Egypt surges in record volume on signs of dollar inflows

Reuters

Egyptian stocks jumped in record
volumes on Thursday, driven by signs that hard currency was flowing into the country after last week’s pound devaluation, while Saudi Arabia’s index extended recent gains.
Egypt’s blue chip index surged 4.5 percent, bringing its gains since the currency was floated last Thursday to 25 percent. The broader EGX 100 index was up by its 5 percent limit two minutes before the close, causing trade to be suspended.
Exchange data showed foreign investors were again heavy net buyers of Egyptian stocks and, after sliding earlier this week, the pound strengthened against the dollar after the central bank announced a $2 billion financing deal with global banks. Bankers said dollar liquidity in the currency market was
improving.
“Today foreign funds were aggressive buyers – the volumes are soaring. The markets will continue to be supported higher for the next week, although profit-taking cannot be ruled out,” said a Cairo-based equities trader.
Commercial International Bank (CIB), the country’s largest listed lender, jumped 4.4 percent to 67.22 Egyptian pounds, after reporting 28 percent jump in third-quarter net income, beating forecasts from Beltone Financial and Naeem Brokerage.
Naeem said CIB was expected to be a major beneficiary from growth in banking activities after the currency float. Telecom Egypt added 2.2 percent after reporting a 27.8 percent fall in net profit attributable to owners. “We expect Telecom Egypt to use an aggressive pricing strategy as its main tool to compete with the current mobile network operators – taking advantage of its existing network and infrastructure,” Naeem said.
Beltone said in research note that in 2017, Egypt’s corporate environment would undergo radical change as the government took tough fiscal and monetary measures, while the price discount offered to foreign funds by the devaluation would help to unlock companies’ value.

GULF MIXED
Saudi Arabia’s index added 2.3 percent to 6,528 points in heavy trade, closing well above technical resistance at its August peak of 6,396 points. Domestic economy-oriented shares were among top gainers, with apparel and mall operator Fawaz Alhokair jumping 6.0 percent to 28.30 riyals, its highest close in six weeks. The stock is still below the median fair value of 10 analysts polled by Reuters of 36.53 riyals. Banking shares, which have been surging over the last three weeks following a huge international sovereign bond sale, continued to rally. The sale “brought down the cost of funding, and long-term investors are reassured that the worst of the liquidity crunch is now behind them,” said Mohammad Al Shammasi, chief investment officer of Riyadh’s Derayah Financial.
He added that a Donald Trump presidency in the United States presented no threat to Gulf markets for the time being. “Only time will tell how he affects oil prices and foreign policy.” The Saudi market’s strength continued to suck funds from other Gulf bourses. Dubai’s index initially rose, rebounding with other global bourses as the shock of Trump’s election faded, but it then reversed course to close 0.2 percent down. In Qatar, the index gave up early gains and slipped 0.1 percent with Qatar National Bank falling 1.9 percent.