By: Fatheya Al-Garhy
The Egyptian Stock Exchange (EGX) closed after the first session of Ramadan with prices maintaining relative stability, the opposite of what most analysts expected. Observers predicted that the EGX’s indices would experience sharp declines in the value of trading with the start of the holy month.
The shares of Orascom Telecom Media and Technology (OTMT) bolstered the market, leading trading for five consecutive trading sessions, particularly because of the company’s stock coupon which was for more than 75% of the market value of a share. 114.3 million of the company’s stocks were traded, accounting for 20% of total transactions to close at EGP 0.47 per share, up 9.3%.
The stock market’s main index, the EGX30, remained stable, closing at 4868 points. The market’s index for small and medium sized enterprises, EGX70, rose 0.1% to close at 427.42 points. It is expected that the EGX70 will approach the resistance level at 421 points during today’s session. The EGX100 index fell 0.02% to close at 734.19 points.
Trading was valued at EGP 267.8 million with 187,344,000 stocks traded in 11,960 transactions. Market capital equalled EGP 337.78million.
Mohamed Abeed, an official with ESGMarkets, attributed OTMT’s strong performance in the recent period to three factors. First, he said that the company’s stocks were priced low. Second, the company’s coupon contributed greater investment. Lastly, the market currently represents an opportunity for accelerated growth.
He noted that the fact that the market maintained trading above the 4800 support level, testing other support levels, bodes well for trading. Abeed said that he expected the market to push 5,000 points, then 5,100 points. He predicted that market would test the 4,900 point level in today’s session, saying that that it would eventually settle at approximately 4,880 points, moving on to test 5,000 later.
Hassan Qenawy, Director of Client Accounts with HC, explained that a state of anticipation still reigns in the market and that predictability would not return until the constitute assembly issue is resolved and a new government is formed.
Mohamed Fathallah, the Managing Director of Al-Tawfeek Financial Brokerage, said that the market did not witness rapid price increases because the main index has thus far failed to break the 5,000 point level.
He explained that the market is anticipating the announcement of a new government, a decision expected to end the current stagnation. Observers had expected President Mohamed Morsi to name a cabinet of technocrats as soon as the election results were announced. The delay, however, has increased the anxiety of investors and driven them to abstain from trading.
Fathallah noted that the OTMT coupons, valued at approximately EGP 5.5 billion, would contribute to the market’s recovery, but that the market requires ongoing economic and political stability.
Transactions made by foreigners led to net sales of EGP 57.5million, accounting for 27.72% of market transactions. Transactions by Arabs equaled EGP 17.69million, accounting for 8.44%. Egyptian transactions represented net purchases of 75.2, accounting for 63.84% of all market transactions. Institutions accounted for 54.5% of all market transactions. Egyptian institutions were the only ones that recorded net purchases. Individuals accounted for 45.5% of transactions and resulted in net purchases with the exception of foreign sales by individuals.