Egypt shares await fresh stimulus to resume rally amid tough market conditions
SOLID FINANCIAL RESULTS FAILED TO PROP UP MARKET AS SELL OFF STREAK WIDEN IN EMERGING MARKETS
Egypt’s stock market (EGX) is seen by analysts to be recovering from losses but is still awaiting fresh stimulus to improve, as solid financial results for blue-chips stocks failed to prop up the market in the few past weeks.
The benchmark EGX30 index may close this week above 14,000 points, Branch Manager at Mubasher Financial Services Safwat Abdel Naeem said.
The EGX is expected to see a bullish trend this week on the back of the positive economic news and the solid financial results which will boost liquidity in most blue-chip stocks, indicated Abdel Naeem.
Trading volumes are expected to rise this week with a turnover averaging between EGP 1bn to EGP 1.5bn per session, he projected.
For his part, Saeed El Feki, branch manager of Osool ESB Securities Brokerage, said that the EGX is likely to maintain the volatile trend until positive news pushes the market higher.
The indices of the EGX are likely to surpass their resistance levels this week, supported by the Central Bank of Egypt’s (CBE) recent decision, El Feki added.
He noted that the EGX30 index may break resistance at 13,850 points and target 14,150 points.
Additionally,the small- and mid-cap EGX70 index is still seeing accumulation, and is likely to rise and surpass resistance at 705 points and hover around 715 points,El Feki pointed out.
Last week, the EGX finished the week on a mixed note.
The main EGX30 index inched lower 0.04%, reaching 13,675.37 points, compared to 13,681.67 points in the week before, while the smalland mid-cap EGX70 index fell 1.09%, reaching 687.44 points.
The broader EGX100 index levelled down 0.8% to 1,723.91 points, from 1,737.98 points a week ago, whereas the equal-weighted EGX50 index grew 2.2%, reaching 2,231.30 points, up from 2,182.98 points.
The bourse’s market capitalisation lost EGP 16bn, logging EGP 763.6bn, down from 779.6bn a week earlier.
Meanwhile, Orange Egypt no longer forecasts that it will achieve losses next year, according to the company’s CEOYasser Shaker.
Shaker noted that the company’s activity grew 8% during the third quarter (Q3) of the year, as reported by the Middle East News Agency (MENA).
The company will stop incurring losses as of 2019, supported by new investments and activities, after recording losses of EGP 234.9m in the nine-month period that ended 30 September 2018 (9M18), compared with EGP 1.76bn during the corresponding period last year.
Orange’s investments in network development will amount to EGP 4bn 9M18 the CEO and managing director indicated, adding that his company did not seek delisting its stock from the EGX after an EGP 15bn capital hike last December, however as traded shares were below 1% it couldn’t comply with the standard rate of a minimum 5%.
The voluntary delisting aimed at protecting the interests of small investors, said Shaker.
The extraordinary general meeting (EGM) of Orange Egypt for Telecommunication has agreed to optionally write off the company’s shares from the EGX.
The EGM approved to buy shares of shareholders negatively affected by the optional write-off,including mortgagee creditors, in accordance with article 55 of the listing rules.
Procedures of the optional writeoff are expected to be completed and submitted to EGM by the end of December, the company added.
In July, the listing committee at the EGX called the main shareholder in Orange Egypt to optionally write-off the company’s shares from the EGX.
In earning news, the unconsolidated financial indicators of Arab Cotton Ginning Company (ACGC) on Sunday reported a 72.9% year-over-year (y-o-y) decrease in its losses in the Q1 of current year.
Net losses amounted to EGP 2.55m from July to September, down from EGP 9.43m in the same three months a year earlier, according to a statement to the EGX.
As for revenues in the firm’s standalone financial statements,the company posted EGP 234,000 by the end of September, compared to EGP 15,000 in the same month last year.
In other market news, Financial Brokerage Group, a subsidiary of EFG Hermes Holding said that Ekuity Holding has raised its stake in Sixth of October for Development and Investment (SODIC) to 4.9% from 4.86%.
Ekuity Holding has purchased 150,000 shares at a value of EGP 2.3m, or EGP 15.6 per share, the company added in a filing to the EGX.
It is worth noting that SODIC previously posted a 9.5% y-o-y increase in consolidated profits for the first half (H1)of 2018, recording EGP 374.09m in profits, compared to EGP 341.5m.
Total revenues hit EGP 1.05bn in the six-month period ended June, versus EGP 1.17bn in the prior-year period.
In other earnings news, Oriental Weavers Carpet reported a 27% yo-y drop in consolidated profits for the 9M18.
Net profit fell to EGP 436.4m in the 9M18, from EGP 598.7m in the yearago period, the household durables firm said in a filing to the EGX.
Sales rose slightly to EGP 7.59bn at the end of September from EGP 7.54bn n in the corresponding ninemonth period of 2017.
At the level of standalone business, profits surged to EGP 380.4m in the January-September period of this year, versus EGP 297.6m in the prior-year period.
Oriental Weavers previously said its consolidated profits fell by 31.3% y-o-y in the H1 of 2018, registering EGP 326.38m in profits, versus EGP 475.03m.
On the other hand, standalone profits grew to EGP 211.37m in H1 in 2018, versus EGP 184.95m in the same period a year earlier.
Meanwhile, Elsewedy Electric announced that a consortium of its subsidiary, El Sewedy Electric for Trade and Distribution, and two other companies has won an EGP 138m contract for the development of the regional control centre in the Canal cities.
The consortium’s two other firms comprise ABB Switzerland and ABB Arab, the company said in a filing to the EGX.
Upon the contract, the alliance will supply, install and conduct tests to develop the international arbitration centre in the canal cities for approximately 115 substations within six governorates, the Egyptian cable maker indicated.
The project will cover developments in the governorates of Sharqia, Ismailia, Suez, Port Said, Red Sean and the North and South Sinai, according to the filing.
The contract is set for execution within 12 months as of 25 September, the date of the deal signing, the company stressed.
TRADING VOLUMES ARE EXPECTED TO RISE THIS WEEK WITH A TURNOVER AVERAGING BETWEEN EGP 1BN TO EGP 1.5BN PER SESSION