “Sustaining above this level would push the index to re-test the resistance level of 9,250 points at least.”
Saeed predicted the EGX70 will focus on its support near 500-505 points, noting that holding steady above this level may halt its backward movement and re-test 520 points.