Egyptian Stock Market Experiences Corrective Movement Amidst Profit-Taking and Rising Interest Rates
Market participants are closely monitoring the Egyptian stock market as it undergoes a corrective movement following robust gains witnessed throughout 2023. On Monday, the EGX30 index, which tracks the performance of the 30 most actively traded companies, experienced a decline of 1.67%, falling from 28,944 points to 28,144.2 points. Local institutions engaged in profit-taking, leading to a net sell-off amounting to EGP 826.7m.
Hany Tawfik, Chairman of International Investors Group, Inc., highlights the shift of liquidity from the stock market to government debt instruments, indicating the EGX’s transformation into a store of value for individuals. The market is no longer solely driven by financial analysis but also by investment strategies.
The EGX70 EWI, measuring medium and small-sized companies, declined by 1.08%, settling at 6,544.9 points, while the broader EGX100 EWI saw a 1.31% decrease, settling at 9,284.2 points. Mohamed Abdel Hakim, Head of the Research Department at Ostoul Securities Brokerage, attributes the selling pressure on stocks to the recent rise in interest rates, prompting investors to redirect their liquidity towards government debt instruments.
Abdel Hakim anticipates a downward correction in the coming period, with the EGX potentially reaching the 25,000-point level due to ongoing selling pressures. He advises investors to mitigate risks by avoiding margin buying during this time.
During Monday’s trading, a total of 764 million shares were exchanged, amounting to EGP 3bn, across 78,600 transactions. CI Capital Brokerage’s research suggests that the stock market’s momentum will slow down in the near term due to rising interest rates, leading investors to shift focus towards fixed-income instruments.
Individual stocks experienced fluctuations, with decliners including Talaat Moustafa Group Holding, Qalaa Holding, Ezz Steel, and Palm Hills, while gainers included Golden Tex, Egyptian Resorts Company, Ibn Sina, Zahraa Maadi, and New Ismailia.
Mostafa Al Kurdi, Group Manager at Arab African International Securities, expects the main EGX30 index to undergo a strong corrective movement if the key support level of 26,400 points is broken. He advises investors to focus on stocks with strong financial positions and avoid margin purchases amidst the ongoing market volatility.
