World

The Egyptian Stock Exchange is in the green zone for the first time since the beginning of the year..and experts: the secret is the pound’s decline

(CNN) — The main index of the Egyptian Stock Exchange recorded a rise of 1.57% since the beginning of the year by the end of Monday’s trading, so that the index traded in the green zone for the first time in 2022, due to the rise in the share of the Commercial International Bank, which represents the largest relative weight in the index. Experts attributed the reasons for this rise in the Egyptian money market to the application of a flexible exchange rate regime for the Egyptian pound against foreign currencies, which stimulated the return of foreign investments to the Egyptian Stock Exchange once again, in addition to Gulf acquisition offers on a number of listed companies.

On October 27, the Central Bank of Egypt implemented a flexible exchange rate system for the pound against foreign currencies, as part of a package of reform measures taken to ensure macroeconomic stability and achieve sustainable and comprehensive economic growth, which included an increase in the interest rate by 200 basis points, and a gradual abolition of the appropriations system. Documentary in import financing operations.

Issa Fathi, Managing Director of Cairo Securities Brokerage Company, said that the rise of the main index of the Stock Exchange to exceed the level of 12,000 points is an extended effect of the Central Bank’s application of a flexible exchange rate system, which encouraged the return of foreign investments to the money market again after a wave of exit witnessed by foreign investors before. Implementation of the Central Bank’s decision, in addition to receiving a large number of listed companies’ acquisition offers from Gulf companies, which caused momentum in the stock exchange and encouraged local investors to buy shares again.

Many Gulf companies made offers to acquire restricted Egyptian companies after their valuation fell to attractive levels, the latest of which was the Emirati National Dyes Company’s offer to acquire the Paints and Chemical Industries Company – Pachin, and before that the Emirati Al-Dar Real Estate Company offered through the Sixth of October Development and Investment Company – SODIC to acquire One of the Orascom companies that owns the O West project in West Cairo.

“Fathy” added, in exclusive statements to CNN in Arabic, that the stock exchange witnessed the highest trading value on stocks this year, exceeding 3 billion pounds ($122.9 million), after executing exceptional deals on the shares of the Commercial International Bank, and transferring ownership between foreign investors that exceeded more than 1.2 million pounds. One billion pounds (49.61 million dollars) at the beginning of Monday’s trading session, indicating that the stock market’s rise is linked to the liberalization of the exchange rate, as it previously achieved record levels after the liberalization of the exchange rate in November 2016, and at that time the main index reached the level of 18,000 points.

The share of the Commercial International Bank increased by 2.34% during Monday’s trading session, to close at 35.9 pounds (1.47 dollars), with a trading volume of 47.5 million shares, with a value of 1.7 billion pounds (68.2 million dollars).

Issa Fathi indicated that the main index of the Egyptian Stock Exchange has achieved a rise of 37.6% since it passed the lowest point it reached during this year last July, as a result of the significant increase in the share of the Commercial International Bank, which represents a relative weight of 40% of the index, in addition to A group of other stocks that play a major role in the rise of the index, including the “Fawry” company for banking technology and electronic payments, and the Financial Group Hermes Holding.

The Managing Director of Cairo Securities Trading Company expected the continuation of the rise of the main index of the Egyptian Stock Exchange after it exceeded the resistance levels at 12,000 points, provided that it would witness during the rise wave profit-taking operations, adding that the catalysts for the rise of the index are linked to the acquisitions of a number of stock exchange companies, and the continued registration of investors. Arabs and foreigners net buy on the Egyptian Stock Exchange.

Arab and foreign investors recorded net purchases on the Egyptian Stock Exchange during the past week, at a value of 123.5 million pounds ($5.1 million) and 91.7 million pounds ($3.8 million), respectively, bringing the total Arab transactions to a net purchase value of 2.5 billion pounds ($102.4 million). Since the beginning of the year, net foreign sales have decreased to 20.3 billion pounds ($831.3 million) since the beginning of the year.

The financial markets expert advised stock exchange dealers to invest in bullishness and buy shares without obtaining credit to finance the purchase of shares, recommending buying shares in the banking, non-banking financial services, basic resources and petrochemical sectors, which are witnessing price growth as a result of the Russian-Ukrainian war.

For his part, Mohamed Kamal, a member of the Board of Directors of the Securities Division of the General Federation of Chambers of Commerce, said that the main index of the Stock Exchange returned to the green zone after the decision to implement a flexible exchange rate system for the pound, and it exceeded the level of 12 thousand points for the first time this year as a result of the government reaching an agreement to obtain financing from The International Monetary Fund, and Egypt’s success in hosting the climate conference in Sharm el-Sheikh, and it was preceded by organizing a conference to develop proposals to overcome economic challenges, expecting the continuation of the rise of the main index during the coming period.

Egypt reached an agreement to obtain $9 billion in loans, including $3 billion from the International Monetary Fund, $1 billion from the Sustainability Fund, and $5 billion from development partner countries.

Kamal said, in exclusive statements to CNN in Arabic, that the return of direct foreign investments to the Egyptian capital market, and the increase in tourism revenues will lead to the rise of the Egyptian Stock Exchange during the coming period, and advised dealers to be careful when entering the stock exchange during the current period, and not to open marginal purchase positions to avoid achieving huge losses. If the market declines.

Kamal agreed that the banking sector is expected to rise during the coming period as a result of adopting a policy of increasing interest rates, which stimulates the demand for savings in the banking sector.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button