Egyp­tian stocks poised to ex­tend record rally; Abu Dhabi slides

The Pak Banker - - 6BUSINESS -

Egyp­tian stocks were set to ex­tend their record win­ning streak as in­vestors bet last week's cur­rency de­val­u­a­tion will boost the econ­omy of the most pop­u­lous Arab na­tion. Abu Dhabi shares fell as traders cashed in fol­low­ing the big­gest jump since Jan­uary. The EGX 30 In­dex rose 0.5 per­cent as of 12:51 p.m. in Cairo, ex­tend­ing its ad­vance for a 12th day, the long­est rally since Bloomberg started track­ing the mea­sure in 1998. About 261 mil­lion shares traded, com­pared with a one-year full daily av­er­age of 198 mil­lion. Abu Dhabi's ADX Gen­eral In­dex re­treated the most in two months.

Un­de­terred by the big­gest in­ter­est rate in­crease in at least 10 years, in­vestors piled into Egyp­tian stocks af­ter the cen­tral bank weak­ened the cur­rency 13 per­cent last week, the most since 2003. The de­val­u­a­tion was part of pol­icy mak­ers' plan to lure for­eign in­vest­ment and al­le­vi­ate a dol­lar short­age that has crip­pled North Africa's big­gest econ­omy. The EGX 30 en­tered a bull mar­ket this month and is now up 32 per­cent from a two year-low in Jan­uary.

Egypt's stocks are "see­ing a clear trend re­ver­sal," said Cairo-based Ashraf Akhnoukh, the man­ager for Middle East and North Africa at Com­mer­cial In­ter­na­tional Bro­ker­age Co. "In­vestors are tak­ing in pos­i­tive sig­nals from the cen­tral bank as of­fi­cials fi­nally move to ad­dress the dol­lar short­age." The rate in­crease was al­ready priced in, he said.

Prop­erty de­vel­oper Six of Oc­to­ber De­vel­op­ment & In­vest­ment Co. was the big­gest gainer, jump­ing 5.6 per­cent on al­most three times the full-daily av­er­age trad­ing vol­ume in the past three months. The com­pany said last week its 2015 profit more than dou­bled.

The ADX Gen­eral In­dex fell 2.4 per­cent. The gauge had climbed the most in seven weeks on Thurs­day. First Gulf Bank PJSC and Emi­rates Telecom­mu­ni­ca­tions Group Co., which to­gether ac­count for more than half of the gauge, led the emi­rate's stocks lower.

First Gulf Bank de­clined 6.6 per­cent af­ter ris­ing 11 per­cent on Thurs­day. Eti­salat dropped 1.9 per­cent, fall­ing for a se­cond day. The largest telecom­mu­nica- tions op­er­a­tor in the United Arab Emi­rates, which shares a mo­nop­oly with Dubai's Du, has re­treated from the high­est level in a decade this month af­ter its 14day rel­a­tive strength in­dex rose to 88, well above the 70 level that sig­nals a se­cu­rity is over­bought.

"The mar­ket is cor­rect­ing it­self fol­low­ing a strong and quick rally," said Tariq Qaqish, the head of as­set man­age­ment at Dubai-based Al Mal Cap­i­tal PSC, which man­ages more than $160 mil­lion in eq­ui­ties and bonds across the Middle East and North Africa. "Pro­vided that global stocks and oil con­tinue to rise, the drop we're see­ing to­day will prob­a­bly be short­lived. We're look­ing at buy­ing op­por­tu­ni­ties in busi­nesses neg­a­tively cor­re­lated to oil such as the tele­coms sec­tor, as well as high-beta real es­tate stocks."

The six-na­tion Gulf Co­op­er­a­tion Coun­cil is home to about 30 per­cent of the world's proven oil re­serves, and na­tions in the re­gion de­pend on in­come from crude to fi­nance govern­ment spend­ing. While Brent, a bench­mark for half the world's oil, fell on Fri­day, it closed higher for a fourth week, at $41.20 per bar­rel.

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