Egypt stock in­dex rises, Gulf mar­kets di­verge

MIDEAST STOCK MAR­KETS

Kuwait Times - - BUSINESS -

Egypt’s stock in­dex surged 3.1 per­cent in heavy trade yes­ter­day as the Egyp­tian pound de­pre­ci­ated against the US dol­lar, prompt­ing more buy­ing by for­eign funds, while Gulf bourses di­verged. Twen­ty­seven of the 30 most liq­uid Egyp­tian shares rose, tak­ing the in­dex to a fresh eight-year high, with Telecom Egypt and Global Telecom Hold­ing each jump­ing to their 10 per­cent daily lim­its. The Egyp­tian pound was be­ing bought for 19 pounds per dol­lar against around 18.8 ear­lier in the day on the back of higher de­mand for the green­back amid a short­age at banks, bankers told Reuters.

For­eign in­vestors were net buy­ers of Egyp­tian stocks by a mod­est mar­gin, bourse data showed. Over­all, many in­vestors con­sider cur­rency weak­ness a pos­i­tive for the stock mar­ket in the short term be­cause it makes prices more at­trac­tive for for­eign in­vestors, and may drive lo­cal funds into stocks as a hedge against in­fla­tion. “The dol­lar rate is keep­ing up the ap­petite” for stocks among for­eign funds, said Wafik Da­wood, port­fo­lio man­ager at Com­pass Cap­i­tal. Also boost­ing sen­ti­ment was news that Banque Misr had signed a mem­o­ran­dum of un­der­stand­ing with In­dus­trial and Com­mer­cial Bank of China for a $500 mil­lion loan aimed at in­creas­ing dol­lar liq­uid­ity and fi­nanc­ing joint Egyp­tian-Chi­nese projects.

Allen San­deep, di­rec­tor of re­search at Cairo’s Naeem Bro­ker­age, said the In­ter­na­tional Mon­e­tary Fund’s three-year, $12 bil­lion bailout pro­gram for Egypt, fi­nalised in early Novem­ber, was con­tin­u­ing to buoy the stock mar­ket. “His­tor­i­cally, any time an emerg­ing mar­ket won an IMF bailout, stock mar­kets soared - one case study could be In­dia’s bailout in 1991, be­cause struc­tural change on both the mon­e­tary and fis­cal level will even­tu­ally be pros­per­ous for the econ­omy.”

Gulf mixed

The in­dex in Qatar, which was closed for a public hol­i­day on Sun­day, rose 0.5 per­cent but fin­ished well be­low its in­tra-day high. Qatari In­vestors Group was the top per­former, jump­ing 9.9 per­cent. On Thurs­day Qatar pub­lished a 2017 state bud­get that pro­jected a deficit of 28.3 bil­lion riyals ($7.8 bil­lion), much smaller than the orig­i­nally pro­jected 2016 deficit, and to­tal spend­ing of 198.4 bil­lion riyals, down from 202.5 bil­lion. Al­though that is slightly con­trac­tionary, it is less so than the 2016 bud­get, and the gov­ern­ment plans to in­crease cap­i­tal spend­ing next year. It did not an­nounce any ma­jor new aus­ter­ity mea­sures; the bud­get’s con­ser­va­tive oil price as­sump­tion of $45 a bar­rel sug­gests the gov­ern­ment has plenty of room to meet its tar­gets next year.

In Saudi Ara­bia, the in­dex was dragged 0.9 per­cent lower by a 3.7 per­cent drop in the largest listed stock, Saudi Ba­sic In­dus­tries, af­ter the com­pany an­nounced a lower cash div­i­dend for the se­cond half of this year com­pared to a year ear­lier. The neg­a­tive sen­ti­ment spilled into some other blue chips, with Na­tional Com­mer­cial Bank de­clin­ing 1.4 per­cent.

But builder Ab­dul­lah Al-Kho­dari was the top per­former, surg­ing 9.3 per­cent in unusu­ally heavy trade. The com­pany, which has many projects with the gov­ern­ment, may ben­e­fit from in­creased work in the com­ing year if the king­dom’s 2017 bud­get in­cludes an in­crease in con­struc­tion ex­pen­di­ture, as many an­a­lysts ex­pect. Saudi Ca­ble Co, which rose 2.5 per­cent on Sun­day af­ter say­ing its Turk­ish sub­sidiary had won a $50 mil­lion or­der, climbed a fur­ther 3.3 per­cent.

Dubai’s main in­dex lost 0.6 per­cent to 3,532 points in a se­cond con­sec­u­tive day of thin trade, re­treat­ing fur­ther from tech­ni­cal re­sis­tance on the Au­gust peak of 3,624 points, which it tested and failed to break de­ci­sively last week. Emaar Prop­er­ties lost 0.9 per­cent. Blue chips were weak in Abu Dhabi, where the in­dex slipped 0.4 per­cent; telecom­mu­ni­ca­tions op­er­a­tor Eti­salat lost 1.6 per­cent. — Reuters

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