Egypt hits 8-yr high on FX eu­pho­ria, Saudi up

Kuwait Times - - BUSINESS -

Egypt’s stock mar­ket surged to an eight-year high yes­ter­day be­cause of hopes for for­eign fund in­flows af­ter the cur­rency was floated last week, while a plan by Saudi Ara­bia’s gov­ern­ment to pay debts to the pri­vate sec­tor boosted that mar­ket.

The Egyp­tian blue chip stock in­dex jumped 2.5 per­cent to 10,097 points, its lofti­est fin­ish since June 2008 - al­though it closed well off the day’s high of 10,177 points, and trad­ing vol­ume, while heavy, de­creased con­sid­er­ably from Mon­day’s mas­sive amount. The in­dex has soared 18.4 per­cent since the Egyp­tian pound’s peg of 8.8 to the U.S. dol­lar was scrapped last Thurs­day. Yes­ter­day, the pound con­tin­ued drift­ing down to near 18 - a level mak­ing Egyp­tian as­sets look cheap to for­eign­ers.

Yes­ter­day ‘s rise brought the in­dex above ma­jor tech­ni­cal re­sis­tance on its Fe­bru­ary 2015 peak of 10,066 points; any break, con­firmed by two straight closes above that level, would point up to the April 2008 record high of 12,039 points.

In con­trast to the pre­vi­ous three days, how­ever, the broader EGX100 in­dex out­per­formed the blue chip bench­mark yes­ter­day, ris­ing 3.5 per­cent - a sign that profit-tak­ing pres­sure was emerg­ing in blue chips. Ex­change data again showed for­eign in­vestors were net buy­ers of stocks, by a ra­tio of over four to one. They bought a net $31 mil­lion, not much by the stan­dards of other emerg­ing mar­kets but one of the largest amounts Cairo has seen in the last few years.

“The very good news is that for­eign­ers are test­ing the water in the stock mar­ket. Their con­tri­bu­tion in terms of size and direc­tion had not been seen in a long time,” said one fund man­ager. Global Tele­com rose 2.4 per­cent and Com­mer­cial In­ter­na­tional Bank climbed 1.9 per­cent. Juhayna Food In­dus­tries surged to its 10 per­cent daily limit.

The Saudi in­dex gained 2.1 per­cent to 6,328 points in its fourth straight day of gains, ris­ing above mi­nor tech­ni­cal re­sis­tance at the Sep­tem­ber peak of 6,238 points. “The trend is bullish as (the in­dex) is trad­ing over the 14-, 21- and 50week sim­ple mov­ing av­er­age lev­els,” Abu Dhabi’s NBAD Se­cu­ri­ties said in a note. The Riyadh gov­ern­ment aims to set­tle its un­paid debts to the pub­lic sec­tor be­fore the end of De­cem­ber, the state news agency re­ported late on Mon­day. The de­layed pay­ments are be­lieved to to­tal over $20 bil­lion and be con­cen­trated in the con­struc­tion sec­tor. Builder Al Kho­dari climbed 4.2 per­cent in heavy trade.

Saudi Phar­ma­ceu­ti­cal In­dus­tries, the only listed drug pro­ducer, gained 2.8 per­cent in a sec­ond day of heavy trade af­ter the en­ergy min­is­ter said on Sun­day that Riyadh planned to de­velop au­to­mo­tive, phar­ma­ceu­ti­cal and so­lar in­dus­tries. All 12 listed banks rose; they have been bullish since the gov­ern­ment’s suc­cess­ful $17.5 bil­lion in­ter­na­tional bond sale last month. Samba jumped 4.2 per­cent.

“This has been a re­lief rally for con­struc­tion stocks and a fun­da­men­tals-driven rally for the bank­ing and petro­chem­i­cal sec­tors,” said San­thosh Balakr­ish­nan, re­search an­a­lyst at Riyad Cap­i­tal. He added that long-term in­vestors had re­turned to buy blue chips that dropped sharply over the last year. — Reuters

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