Egypt hits 8-year high on FX euphoria

CAIRO / Reuters

Egypt’s stock market surged to an
eight-year high on Tuesday because of hopes for foreign fund inflows after
the currency was floated last week, while a plan by Saudi Arabia’s government
to pay debts to the private sector boosted that market.
The Egyptian blue chip stock index jumped 2.5 percent to 10,097 points, its loftiest finish since June 2008 – although it closed well off the day’s high of 10,177 points, and trading volume, while heavy, decreased considerably from Monday’s massive amount.
The index has soared 18.4 percent since the Egyptian pound’s peg of 8.8 to the US dollar was scrapped last Thursday. On Tuesday, the pound continued drifting down to near 18 — a level making Egyptian assets look cheap to foreigners.
Tuesday’s rise brought the index above major technical resistance on its February 2015 peak of 10,066 points; any break, confirmed by two straight closes above that level, would point up to the April 2008 record high of 12,039 points.
In contrast to the previous three days, however, the broader EGX100 index outperformed the blue chip benchmark on Tuesday, rising 3.5 percent – a sign that profit-taking pressure was emerging in blue chips.
Exchange data again showed foreign investors were net buyers of stocks, by a ratio of over four to one. They bought a net $31 million, not much by the standards of other emerging markets but one of the largest amounts Cairo has seen in the last few years.
“The very good news is that foreigners are testing the water in the stock market. Their contribution in terms of size and direction had not been seen in a long time,” said one fund manager. Global Telecom rose 2.4 percent and Commercial International Bank climbed 1.9 percent. Juhayna Food Industries surged to its 10 percent daily limit.

SAUDI
The Saudi index gained 2.1 percent to 6,328 points in its fourth straight day of gains, rising above minor technical resistance at the September peak of 6,238 points. “The trend is bullish as (the index) is trading over the 14-, 21- and 50-week simple moving average levels,” Abu Dhabi’s NBAD Securities said in a note.
The Riyadh government aims to settle its unpaid debts to the public sector before the end of December, the state news agency reported late on Monday.
The delayed payments are believed
to total over $20 billion and be concentrated in the construction sector. Buil-
der Al Khodari climbed 4.2 percent in heavy trade.
Saudi Pharmaceutical Industries, the only listed drug producer, gained 2.8 percent in a second day of heavy trade after the energy minister said on Sunday that Riyadh planned to develop automotive, pharmaceutical and solar industries.
All 12 listed banks rose; they have been bullish since the government’s successful $17.5 billion international bond sale last month. Samba jumped 4.2 percent.
“This has been a relief rally for construction stocks and a fundam-
entals-driven rally for the banking and petrochemical sectors,” said Santhosh Balakrishnan, research analyst at the Riyad Capital.
He added that long-term investors had returned to buy blue chips that dropped sharply over the last year. For example, Samba is still down 13.8 percent year-to-date but has risen 21.9 percent over the last 30 days. Abu Dhabi’s index rose 1.4 percent as the largest listed developer, Aldar Properties, climbed 1.5 percent to 2.65 dirhams.
Aldar posted net attributable profit for the third quarter of 747.8 million dirhams ($203.6 million), up 17.9
percent; SICO Bahrain had forecast
480 million dirhams and EFG Hermes 682 million dirhams. Analysts at Naeem Brokerage said gross profit had recovered on a surge in revenues; they kept
a “buy” rating on the stock with a target of 3.88 dirhams.
The largest listed developer in neighbouring Dubai, Emaar Properties, gained 2.3 percent, helping lift Dubai’s index 0.8 percent. Builder Arabtec, which has not yet reported quarterly earnings, advanced 3.1 percent.
Qatar’s index closed up 0.2 percent. Vodafone Qatar rose 0.9 percent after
reporting a quarterly loss of 63.9 million riyals ($17.6 million), compared to a
loss of 113.6 million riyals a year ago and Arqaam Capital’s forecast of a 94 mil-
lion riyal loss.