Egypt stock market is expected to move upwards towards the last days of the year as correction seems finally to come to an end, with Arab and local investors expected to build new positions in blue-chips stocks, while foreigners are expected to become net sellers in the few coming weeks.
The benchmark EGX30 index is likely to see short-term resistance at 12,600 then 12,770 points, said Ayman Fouda, head of capital market committee at the African Economic Council, noting that if the index remained stable above these levels, this would enable the index to retest the levels of 12,951.
The index will see support at 12,525 and 12,430 points, the analyst added.
As for the small and medium-sized stocks index, the EGX70, Fouda expects it to see resistance at 669 and 677 points, whereas support will be at 658 and 650 points.
Osama Naguib, head of technical analysis at Arab Finance, noted that the EGX30 has reached new support between 12,500 and 12,600 points, forecasting that this would prompt the index to regain 12,900 and 13,000 points, an area which Naguib described as an incentive for new sales and price pressures.
The Egyptian Exchange (EGX) ended the second week of December on a positive note, recovering some of its recent losses during a correction movement.
Performance during the week was mostly positive with the main index closing in the green zone in four out of five sessions, after a two-year low.
Benchmark index EGX30 rose 4.9% or 609 points and closed at the level of 12,996.89 points. Last Sunday, the index fell to its lowest level since 18 December 2016 at 12,140 points. Small and medium-sized enterprise index EGX70 also rose by 2.1%, as it closed the week at 675 points. The broader index EGX100 recorded 2.6% gains, as it settled at 1,647 points. Equal-weighted EGX50 added 4.5% and ended the week at the level of 2,051.2 points.
Market capitalisation increased by around EGP 27.34bn, as it closed at the level of EGP 740.18bn. Meanwhile, EFG Hermes expects interest rates in Egypt to decline by 2% next year, which could prompt another rally for Egypt stock market.
The company’s head of research Ahmed Shams said last Thursday that inflation is expected to reach 13% to 14% in 2019.
London-based research firm Capital Economics expects inflation to fall further in Egypt over the coming months as the effects of the food price spike continue to unwind and underlying inflation stays weak.
Egyptian inflation dropped back in November and it is expected to fall further over the coming months.
The Central Bank of Egypt is likely to keep interest rates unchanged at its meeting later this month but will resume its easing cycle in early 2019.
In market news, HSBC Securities Egypt announced that Moon Capital Partners Master Fund Limited has raised its stake in Global Telecom Holding (GTH) to 4.8% from 4.07%.
The transaction was implemented at a value of EGP 109.94m or at an average price of EGP 3.2 per share, according to a filing to the EGX.
The GTH previously reported turning to losses on a yearly basis for the first nine months of 2018.
Losses amounted to $345.1m for the nine-month period ended September, against a profit of $56.8m in the same period of the prior year.
Revenues narrowed to $2.12bn at the end of September, from $2.29bn in the same period the year before.
Meanwhile, B Investments Holdings announced its investments in the renewable energy field are focused on solar power plants.
The Cairo-based private equity firm has invested around EGP 95m into three solar power plants through its subsidiary, Infinity Solar, according to a statement to the EGX. These plants are BSEP, Phoenix, and MMID, B Investments highlighted.
The company’s investments are part of the second phase of the government feed-in tariff programme that stipulates selling electricity to the state-run electricity firm at 8.4 cents per kilowatt/hour for 25 years as of the operation date, the company added.
Last week, B Investments said that Infinity Solar tied up the 30 MW solar power plant MMID to the national electricity grid.
The renewable energy developer started the trial and test operations and is set to be fully operated within 45 days.
Infinity Solar will also link the 500 MW solar plant BSEB to the national electricity network in 10 days prior to the end of December. The company will link the 50 MW Phoenix with the national grid as well.
B Investments previously posted a 52.8% year-over-year rise in consolidated profits for the first nine months of 2018.
Elsewedy Electric Company announced it will sign a deal with Arab Contractors for the construction of a $3bn hydroelectric power plant in Tanzania in four years, Elsewedy’s marketing director said.
Arab Contractors will hold a 55% stake in the project, while Elsewedy will have the remaining 45%, Reuters reported, citing Ahmed Hassouna, El Sewedy’s head of marketing.
The project, expected to be one of Africa’s biggest plants, will include nine turbines with a total production capacity of 2,100 MW, Hassouna noted.
He also added that Elsewedy has signed a $500m credit facility with the African Export-Import Bank (Afreximbank) to expand in Africa.
Land plots spanning 100,000 sqm in Uganda are expected to be delivered to Elsewedy within a few days for the construction of a factory for manufacturing transformers, smart counters, and isolators, Hassouna said, pointing out that the construction work is set to commence in 2019.
In July, CEO of Elsewedy Electric, Ahmed El Sewedy, revealed that the Egyptian cable maker would partner with Arab Contractors and other firms to compete for the construction of a hydroelectric plant in Tanzania.
In October, the Arab world’s largest listed cable company announced that the consortium received the preliminary approval to commence the construction of the project.
In other company news, Palm Hills Development Company’s board of directors has approved to raise the credit facility for its project ‘The Crown’.
The facility, provided by the National Bank of Egypt and other lenders, will be raised to EGP 1.24bn from EGP 852m, the Cairo-based real estate firm said in a filing to the EGX last Tuesday.
Prior to that, Palm Hills announced it obtained the approval of seven banks to raise the credit facility limit for The Crown.
The maturity date of the loan has been extended to eight years instead of six to accelerate the project’s construction work, the company added.
Palm Hills previously reported a net profit of EGP 439.9m for a six-month period ended in June, versus EGP 349.3m in the prior-year period.