Egyptian shares are seen by analysts to extend their sideways move awaiting fresh catalysts to resume a rally, as investors are tracking any signs from the Central Bank of Egypt (CBE) regarding starting its easing cycle when its Monetary Policy Committee (MPC) meets in the few coming days.
“We could see the market move sideways in the few coming sessions, as investors are awaiting the CBE decision about interest rates. They could also hunt for cheap prices and build new positions in blue-chip stocks,” said Sameh Gharib, head of technical analysis at Roots Stock Brokerage House.
The CBE’s MPC is scheduled to meet in mid-February.
He added that the index is currently targeting 15,300 points in the mid-term, while its long-term target stands at 15,800 points.
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 February, awaiting fresh stimulus, including the earnings season for listed companies.
The benchmark EGX30 will see short-term resistance at 15,200 then at 15,300, whereas support is expected at 15,100, 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, expected the Egyptian stock market to see profit-taking next week after reaching a record high in last weeks’ trading sessions.
The benchmark index will likely test 15,100 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 15,500 points.
Meanwhile, market analyst Tony Kamal said in a research note that the benchmark index will move sideways after hitting a new record.
Blue chips’ performance are tracking the main benchmark index’s movement, the analyst added.
EGX30 shed 0.15% in a week amid weak liquidity
Last week, the main index EGX30 fell 0.54% to 15,088 points, with trading volumes of 879.6m shares and a total turnover of EGP 3.7bn.
Market capital gained EGP 11bn, and reached a total of EGP 861.4bn.
The small- and medium-sized enterprises index EGX70 rose 2.83%, making its biggest gains since mid-December, as it closed at 870.97 points, while the broader index EGX100 added 2.01% and reached 2,057 points.
Meanwhile, the equal-weighted index EGX50 lost 0.54% and ended the week at the level of 2,695.
The main support level for the main index now is 15,050 points, according to market analyst Said El-Fekky.
Fekky believes that the anticipation of the CBE decision regarding interest rates led to caution among investors, who will soon seek new positions, which will help the main index target resistance levels near 15,300.
Meanwhile, the Egyptian Exchange (EGX) saw a mostly positive performance during January, as the market indices were supported by foreign and Arab investors’ buying.
The benchmark index EGX30 extended a rally for the fifth month in a row, levelling up 0.15% in January, and reaching the level of 15,042.37 points.
Traded values on the main index’s stocks totalled EGP 15.18bn, with volumes of 4.14bn shares.
The market capital rose by 4%, or EGP 33.5bn, as it ended the first month of 2018 at EGP 858.5bn.
Meanwhile, the EGX70 surged 4.26% in January, making its highest monthly gains since last September, as it closed at 862.94 points, while the broader index EGX100 increased by 3.56% to 2,041 points.
The equal-weighted index EGX50 was up 4.72% to the level of 2,690 points.
On another note, MubasherTrade maintained its sell/moderate risk rating for the Commercial International Bank (CIB) with a price target (PT) of EGP 76 per share, according to a recent report.
The CIB posted a 25% year-over-year (y-o-y) surge in consolidated net profit to reach EGP 7.52bn in 2017.
The research firm attributed the growth in earnings to a 24.8% y-o-y rise in net interest income (NII) at EGP 12.5bn, coupled with an 83.4% y-o-y hike in non-interest income to EGP 2.38bn.
The bank’s net loans rose by 3.6% y-o-y to EGP 88.4bn in December 2017, while customer deposits increased by 8.2% y-o-y to EGP 250.7bn, the report said.
The bank’s net loans-to-deposits ratio fell to 35.3% from 36.8% in December 2016, which is attributable to the current high-interest rates which led to a slowdown in demand for credit, the report highlighted.
“We believe that lending to corporates and retail clients should increase over the coming period with the expected easing by the Central Bank of Egypt (CBE),” MubasherTrade noted.
CIB’s capital adequacy ratio (CAR) increased to 19.3% in December 2017 from 13.97% in December 2016, which is “comfortably above the minimum CAR required by the CBE of 11.25%,” MubasherTrade reported.