Egypt succumbs to profit taking, Saudi whipsaws but ends week up

epa02960692 (FILE) A file photo dated 11 August 2011, shows trading room of the Egyptian stock market in Cairo, Egypt. According to media sources, Egypt's benchmark stock index, EGX30, dropped by 5.1 per cent shortly after the market opened on 10 October, following overnight clashes that erupted between army troops and protesters that left at least 24 people dead.  EPA/KHALED ELFIQI


DUBAI / Reuters

Egypt’s stock index slipped from a multi-year peak on Thursday while shares in the Gulf were mixed with Saudi Arabia’s market swinging in volatile, heavy trade but ending the week on a firm footing.
Cairo’s index of the 30 most actively traded shares dropped 1.7 percent to 11,353 points, falling from a strong technical barrier at its 2008 peak of 12,039 points. The broader market index, which has been outperforming over the last few sessions, retreated 0.1 percent.
Investor turnout remained strong, according to bourse data, but heavily skewed towards aggressive selling from local traders while international funds remained net buyers.
Mohamed El Nabarawy, head of asset mananement at Cairo-based HC Securities & Investment, believes that there are opposing forces at play which will create a divergence in stock performance in the near term.
“So far we have seen shares rally in unison after the (currency) float, so profit taking is an almost natural occurance. But I think moving forward stocks will diverge as investors assess the impact of higher VAT and of the 3 percent hike in interest rates on profitability.”
On Nov. 3, the central bank ditched its peg of 8.8 per dollar and hiked interest rates by 300 basis points to stabilise
the newly floated pound. The stock
market index has rallied 33 percent since that date.
In August the government introduced a value-added tax of 13 percent, rising to 14 percent in the next fiscal year, part of an economic reform plan.
On Thursday Orascom Telecom was the most heavily traded share, falling 5.6 percent. Amer Group dropped 5.9 percent.

Riyadh’s index closed up 1 point to 6,797 points in extremely volatile and heavy trade. Volumes rose to their highest level since April.
The index managed to end the week up 2.5 percent, despite a weaker start and uncertainty over the fate of crude oil prices at the OPEC meeting next week.
On Thursday, the petrochemical sector clung onto small gains with heavyweight Saudi Basic Industries adding 0.3 percent.
Domestic-focused shares, however, diverged. Saudi Telecom Co climbed a further 2.2 percent, taking its gains for the week to 3.3 percent but food producer Savola dropped 1.1 percent to 36.50 riyals.
NCB Capital said in a note that they remain “overweight” on Savola with a price target of 46.60 riyals. “Savola is currently trading below the market value of its investments, essentially offering the core business for free. Other positives for Savola include expectations of the retail segment turning profitable in 2017.”
The insurance sector, usually traded by retail investors for short term profits, fell 0.8 percent.
Dubai’s main index surrendered to profit taking in the final hour of trade and pulled back 0.8 percent to 3,324 in volatile trade, closing 85 points below its intra-day high. Many of the speculative shares, which have been the most active this week, pulled back with Amlak Finance dropping 5.9 percent.
Blue-chip lenders provided support to Abu Dhabi’s stock index, closing 0.3 percent higher. Union National Bank rose 2.8 percent and Abu Dhabi Islamic Bank added 1.7 percent. Shares in both lenders were volatile throughout the week after quashing rumours that they were in merger talks with other local banks.

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