Egyptian shares are expected by analysts to test new historical peaks in 2017, as local investors are likely to build new positions in certain blue-chip stocks ahead of the year’s end, while foreign investors are expected to start a sell-off streak to book gains ahead of the holiday season.
“We could see the market keeping the rally alive on local investors’ purchases ahead of year-end. They could hunt for the cheap prices and build new positions in blue-chip stock,” said Sameh Gharib, head of technical analysis at Roots Stock Brokerage House.
He added that the index is currently targeting 15,000 points in the mid-term, while its long-term target stand at 15600 points.
“The market could test new historical peaks in 2018,” he concluded.
Meanwhile, Ayman Fouda, head of capital market committee at the African Economic Council, expects the market to move sideways in the few coming sessions until the end of 2017.
The benchmark EGX30 will see short-term resistance at 14,300 then at 14,442, whereas support is expected at 14,100 and 13,960, the analyst said in a research note.
Meanwhile, the small and medium enterprises’ EGX70 index will see short-term resistance at 773 and 777, whereas support will be seen at 765 and 758 points, he added.
The analyst advised investors and traders to closely watch stocks and to consider quick trades between support and resistance levels for stocks seeing a jittery sideways performance.
Saeed Al Feky, branch manager at Osool Securities, expects the Egyptian Exchange to see profit-taking next week after reaching a record high in last week’s trading sessions.
The benchmark index will likely test 14,800 points this week, Al Feky said, confirming that if the main benchmark index holds above this level, profit-taking will come to an end along with the impact of the geopolitical tensions, while the index will resume its rise and head for 15,000 points.
Meanwhile, market analyst Tony Kamal said in a research note that the benchmark index will continue its rise after hitting a new record.
The support level of EGX30, the main gauge, is expected at 14,250 points, Kamal noted, forecasting that the index will peak at 15,000 points by the end of 2017.
Blue chips’ performance is tracking the main benchmark index’s movement, the analyst added.
EGX30 keep rally alive in a week
Last week, The Egyptian Exchange’s indices closed on an up note, boosted by Arab investors’ buying transactions, while Egyptians and foreigners were net sellers.
EGX30, the main benchmark index, rose 2.69% or 385.18 points to 14,679.91 points after 723.6 million shares were traded, with a turnover of EGP 3.7bn.
EGX70 rallied 4.85% or 37.19 points to 804.74 points, while EGX100 surged 5.07% or 91.72 points to 1,902.53 points.
The equally-weighted EGX50 gained 3.45% to 2,572 points, with a turnover of EGP 4.6bn.
“Arab investors served as the main boost to the market last week,” said Gharib, in a research note.
Arab investors were net buyers last week, with transactions worth EGP 418.4m.
Meanwhile, Egyptian and foreign investors were mostly net sellers, with transactions amounting to EGP 299m and EGP 119.4m, respectively.
Egyptians accounted for 64.3% of the EGX’s transactions last week, while foreigners and Arabs made up 23.4% and 12.3%, respectively.
The index tests resistance this week could be at 14,700 points, and by breaking it, it will eye resistance at 15,000 points, with its support level at 14,500 points, Gharib added.
Market capitalisation gained EGP 32bn to EGP 820.7bn over the week, from EGP 788.7bn in the previous week.
The Commercial International Bank, the heaviest relative weight on the main index, rose 2.02% to EGP 74.19 after 9.56 million shares were traded, generating EGP 706.9m.
Meanwhile, heavyweight Telecom Egypt was among the top gainers last week, soaring 6.5%.
Pharos Research upgraded its fair value of Telecom last week at EGP 15.25 per share, with an “equal weight” recommendation, according to a recent report.
“TE’s launching of mobile services is a double-edged sword as it could negatively impact the company’s financial performance,” Pharos added, noting that “the roaming agreements do not allow for adequate returns, given the price cuts initially introduced by TE.”
“We assume a dividend payout ratio of 40% on 2017 earnings, translating into a dividend yield of 7.3%,” Pharos highlighted.