MARKET REPORT Egypt’s blue-chip stocks extend gains

Egyptian blue-chip stocks rose to their highest in nearly three-and-a-half months, extending the previous session’s gains, after Egypt reported better-than-expected inflation data for the month of July. Most Arabian Gulf markets traded yesterday after a threeday Eid holiday, while Saudi Arabia and Oman will resume trading on Sunday.

Egypt’s blue-chip index surged 2.5 per cent to 14,541 points, a level not reached since May 5. The country’s biggest lender Commercial International Bank rose 2.8 per cent, while El Sewedy Electric jumped 8.1 per cent.

Egypt last week reported that its headline inflation rate had fallen to its lowest in nearly four years, dropping to 8.7 per cent in July and defying analyst expectations since it followed a fresh round of fuel subsidy cuts that pushed domestic fuel prices up by 16 per cent to 30 per cent.

The inflation data provides enough room for the central bank to embark on monetary easing. Last month, the monetary policy committee kept key interest rates on hold at 15.75 per cent and 16.75 per cent for overnight deposit and lending, respectively.

But in the Arabian Gulf, major markets reversed earlier gains as optimism over Washington delaying tariffs on some Chinese imports gave way to fears that the global economy was heading towards recession in the wake of a slump in Germany’s exports and slowing Chinese industrial growth.

Germany’s disappointing exports sent Europe’s largest economy into reverse in the second quarter as its manufacturers bore the brunt of a global slowdown amplified by tariff conflicts and uncertainty over Brexit. China’s economy stumbled more sharply than expected in July, with industrial output growth cooling to a more than 17-year low, as the intensifying US trade war took a heavier toll on businesses and consumers.

In Abu Dhabi the index fell 0.9 per cent to 5,054 points with First Abu Dhabi Bank sliding 0.9 per cent, and investment firm Waha Capital plunging 6.9 per cent after swinging to second-quarter loss.

In Dubai, the index was down 0.2 per cent at 2,832 points with blue-chip developer Emaar Properties and Dubai Islamic Bank both trading 0.6 per cent lower.