Egypt stocks continue surge in response to currency devaluation

CAIRO / Reuters

Egypt’s stock market rose sharply for a third day on Monday in response to the devaluation of the Egyptian pound which has raised hopes for capital inflows, while higher oil prices boosted petrochemical shares in Saudi Arabia.
The Egyptian blue chip index jumped 5.4 percent in its heaviest trade since March, bringing its gains to 15.6
percent since the pound’s peg to the dollar was abandoned on Thursday. The broader EGX100 index added
2.5 percent. The devaluation has raised hopes for
major inflows of foreign money into Egyptian markets in coming months. Regional investment bank Arqaam Capital said it was going overweight on Egypt in the wake of the devaluation.
It estimated $4.5 billion of foreign money — or about 16 percent of the stock market’s total capitalisation — would flow into the market in the next year if foreign ownership of stocks rose to 25 percent, a normal level for an emerging market.
Saudi Arabia’s index climbed 1.5 percent, taking its gains since hitting a 2016 low on Oct. 3 to 14.4 percent.
Petrochemical producers were buoyed by a 1.2 percent rebound in Brent oil futures, with the sector’s index climbing 1.8 percent. The retail sector outperformed, extending Sunday’s strong gains. Apparel and mall operator Fawaz Alhokair gained 2.9 percent.
But food producer Savola Group, which has business lines in Egypt, dropped 0.3 percent after saying the devaluation of the Egyptian pound would hit its fourth-quarter results by 171 million riyals ($45.6 million). Dubai’s main index closed up 0.1 percent at 3,281 points, well below its intra-day high of 3,311 points. Emaar Malls climbed 1.5 percent after reporting a 16 percent rise in third-quarter net profit to 435 million dirhams ($118.4 million), against EFG Hermes’ forecast of 421.8 mln dirhams.
In Qatar, the index bounced 0.2 percent as oil drilling provider Gulf International Services soared 6.9 percent in its heaviest trade since late May. Abu Dhabi’s index edged down 0.1 percent as Dana Gas fell 1.9 percent and Abu Dhabi Commercial Bank lost 1.0 percent.