Egypt continues rally on IMF

Reuters

Egypt’s stock market gained for a 12th straight session on Sunday after the International Monetary Fund approved a $12 billion loan for the country, while Saudi Arabia rose, bucking a downtrend in the rest of the Gulf.
The IMF loan approval had been widely expected, but it added fresh fuel to a rally caused by Egypt’s decision to float its currency on Nov. 3, which has created hopes for major inflows of foreign money.
Egypt’s blue-chip index climbed 2.1 percent in massive volume, although the index came well off the day’s high and volume fell from the record set on Thursday. The index has surged 28.1 percent since the pound was floated.
Financials and exporters were among Sunday’s top gainers, with Egypt Kuwait Holding jumping 4.3 percent and Arabian Food Industries rising 10.7 percent. A few blue chips declined on profit-taking, however; at current exchange rates, domestic stock prices in Egyptian pounds have risen close to global depositary receipts expressed in dollars.
Telecom Egypt, for example, fell 2.2 percent to 9.85 pounds. Its GDRs, each of which represents five shares, last closed at $2.505, equivalent to 7.89 pounds.
Exchange data once again showed net foreign buying of stocks, to the tune of about $18 million – a large amount by the standards of recent years, though down from last week’s levels and not big by the standards of many emerging markets.
“People are buying the economic growth expected in the next few years … Most of the money is transfers from abroad,” said Hany Genena, analyst at Beltone Financial in Cairo. Yields on Egypt’s three- and nine-month Treasury bills fell on Sunday at a weekly auction, another sign of fund inflows.
Bank of America Merrill Lynch recommended in a report that investors buy six-month T-bills without hedging them, reviving a trade that was popular among foreign investors before political upheaval in 2011 ushered in years of instability.

GULF
Saudi Arabia’s index added 2.1 percent at 6,663 points in heavy trade, confirming a break above technical resistance at its August peak of 6,396 points and pointing towards the July peak of 6,703 points.
Etihad Etisalat (Mobily) surged 6.2 percent after saying it had been awarded 219.46 million riyals ($58.5 million) from rival Zain Saudi, following an arbitration ruling in a contract dispute between the two firms. Zain rose 0.6 percent, however, as investors welcomed the fact that the award was much less than the 2.2 billion riyals which Mobily had originally been seeking. Saudi banking shares continued their ascent, with lender Saudi Hollandi surging 6.7 percent to 11.90 riyals – still a 24 percent discount to the mean fair value of analysts polled by Reuters.
Petrochemical shares firmed, with the sector’s index gaining 1.1 percent, even though Brent crude oil tumbled 2.4 percent to below $45 barrel on Friday.
In recent months the market has become less closely correlated to oil – first because of fears of systemic problems in the economy as liquidity tightened, and then because Riyadh’s huge international bond issue last month eased those fears.
“What we are witnessing this year is that idiosyncratic risk is driving market performance, and the stock market performance has somewhat decoupled from the movement of oil prices,” said Santhosh Balakrishnan, analyst at Riyad Capital.
Elsewhere in the Gulf, shares in MSCI’s emerging market index slid after a sharp drop in emerging markets globally on Friday. Dubai’s main index fell 1.3 percent as Emaar Properties lost 3.0 percent.
DXB Entertainments, which is not part of the MSCI index but could be added in a review this week, lost 2.6 percent after the amusement park builder recorded a widening net loss for the three months to Sept. 30 of 103.6 million dirhams ($28.2 million), versus a year-ago loss of 37 million dirhams.
The company spent 38.3 million dirhams on marketing expenses and incurred operating expenses leading up to the opening of two theme parks. The company said it expects to complete a third theme park in 2019. In Abu Dhabi, the index closed down 1.1 percent as First Gulf Bank dropped 0.8 percent and Etisalat fell 1.4 percent. Qatar’s main index slid 0.9 percent with Industries Qatar slipping 1.8 percent.