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EGX opens on positive note for 4th day in row
For the first day in a row, the Egyptian Stock Exchange opens its session Tuesday at a positive note.
The EGX started transactions at a collective rise to all indexes, where the main index EGX30 rose by 1.23 percent; EGX50 rose by 1.67 percent; EGX20 jumped by 1.35 percent; EGX70 increased by 1.59 percent and EGX100 rose by 1.16 percent.
Egypt may stall near major resistance, Saudi may rise on govt payment plan
(REUTERS): Egypt’s blue chips equities index may stall on Tuesday as it nears major technical resistance, while Saudi Arabia’s general market index may close in on its minor technical resistance after the government said it would settle all delayed payments to the private sector.
Egypt’s main index, last at 9,853 points, which has surged 15.6 percent since the central bank floated the currency early on Thursday, may take a breather as it nears its early 2015 peak of 10,066 points, a major technical resistance.
Although investor optimism may not fade over the long term, profit-taking at current levels may limit any near-term gains.
Saudi Arabia’s stock market, last at 6,198 points is nearing minor technical resistance on the September peak of 6,238 points and may test those levels after a government economic body said it was looking at making payments to the private sector, which have been delayed by sharp declines of oil revenues, before December-end.
Although the amount was not stated, the Council of Economic and Development Affairs said in a state news statement that it had also cancelled projects valued at up to 1 trillion Saudi riyals ($266.7 billion).
“First, they secured the money through the bond sale, and now they are securing the payments, this is all good news for the stock market,” said a Jeddah-based portfolio manager.
Other markets in the Gulf may trade in a narrow band, in line with global markets as investors were optimistic but cautious over improving prospects for a win by Democrat Hillary Clinton in the U.S presidential election.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.3 percent.
In Abu Dhabi, the index may get a boost from the third quarter net profit beat from its largest listed developer.
Aldar Properties reported a 17.9 percent increase in third-quarter attributable net profit of 747.8 million dirhams ($203.6 million). SICO Bahrain forecast Aldar would make a quarterly profit of 480.26 million dirhams, and EFG Hermes expected earnings of 682.06 million dirhams.
Vodafone Qatar, an affiliate of Vodafone Group , reported a narrowing second-quarter loss on Tuesday.
The operator made a net loss of 63.9 million riyals ($17.6 million) compared with a loss of 113.6 million riyals in the prior-year period, and the forecast of a 94 million riyal loss from Arqaam Capital.
Egypt continues surge on currency devaluation; petchems boost Saudi
(REUTERS): Egypt’s stock market rose sharply for a third day on Monday in response to the devaluation of the Egyptian pound which has raised hopes for capital inflows, while higher oil prices boosted petrochemical shares in Saudi Arabia.
The Egyptian blue chip index jumped 5.4 percent in its heaviest trade since March, bringing its gains to 15.6 percent since the pound’s peg to the dollar was abandoned on Thursday. The broader EGX100 index added 2.5 percent.
The devaluation has raised hopes for major inflows of foreign money into Egyptian markets in coming months. Regional investment bank Arqaam Capital said it was going overweight on Egypt in the wake of the devaluation.
It estimated $4.5 billion of foreign money – or about 16 percent of the stock market’s total capitalisation – would flow into the market in the next year if foreign ownership of stocks rose to 25 percent, a normal level for an emerging market.
Arqaam said it favoured banks that would benefit from the 3 percentage point interest rate hike that accompanied the devaluation, such as Commercial International Bank (CIB) , and firms whose income would be boosted by a weaker pound such as Global Telecom. It said it was wary of companies that would have trouble passing on higher import costs to consumers, such as Edita Food Industries.
The increase in Egyptian interest rates will support banks’ profitability given their large exposure to short-term government securities, Moody’s Investors Service said.
CIB shares jumped 8.3 percent on Monday, while Global Telecom surged 7.7 percent and Edita climbed 7.9 percent.
Despite the market’s euphoria, Wafik Dawood, portfolio manager at Cairo-based Compass Capital, said stocks’ rise would not be one-way.
“The market is re-rating assets, pricing in the weaker pound, but the trend is likely to be challenged by the super 300 basis point hike in interest rates,” he said. “This will attract money because of the carry trade, but borrowers will be hit.”
He added that while the long-term picture looked positive, there would be short-term volatility. “Until there is hard evidence of fund inflows sticking around long enough, markets will be unable to unlock their true potential.”
Saudi Arabia’s index climbed 1.5 percent, taking its gains since hitting a 2016 low on Oct. 3 to 14.4 percent.
The market has been surging since Riyadh’s $17.5 billion foreign bond issue last month eased concern about government finances and banking system liquidity. Al Rajhi Capital said improving liquidity and a slight decline in Saudi interbank money rates had encouraged investors to return to stocks.
Petrochemical producers were buoyed by a 1.2 percent rebound in Brent oil futures, with the sector’s index climbing 1.8 percent.
The retail sector outperformed, extending Sunday’s strong gains. Apparel and mall operator Fawaz Alhokair gained 2.9 percent.
But food producer Savola Group, which has business lines in Egypt, dropped 0.3 percent after saying the devaluation of the Egyptian pound would hit its fourth-quarter results by 171 million riyals ($45.6 million).
Dubai’s main index closed up 0.1 percent at 3,281 points, well below its intra-day high of 3,311 points.
Emaar Malls climbed 1.5 percent after reporting a 16 percent rise in third-quarter net profit to 435 million dirhams ($118.4 million), against EFG Hermes’ forecast of 421.8 mln dirhams.
In Qatar, the index bounced 0.2 percent as oil drilling provider Gulf International Services soared 6.9 percent in its heaviest trade since late May.
Abu Dhabi’s index edged down 0.1 percent as Dana Gas fell 1.9 percent and Abu Dhabi Commercial Bank lost 1.0 percent.